Press Release: Statement of the IMF Mission at the Conclusion of its Visit to Côte d’Ivoire
March 22, 2010Press Release No. 10/105
March 22, 2010
An International Monetary Fund (IMF) mission, led by Ms. Doris Ross, traveled to Côte d’Ivoire from March 4 to 18. The mission met with the Minister of Economy and Finance, Charles Koffi Diby, and several other ministers, as well as senior officials of the BCEAO, the civil service, the private sector, donors, and political parties. It also met with President Laurent Gbagbo and Prime Minister Guillaume Soro. Representatives from the World Bank and the African Development Bank participated in some of the discussions.
The mission reviewed the implementation of the authorities’ economic program and their poverty reduction strategy in 2009, which the IMF supported through its Extended Credit Facility. The mission updated the economic outlook for Côte d’Ivoire in light of recent sociopolitical events and difficulties in the electricity sector. It held discussions with the authorities towards the second review of the program supported by the ECF. These discussions focused on the necessary adjustments to ensure that the economic program for 2010 remains consistent with their economic and social policy objectives.
At the conclusion of the staff mission, Ms. Ross issued the following statement in Yamoussoukro:
“Despite the global financial crisis, economic growth in Côte d’Ivoire accelerated to 3.8 percent in 2009—achieving a positive per capita growth rate for the first time since 1998. Benefiting from abundant rainfall and the rise in world cocoa prices, in particular, agriculture achieved significant progress. Industry and services followed this good dynamic. The general consumer price index declined, reflecting improvements in supply at the national level and in import prices. The external current account shows a sizeable surplus, owing to a substantial improvement in the terms of trade.
“With respect to the economic program in 2009, the budget outcome was generally in line with earlier commitments. However, structural reform implementation was slow, particularly in the important areas of electricity, medium-term sustainability of the government wage bill, and improvement of the business environment. Progress was made in the poverty reduction strategy mainly from the institutional point of view.
“Budget execution in 2009 resulted in a budget deficit of 1.6 percent of GDP. Revenue performance was close to the initial target. The below-target performance of customs revenue was offset by improved collection of oil revenue, VAT, and registration fees for cocoa exports following the improvement in international prices for this product. Public expenditure remained within the planned envelope, and the authorities increased spending to benefit the poor to 7.8 percent of GDP, although subsidies to the electricity sector greatly surpassed their budget allocations.
“After reaching the decision point under the HIPC Initiative in early April 2009, the government signed framework agreements for restructuring the external debt with the Paris Club, followed by bilateral agreements on government-to-government debt. A restructuring of the London Club debt was launched on March 15 and is expected to be completed by early April. At the domestic level, efforts continued to reduce arrears and VAT credits payable, and the government honored its commitment to issue securities to finance its activities only by auction.
“The economic program for 2010 is being pursued in an economic environment that has deteriorated significantly. The sociopolitical events of February and recent power shortages have led to a slowdown in activity, and economic growth could fall slightly to 3 percent, while inflation is expected to reach 2.5 percent at end-2010.
“The mission welcomed the authorities’ reaffirmation of their main objectives despite unexpected challenges. Controlling budget deficits remains a key pillar of the economic program. In this context, revenue collection efforts should be intensified, particularly by restoring the normal level of customs revenue. Expenditure aimed at poverty reduction will continue to grow, despite the cost of measures taken to restore power supply and refining activity to normal levels, and the additional costs of programs to overcome the internal crisis.
“We should see significant progress in the implementation of structural reforms in 2010. Bold measures should be taken to: (i) eliminate over time the electricity sector deficit and ensure the sustainability of the power supply, as well as the viability of the drinking water and oil products sectors; (ii) ensure the medium-term sustainability of the government wage bill; and (iii) improve the business climate and economic governance. Implementation of the PRSP should be intensified through concrete actions.
“The discussions towards the second review of the program supported by the ECF have achieved significant progress. They should be concluded at the latest by end-April during the Spring Meetings of the IMF by an agreement in principle, prior to submission of the review to the IMF Executive Board.
“The mission thanks the Ivorian authorities for their warm welcome and for the high quality of the discussions.”