IMF Executive Board Concludes 2001 Article IV Consultation with Togo

Public Information Notice (PIN) No. 11/100
July 27, 2011

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 18, 2011, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Togo.1 The Executive Board also completed the sixth review of Togo’s performance under its Extended Credit Facility (ECF) arrangement.


Since the conclusion of the last Article IV consultation in April 2009, Togo has made further progress in overcoming the legacy of its protracted 1990-2005 domestic crisis. Despite an adverse global economic environment, growth has continued to accelerate, reaching 3.7 percent in 2010. Economic Growth nevertheless remains modest relative to population growth and to other countries in the region. Average inflation in 2010 remained modest at 1.4 percent, thanks largely to abundant local food production and limited pass-through of higher global oil prices. The current account deficit has widened owing to higher oil prices and imports of intermediate and capital goods, reflecting in part higher public investment spending. Public finances have strengthened markedly, given the external debt relief under the Highly Indebted Poor Countries Initiative (HIPC) and prudent fiscal policy.

The Togolese authorities have built a strong record of implementation of their IMF-supported economic program. With the conclusion of the sixth review of its ECF arrangement, Togo has successfully completed its three-year program in a timely manner. In 2010, budget execution was particularly strong, with all fiscal performance criteria met by ample margins. Revenue collection improved, and current expenditures remained within program ceilings. The execution of priority social spending and of capital projects improved substantially in 2010, nearly reaching ambitious targets.

The conduct of fiscal policy in 2011 was complicated by the mounting subsidies following the non-adjustment of fuel pump prices, notwithstanding global higher prices. In June, the authorities began gradual fuel price adjustments and initiated targeted social measures, developed in consultation with stakeholders, to cushion the impact on the vulnerable population. To offset partially the budgetary cost of fuel subsidies, the authorities postponed some lower-priority investment spending to 2012. Overall, the budget stance has become somewhat more accommodative in 2011, targeting a domestic primary deficit of 1.6 percent of GDP, rather than 0.4 percent previously. Fiscal balances for 2008-2011 have nevertheless remained consistent on average with the authorities’ initial target for the program, as a result of the overperformance in 2010.

Structural reforms to address weaknesses stemming from the domestic crisis have advanced since 2009, although progress has been slower than planned in some key areas. While improvements in public financial management have generally proceeded well, reform efforts have not yet yielded desired results in other sectors, such as phosphates and banking. In particular, the privatization process for the four largest state-owned banks—a key step to improve their soundness, protect public finances and promote financial intermediation—is taking longer than anticipated, in part due to the need to establish an inclusive consultative mechanism to make strategic choices on the privatization process. Following these decisions, the authorities re-energized the privatization process by issuing a call for expressions of interest in the local and international media. The authorities remain committed to seeking strategic investors and aim to bring the banks to the point of sale before end-2011.

For the medium-term, the authorities are emphasizing policies to strengthen the foundations for growth. To address infrastructure bottlenecks, the authorities intend to scale up public investment by around 2½ percent of GDP a year in 2012-2014, while maintaining macroeconomic stability and debt sustainability. With the objective of mobilizing more domestic resources for priority social and investment spending, the authorities intend to redouble efforts to modernize tax and customs administration and reduce tax exemptions.

Despite Togo’s considerable progress in economic stabilization, it remains vulnerable, and risks persist. Worsening of external price shocks would lead to deterioration in growth, the current account, price stability, and the budget. Persistent constraints in administrative capacity could delay implementation of reforms designed to address key obstacles to growth, thereby postponing recovery.

Executive Board Assessment

Executive Directors agreed with the thrust of the staff appraisal. They commended the authorities for the strong track record and successful completion of the ECF-supported program, despite the adverse shocks and limited administrative capacity. Economic growth has picked up, bolstered by countercyclical fiscal policy in 2010 and progress in implementing the reform agenda. Directors stressed that continued commitment to preserve fiscal sustainability and address underlying structural weaknesses is critical to boosting growth potential. They welcomed the authorities’ intention to remain closely engaged with the Fund and development partners in order to consolidate the gains achieved thus far.

Directors welcomed the implementation of the automatic mechanism for adjusting retail prices for oil products, accompanied by targeted measures to cushion the social impact. They supported the emphasis of the medium-term fiscal framework on scaling up investment in infrastructure and priority social spending. Directors underscored the need to be vigilant about potential shortfalls in revenue and the quality of public projects. Adopting a rules-based framework anchored on the fiscal deficit and debt level would be helpful in this regard. Directors encouraged further efforts to strengthen public financial management, revenue collection, and management of contingent liabilities, with technical support from development partners. They noted that Togo remains at moderate risk of debt distress, calling for improved capacity in debt management, and a financing strategy that relies on grants and highly concessional loans.

Directors considered speeding up bank privatization to be central to the reform agenda—a key step to improve access to credit and promote private sector growth. They also stressed that a financial sector development strategy is a high priority in this area, and welcomed its preparation in cooperation with stakeholders and with technical assistance from the Fund.

Directors underlined the importance of broader and deeper structural reforms to boost competitiveness and productivity growth, and reduce poverty. Efforts should focus on improving the business climate, increasing investment in physical and human capital, and enhance governance in public sector operations. Directors noted that membership in the West African Economic and Monetary Union has provided an important anchor of stability, particularly in the face of recent external shocks.

Togo: Selected Economic and Financial Indicators, 2009–13



2009 2010 2011 2012 2013


Actual Est. Proj. Proj. Proj.
  (Percentage growth, unless otherwise indicated)

National income, prices, and exchange rates


Real GDP

3.2 3.7 3.9 4.5 4.7

Real GDP per capita

0.7 1.1 1.3 1.9 2.2

GDP deflator

1.9 1.8 3.8 2.7 2.4

Consumer price index (average)

1.9 1.4 4.3 2.6 2.4

GDP (CFAF billions)

1,490 1,573 1,696 1,821 1,952

Exchange rate CFAF/US$ (annual average level)

470.7 494.2

Real effective exchange rate

0.3 -6.0

Terms of trade (deterioration = –)

4.8 -0.2 -1.6 -1.6 -0.4
  (Annual change, percent of beginning-of-period broad money)

 Monetary survey


Net foreign assets1

0.7 3.0 2.1 -0.2 0.8

Credit to government1

6.4 3.0 4.8 1.4 1.9

Credit to nongovernment sector

9.7 10.3 8.5 6.8 6.4

Broad money (M2)

16.2 16.3 11.6 10.3 9.2

Velocity (GDP/end-of-period M2)

2.4 2.2 2.1 2.1 2.0


(Percent of GDP, unless otherwise indicated)

Investment and savings


Gross domestic investment

18.0 18.9 19.4 21.8 22.7


5.5 7.9 8.9 11.5 12.6


12.5 11.0 10.5 10.3 10.1

Gross national savings

11.4 11.7 11.7 13.7 14.4


2.7 6.2 5.0 7.4 7.0


8.7 5.4 6.8 6.4 7.3

Government budget


Total revenue and grants

18.5 20.9 22.2 22.7 22.7


16.9 18.9 18.9 18.4 18.5

Total expenditure and net lending

21.3 22.5 26.1 26.8 28.3

  Domestic primary expenditure

17.4 16.7 20.4 19.5 20.2

Overall balance (payment order basis)

-2.8 -1.6 -3.9 -4.1 -5.6

  Domestic primary balance2

-0.4 2.2 -1.6 -1.1 -1.7

Change in domestic arrears

-1.0 -2.3 -0.8 -0.3 -0.3

External sector


Current account balance

-6.6 -7.2 -7.6 -8.1 -8.3

  Exports (goods and services)3

36.8 37.3 37.4 37.1 37.2

  Imports (goods and services)3

-52.5 -53.8 -55.1 -55.8 -56.0

External public debt4

52.7 17.2 16.0 17.1 19.2

External public debt service (percent of exports)4

4.6 5.1 2.9 2.9 3.1

Total public debt4

67.8 32.3 27.4 27.1 27.8

Sources: Togolese authorities and IMF staff estimates and projections.

1 Change as a percentage of broad money at the beginning of the period.

2 Revenue minus expenditure, excluding grants, interest, and foreign-financed expenditure.

3 Aggregate import and export figures, both for historical data and for projections, now include separately the imports and exports from the binational electricity generating company CEB, which were previously netted out when calculating aggregate numbers.

4 Includes arrears and state-owned enterprises external debt.

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. An explanation of any qualifiers used in summings up can be found here:


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