Press Release No. 10/485

Press Release: IMF Executive Board Completes Fifth Review Under the Extended Credit Facility for Togo and Approves US$22 Million Disbursement

December 10, 2010

The Executive Board of the International Monetary Fund (IMF) today completed the fifth review of Togo’s economic performance under a program supported by the three-year arrangement under the Extended Credit Facility (ECF). The Executive Board approved a request for a modification of a performance criterion related to net domestic financing and an extension of the program to end-August 2011. Completion of the review enables the immediate disbursement of an amount equivalent to SDR 14.3 million (about US$22 million), bringing total disbursements under the arrangement to SDR 86.61 million (about US$133.24 million).

The Executive Board approved a three-year SDR ECF arrangement with an access amount equivalent to SDR 66.06 million (about US$101.62 million) for Togo on April 21, 2008 to support the government's economic program (see Press Release No. 08/90). The Board later approved two augmentations on September 22, 2008 and June 25, 2010 totaling SDR 29.35 million (about US$45.15 million)

The Executive Board also agreed that Togo has taken the steps necessary to reach its completion point under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative. This decision on the HIPC completion point is contingent upon the Executive Board of the World Bank reaching a similar decision, after which a joint press release will be issued.

Following the Executive Board’s discussion of Togo, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, said:

“The Togolese authorities are to be commended for continued strong implementation of their economic reform program under the ECF arrangement, which has contributed to strengthened public finances and macroeconomic stability. Countercyclical fiscal policy in 2010 has helped support a modest economic recovery.

“The 2011 budget appropriately emphasizes increasing public investment to support medium-term growth and poverty reduction, to be financed largely by raising domestic revenue. The authorities are committed to limiting growth in current spending and to curtailing lower priority spending in case of shortfalls in revenue or available concessional financing. Continued strong budget execution, including in priority social spending, will be key.

“Enhancing growth prospects will also depend on sustaining the momentum of reforms, particularly in public finance, debt management, and the investment climate. The clearance of domestic arrears is expected to be completed. Implementation of the recently adopted automatic pricing mechanism for petroleum products will minimize distortions, cushion the social impact of price shocks, and safeguard public finances. It will be important to proceed with the privatization process for state-owned banks.

“Togo has taken the steps necessary to reach completion point under the enhanced HIPC Initiative. To reap lasting benefits from the considerable debt relief, judicious use of opportunities is important. The authorities will need to increase investment in physical and human capital and pursue growth-enhancing structural reforms while maintaining prudent fiscal and debt policies. Continued support from donors will be crucial,” Mr. Portugal added.