IMF Executive Board Concludes 2018 Article IV Consultation, Completes Third Reviews under Extended Credit Facility and Extended Fund Facility Arrangements, and Approves US$136.6 Million Disbursement with Côte d'Ivoire

June 18, 2018

  • Robust economic growth is projected to continue in 2018, and inflation remains subdued.
  • The program aims to achieve a sustainable balance of payments position, foster inclusive growth and poverty reduction, and create fiscal space for investing in priority infrastructure and social projects.
  • Under the program, the budget deficit is projected to converge to the WAEMU regional norm of 3 percent of GDP in 2019.

On June 18, 2018, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation [1] and completed the third reviews under the Extended Credit Facility (ECF) and Extended Fund Facility (EFF) arrangements for the Republic of Côte d’Ivoire. Completion of this review enables the disbursement of SDR 96.786 million (about US$136.6 million).

The three-year ECF/EFF arrangements with a total access of SDR 650.4 million (about US$917.8 million or 100 percent of Côte d’Ivoire’s quota) were approved by the IMF Executive Board on December 12, 2016.

GDP growth is estimated at about 7¾ percent in 2017 despite the fall in cocoa prices. Inflation remained subdued at about 1 percent. The medium-term outlook is for continued strong economic activity with robust growth and low inflation. Risks to the forecast are broadly balanced.

The Ivoirian authorities have adopted a comprehensive program of economic reforms to achieve a sustainable balance of payments position, inclusive growth, and poverty reduction by investing in priority infrastructure and social projects. These objectives are being supported by the IMF program arrangements. The program is anchored on the convergence of the budget deficit to the West African and Economic Monetary Union norm of 3 percent of GDP by 2019, to preserve public debt sustainability and support the regional international reserves pool. Fiscal discipline is underpinned by mobilizing revenue and spending prioritization in order to create fiscal space for priority infrastructure and social projects. Implementing their program, the authorities have pursued structural reforms to further strengthen the revenue administration and public financial management and adopted measures for fiscal consolidation while protecting priority spending. They are also further strengthening the financial system.

Following the Executive Board discussion, Mr. Mitsuhiro Furusawa, deputy Managing Director and Acting Chair, made the following statement:

“Côte d’Ivoire’s performance under its Fund-supported program has been good. The authorities contained the budget deficit in 2017 and are committed to meeting the program budget deficit target in 2018 and reduce the fiscal gap to meet the WAEMU convergence criterion of 3 percent of GDP in 2019. The medium-term outlook remains robust, with growth projected to average around 7 percent over 2018-23.

“Further revenue mobilization is needed to achieve the fiscal objectives. Building on past implementation of fiscal structural reforms, measures to buttress revenue administration and public financial management should accelerate. Moreover, cautious debt and financial management is required to firmly anchor Côte d’Ivoire’s debt on a sustainable path. The authorities are taking steps to further consolidate the banking sector’s stability.

“Continued implementation of reforms that foster sustainable and inclusive growth would be needed. Further improvements in the business environment would help make private investment the main driver of growth.”

Executive Board Assessment [2]

Executive Directors agreed with the thrust of the staff appraisal. They welcomed the authorities’ sound macroeconomic policy management against a backdrop of domestic shocks and unfavorable cocoa export prices, and commended the good performance under the Fund‑supported program. They noted that Côte d’Ivoire’s medium‑term growth outlook remains buoyant. Nonetheless, Directors stressed that risks should be mitigated by pursuing prudent fiscal and borrowing policies to reduce the budget deficit and create fiscal buffers. In this context, they commended the authorities’ commitment to their program.

Directors encouraged the authorities to continue to implement reforms that foster sustainable and inclusive growth to further reduce poverty and strengthen social cohesion. They noted that enhancing transportation, electricity, and water infrastructure would yield productivity gains in agriculture and industry. They encouraged the authorities to ensure adequate funding for critical infrastructure and social safety nets by accelerating revenue mobilization. Further improvements in the business environment including sustained efforts to strengthen governance would help make private investment the main driver of growth.

Directors welcomed the authorities’ commitment to meeting the WAEMU convergence criterion of 3 percent of GDP in 2019, which will help anchor fiscal and debt sustainability. They stressed that achieving this objective will require lowering the budget deficit by accelerating revenue administration reforms and adopting additional tax policy measures, together with expenditure prioritization. Directors advised building consensus on tax reforms through close partnership with the private sector and introducing tax measures consistent with WAEMU guidelines.

Directors stressed that prudent debt and financial management is required to anchor debt on a sustainable path. They noted that Côte d’Ivoire’s debt distress risk remains moderate, but that external debt liquidity and solvency indicators warrant close monitoring. Preserving the fiscal consolidation path would limit recourse to external financing and help mitigate risks from potentially tighter international financial conditions. Monitoring fiscal risks from public enterprises and private‑public partnerships will also be important. Directors noted that the financial sector is generally stable, but urged the authorities to address pockets of vulnerability.

Directors recommended accelerating the energy sector restructuring to preserve its financial sustainability and support economic growth. They welcomed the agreements between the government, the national oil refinery SIR, and the state‑owned petroleum company PETROCI. They encouraged the timely resolution of the electricity arrears accumulated by the public sector and looked forward to the SIR debt restructuring by end‑August 2018.

Directors recommended sustaining progress in disseminating and improving the quality of economic statistics. They welcomed the recent publication of the quarterly national accounts and encouraged the authorities to further improve the coverage of high‑frequency indicators.

It is expected that the next Article IV consultation with Côte d’Ivoire will take place in accordance with the Executive Board decision on the consultation cycles for members with Fund arrangements.

 

Côte d'Ivoire: Selected Economic Indicators


2017

2018

2019

2020

2021

2022

Projections

(Annual percentage changes, unless otherwise indicated)

National income

GDP at constant prices

7.8

7.4

7.0

6.9

6.8

6.6

GDP deflator

1.1

0.5

2.0

1.8

1.9

1.8

Consumer price index (annual average)

0.8

1.7

2.0

2.0

2.0

2.0

External sector (on the basis of CFA francs)

Exports of goods, f.o.b., at current prices

8.4

5.2

8.7

8.5

11.4

12.2

Imports of goods, f.o.b., at current prices

4.9

15.0

12.0

8.9

11.7

11.4

Export volume

15.7

8.9

8.5

10.1

12.3

12.8

Import volume

6.3

8.8

11.9

9.4

10.4

9.8

Terms of trade (deterioration –)

-4.3

-8.3

0.1

-1.1

-1.3

-1.3

Nominal effective exchange rate

1.1

...

...

...

...

...

Real effective exchange rate (depreciation –)

-0.1

...

...

...

...

...

Central government operations

Total revenue and grants

8.0

8.4

8.7

10.1

9.2

8.6

Total expenditure

9.9

6.1

5.3

9.5

8.9

8.5

(Changes in percent of beginning-of-period broad money unless otherwise indicated)

Money and credit

Money and quasi-money (M2)

19.7

14.6

13.5

11.4

12.1

11.0

Net foreign assets

9.6

8.1

3.7

2.0

2.7

2.2

Net domestic assets

10.1

6.5

9.9

9.3

9.4

8.9

Of which : government

3.6

-1.1

2.3

2.0

2.0

1.9

private sector

8.1

7.7

7.6

7.3

7.3

7.0

Credit to the economy (percent)

13.3

13.3

13.4

13.0

12.8

12.1

(Percent of GDP unless otherwise indicated)

Central government operations

Total revenue and grants

19.2

19.3

19.2

19.4

19.5

19.5

Total revenue

18.1

18.1

18.1

18.4

18.6

18.9

Total expenditure

23.4

23.0

22.2

22.4

22.4

22.4

Overall balance, incl. grants, payment order basis

-4.2

-3.8

-3.0

-3.0

-2.9

-2.9

Primary basic balance 1/

-1.2

-0.4

0.1

0.9

0.6

0.9

Gross investment

20.8

22.0

22.8

23.0

24.0

24.2

Central government

6.6

6.8

6.8

6.2

6.7

6.6

Nongovernment sector

14.2

15.2

16.0

16.8

17.3

17.6

Gross domestic saving

23.5

23.1

23.5

23.8

25.1

25.9

Central government

1.9

2.6

3.4

3.6

3.8

4.0

Nongovernment sector

21.6

20.5

20.1

20.2

21.3

21.9

Gross national saving

18.7

19.3

19.7

20.0

21.2

21.7

Central government

2.2

3.0

3.7

3.2

3.7

3.6

Nongovernment sector

16.5

16.3

16.0

16.8

17.6

18.1

External sector balance

Current account balance (including official transfers)

-2.1

-2.7

-3.1

-3.1

-2.8

-2.5

Current account balance (excluding official transfers)

-3.2

-3.9

-4.1

-4.1

-3.7

-3.1

Overall balance

4.5

2.9

1.0

0.8

1.1

0.9

Public sector debt

Central government debt, gross

46.8

48.7

47.3

46.9

46.0

45.2

Central government debt (excluding C2D)

42.7

44.7

44.0

44.2

43.4

42.7

External debt

28.6

34.0

32.5

30.6

29.4

28.5

External debt (excluding C2D)

23.9

29.5

28.8

27.6

26.6

25.8

External debt-service due (CFAF billions)

556

672

738

1037

651

704

Percent of exports of goods and services

7.6

8.8

8.8

11.4

6.5

6.2

Percent of government revenue

13.1

14.6

14.7

18.7

10.7

10.5

Memorandum items:

Nominal GDP (CFAF billions)

23,510

25,372

27,687

30,106

32,748

35,541

Nominal exchange rate (CFAF/US$, period average)

581

…

…

…

…

…

Nominal GDP at market prices (US$ billions)

40.5

48.0

52.9

58.2

63.8

69.7

Population (million)

25.0

25.6

26.3

27.0

27.7

28.4

Nominal GDP per capita (CFAF thousands)

942

991

1,054

1,117

1,184

1,252

Nominal GDP per capita (US$)

1,621

1,872

2,014

2,159

2,305

2,456

Real GDP per capita growth (percent)

5.2

4.8

4.4

4.3

4.2

4.0

Sources: Ivoirien authorities; and IMF staff estimates and projections.

1/ Defined as total revenue minus total expenditure, excluding all interest and foreign-financed investment expenditure. 

[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every two years with members who have an IMF-supported program. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

[2] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.imf.org/external/np/sec/misc/qualifiers.htm.

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