Press Release: IMF Executive Board Approves US$129 Million Disbursement to Côte d’Ivoire Under the Rapid Credit Facility
July 8, 2011Press Release No. 11/272
July 8, 2011
The Executive Board of the International Monetary Fund (IMF) today approved a disbursement in an amount equivalent to SDR 81.3 million (about US$129.2 million) for Côte d’Ivoire under the Rapid Credit Facility (RCF)1 to support the country’s economic recovery program following a damaging political crisis. The disbursement, representing 25 percent of the country’s quota in the Fund, is available immediately.
The Executive Board also noted the authorities’ cancellation of the arrangement under the Extended Credit Facility (ECF), which was approved in 2009 for the equivalent of SDR 373.98 million (about US$565.7 million; see Press Release No. 09/96). That arrangement went off track during the country’s political crisis after disbursements equivalent to SDR 230.892 million (about US$345.4 million; see Press Release 10/284). The authorities have expressed their intention to request a new arrangement under the ECF later in 2011 once they are in a position to formulate a medium-term economic program. This could open the way for the renewal of interim debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative, under which Côte d’Ivoire reached its decision point in April 2009 (see Press Release No. 09/104).
Côte d’Ivoire experienced months of political turmoil and violence after a presidential run-off in November 2010. The crisis virtually paralyzed economic activity, leading to a sharp contraction in 2011, tentatively projected at 6-7 percent of gross domestic product. The crisis also led to severe budget and balance-of-payments deficits.
Following the Executive Board’s discussion of Côte d’Ivoire, Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Chair, made the following statement:
“The prolonged post-election conflict has had serious consequences for Côte d’Ivoire’s economy. The authorities’ 2011 program appropriately reflects short-term priorities of restoring law and order and the operations of the public administration, as well as promoting economic recovery and meeting social needs.
“The authorities’ fiscal program for 2011 is realistic but is subject to important uncertainties. Expenditures are expected to rise significantly, while revenues will depend on the speed of the economic recovery. It will be necessary to prioritize expenditures in line with available resources and seek grant and concessional external financing. The authorities are appropriately working toward a cooperative resolution of Côte d’Ivoire’s debt service arrears with external creditors.
“The banking sector suffered serious damage as a result of the conflict. It will be critical to normalize banking operations as quickly as possible to provide sufficient credit to support economic recovery.
“The authorities will need more time to formulate their medium-term economic program, but it will be crucial to resume structural reforms as soon as possible to make progress toward the HIPC Initiative completion point. Key reform areas include the energy and cocoa sectors.
“Inaccurate data on nonconcessional external borrowing provided for the second review under the ECF resulted in a noncomplying disbursement. The Board decided to waive the nonobservance of the performance criterion in light of the corrective measures taken by the authorities.”
1 The Rapid Credit Facility provides low access, rapid, and concessional financial assistance to low-income countries facing an urgent balance of payments need, without the need for program-based conditionality. It also provides policy support and can help catalyze foreign aid, and is available to Poverty Reduction and Growth Trust-eligible members that face an urgent balance of payments need, and where a full-fledged economic program is either not necessary or not feasible.