Press Release: Statement by the IMF Mission to Côte d'Ivoire
November 27, 2007
The following statement was issued today in Abidjan by Mr. Arend Kouwenaar, the International Monetary Fund (IMF) mission chief for Côte d'Ivoire:
"An IMF mission led by Mr. Arend Kouwenaar visited Abidjan from November 12-26, 2007. It also visited Yamoussoukro, in addition to Bouaké, Korhogo and other towns in the Central, Northern, and Western zones of Côte d'Ivoire. The purpose of this visit was to discuss with the authorities the progress achieved in implementing their program supported under the IMF's Emergency Post Conflict Assistance (EPCA). In addition, the mission was there to discuss economic policies for 2008 which could be supported by additional assistance under EPCA. Members of the World Bank and African Development Bank missions also participated in the discussions. Furthermore, the IMF mission met with representatives of civil society, the private sector, and the international community.
"GDP growth is expected to achieve 1.7 percent in 2007, on account of incipient recovery in a number of sectors, reflecting the fact that growth in private investment has resumed in real terms for the first time since 1999. The increase in consumer prices has stayed around 2.5 percent (year-on-year). However, the prices of certain commodities—particularly rice, milk, and flour—have recently undergone significant increases on account of rising world food prices.
"Although the political and social environment remains a challenging one, the government has implemented most of the measures envisaged in the context of the EPCA-supported program for 2007. Budget revenue has been satisfactory thanks to the favorable performance of the value added tax and corporate tax receipts which offset a shortfall in petroleum product taxes. The government is also resuming normal budget execution procedures as well as the regular reporting of physical and financial flows in the key sectors of coffee, cocoa, and energy, thereby enhancing transparency and good governance. The government has also confirmed its commitment to be in conformity with the Extractive Industries Transparency Initiative (EITI), and audits of the subsectors of oil and gas extraction, refining, and electricity are nearing completion. In addition, considerable efforts have been made to normalize financial relations with multilateral financial institutions. Since July 2007, Côte d'Ivoire has been current on its debt service flow obligations to the World Bank and the African development Bank. Its arrears to the World Bank and the AfDB are expected to be settled by January 2008 and April 2008, respectively.
"The IMF mission noted that the overall expenditure envelope was respected. However, it voiced concern regarding the composition of budget expenditures in 2007, notably higher than budgeted spending by a number of government institutions (including salaries and sovereignty outlays) and for frontline bonuses for the military. The mission noted that capital expenditures and expenditures related to crisis resolution have fallen short of EPCA program projections. The mission held discussions with the government regarding corrective measures designed to get as close as possible to the initial fiscal objectives.
"The government and the mission reached agreement, ad referendum, on the key elements of a program for 2008 that could be supported by additional EPCA assistance. After its finalization, the program is subject to review by IMF Management and approval of the Executive Board of the IMF. The main objectives are to help Côte d'Ivoire overcome economic stagnation and allow it once again to achieve the growth rate recorded in the years prior to the crisis, while maintaining macroeconomic balance and strengthening governance and transparency.
"Economic policies will continue to aim at strengthening government finance while mobilizing domestic and external resources. These efforts should also make it possible to regularize financial relations with multilateral institutions and to take comparable steps with other creditors. Such efforts should also help raise the portion of budget expenditure allocated to post-crisis programs as well as to rehabilitating basic infrastructures. There are also plans to continue reducing domestic arrears to the private sector. The program will expedite structural reforms, particularly in the sectors of coffee/cocoa, cotton, and energy. Finally, the mission welcomed plans by the government to adopt Poverty Reduction Strategy Paper (PRSP) by end-September 2008, following a broad consultative process.
"On the basis of this program, and given that the international environment is expected to remain favorable, growth is expected to accelerate further, reaching 3 percent in 2008. This should make it possible at last to resume positive growth in per capita GDP. This will depend, however, on progress achieved in implementing the roadmap for the Ouagadougou Accord, in particular, the effective reunification of the country, and the redeployment of government services throughout the nation. The support of the international community will be crucial if Côte d'Ivoire is to overcome the crisis. The mission reiterates that the IMF stands ready to support the country in its efforts."