Public Information Notices

Côte d'Ivoire and the IMF

Public Information Notice (PIN) No. 00/76
September 8, 2000
International Monetary Fund
700 19th Street, NW
Washington, D.C. 20431 USA

IMF Concludes Article IV Consultation with Côte d’Ivoire

Public Information Notices (PINs) form part of the IMF's efforts to promote transparency of the IMF's views and analysis of economic developments and policies. With the consent of the country (or countries) concerned, PINs are issued after Executive Board discussions of Article IV consultations with member countries, of its surveillance of developments at the regional level, of post-program monitoring, and of ex post assessments of member countries with longer-term program engagements. PINs are also issued after Executive Board discussions of general policy matters, unless otherwise decided by the Executive Board in a particular case.

On July 12, 2000, the Executive Board concluded the Article IV consultation with Côte d’Ivoire.1


In March 1998, the Executive Board of the IMF approved a three-year arrangement under the Poverty Reduction and Growth Facility (PRGF) in support of Côte d’Ivoire’s adjustment efforts. These efforts aim to address the unfinished reform agenda in order to attain a high rate of sustainable growth, reduce poverty, and achieve financial viability. The program focuses on three key policy components: (a) the pursuit of a prudent fiscal policy; (b) the deepening of structural reforms to promote private sector development and investment; and (c) the pursuit of an ambitious social development agenda. Emphasis also has been put on addressing forcefully governance issues. At the same time, the Executive Boards of the IMF and the World Bank agreed that Côte d’Ivoire had qualified for assistance under the Heavily Indebted Poor Countries (HIPC) Initiative.

Performance under the 1998 PRGF-supported program was mixed, and there were some difficulties in its implementation. The public finance situation remained very fragile, delays were experienced in implementing key structural reforms, and most of the governance issues were not resolved. While some progress was made in 1999, the economic and financial situation continued to worsen. The previous administration was informed at the time of the 1999 Article IV consultation that negotiations of the second-year PRGF arrangement would be initiated only after implementation of needed corrective measures, especially on governance, and satisfactory fiscal performance. Up to the time of the coup d’état in December 1999,2 little progress was achieved and the fiscal situation deteriorated significantly.

The economy has also been adversely affected by a sharp deterioration in the terms of trade (world cocoa prices are presently some 40 percent below their level at end-1998), as well as by a significant slowdown in disbursements of external assistance, which began prior to the coup d’état. For 1999, real GDP growth is estimated at 2.8 percent, down from 4.5 percent in 1998. Inflation remained subdued, and the 12-month consumer price inflation stood at 1.6 percent at end-December 1999. The external current account deficit (including grants) remained at about 4 percent of GDP in 1999. The full impact of the drop in world prices for cocoa will occur in 2000, when the external current account deficit is projected to widen to 5.5 percent. Real GDP growth is also projected to fall to around 2 percent in 2000.

The overall fiscal deficit (including grants) for 1999 is estimated at about 3 percent of GDP, up from 2.4 percent in 1998. The combined stock of spending committed for which payment orders have not been issued and arrears (including those identified from previous years in the recently completed audit) amounted to more than 7 percent of GDP at end-1999. Non reschedulable external arrears started to accumulate in late 1999, and at end-June 2000, these arrears amounted to CFAF 67 billion (0.9 percent of GDP). For 2000, the revised budget aims at reducing the overall fiscal deficit to 1.8 percent of GDP, but not all the measures needed to achieve it have been identified and adopted.

Regarding structural measures, progress was made in some areas, but there have been delays. The marketing of coffee was liberalized in October 1998 and that of cocoa in August 1999. The authorities also decided to dissolve the new CAISTAB and reaffirmed that the liberalization will be maintained. Regarding privatization, the sale of the state-owned bank BIAO was finalized in January 2000. A call for bids for the petroleum refinery was launched, although further progress on this and other operations has been slow. Concerning trade liberalization, the final stage of the common external tariff was put in place as planned on January 1, 2000, but a long list of commodities is still subject to reference prices. The difficult financial situations of the Caisse Autonome d’Amortissement, the savings and postal checking agency, and the retirement fund for government employees have not yet been addressed. In the social sectors, spending was lower than budgeted and the realization of physical objectives lagged in 1999. A number of outstanding governance issues remained, particularly related to problems that arose in recent years, including in the areas of control over public spending, tax fraud, mismanagement at CAISTAB, and nonperforming crop credits.

The new authorities reaffirmed their determination to tackle the above issues and hoped that an SMP could be agreed upon before the fall elections. The SMP could be developed into a PRGF-supported program after the elections, and once donors have fully resumed their relations with Côte d’Ivoire. The authorities indicated that they will make every effort to meet their external debt obligations. They have contacted the Paris Club to find a solution to the outstanding external arrears. They have also made full principal and interest payments to Côte d’Ivoire’s private creditors after some delays.

Executive Board Assessment

Executive Directors noted with concern that Côte d’Ivoire’s economic and financial position had worsened precariously in the midst of a tense political and social situation. Directors regretted the serious slippages in policy implementation, notably regarding governance and the deteriorating fiscal situation, and the authorities’ consequent inability to proceed with the second annual arrangement under the Poverty Reduction and Growth Facility (PRGF). Directors observed that the lack of an operative program supported by the Fund had contributed to a drop in disbursement of external assistance, and that the economic situation had also been affected by a sharp deterioration in the terms of trade.

Directors noted the continuing lack of progress in key policy areas in 1999 and the first half of 2000, despite intensive monitoring by Fund staff. Serious fiscal slippages have continued, leading to a sizable accumulation of domestic and external arrears and of spending commitments for which payment orders have not been issued (DENOs). The main reasons for these slippages have been excessive tax exemptions and fraud, weak expenditure control, and off-budget spending.

Directors noted that the new government had initially indicated its commitment to reach understandings on a staff-monitored program (SMP) that would address Côte d’Ivoire’s major policy challenges, and that could be converted to a PRGF-supported program soon after the constitutional referendum and presidential and parliamentary elections scheduled for the coming months. Directors regretted that the discussions on a SMP could not be concluded because several key corrective measures in the fiscal and governance areas had not yet been identified or adopted by the authorities. In view of the precarious economic and financial situation, Directors urged the authorities to move ahead expeditiously—and without waiting for the elections—with the needed corrective measures. Directors considered that the recent political developments had seriously circumscribed the conduct of macroeconomic and structural policies. They looked forward to the forthcoming elections and emphasized their importance in reducing political uncertainties, providing a suitable environment for the needed bold policy initiatives, and improving relations with external creditors.

In the critical fiscal area, Directors considered that the reduction in the overall deficit to the revised budget level would be appropriate, but could only be achieved through determined measures. They attached special importance to improving revenue performance by combating fraud vigorously, reducing exemptions, simplifying the VAT, and implementing an action plan for the customs department. On the spending side, the priorities are to contain the wage bill within the budgetary envelope (despite the recent wage increase and bonuses to the military); to identify and implement measures to reduce nonpriority spending; to avoid off-budget outlays; and to ensure that social outlays are increased and that the funds are used efficiently.

Directors expressed the hope that the authorities would move expeditiously to address outstanding governance issues. In particular, they should remedy the shortcomings identified by the external audit of the CAISTAB (the former coffee and cocoa regulatory body); resolve the outstanding issues of the nonperforming crop credits; apply sanctions in the cases involving fraudulent exporters; deal swiftly with any new cases of fraud and corruption; and more generally improve transparency in budget operations.

Directors underscored the need to address forcefully the weaknesses in the financial system and urged the authorities to speed up the reform of the postal savings and checking agency to stem the ongoing losses. They also called on the authorities to carry out promptly the audit of the state bank—the Caisse Autonome d’Amortissement—and decide on a strategy for its privatization or liquidation.

Directors urged the authorities to move ahead on the other outstanding structural reforms. Regarding the oil refinery (SIR), a new competitive and transparent bidding process should be launched with the aim of finalizing its privatization as soon as possible. In the cocoa and coffee sectors, Directors welcomed the dissolution of the new CAISTAB and the intention of the authorities not to backtrack on the liberalization carried out last year. They recommended that the implementation of the accompanying measures to strengthen producer organizations be accelerated. Directors also emphasized the need for the authorities to accelerate the implementation of the poverty reduction action plan and to improve the delivery of high-priority social services, including by stepping up the construction of schools and clinics.

Directors urged the authorities to implement with determination and without delay all necessary measures to put Côte d’Ivoire—initially in the context of a SMP—on a medium-term adjustment path that could be supported by the PRGF, and which could, in turn, provide a track record to justify eventual debt relief under the enhanced HIPC Initiative.

Directors strongly regretted the build up of external arrears, and emphasized the need to normalize relations with creditors as soon as possible.

Directors encouraged the authorities to continue to strengthen the statistical system.

Côte d’Ivoire: Selected Economic Indicators, 1995-99

  1995 1996 1997 1998 1999

  (Annual percentage change, unless other wise indicate)
National income          
  Real GDP per capita 3.2 3.1 3.1 0.9 -0.8
  GDP at constant prices 7.1 6.8 6.6 4.5 2.8
  Consumer price index (end of period) 7.7 3.5 5.2 2.0 1.6
External sector (on the basis of CFA francs)          
  Exports, f.o.b., at current prices 19.7 14.9 8.6 2.5 5.4
  Imports, f.o.b., at current prices 38.3 14.4 13.3 1.7 6.9
  Terms of trade (deterioration -) 14.9 -12.3 -3.7 3.8 -4.6
  Real effective exchange rate (depreciation -)1/ 8.3 -1.0 2.2 3.4 -5.8
Central government operations          
  Total revenue and grants 29.9 11.8 7.8 4.9 -8.9
  Total expenditure 14.8 4.1 8.3 5.7 5.4
Money and credit          
  Net domestic assets 2/ 5.8 0.7 10.1 7.2 4.9
  Money and quasi money (M2) 17.0 3.0 12.2 6.3 0.9
  (In percent of GDP, unless otherwise indicated)
Central government operations          
  Total revenue and grants 22.8 22.9 22.2 21.7 19.0
  Total expenditure 26.5 25.2 24.5 24.1 21.9
  Overall deficit (-), payment order basis -3.7 -2.3 -2.3 -2.4 -2.9
Gross domestic investment 12.9 15.6 15.5 16.0 16.3
  Central government 4.2 4.2 5.3 6.1 4.2
  Nongovernment sector 8.7 11.4 10.2 9.9 12.1
Gross domestic savings 20.3 24.3 24.7 25.1 22.6
  Central government 5.4 6.1 6.2 6.3 4.1
  Nongovernment sector 14.9 18.2 18.6 18.9 18.5
Gross national savings 9.0 10.8 13.6 14.6 11.8
External sector          
  Current account balance (including official transfers) 3/ -5.8 -4.7 -4.6 -3.9 -4.0
  Overall balance of payments (in millions of U.S. dollars) -203 -316 -263 -142 -479
  External public debt (including IMF) 4/ 157.9 163.0 135.9 96.0 92.8
  Public external debt-service ratio (including IMF) 5/          
      In percent of exports of goods and nonfactor services 32.9 25.0 20.8 26.9 20.4
      In percent of government revenue 62.3 52.1 42.2 43.6 47.6

Sources: Ivorien authorities; and IMF staff estimates.

1/ Based on end-of-period changes in relative consumer prices and the nominal effective exchange rate.
2/ Changes in percent of broad money at beginning of period.
3/ Excluding late interest on payments arrears to commercial banks.
4/ Including short-term liabilities to the Central Bank of West African States (BCEAO) and all arrears to
commercial banks, and reflecting the 1998 rescheduling with the Paris Club and the London Club agreement.
5/ Public debt service due before debt relief.

1 Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. 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. 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. In this PIN, the main features of the Board’s discussion are described.
2 In December 1999, a military coup d'état took place and a new government was formed in early January 2000 and then reshuffled in May. A constitutional referendum was held on July 23, 2000, and the first round of presidential elections has been postponed to October 22.


Public Affairs    Media Relations
E-mail: E-mail:
Fax: 202-623-6278 Phone: 202-623-7100