Press Release: IMF Reaches Staff-Level Agreement with Côte d’Ivoire on a Program to be Supported with US$614 million Under the Extended Credit Facility, Concludes 2011 Article IV Staff Mission
September 15, 2011Press Release No. 11/333
September 15, 2011
A staff team from the International Monetary Fund (IMF) led by Ms. Doris Ross has been in Abidjan since August 31 to hold discussions on a three-year economic and financial program for Côte d’Ivoire and for the 2011 Article IV Consultation. The mission met with Prime Minister Guillaume Kigbafori Soro, State Minister for Justice Ahoussou Jeannot, State Minister for Employment and Social Affairs Gilbert Kone, State Minister for Planning and Development Albert Mabri Toikeuse, Minister of Economy and Finance Charles Koffi Diby, Minister of Industry Moussa Dosso, Minister of Economic Infrastructure Patrick Achi, Minister of Mines, Petroleum, and Energy Adama Toungara, Minister of Civil Service Konan Gnamien, Minister of Agriculture Mamadou Sangafowa Coulibaly, Minister of Commerce Dagobert Bazio, Minister-Delegate for Defense Paul Koffi Koffi, National Director of the Central Bank of West African States (BCEAO) Jean-Baptiste Aman, other senior officials, and representatives of civil society, the private sector, and the diplomatic community.
At the conclusion of the visit, Ms. Ross made the following statement:
“The Côte d’Ivoire authorities and the IMF team have completed the discussions for the 2011 Article IV Consultation. In addition, they have reached a staff-level agreement on an economic framework through 2014, that is expected to facilitate the transition from crisis recovery to sustained growth. These policies could be supported with SDR 390 million (about US$614 million) under the IMF’s Extended Credit Facility (ECF), subject to approval by IMF management and the Executive Board. The Board could consider Côte d’Ivoire’s request for ECF support in early November.
“The post-election crisis that began in December 2010 had a strong negative impact on the population and the economy. With the end of the crisis and the investiture of President Ouattara in April/May, Côte d’Ivoire embarked on the road to recovery. The IMF approved financial support of about US$130 million in July (see Press Release No. 11/272). The recovery has been faster than expected, with industrial production in June reaching 95 percent of its level a year earlier, as against 50 percent in April. The current agricultural season is also expected to be strong. As a result, gross domestic product (GDP) for 2011 is now projected to be 5.8 percent below 2010, a smaller decline than previously envisaged. Consumer prices, which rose sharply during the crisis, are on a downward trend.
“The main goal of the government’s economic strategy is to rebuild the economy after years of internal crisis, weak investment, low growth, and low employment. To foster a dynamic private sector able to stimulate job creation and reduce poverty, the government is embarking on reforms to make the economy more efficient and aims to increase public investment, partnering on infrastructure projects with the private sector where possible.
“These plans form the foundation of the medium-term reform program. Policy measures include measures to raise government revenues by expanding the tax base; to strengthen public financial management; to reach financial balance in the power sector; to reform the legal system, especially pertaining to commercial affairs, and to improve the business environment; to establish the long-term viability of the public pension funds; and to enhance the ability of the Ivoirien financial sector to intermediate savings.
“Achieving the aims of the authorities’ program will require not only robust implementation of reforms, but also continued improvement in the security environment, especially with respect to the movement of goods and persons, and the successful conduct of legislative elections, which are currently expected at the end of 2011. To reach the Completion Point under the Heavily Indebted Poor Countries (HIPC) Initiative, the authorities need to focus on key reforms, particularly in the coffee/cocoa sector.
“For 2011, the government’s immediate economic policy priority has been to support the recovery. The 2011 budget balances tax relief to support private sector activity with the need to fund the restoration of public services. The government secured external assistance at exceptional levels and forbearance by external creditors has allowed a substantial deficit to be financed with limited recourse to regional financial markets.
“For 2012, the economy is expected to move into an expansion phase, growing by 8-9 percent, and with the external current account swinging into deficit for the first time in several years. Government revenue is expected to recover, though not fully to pre-crisis levels, easing funding constraints. Post-crisis incorporation of ex-combatants and previously-unpaid teachers from the country’s North into the government payroll will further expand the already high wage bill. The government expects to accommodate this increase through tight controls of other current spending, so as to create the fiscal space needed to increase public investment to 5 percent of GDP (from 3 percent in 2010).
“For 2013-14, successful implementation of the government’s program should lead to economic growth of around 6 percent, with continued revenue growth permitting further increases in public investment to reach a targeted 7 percent of GDP in 2014.
“The IMF team thanks the authorities for their hospitality and for the constructive discussions.”