Press Release No. 12/376

Press Release No. 12/376
October 2, 2012

An International Monetary Fund (IMF) mission led by Mr. Michel Lazare, Assistant Director in the IMF’s African Department, visited Abidjan during September 19–October 3, 2012 to conduct discussions for the second review of a program supported by the Extended Credit Facility (ECF), which was approved by the IMF Executive Board on November 4, 2011¹ (see Press Release No. 11/399) in the amount of SDR 390.24 million (about US$616 million). The mission met with H.E. Dr. Alassane Dramane Ouattara, President of the Republic of Côte d’Ivoire; H.E. Jeannot Ahoussou Kouadio, Prime Minister; Mr. Charles Koffi Diby, Minister of Economy and Finance; other members of the government and the first Vice-President of the National Assembly. The mission also met with senior civil servants, members of the business and donor partners, and civil society representatives.

Discussions focused on recent economic developments and growth prospects, policy implementation under the ECF, the government’s economic reform agenda, and public debt management after reaching the Completion Point under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative in late June 2012.

At the conclusion of the mission, Mr. Michel Lazare issued the following statement:

“The Côte d’Ivoire authorities and the IMF mission made excellent progress in discussions for the second review of the ECF-supported program and have reached agreement, subject to approval by IMF management and the Executive Board, on a policy package that could provide the basis for completing the second program review, which would pave the way for a disbursement of some US$100 million. Executive Board consideration is expected in late November.

“Economic performance in the first half of 2012 was stronger than expected. The mission has consequently revised upward its forecast of growth in 2012 from 8.1 percent to 8.6 percent. Twelve-month inflation finished 2011 at 1.9 percent and stood at 1.7 percent in July 2012. Budget execution was also better than expected. Fiscal revenue continued the strong performance of the second half of 2011 through the first half of 2012, with receipts about 1 percent of annual gross domestic product (GDP) higher than projected, reflecting in part the rapid recovery of economic activity. Expenditure stayed within budget targets, with good execution rates for public investment and with projected pro-poor spending exceeded. All of the quantitative performance criteria for end-June under the ECF arrangement were observed.

“Progress has also been made in the implementation of structural reforms, many of which seek to strengthen public financial management and to improve the business climate. The mission welcomes the completion of the cocoa sector reform, which should help reduce rural poverty. The approval of the strategies to reduce state participation in the enterprise sector and to restructure the state-owned banks are also important steps, as is the adoption of the new Investment Code. The mission also welcomes the creation of the unified civil service database, and the expansion of coverage of the Medium-Term Expenditure Framework to additional ministries.

“There have been some delays in implementing other planned reforms. Further progress is needed to address the financial pressures from rising world energy prices, particularly with regard to the pricing, taxation, and subsidy structure for petroleum products and electricity.

“The prospects for 2013 are positive, with continued strong growth and low inflation. Against this background, the 2013 budget should see robust revenue gains. With the support of substantial external financing, public investment would rise to over 7 percent of GDP, in line with the National Development Plan.

“The government’s reform program is set to continue into 2013. Key priorities in this regard are electricity sector reforms, in order to ensure adequate funding for extension of the production and distribution infrastructure; banking reform, to improve financial intermediation; the strengthening of debt management to protect public finances; the introduction of flexibility in fuel prices, to convey appropriate price signals together with measures to reduce the social impact; the development of a strategy for managing the wage bill, to ensure adequate public resources for operations and investment; and efforts to improve the business climate more broadly.

“The continued implementation of authorities’ reform agenda supported by the Fund ECF arrangement should result in substantial job creation, increased funding possibilities for pro-poor expenditures, and higher living standards more generally for the people of Côte d’Ivoire.

“The IMF team thanks the authorities for their cordial hospitality and for the constructive discussions.”

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¹ The ECF is the IMF’s main tool for medium-term financial support to low-income countries. Financing under the ECF currently carries a zero percent interest rate, with a grace period of 5½ years, and a maturity of 10 years.