IMF Executive Board Approves Three-Year, US$615.9 Million Extended Credit Facility Arrangement and Additional Interim Debt Relief for Côte d'IvoirePress Release No. 11/399
November 4, 2011
The Executive Board of the International Monetary Fund (IMF) today approved a three-year arrangement for Côte d’Ivoire under the Extended Credit Facility (ECF)1 in an amount equivalent to SDR 390.24 million (about US$615.9 million), representing 120 percent of Côte d’Ivoire’s quota in the IMF. Approval makes immediately available a first disbursement of an amount equivalent to SDR 81.3 million (about US$128.3 million). The Executive Board also approved an amount equivalent to SDR 5.04 million (about US$8 million) in interim assistance for Côte d’Ivoire under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative, representing relief on debt service pending irrevocable debt relief when the country reaches the HIPC completion point. The Executive Board also concluded the Article IV consultations with Côte d’Ivoire, which will be covered in a separate Public Information Notice.
Côte d’Ivoire is recovering from a prolonged sociopolitical crisis that led to widespread violence and a sharp decline in economic activity in early 2011. Since late-April 2011, the new government has embarked on an ambitious investment-led recovery. The IMF approved financial support of an amount equivalent to SDR 81.3 million (about US$128 million) under the Rapid Credit Facility in July (see Press Release No. 11/272). The recovery has picked up pace, and projected decline in real gross domestic product (GDP) was reduced in September to a 5.8 percent contraction from 6.3 percent previously. Real GDP is expected to bounce back with growth of 8–9 percent in 2012.
Côte d’Ivoire reached the decision point under the HIPC Initiative on March 31, 2009 (see Press Release No. 09/104) and could qualify for irrevocable debt relief on the vast majority of its external debts through the HIPC and Multilateral Debt Relief initiatives in 2012 once it completes the so-called completion point triggers. These include key structural and social reforms, including in the areas of public financial management, debt management and governance, and the coffee and cocoa sector, alongside standard HIPC requirements of implementing a national poverty reduction strategy and satisfactory implementation of the government’s ECF-supported economic program. Reaching the HIPC completion point will reduce Côte d’Ivoire’s external debt to a sustainable level. The authorities have requested technical assistance from the IMF and the World Bank to formulate a comprehensive debt management strategy, and intend to set up a national debt agency in line with West African Economic and Monetary Union guidelines.
Following the Executive Board’s discussion of Côte d’Ivoire, Mr. Min Zhu, Deputy Managing Director and Acting Chair, made the following statement:
“Côte d’Ivoire’s economy is recovering faster than anticipated, following a severe post-election crisis that caused a sharp decline in activity in the first four months of the year. Real GDP is now expected to decline by slightly less than 6 percent in 2011. Inflation is receding from its peak in April, although it remains above its pre-2011 trend. The financial sector, weakened by the damages the economy sustained during the crisis, is fully operational again. Performance to date under the authorities’ 2011 program supported under the IMF’s Rapid Credit Facility has been good.
“The authorities’ new medium-term economic program, which is being supported under the IMF’s Extended Credit Facility, aims to fully restore law and order and to consolidate peace through economic growth and job creation, in particular for the youth. The economy is expected to rebound in 2012, and the authorities’ ambitious and broad investment and structural reform plans are expected to help maintain a robust growth path over the medium term.
“The fiscal program for 2011-12 is realistic in the face of continued large uncertainties. The emphasis on investment is appropriate. Expenditures will remain relatively high, while revenues will still reflect the impact of the post-election crisis. Over the medium term, implementation of the authorities’ structural reform program is expected to improve the business climate and tax administration, and create the fiscal space needed to support investment and allow the country renewed access to foreign direct investment and other foreign financing.”
1 The Extended Credit Facility (ECF) has replaced the Poverty Reduction and Growth Facility (PRGF) as the Fund’s main tool for medium-term financial support to low-income countries by providing a higher level of access to financing, more concessional terms, enhanced flexibility in program design features, and more focused streamlined conditionality. Financing under the ECF carries a zero interest rate, with a grace period of 5½ years, and a final maturity of 10 years (http://www.imf.org/external/np/exr/facts/ecf.htm). The Fund reviews the level of interest rates for all concessional facilities every two years.