## TOGO — SIXTH REVIEW UNDER THE EXTENDED CREDIT FACILITY AND REQUEST FOR AUGMENTATION OF ACCESS (Content unit: 1tgoea2020001)

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### Executive summary and program request
- Sixth and final review of the ECF arrangement approved May 2017 for a three-year period with total planned disbursements of SDR 176.16 million.
- All end-September 2019 quantitative performance criteria (QPCs) were met; all end-October 2019 structural benchmarks (SBs) were met; end-December 2019 performance broadly satisfactory though the SB on privatization of the two state-owned banks was not met.
- Authorities requested an augmentation of access of 48.7 percent of quota (SDR 71.49 million / SDR 71.67 million referenced in text) to address urgent financing needs from COVID-19; staff supports completion of the sixth review and the augmentation request.

### Recent economic developments (2017–19)
- Growth and real sector:
  - Real GDP: 2016: 5.6; 2017: 4.4; 2018: 4.9; 2019: 5.3.
  - Electricity consumption: 27 percent higher at December 2019 vs December 2018.
  - Credit to the private sector expanded by 4 percent at end-2019 (y-o-y).
  - Weaknesses: coffee and phosphate production markedly lower since Q2 2019 vs Q2 2018.
- Inflation:
  - Headline inflation: -0.3 percent (y-o-y) in December 2019; core inflation: 0.1 percent (y-o-y).
- Fiscal consolidation and debt:
  - Overall fiscal deficit: 1.7 percent of GDP at end-September 2019 (program test date); 1.2 percent of GDP at end-December 2019 (excluding CNSS transaction).
  - Tax revenue collection improved by 0.7 percentage points of GDP from 2018 to 2019 but was below target.
  - Current spending declined by 0.7 percentage points of GDP relative to 2018.
  - Capital spending (excluding CNSS transaction) improved by 0.6 percentage points of GDP relative to 2018.
  - Public debt: 76.2 percent of GDP at end-2018 to 70.9 percent of GDP at end-2019.
  - Government bond subscription rate in regional market averaged 224 percent in 2019.
  - Government sold buildings to CNSS in 2019Q4 to pay social security contributions arrears (excluded from fiscal analysis).

### COVID-19 impact and 2020 outlook
- Downward revisions and shocks:
  - Growth projection for 2020 revised from 5.5 percent to 3 percent.
  - Fiscal deficit expected to widen from 1.9 percent of GDP to 3.6 percent of GDP.
  - Balance of payments: financing gap of 1.7 percent of GDP (CFAF 58 billion).
  - Private consumption expected to decline significantly; poor affected disproportionately.
  - Exports of services and FDI/portfolio inflows expected to fall substantially.
- Fiscal costs and financing:
  - Immediate direct costs of COVID-19 action plan estimated at CFAF 21 billion (about $35 million or 0.6 percent of GDP).
  - Broader health and resilience financing need estimated at about CFAF 70 billion (about $130 million or 2 percent of GDP).
  - Authorities secured about CFAF 7 billion for the plan from development partners and state resources.
  - To accommodate COVID-19 spending (1.3 percent of GDP) and revenue loss (0.4 percent of GDP), projected overall fiscal deficit revised up by 1.7 percentage points, from 1.9 to 3.6 percent of GDP.
- Uncertainty and risks:
  - Projections subject to high uncertainty; risks skewed to the downside (socio-political, regional security, protectionism, weak global growth).

### Medium-term outlook (post-COVID-19 dissipation)
- Growth and inflation:
  - Medium-term growth projected at around 5½ percent.
  - Inflation likely to approach 2 percent in 2020 and remain at this level over the medium term.
- Fiscal and external:
  - Overall fiscal deficit expected to remain within WAEMU criterion.
  - Current account deficit projected to stabilize around 4 percent of GDP.
  - Public debt projected to fall below 70 percent of GDP starting in 2020 and PV of public debt of 55 percent of GDP (benchmark for medium debt carrying capacity) starting in 2022.
- Key medium-term downside risks: delayed reforms, regional security threats, global headwinds.

### Program performance, structural reforms, and unfinished actions
- Program implementation:
  - Significant progress on revenue administration, PFM, and public investment planning; reforms incomplete on privatization of two state-owned banks.
  - Fifth review completed October 2019; sixth review recommended for completion.
- Structural reforms and priorities:
  - Implement TADAT recommendations and address customs deficiencies.
  - Bolster voluntary tax compliance and follow up on PIMA recommendations.
  - Pursue prudent borrowing policy and strengthen debt management capacity.
  - Complete restructuring/privatization of the two state-owned banks to safeguard financial stability.
  - Continue reforms to improve business environment and governance; implement National Development Plan measures.

### Fiscal policy and 2020 framework (selected figures and targets)
- 2020 budget approved December 18, 2019 aimed at overall fiscal deficit of 1.9 percent of GDP.
- Expected revenue yields from recent measures: about 0.4 percent of GDP.
- Spending review potential long-term savings: up to 1.1 percent of GDP.
- Immediate COVID-19 action plan cost: CFAF 21 billion (about $35 million or 0.6 percent of GDP).
- Broader financing need: CFAF 70 billion (about $130 million or 2 percent of GDP).
- COVID-19 accommodation: 1.3 percent of GDP additional spending plus 0.4 percent of GDP revenue loss ⇒ fiscal deficit revised from 1.9 to 3.6 percent of GDP.
- Revised debt path: from 70.9 percent of GDP in 2019 to projected 67.1 percent of GDP at end-2020.

### Social protection and PFM measures
- Measures to improve execution: monitoring system for social expenditure; strengthened data processing; appointment of a manager at ministry of finance to monitor social spending execution.
- Monthly coordination of commitment, procurement, and cash plans between sectoral ministries and ministry of finance.
- Prioritization of social spending among investment spending.

### Debt management, reprofiling, and capacity
- Medium-Term Debt Strategy to bring PV of total public debt below 55 percent of GDP by 2022.
- First tranche of debt reprofiling executed:
  - Borrowed EUR 103.6 million (CFAF 68 billion) in December 2019; interest rate 4.68 percent; maturity 10 years; grace period 2 years.
  - Proceeds used to repay CFAF 66.6 billion of domestic and regional debt in January 2020 with interest rates about 7 percent and maturities 3 and 8 years.
  - Operation marginally reduced NPV of total public debt and smoothed near-term debt service but increases external debt indicators and rollover risk.
- Improve exchange of information among stakeholders; integrate debt service forecasts with budget forecasts.
- Staff preparing framework for a resident advisor on debt management.

### Financial sector policies and vulnerabilities
- Bank privatization:
  - Prequalification notice Sept 2019; proposals received Dec 2019; missing bidder information requested; preliminary bidding closing (end-December 2019 SB) not met.
  - Tendering delayed due to elections and COVID-19; confidentiality agreements sent to prequalified buyers in March 2020.
  - Recommendations: fit-and-proper checks (with BCEAO and WAMU Banking Commission); close monitoring of banks’ liquidity; senior management to keep stakeholders informed.
- NPLs and regulatory standards:
  - System NPL ratio: 17 percent at end-June 2019 (about 13 percent excluding two state-owned banks); WAEMU average: 11.7 percent.
  - Loan concentration ratio: 169 percent at end-2018 (regulatory ceiling 65 percent; WAEMU average 82.6 percent).
  - Overall capital adequacy ratio dropped to 5.9 percent in 2018 (excluding two state-owned banks: 16.1 percent).
  - Credit Information Bureau (BIC) coverage of adult population: 16 percent.
  - Recommendations: strengthen NPL recovery frameworks; enforce BCEAO NPL accounting/reporting; write off NPLs not recovered after 5 years; improve SRT governance; expand BIC coverage; capacity building for commercial courts.

### Business environment, governance, and AML/CFT
- Doing Business score improved from 48.9 (2018) to 62.3 (2020); notable gains:
  - Registering property: time reduced from 283 to 35 days.
  - Starting a business: cost reduced by 88 percent.
  - Getting electricity: cost reduced by 58 percent.
  - Dealing with construction permits: cost reduced by 29 percent.
- Remaining obstacles: insolvency resolution, legal frameworks, automation of border procedures, appeal procedures, advance rulings.
- Governance laws under preparation: asset declaration (Cabinet adopted Nov 2019), framework law on fight against corruption, code of conduct for civil servants.
- AML/CFT:
  - December 2019 workshop validated/amended national ML/FT risk assessment.
  - Togo assessed to have high overall ML vulnerability due to non-adoption of essential texts, capacity weaknesses, lack of awareness among financial and non-financial sectors, insufficient supervision, large informal cash-based sector.
  - GIABA launched mutual evaluation of Togo’s AML/CFT regime in Dec 2019.

### Program financing, safeguards, and capacity to repay
- Program financing status: program is fully financed.
- Authorities requested augmentation of ECF access by 48.7 percent of quota (SDR 71.49 million / SDR 71.67 million references).
- World Bank preparing CFAF 7 billion financial package for urgent COVID-19 items.
- BCEAO safeguards assessment (2018): strong control environment; audit arrangements broadly conform to international standards; financial statements in accordance with IFRS.
- Capacity to repay the Fund:
  - Obligations peak in 2026 at 3.3 percent of government revenue or 0.7 percent of GDP.
  - Fund obligations (principal, millions of SDRs): 2020: 5.2; 2021: 1.8; 2022: 2.5; 2023: 12.6; 2024: 20.1; 2025: 39.9; 2026: 49.5; 2027: 47.0; 2028: 37.0; 2029: 29.4; 2030: 9.7; 2031–2034: 0.0.
  - Outstanding IMF credit (millions of SDRs): 2020: 249.4; 2021: 247.7; 2022: 245.1; 2023: 232.6; 2024: 212.4; 2025: 172.6; 2026: 123.0; 2027: 76.0; 2028: 39.1; 2029: 9.7; 2030–2034: 0.0.

### Debt sustainability, baseline assumptions, and stress tests
- Baseline macro assumptions:
  - Real GDP growth: 2020: 3.0; 2021: 4.0; 2022–2030 average: 5.5.
  - Inflation: expected to reach 2 percent in the medium term.
  - Total revenue (incl. grants): Current DSA — 23.8 percent of GDP in 2020 and 25.3 percent over 2021–30.
  - Primary balance (commitment basis, incl. grants): -0.7 percent of GDP in 2020 and 1.0 percent of GDP over 2021–30.
- Public debt projections and classification:
  - Total public debt (percent of GDP): 2016: 81.4; 2017: 76.0; 2018: 76.2; 2019: 70.9; 2020: 67.1; 2021: 63.1; 2022: 59.3; 2023: 55.9; 2024: 52.6.
  - PV of total public debt projected to fall below the 55 percent benchmark in 2022.
  - Debt carrying capacity: Composite indicator 2.91 ⇒ Medium.
- Risk assessments and stress tests:
  - External debt distress risk: Moderate (judgment applied despite mechanical low-risk signals because of high domestic debt).
  - Overall risk of debt distress: High.
  - Standardized and tailored stress tests performed (shocks to growth, primary balance, exports, other flows, depreciation, combined shocks, contingent liabilities).
  - Most extreme shocks differ by indicator (e.g., PV debt-to-GDP: Non-debt flows; debt service-to-revenue: one-time depreciation).
- Policy implications: sustain fiscal consolidation (primary surplus ~1 percent of GDP through 2029), improve debt management, reduce domestic debt, manage local-currency debt to non-residents and potential reprofiling operations, and limit fiscal costs from bank privatization.

### Program performance, quantitative targets, and structural benchmarks (selected)
- Selected economic indicators (2016–24):
  - Real GDP: 2016: 5.6; 2017: 4.4; 2018: 4.9; 2019: 5.3; 2020: 3.0; 2021: 4.0; 2022–2024: 5.5 each year.
  - CPI (average): 2016: 0.9; 2017: -0.2; 2018: 0.9; 2019: 0.7; 2020–2024: 2.0 each year.
  - Total public debt (including SOE debt): 2016: 81.4; 2017: 76.0; 2018: 76.2; 2019: 70.9; 2020: 67.1; 2021: 63.1; 2022: 59.3; 2023: 55.9; 2024: 52.6.
- Quantitative performance criteria and ITs (end-September and end-December 2019):
  - Domestic primary fiscal balance (floor): Adjusted actual -3.2 — Met.
  - Net domestic financing (ceiling): Adjusted actual 53.3 — Met.
  - Total fiscal revenue (floor): End-September Adjusted Actual 445.1 / Act. 457.4 — Met; End-December Prel. 635.9 / Estimate 624.5 — Not met.
  - Total domestically financed social spending (floor): End-September Adjusted Actual 164.0 / Act. 143.8 — Not met; End-December Prel. 218.6 / Estimate 222.4 — Met.
- Structural benchmarks for 6th review (deadlines end-October 2019 and end-December 2019):
  - Revenue administration, customs dematerialization, program budgeting, and multi-year PIP — Met.
  - Close submission of preliminary bidding documents for privatization of both public banks — Not met.

### Capacity development strategy and TA priorities
- CD priorities: tax administration core functions; customs automation and risk-based controls; budget preparation and PIMA implementation; debt management capacity building; statistics improvement (GDP rebasing and e-GDSS).
- Mitigating capacity constraints: emphasize resident advisors, sequencing of TA, outreach to development partners; authorities requested a resident advisor in debt management.
- FY2020 CD focus: revenue administration, fiscal policy, PFM, and statistics.

### Staff views and recommended priorities
- Staff supports: completion of the sixth and final review and augmentation of access by 48.7 percent of quota (SDR 71.49 million).
- Recommended immediate priorities:
  - Address human and economic implications of COVID-19 while safeguarding fiscal achievements.
  - Implement revenue administration, PFM reforms, and TADAT/PIMA recommendations to secure permanent revenue.
  - Strengthen debt management capacity and adopt prudent borrowing policies.
  - Prioritize completion of restructuring/privatization of the two state-owned banks to protect financial stability.

*International Monetary Fund — Content unit 1tgoea2020001 (Executive Summary, Selected Sections, Annexes, and DSA excerpts, March 26, 2020).*

### 71.49 million or about US$97.1 million) to address the urgent financing need stemming from

### TOGO — SIXTH REVIEW UNDER THE EXTENDED CREDIT FACILITY AND REQUEST FOR AUGMENTATION OF ACCESS

### Executive summary
- The report covers the sixth review of the ECF arrangement and the authorities’ request for augmentation of access to address COVID-19 implications.
- The ECF arrangement was approved in May 2017 for a three-year period with total planned disbursements of SDR 176.16 million.
- For the sixth and last program review, all end-September 2019 quantitative performance criteria (QPCs) were met as well as the end-October 2019 fiscal structural benchmarks (SBs). Performance at end-December 2019 was broadly satisfactory, with all ITs except one met. The SB on the privatization of the two state-owned banks was not met.
- The authorities requested an augmentation of access of 48.7 percent of quota (SDR 71.49 million) to address the urgent financing need stemming from their plan to control the spread of the COVID-19 and mitigate its economic implications.

### Recent economic developments (2017–19)
- Economic recovery:
  - Growth: accelerated from 4.9 percent in 2018 to 5.3 percent in 2019.
  - Building and construction picked up; electricity consumption was 27 percent higher at December 2019 relative to December 2018.
  - Credit to the private sector expanded by 4 percent at end-2019 (y-o-y).
  - Weaknesses in export-oriented sectors: coffee and phosphate production markedly lower since Q2 2019 versus Q2 2018.
  - Headline inflation: -0.3 percent (y-o-y) in December 2019; core inflation: 0.1 percent (y-o-y).
  - First COVID-19 case in early March 2020; number of cases increasing (Annex II).
- Fiscal consolidation and public debt:
  - Overall fiscal deficit: 1.7 percent of GDP at end-September 2019 (program review test date); 1.2 percent of GDP at end-December 2019 (excluding the transaction with the Social Security Fund, CNSS).
  - Tax revenue collection improved by 0.7 percentage points of GDP from 2018 to 2019 but was below target due to lower-than-expected domestic tax collection.
  - Current spending declined by 0.7 percentage points of GDP relative to 2018.
  - Capital spending (excluding the CNSS transaction) improved by 0.6 percentage points of GDP relative to 2018.
  - Public debt: declined from 76.2 percent of GDP at end-2018 to 70.9 percent of GDP at end-2019.
  - Subscription rate of government bonds in the regional market averaged 224 percent in 2019.
  - Government sold buildings to CNSS in 2019Q4 to pay social security contributions arrears; this transaction is excluded from fiscal policy analysis in the report.

### COVID-19 impact and 2020 outlook
- Downward revisions and shocks:
  - Growth projection for 2020 revised from 5.5 percent to 3 percent.
  - Fiscal deficit: expected to widen from an initial projection of 1.9 percent of GDP to 3.6 percent of GDP, due to higher healthcare spending and revenue loss.
  - Balance of payments: financing gap of 1.7 percent of GDP.
  - Private consumption expected to decline significantly in 2020, affecting the poor more acutely.
  - External sector: lower goods exports may be offset by lower goods imports (oil price effects), but exports of services and FDI/portfolio inflows expected to fall substantially, increasing external financing needs.
- Uncertainty and risks:
  - Macroeconomic projections are subject to a high degree of uncertainty given rapidly evolving COVID-19 impacts.
  - Risks skewed to the downside: socio-political uncertainty nationally; security and terrorism threats regionally; protectionism and weak global growth internationally.

### Medium-term outlook (post-COVID-19 dissipation)
- Growth and inflation:
  - Medium-term growth projected at around 5½ percent.
  - Inflation likely to approach 2 percent in 2020 and remain at this level over the medium term.
- Fiscal and external positions:
  - Overall fiscal deficit expected to remain within the WAEMU deficit criterion.
  - External current account deficit projected to stabilize around 4 percent of GDP.
  - Public debt projected to fall below 70 percent of GDP starting in 2020 and decline below the benchmark for countries with medium debt carrying capacity starting in 2022 (net present value of public debt of 55 percent of GDP).
- Key medium-term downside risks: delayed reforms, regional security threats, and global headwinds.

### Program performance and policy areas
- Program implementation:
  - Togo made significant progress during 2017-20 under the Fund-supported program in several areas; reforms remain incomplete in a few sectors (notably the delayed privatization of two state-owned banks).
  - The fifth review of the program was completed in October 2019.
- Structural reforms and reforms needed:
  - Progress on revenue administration and public financial management: collection of tax arrears, online submission of customs declarations, steps toward program-based budgeting.
  - Important recommendations to implement:
    - Implement recommendations from the recent Tax Administration Diagnostic Assessment Tool.
    - Address remaining deficiencies in essential customs functions.
    - Bolster voluntary tax compliance to ensure strong permanent revenue.
    - Follow up on key recommendations from the 2016 and 2019 Public Investment Management Assessments.
  - Pursue a prudent borrowing policy and strengthen debt management capacity to safeguard debt sustainability.
  - Complete delayed reforms of the two state-owned banks to safeguard financial stability and prevent risks to the state budget.
  - Continue reforms to improve the business environment, strengthen governance, and implement measures outlined in the National Development Plan to support strong and inclusive growth.

### Staff views and recommendations
- Staff supports:
  - Completion of the sixth and last review of the ECF arrangement, given broadly satisfactory performance and implementation of measures.
  - The authorities’ request for augmentation of access by 48.7 percent of quota (SDR 71.49 million) to address the financing gap stemming from the COVID-19 outbreak.
- Recommended priorities for policy implementation:
  - Immediate actions to address human and economic implications of COVID-19 while safeguarding fiscal achievements.
  - Implement revenue administration and PFM reforms and the TA recommendations to secure permanent revenue.
  - Strengthen debt management capacity and adopt prudent borrowing policies.
  - Prioritize reforms to complete the restructuring/privatization of the two state-owned banks to protect financial stability.

*International Monetary Fund — Executive Summary and Selected Sections from the Sixth Review Under the ECF and Augmentation Request (March 26, 2020).*

### 7.      Program performance is satisfactory in most sectors, except on the bank privatization:

### 7.      Program performance is satisfactory in most sectors, except on the bank privatization:

### Program performance and fiscal targets
- All end-September 2019 quantitative performance criteria (QPCs) were met, including the domestic primary balance and net domestic financing.
- The indicative targets (ITs) on total fiscal revenue and non-accumulation of net domestic arrears were met.
- The IT on social spending was missed by 0.6 percent of GDP.
- The authorities met all continuous QPCs.
- At end-December 2019, all ITs except one were met based on preliminary data, including the domestic primary balance and net domestic financing.
- The end-December IT on social spending was met after corrective measures.
- The ambitious revenue target for 2019 was missed, although tax revenue collection improved relative to 2018.
- All five end-October structural fiscal benchmarks (SBs) were met, including those on revenue administration, steps towards program budgeting, and the public investment plan (Table 9).
- The end-December SB on a milestone for the privatization of the two state-owned banks was not completed; reforms in this area have been delayed.

### Selected economic indicators (2016–24) — key figures from Text Table 2
- Real GDP: 2016: 5.6; 2017: 4.4; 2018: 4.9; 2019: 5.3; 2020: 3.0; 2021: 4.0; 2022: 5.5; 2023: 5.5; 2024: 5.5
- Consumer price index (average): 2016: 0.9; 2017: -0.2; 2018: 0.9; 2019: 0.7; 2020: 2.0; 2021: 2.0; 2022: 2.0; 2023: 2.0; 2024: 2.0
- Domestic primary balance: 2016: -4.5; 2017: 0.8; 2018: 2.4; 2019: 1.5; 2020: 0.9; 2021: 2.9; 2022: 2.9; 2023: 2.9; 2024: 2.9
- Overall primary balance (commitment basis, incl. grants): 2016: -7.2; 2017: 1.5; 2018: 1.6; 2019: 1.5; 2020: -0.7; 2021: 1.0; 2022: 1.0; 2023: 1.0; 2024: 1.0
- Overall balance (commitment basis, incl. grants): 2016: -9.5; 2017: -0.3; 2018: -0.8; 2019: -1.2; 2020: -3.6; 2021: -1.5; 2022: -1.4; 2023: -1.4; 2024: -1.3
- Overall primary balance (cash basis, incl. grants): 2016: -7.2; 2017: -0.3; 2018: -1.8; 2019: 1.5; 2020: -0.7; 2021: 1.0; 2022: 1.0; 2023: 1.0; 2024: 1.0
- Overall balance (cash basis, incl. grants): 2016: -9.5; 2017: -2.1; 2018: -4.2; 2019: -1.2; 2020: -3.6; 2021: -1.5; 2022: -1.4; 2023: -1.4; 2024: -1.3
- Current account balance: 2016: -9.8; 2017: -2.0; 2018: -3.5; 2019: -4.2; 2020: -4.9; 2021: -4.3; 2022: -4.4; 2023: -4.3; 2024: -4.1
- Total public debt (including SOE debt): 2016: 81.4; 2017: 76.0; 2018: 76.2; 2019: 70.9; 2020: 67.1; 2021: 63.1; 2022: 59.3; 2023: 55.9; 2024: 52.6
- Total public debt (excluding SOE debt): 2016: 78.0; 2017: 72.7; 2018: 73.6; 2019: 68.7; 2020: 65.3; 2021: 61.5; 2022: 58.0; 2023: 54.8; 2024: 51.7

### Policy discussions — focus and near-term COVID-19 response
- Sixth and final program review focused on: (i) pursuing fiscal consolidation while addressing COVID-19 and protecting social spending; (ii) implementing measures recommended by TADAT and PIMA; (iii) advancing program-based budgeting and strengthening the public investment program; (iv) completing privatization of the two public banks.
- Since the COVID-19 outbreak, discussions focused on immediate measures to mitigate human and economic impacts.

### A. Fiscal Policy — 2020 framework and COVID-19 adjustments
- 2020 budget approved by Parliament on December 18, 2019 aims at an overall fiscal deficit of 1.9 percent of GDP.
- Expected revenue yields from recently introduced measures: about 0.4 percent of GDP (property tax, motor vehicle tax, import lump sum deposits).
- Spending review suggested potential long-term savings up to 1.1 percent of GDP.
- 2020 fiscal target expected to reduce public debt below 70 percent of GDP by end-2020.
- Immediate and direct costs of the COVID-19 action plan estimated at CFAF 21 billion (about $35 million or 0.6 percent of GDP).
- Overall financing need for broader health and resilience improvements estimated at about CFAF 70 billion (about $130 million or 2 percent of GDP).
- Authorities secured financing of about CFAF 7 billion for the plan and plan to partly cover costs with own resources.
- To accommodate COVID-19 spending needs (1.3 percent of GDP) and revenue loss from slower growth (0.4 percent of GDP), the projected overall fiscal deficit for 2020 was revised by 1.7 percentage points of GDP, from 1.9 to 3.6 percent of GDP.
- Revised debt path: from 70.9 percent of GDP in 2019 to a projected 67.1 percent of GDP at end-2020.

### Social protection execution
- Measures advancing to improve execution of social protection programs, including deployment of a monitoring system for social expenditure, strengthened data processing capacity, and appointment of a manager at the ministry of finance to monitor execution of social spending.
- Monthly coordination between sectoral ministries and ministry of finance on commitment plan, procurement plan, and cash plan, including social spending.
- Execution of social spending prioritized among investment spending.

### Medium-term fiscal framework
- Projections anchored on a primary surplus of 1 percent of GDP, keeping overall deficit below 2 percent of GDP.
- Continued fiscal consolidation and sustained GDP growth expected to substantially reduce total public debt, declining below the benchmark for countries with medium debt carrying capacity starting in 2022.
- Financial sector weaknesses could create fiscal costs that would delay the decline in the debt path by about one year.
- Togo assessed at moderate risk of external debt distress and high risk of overall debt distress, unchanged from the last ECF review.

### B. Structural Fiscal Reforms — tax administration, customs, PFM, budgeting
- Tax administration (TADAT) follow-up and OTR modernization:
  - Progress: creation/harmonization of tax identification numbers; voluntary compliance efforts; tele-procedures; withholding and provisional deposits; internal controls; new electronic payment system for large and medium-sized companies; progressive extension of online reporting.
  - Weaknesses: lack of automatic processing for filing, tax control, disputes, and tax arrears recovery; OTR not assessing tax collection against potential; absence of an automated accounting system.
  - IMF technical assistance team working with authorities to design and start implementation of corrective measures.
- Customs: finalizing action plan for complete dematerialization of customs declarations and ASYCUDA World functionality; improve customs valuations procedures including cross checks with international databases; advance/early declaration procedures.
- Voluntary compliance and land reform support: estimate cadastral values; digitize cadastral plans; set up a land information system; formalize informal operators and register overnight taxpayers; assess and append tax expenditures to the budget law.
- PFM and public investment program (PIMA recommendations):
  - Align PIP to realistic medium-term resource envelopes; continue cost-benefit methodology; integrate PPP decision-making with conventionally-funded projects; extend PIP scope to central government and other public entities.
  - PIP committee operational; medium-term PIPs prepared for 2019-21 and 2020-22.
  - For 2020-22, investment project inclusion condition: selected using the cost-benefit methodological guide.
  - Improve execution rate of the investment budget.
- Program budgeting:
  - Testing program budgeting in 2020 for full shift in 2021.
  - 2020 budget was presented to Parliament under both traditional and program-based format.
  - Need to finalize rewriting the information system; if not ready by June 2020, use upgraded system for transition while finalizing rewriting.
  - Decentralization of oversight functions to be completed through appointment of controllers delegated to sectoral ministries.
- Cash management and TSA:
  - Synchronization of commitment, procurement, and cash plans reduced payment arrears.
  - Remaining issues: procurement delays and deviation of actual spending from forecasts.
  - Immediate TSA reform step: integrate Treasury bank accounts at BCEAO, including autonomous bodies and local authorities accounts as well as donor project accounts (in consultation with donors).

### C. Borrowing Policies and Debt Management
- Medium-term fiscal framework aims to bring PV of total public debt below 55 percent of GDP by 2022 (threshold for countries with medium debt-carrying capacity).
- Medium-Term Debt Management Strategy to be refined with more detailed guidelines (interest rates, refinancing, foreign-currency risks).
- Improve systematic exchange of information between stakeholders and fully integrate debt service forecasts with budget forecasts.
- First tranche of a debt reprofiling operation executed:
  - Borrowed EUR 103.6 million (CFAF 68 billion) externally in December 2019 with guarantee from African Trade Insurance Agency; interest rate 4.68 percent; maturity 10 years; grace period 2 years.
  - Proceeds used to repay CFAF 66.6 billion of domestic and regional debt in January 2020 with interest rates of about 7 percent and maturity of 3 and 8 years.
  - Operation reduces NPV of total public debt marginally, smoothens near-term debt service, alleviates fiscal crowding out risk, and strengthens regional foreign exchange reserves.
  - Entails risks: higher external debt indicators and higher rollover risk in international markets.
  - Recent global financial market turbulence likely to narrow room for additional external financing in the near future.

### D. Financial Sector Policies — bank privatization, NPLs, regulatory standards
- Privatization of the two state-owned banks encountered delays but authorities remain committed:
  - Prequalification notice published in September 2019; proposals received in early December 2019.
  - Missing information in some proposals; bidders given until mid-January 2020 to provide required information.
  - Transaction advisors reviewed proposals to select prequalified bidders for final tendering.
  - Tendering process was envisaged for December 2019 (structural benchmark) but advisors recommended waiting until after Presidential elections in February 2020.
  - After elections, global financial uncertainty from COVID-19 deemed unfavorable for tender; instead confidentiality agreement sent to pre-qualified buyers in March 2020 to allow access to the data room.
  - Recommendations: ascertain buyer is fit and proper (in collaboration with BCEAO and WAMU Banking Commission); monitor banks’ liquidity closely; senior management of the two public banks to keep stakeholders informed.
- NPLs and regulatory compliance:
  - System NPL ratio: 17 percent at end-June 2019 (about 13 percent excluding the two state-owned banks).
  - WAEMU average NPL ratio: 11.7 percent.
  - Recovery rate by state-owned entity SRT of NPLs from previous privatizations: less than 10 percent during the last decade.
  - Legal and institutional frameworks for NPL recovery should be strengthened; enforce BCEAO instruction on accounting and reporting of NPLs; finalize full application of revised accounting framework for banks (e.g., write off NPLs not recovered after 5 years); design strategy to improve efficiency and governance of SRT.
  - Need strategy to address potential implications of COVID-19 on the financial system, particularly NPLs.
  - Loan concentration ratio of the banking system: 169 percent at end-2018 (regulatory ceiling: 65 percent; WAEMU average: 82.6 percent).
  - Overall capital adequacy ratio dropped to 5.9 percent in 2018 due primarily to regulatory capital needs at the two state-owned banks; excluding the two state-owned banks, ratio at 16.1 percent.
  - Move to Basel II/III since January 2018 has revealed weaknesses in the two public banks.
  - Credit Information Bureau (BIC) coverage of adult population: currently at 16 percent; recommendations to expand coverage by encouraging customer consent to share credit information and setting up collaborative forum for banks and BIC.
  - Strengthen capacity building for commercial courts.

*Source: IMF staff report chapter on program performance and policy discussions (Content unit: 1tgoea2020001).*

### 18.      While business environment indicators have improved significantly, there is potential

### 18.      While business environment indicators have improved significantly, there is potential

### Business environment improvements
- Doing Business overall score improved from 48.9 in the 2018 report to 62.3 in the 2020 report.
- Comparative standing: Togo’s Doing Business indicators were in line with the WAEMU average ten years ago and are now well ahead among low income countries.
- Notable reforms and measured gains:
  - Registering property: time reduced from 283 to 35 days.
  - Starting a business: cost reduced by 88 percent.
  - Getting electricity: cost reduced by 58 percent.
  - Dealing with construction permits: cost reduced by 29 percent.
- Remaining obstacles to private sector development:
  - Need to strengthen insolvency resolution (for instance, informal debt restructuring, or the regulation of insolvency professionals).
  - Improve legal frameworks.
  - OECD trade facilitation indicators show Togo is below best practice on automation of border procedures, appeal procedures, and advance rulings.

### Governance, anti-corruption, and judicial capacity
- Governance assessments indicate:
  - Generally weak market trust in the judiciary.
  - Divergence between existing legal framework and actual practice.
- Three governance laws under preparation:
  - A law on asset declaration (adopted by the Cabinet in November 2019 and pending Parliamentary approval).
  - A framework law on the fight against corruption that will expand the definition of corruption.
  - A code of conduct for civil servants.
- Recommendations and priorities:
  - Fully implement the new law on asset declaration while ensuring international good practice, including on comprehensiveness of disclosed information and its publication and verification.
  - Swiftly adopt the legal framework for the United Nations (UN) Convention Against Corruption, as well as the code of ethics and conduct.
  - Implement remaining recommendations of the 2018 report of the UN Counter-Terrorism Executive Directorate, including protection of whistleblowers, recovery of assets, and international cooperation.
  - Fully operationalize the anti-corruption agency HAPLUCIA and all commercial courts to deal with business conflicts.

### Anti–money laundering / countering financing of terrorism (ML/FT)
- December 2019 workshop validated and amended the national risk assessment on ML/FT (carried out with World Bank support).
- Togo assessed to have a high level of overall ML vulnerability because of:
  - The non-adoption of certain essential texts for the appropriate application of the uniform WAEMU law on AML/CFT.
  - Capacity weaknesses in institutions responsible for the fight against ML.
  - Ignorance of the vast majority of financial institutions and all designated non-financial businesses and professions of the anti-money laundering system and their obligations.
  - Insufficient AML/CFT supervision of the financial sector and non-existing supervision of the non-financial sector.
  - A large informal sector with widespread use of cash for transactions, which makes illicit financial flows easier.
- GIABA launched a mutual evaluation of Togo’s AML/CFT regime in December 2019.

### Program modalities, financing, and safeguards
- Authorities requested an augmentation of access under the current ECF arrangement by 48.7 percent of quota (SDR 71.49 million) to address urgent financing needs linked to COVID-19; request for disbursement upon completion of the 6th review of the ECF arrangement. Staff supports this request.
- Program financing status: The program is fully financed.
- Development partner support:
  - The World Bank is preparing a financial package of CFAF 7 billion to address urgent items under the authorities’ COVID-19 plan.
- Safeguards assessment:
  - Last safeguards assessment of the BCEAO completed in 2018 found a strong control environment, audit arrangements in broad conformity with international standards, and financial statements prepared in accordance with International Financial Reporting Standards (IFRS).
  - BCEAO enhanced the oversight role of its audit committee and is strengthening its risk management function; financial statements continue to be published on a timely basis.
- Capacity to repay the Fund:
  - Obligations to the Fund, including the proposed augmentation, would peak in 2026 at 3.3 percent of government revenue or 0.7 percent of GDP.

### Capacity development and program succession
- FY2020 capacity development focus: revenue administration, fiscal policy, public financial management, and statistics.
- IMF technical assistance supports the reform agenda under the Fund-supported program and beyond (Annex IV).
- Near-term TA on revenue administration to support measures based on the recent TADAT and provide capacity building on tax policy issues.
- PFM TA will support parallel testing of program-based budgeting in 2020 and a full shift in 2021.
- Staff preparing a framework to respond to the authorities’ request for a resident advisor on debt management.
- Authorities expressed intention to request a successor program after completion of the sixth and last program review.

### Macroeconomic developments, outlook, and staff appraisal
- Growth and outlook:
  - Economic growth estimated to have accelerated from 4.9 percent in 2018 to 5.3 percent in 2019.
  - 2020 growth projection revised downward to 3 percent due to COVID-19.
  - Medium-term growth projection: hover around 5½ percent, supported by public infrastructure upgrades and business environment improvement.
- Fiscal and balance of payments impact of COVID-19:
  - Fiscal deficit and the balance of payments financing gap projected to widen by about 1.7 percentage points of GDP relative to previous baseline projections.
  - 2020 fiscal deficit forecast to widen to 3.6 percent of GDP to accommodate additional healthcare spending related to COVID-19 and other adverse impacts.
- Public debt and fiscal framework:
  - Public debt projected to decline below 70 percent of GDP by end-2020.
  - Medium-term projections anchored on a primary surplus of 1 percent of GDP, which would keep the overall deficit below 2 percent of GDP.
  - This fiscal framework is expected to reduce public debt below the benchmark for countries with medium debt-carrying capacity starting in 2022 and keep debt on a downward path thereafter.
- Program performance and reforms:
  - Most quantitative performance criteria (QPCs), indicative targets (ITs), and structural benchmarks (SBs) were met.
  - Overall fiscal deficit (excluding the transaction with CNSS) estimated at 1.2 percent of GDP at end-2019.
  - Togo has complied for a third consecutive year with the WAEMU convergence criterion of a fiscal deficit not exceeding 3 percent of GDP.
  - Structural reforms progressing: tax arrears collection, online submission of customs declarations, and key steps toward program-based budgeting.
  - Delays exist in reforms related to the state-owned public banks.
- Staff recommendations and priorities:
  - Accelerate reforms in the financial sector and complete reforms of the two state-owned banks to safeguard financial stability and prevent risks to the state budget.
  - Revenue authority (OTR) to design and implement measures identified in the recent TADAT, address deficiencies in essential customs functions, and bolster voluntary compliance.
  - Follow up on key recommendations from the 2016 and 2019 PIMA assessments to improve efficiency of public investment programs.
  - Continue parallel testing of program-based budgeting in 2020 and complete the full shift in 2021.
  - Build on business environment improvements and implement reforms outlined in the National Development Plan.
- Staff conclusion:
  - Staff recommends completion of the sixth and final review of the ECF arrangement and supports the request for augmentation of access. Program performance has been broadly satisfactory and the capacity to repay the Fund is adequate.

*Source: Content unit 1tgoea2020001 (IMF).*

### 32.      Staff also recommends that Togo be placed on the standard 12-month cycle for Article

### 1tgoea2020001 - 32.      Staff also recommends that Togo be placed on the standard 12-month cycle for Article

### Real sector developments
- Economic recovery is firming up; private consumption and investment continue growing.
- Airport activity and port traffic:
  - Airport passengers: series peaks shown around 10,500–23,500 (chart axis values); freight (tons, RHS) shown 750–950 (chart axis values).
  - Traffic at Lomé port: cumulative series plotted across 2017–2019 with axis values 18,500–23,500 (thousand tons).
- Agricultural production:
  - Production of cocoa and coffee weakened (cumulative, million tons for 2017–19 shown across months).
- Inflation:
  - Headline and core inflation (WAEMU definition) shown Jan-16–Dec-19 (percent, Y-o-Y); statement: "Inflation is broadly in positive territory."

### External sector developments
- Current account and trade:
  - Current account balance improved significantly in 2017–2018.
  - Trade balance strengthened, driven by reduced intermediate and capital goods imports related to public and private investments.
- WAEMU reserves:
  - WAEMU reserves (2010–2019, in months of next year's imports) series shown rising to 3.0–7.0 range (chart axis); note: "* Excluding intra-regional trade".
- Charted metrics (2012–2018):
  - Current account balance (in percent of GDP) and trade balance components plotted showing improvement in 2017–2018.

### Fiscal, monetary, and banking sector developments
- Fiscal revenue and balances (December 2018 and 2019):
  - Tax revenues improved in 2019, but total revenues fell because gains from large nontax revenues in 2018 were not repeated and weaknesses in domestic taxes in 2019.
  - Projected fiscal balances were met because of underexecution of public investment and larger-than-projected budget support grants.
  - External financing was higher than projected because of budget support grants and loans.
- Government bond market:
  - Interest rates on bonds issued by Togo in the regional market decreased in 2019 (interest rate series Jan-2016–Feb-2020 plotted).
- Banking sector vulnerabilities:
  - NPLs remain high; capital cushions are diminishing; concentration remains elevated.
  - Financial Soundness Indicators (2013–Jun. 2019) show regulatory capital to risk-weighted assets and non-performing loans to total gross loans with loans to top 5 borrowers to capital (RHS) elevated.
  - Loan distribution (2005–2018) shows continued concentration by sector.

### Medium-term economic prospects (2011–24)
- Growth and investment:
  - Togo expected to continue growing faster than Sub-Saharan Africa but slightly slower than the rest of WAEMU.
  - Driver of growth expected to shift from public to private investment as public investment returns to pre-surge levels.
- Fiscal and external projections:
  - Fiscal consolidation expected to continue; public debt should follow a downward path.
  - External current account expected to converge to fundamentals as government imports are contained.
- Charted series include Real GDP (percent change), Public and Private Investment (percent of GDP), Overall Budget Deficit and Public Debt (percent of GDP), Current Account Deficit, Exports and Imports (percent of GDP) for 2011–2024.

### Key statistics and projections (selected from Table 1: 2016–24)
- Real GDP (annual): 5.6, 4.4, 4.9, 5.3, 3.0, 4.0, 5.5, 5.5, 5.5 (2016–2024).
- Consumer price index (average): 0.9, -0.2, 0.9, 0.7, 2.0, 2.0, 2.0, 2.0, 2.0 (2016–2024).
- GDP (CFAF billions): 2,649; 2,789; 2,975; 3,199; 3,446; 3,742; 4,062; 4,411; 4,789 (2016–2024).
- Gross domestic investment (percent of GDP): 33.5, 25.9, 26.8, 25.1, 26.6, 26.0, 29.5, 33.1, 33.3 (2016–2024).
- Current account balance (percent of GDP): -9.8, -2.0, -3.5, -4.2, -4.9, -4.3, -4.4, -4.3, -4.1 (2016–2024).
- Total public debt (percent of GDP): 81.4, 76.0, 76.2, 70.9, 67.1, 63.1, 59.3, 55.9, 52.6 (2016–2024).

### Central government financial operations (Table 2a and 2b, selected figures)
- Revenue and grants (Billions of CFAF, Dec. series and projections):
  - Total revenue and grants examples: 710.8; 496.2; 734.4; 746.9; 833.4; 818.5; 895.1; 977.6; 1,072.1; 1,172.9 (various rows/years).
  - Total revenue (Billions of CFAF): 604.9; 457.4; 635.9; 624.5; 694.8; 679.9; 744.6; 814.2; 894.7; 980.2.
  - Tax revenue (Billions of CFAF): 491.9; 403.2; 563.0; 551.4; 617.5; 603.0; 661.2; 722.6; 793.2; 868.4.
- Expenditure and net lending (Billions of CFAF): 733.8; 542.9; 626.4; 678.8; 900.5; 943.5; 951.9; 1,036.5; 1,136.0; 1,233.0.
- Public investment (Billions of CFAF): 201.7; 105.5; 290.0; 129.7; 329.4; 329.4; 348.7; 384.3; 427.9; 473.5.
  - Domestically financed and foreign financed breakdowns provided (e.g., foreign financed: 130.9; 70.5; 156.4; 122.5; 194.5; 194.5; 221.3; 240.3; 260.9; 283.2).
- Overall balance (commitment basis, incl. grants) (Billions of CFAF): -23.0; -46.7; -92.1; 68.1; -67.1; -125.0; -56.8; -58.9; -64.0; -60.2 (selected years).
- Financing: total financing (Billions of CFAF): 189.7; 57.4; 149.2; 119.2; 185.4; 185.1; 207.3; 222.3; 241.4; 252.8.
  - External financing (net): 130.4; 44.1; 144.1; 250.9; 294.7; 174.7; 206.6; 216.4; 225.9; 237.3.
  - Grants row examples: 105.9; 38.8; 98.4; 122.4; 138.6; 138.6; 150.5; 163.4; 177.4; 192.6.
- As percent of GDP (selected):
  - Total revenue and grants: 23.9; 15.5; 23.0; 23.4; 24.0; 23.8; 23.9; 24.1; 24.3; 24.5.
  - Total expenditure and net lending: 24.7; 17.0; 25.8; 21.2; 26.0; 27.4; 25.4; 25.5; 25.8; 25.7.
  - Public investment (percent of GDP): 6.8; 3.3; 9.1; 4.1; 9.5; 9.6; 9.3; 9.5; 9.7; 9.9.

### Balance of payments (Table 3, selected levels and percent of GDP)
- Current account balance (Billions of CFAF): -56.1; -102.7; -135.9; -169.3; -161.6; -179.7; -190.7; -194.4 (2017–2024).
  - As percent of GDP: -2.0; -3.5; -4.2; -4.9; -4.3; -4.4; -4.3; -4.1.
- Trade balance on goods (Billions of CFAF): -373.8; -434.6; -479.0; -521.3; -545.5; -595.5; -642.5; -686.8.
  - Trade balance on goods (percent of GDP): -13.4; -14.6; -15.0; -15.1; -14.6; -14.7; -14.6; -14.3.
- Exports (Billions of CFAF): 591.5; 600.4; 631.9; 612.9; 665.5; 724.0; 792.0; 868.4.
  - Exports (percent of GDP): 21.2; 20.2; 19.8; 17.8; 17.8; 17.8; 18.0; 18.1.
- Imports (Billions of CFAF): 965.3; 1,035.1; 1,110.9; 1,134.3; 1,211.0; 1,319.5; 1,434.6; 1,555.2.
  - Imports (percent of GDP): 34.6; 34.8; 34.7; 32.9; 32.4; 32.5; 32.5; 32.5.
- Financial account (– = inflow) (Billions of CFAF): 117.8; 99.1; 95.5; 136.1; 72.9; 49.8; 40.3; 50.5.
  - Financial account (percent of GDP): 4.2; 3.3; 3.0; 4.0; 1.9; 1.2; 0.9; 1.1.
- Overall Balance (Billions of CFAF): -30.2; -23.0; -68.8; -81.8; -0.4; 15.8; 26.4; 25.5.
  - Overall Balance (percent of GDP): -1.1; -0.8; -2.2; -2.4; 0.0; 0.4; 0.6; 0.5.
- Financing gap and IMF ECF:
  - Financing gap (Billions of CFAF) reported as 40.3; 40.0; 40.8; 78.5; 0.0; 0.0; 0.0; 0.0 with IMF ECF identified as 40.3; 40.0; 40.8; 78.5 (selected years).
  - Proposed ECF augmentation noted as 0.0; 0.0; 0.0; 58.1 (specific row present).

### Monetary survey (Table 4, selected figures)
- Net foreign assets (Billions of CFAF): 551.5; 559.7; 731.3; 753.2; 783.3; 826.4; 871.9; 919.8 (2017–2024).
  - Net foreign assets (percent of beginning-of-period broad money): 1.7; 0.5; 0.1; 1.2; 1.5; 2.0; 1.9; 1.8.
- Credit to nongovernment sector (Billions of CFAF): 1,176.9; 1,225.7; 1,301.3; 1,482.6; 1,649.9; 1,819.5; 1,998.1; 2,202.9.
  - Credit to private sector (of which): 1,099.3; 1,085.7; 1,130.5; 1,336.9; 1,486.3; 1,648.0; 1,827.3; 2,026.0.
- Money supply (M2) (Billions of CFAF): 1,561.5; 1,702.0; 1,778.4; 2,018.8; 2,206.9; 2,412.3; 2,636.3; 2,884.7.
  - Annual change of M2 (percent of beginning-of-period broad money): 10.0; 9.0; 4.5; 13.5; 9.3; 9.3; 9.3; 9.4.
- Memorandum items:
  - Velocity (GDP/end-of-period M2): 1.8; 1.7; 1.8; 1.7; 1.7; 1.7; 1.7; 1.7.
  - Net foreign assets (in months of next year's WAEMU imports) and BCEAO NFA series appear in Table 3 memorandum rows.

### Financial soundness indicators (Table 5, 2014–18)
- Capital adequacy and asset quality (percent):
  - Regulatory capital to risk-weighted assets: 14.0; 8.7; 5.8; 8.4; 16.1 (2014–2018*).
  - Non-performing loans to total gross loans: 15.6; 16.8; 16.2; 19.3; 17.8.
  - Loans to top 5 borrowers to capital: 136.3; 166.6; 186.0; 128.7; 169.0.
- Profitability and spreads:
  - Average lending rate: 9.9; 7.8; 7.8; 8.2; 7.8.
  - Average interest rate spread: 6.8; 5.0; 4.7; 4.9; 4.8.
  - Return on assets (ROA): 0.7; 0.6; 0.6; 1.1; 0.8.
- Liquidity ratios:
  - Liquid assets to total assets: 26.3; 24.8; 17.6; 19.5; 17.1.
  - Loans to deposits ratio: 92.7; 93.9; 90.6; 87.2; 82.0.
- Notes:
  - * Year of first reporting in accordance with Basel II / III and Revised Chart of Accounts. CAR ratio excludes the two banks with negative shareholders’ equity.

### Quantitative performance criteria and indicative targets (Table 6, End-September and End-December 2019)
- Performance criteria (Billions of CFAF, adjusted actual and status):
  - Domestic primary fiscal balance (floor): Adjusted actual -3.2; Status Met.
  - Non-accumulation of arrears on external public debt: Adjusted actual 0.0; Status Met.
  - Net domestic financing (ceiling): Adjusted actual 53.3; Status Met.
  - Government contracting or guaranteeing of nonconcessional external debt (ceiling): Adjusted actual 0.0; Status Met.
- Indicative targets and outcomes:
  - Total fiscal revenue (floor): Adjusted actual 445.1; Actual 457.4; Status Met (end-September); Prel. 635.9; Estimate 624.5; Status Not met (end-December).
  - Total domestically financed social spending (floor): Adjusted actual 164.0; Act. 143.8; Status Not met (end-September); Prel. 218.6; Estimate 222.4; Status Met (end-December).
  - Net domestic arrears accumulation (ceiling): Adjusted actual 0.0; Estimate -131.8; Status Met (end-September); Prel. 0.0; Estimate -73.2; Prel. -141.6; Status Met (end-December).
- Memorandum items include overall primary balance and government contracting or guaranteeing of nominal concessional external debt (various values listed).

*Source: Togolese authorities; BCEAO; UMOA Titres; INSEED; PAL; IMF staff estimates and projections (excerpts from the provided IMF country report content).*

### 7. Togo:

### 7. Togo

### Indicators of Capacity to Repay the Fund (2020) — Key Figures
- Fund obligations based on existing and prospective credit (in millions of SDRs) — Principal:
  - 2020: 5.2
  - 2021: 1.8
  - 2022: 2.5
  - 2023: 12.6
  - 2024: 20.1
  - 2025: 39.9
  - 2026: 49.5
  - 2027: 47.0
  - 2028: 37.0
  - 2029: 29.4
  - 2030: 9.7
  - 2031–2034: 0.0
- Charges and interest (in millions of SDRs): 2020–2034: 0.0 (each year)
- Total obligations based on existing and prospective credit:
  - In millions of SDRs: same as principal series above.
  - In billions of CFAF:
    - 2020: 4.2
    - 2021: 1.4
    - 2022: 2.0
    - 2023: 10.2
    - 2024: 16.3
    - 2025: 32.3
    - 2026: 40.1
    - 2027: 38.0
    - 2028: 29.9
    - 2029: 23.8
    - 2030: 7.8
    - 2031–2034: 0.0
  - In percent of government revenue:
    - 2020: 0.6; 2021: 0.2; 2022: 0.2; 2023: 1.1; 2024: 1.7; 2025: 3.0; 2026: 3.3; 2027: 2.8; 2028: 2.0; 2029: 1.4; 2030: 0.4; 2031–2034: 0.0
  - In percent of exports of goods and services:
    - 2020: 0.4; 2021: 0.1; 2022: 0.2; 2023: 0.8; 2024: 1.2; 2025: 2.1; 2026: 2.4; 2027: 2.1; 2028: 1.5; 2029: 1.1; 2030: 0.3; 2031–2034: 0.0
  - In percent of debt service:
    - 2020: 5.3; 2021: 1.8; 2022: 2.0; 2023: 8.1; 2024: 10.8; 2025: 18.4; 2026: 18.8; 2027: 17.1; 2028: 13.9; 2029: 11.1; 2030: 4.3; 2031–2034: 0.0
  - In percent of GDP:
    - 2020: 0.1; 2021: 0.0; 2022: 0.1; 2023: 0.2; 2024: 0.3; 2025: 0.6; 2026: 0.7; 2027: 0.6; 2028: 0.4; 2029: 0.3; 2030: 0.1; 2031–2034: 0.0
  - In percent of quota:
    - 2020: 3.5; 2021: 1.2; 2022: 1.7; 2023: 8.6; 2024: 13.7; 2025: 27.2; 2026: 33.7; 2027: 32.0; 2028: 25.2; 2029: 20.0; 2030: 6.6; 2031–2034: 0.0
- Outstanding IMF credit:
  - In millions of SDRs:
    - 2020: 249.4; 2021: 247.7; 2022: 245.1; 2023: 232.6; 2024: 212.4; 2025: 172.6; 2026: 123.0; 2027: 76.0; 2028: 39.1; 2029: 9.7; 2030–2034: 0.0
  - In billions of CFAF:
    - 2020: 202.7; 2021: 200.2; 2022: 197.9; 2023: 187.7; 2024: 171.6; 2025: 139.6; 2026: 99.5; 2027: 61.5; 2028: 31.6; 2029: 7.8; 2030–2034: 0.0
  - In percent of government revenue:
    - 2020: 29.8; 2021: 26.9; 2022: 24.3; 2023: 21.0; 2024: 17.5; 2025: 12.8; 2026: 8.2; 2027: 4.6; 2028: 2.1; 2029: 0.5; 2030–2034: 0.0
  - In percent of exports of goods and services:
    - 2020: 20.7; 2021: 18.8; 2022: 17.1; 2023: 14.9; 2024: 12.4; 2025: 9.3; 2026: 6.1; 2027: 3.4; 2028: 1.6; 2029: 0.4; 2030–2034: 0.0
  - In percent of debt service:
    - 2020: 255.2; 2021: 252.0; 2022: 196.0; 2023: 149.1; 2024: 113.7; 2025: 79.5; 2026: 46.8; 2027: 27.6; 2028: 14.7; 2029: 3.7; 2030–2034: 0.0
  - In percent of GDP:
    - 2020: 5.9; 2021: 5.3; 2022: 4.9; 2023: 4.3; 2024: 3.6; 2025: 2.7; 2026: 1.8; 2027: 1.0; 2028: 0.5; 2029: 0.1; 2030–2034: 0.0
  - In percent of quota:
    - 2020: 169.9; 2021: 168.7; 2022: 167.0; 2023: 158.4; 2024: 144.7; 2025: 117.5; 2026: 83.8; 2027: 51.8; 2028: 26.6; 2029: 6.6; 2030–2034: 0.0
- Net use of IMF credit (millions of SDRs):
  - Disbursements 2017–2019: 96.6 (2017 figure shown)
  - Repayments and repurchases:
    - 2020: 7.5; 2021: 1.8; 2022: 2.5; 2023: 12.6; 2024: 20.1; 2025: 39.9; 2026: 49.5; 2027: 47.0; 2028: 37.0; 2029: 29.4; 2030: 9.7; 2031–2034: 0.0

### Memorandum Items (Projections)
- Nominal GDP (in billions of CFAF): 2020: 3,446; 2021: 3,742; 2022: 4,062; 2023: 4,411; 2024: 4,789; 2025: 5,199; 2026: 5,645; 2027: 6,129; 2028: 6,654; 2029: 7,225; 2030: 7,844; 2031: 8,516; 2032: 9,246; 2033: 10,039; 2034: 10,899
- Exports of goods and services (in billions of CFAF): 2020: 979; 2021: 1,063; 2022: 1,156; 2023: 1,262; 2024: 1,380; 2025: 1,509; 2026: 1,642; 2027: 1,788; 2028: 1,947; 2029: 2,120; 2030: 2,299; 2031: 2,502; 2032: 2,712; 2033: 2,952; 2034: 3,199
- Government revenue (in billions of CFAF): 2020: 680; 2021: 745; 2022: 814; 2023: 895; 2024: 980; 2025: 1,094; 2026: 1,210; 2027: 1,339; 2028: 1,483; 2029: 1,645; 2030: 1,823; 2031: 2,022; 2032: 2,233; 2033: 2,422; 2034: 2,627
- Debt service (in billions of CFAF) (includes state-owned enterprises debt):
  - 2020: 79; 2021: 79; 2022: 101; 2023: 126; 2024: 151; 2025: 176; 2026: 213; 2027: 223; 2028: 215; 2029: 214; 2030: 182; 2031: 169; 2032: 177; 2033: 187; 2034: 199
- CFAF/SDR (period average): 2020: 813; 2021: 808; 2022: 807; 2023: 807; 2024: 808; 2025: 809; 2026: 809; 2027: 809; 2028: 809; 2029: 809; 2030–2034: 809 (each year)

*Sources: IMF staff estimates and projections.*

### Schedule of Disbursements Under ECF Arrangement 2017–19
- Disbursements and availability dates (each SDR 25.17 million = 17.1 percent of quota):
  - May 5, 2017 — Following Executive Board Approval of an ECF arrangement
  - September 15, 2017 — Observance of continuous and end-June 2017 performance criteria and completion of the first review under the arrangement
  - March 15, 2018 — Observance of continuous and end-December 2017 performance criteria and completion of the second review under the arrangement
  - September 15, 2018 — Observance of continuous and end-June 2018 performance criteria and completion of the third review under the arrangement
  - March 15, 2019 — Observance of continuous and end-December 2018 performance criteria and completion of the fourth review under the arrangement
  - September 15, 2019 — Observance of continuous and end-June 2019 performance criteria and completion of the fifth review under the arrangement
  - December 15, 2019 — SDR 96.63 million (25.14 + 71.49) (65.8 percent of quota) — Observance of continuous and end-September 2019 performance criteria and completion of the sixth review under the arrangement
  - Total amount of the arrangement: SDR 247.65 million (176.16 + 71.49) (168.7 percent of quota)

### Structural Benchmarks for the 6th Review — Measures, Rationale, Deadlines, Status
- Revenue administration:
  - Formalize creation and reinforce risk-analysis role of Revenue Collection and Receivables Recovery Unit to increase recovery rates (targets: large taxpayers’ unit from 66 percent in 2017 to 70 percent in 2019; medium-sized from 48 percent in 2017 to 60 percent in 2019). Deadline: End-October 2019. Status: Met.
  - (i) Deploy hardware/software for cash registers; (ii) formulate strategy for risk-based spot checks; (iii) appoint focal points to centralize spot check results. Deadline: End-October 2019. Status: Met.
  - Make online submission of declarations and supporting documents mandatory for customs clearance for the 30 largest importers/filers. Deadline: End-October 2019. Status: Met.
- Expenditure management:
  - Revise and enforce multi-year public investment program. Deadline: End-October 2019. Status: Met.
  - Develop standard framework of performance indicators and train stakeholders for program budgeting transition. Deadline: End-October 2019. Status: Met.
- Financial sector:
  - Close submission of preliminary bidding documents for privatization of both public banks. Deadline: End-December 2019. Status: Not met.

### Assessment of Progress under the ECF Arrangement 2017–20 — Key Findings
- Fiscal consolidation and debt:
  - Fiscal deficit narrowed by 8.3 percentage points of GDP during the program period.
  - Overall fiscal deficit: 2016: 9.5 percent of GDP; estimated 2019: 1.2 percent of GDP (excluding CNSS transaction).
  - Public debt declined from 81 percent of GDP at end-2016 to 70.9 percent of GDP at end-2019.
  - Early reimbursement of domestic loans in January 2020 expected to reduce the debt ratio further by almost 2 percentage points of GDP.
  - Authorities refrained from contracting new non concessional external debt, apart from external loan related to reprofiling operation.
- Revenue administration:
  - Foregone revenue reduced from 4.3 percent of GDP to 2.3 percent of GDP during 2016–2019.
  - Recovery rate of tax arrears improved: large taxpayers’ unit from 66 to 71 percent; medium-sized unit from 48 to 72 percent.
  - Measures: customs post-clearance audit program; stricter controls in phosphate, clinker, cement, iron; prohibition of customs clearance for importers with outstanding tax arrears; lump sum clearance deposit for importers deemed inactive.
  - Electronic processing of customs clearance progressing.
- Public Financial Management (PFM):
  - Stock of government payment arrears reduced significantly after independent audit and reimbursement plan.
  - No new arrears accumulated in 2019 due to coordinated monthly commitment, procurement, and cash plans.
  - Manual prepared for cost-benefit analysis of public investment projects; only selected/prioritized projects included in PIP and budget.
  - Government accounts moved to Treasury Single Account; debt management centralized; MTDS updated regularly; preparations for program-based budgeting underway.
- Business environment and growth:
  - World Bank Doing Business score improved from 48.9 (2018) to 62.3 (2020); Togo among top-ten improvers and top reformer in Sub-Saharan Africa.
  - One of two newly established commercial courts (for Lomé) started operations.
  - Anti-corruption agency HAPLUCIA operational in 2018; three laws under preparation (declaration of property/assets for high-ranked officials; framework law on fight against corruption; code of conduct for civil servants).
  - Real GDP growth averaged 4.9 percent during 2017–19 versus program target 5.2 percent; lower growth mainly due to uncertainty from 2017–18 socio-political tensions.
- Financial sector:
  - Reforms delayed and incomplete. Two state-owned banks exhibit persistent weaknesses.
  - Strategy changed from merger and government recapitalization to privatization; process not completed and weaknesses persist.

### Annex II — Implications of COVID-19 (Facts, Potential Implications, Authorities’ Plan)
- Facts:
  - WHO declared COVID-19 a pandemic on March 11.
  - First case in Togo recorded on March 6, 2020; increased to about twenty cases (as of text).
- Vulnerabilities and economic channels:
  - Togo is a regional logistical hub with strong trade ties with China and insufficient preparedness.
  - Supply-side impacts: services (airport, port, tourism) expected to be most affected; Lomé airport traffic likely to fall; port of Lomé transit activity hindered; retail affected as China accounts for about a quarter of total imports.
  - Demand-side impacts: loss of income and uncertainty reduce consumption and investment; confidence effects, containment efforts, supply disruptions, behavioral changes (social distancing) could further disrupt activity.
  - Health preparedness: Global Health Security Index ranks Togo among countries least prepared for outbreaks.
  - An outbreak will widen fiscal deficit and worsen balance of payments.
- Authorities’ plan and financing need:
  - Direct cost of action plan estimated at CFAF21 billion (about USD35 million or 0.6 percent of GDP).
  - Including additional costs (resilience of health system and adverse impacts), overall financing need estimated at about CFAF70 billion (about USD130 million or 2 percent of GDP).
  - Financing secured to date: about CFAF 7 billion from development partners.
  - Fiscal impact: projected overall fiscal deficit for 2020 revised up by 1.7 percentage points of GDP, from 1.9 to 3.6 percent of GDP.
  - Balance of payments: additional financing need estimated at about CFAF 58 billion (or 1.7 percent of GDP); proposed augmentation of ECF access by this amount, corresponding to about 48.7 percent of Togo’s quota.
- Annex II. Table 1. Togo: COVID-19 Measures (billion CFAF) — Cost estimates:
  - Surveillance: 0.13
  - Laboratory: 0.99
  - Points of Entry: 0.37
  - Communication: 0.23
  - Case Management: 2.63
  - Infection Prevention and Control: 0.14
  - Coordination: 0.13
  - Rehabilitation of hospitals in main cities to enhance resilience against pandemics and chronic diseases: 16.06
  - Total: 20.69

### Annex III — Risk Assessment Matrix (Selected Risks, Likelihood, Expected Impact, Mitigating Policies)
- External risks:
  - More severe Covid-19 pandemic: Relative likelihood: High (ST). Expected impact if realized: High. Mitigation: Reallocate fiscal spending to health sector; appeal for additional concessional external financing.
  - Rising protectionism and retreat from multilateralism: Relative likelihood: High (ST, MT). Expected impact: High. Mitigation: Prudent budgetary management; bolster regional policy coordination and regional trade.
  - Sharp rise in risk premia: Relative likelihood: High (ST). Expected impact: High. Mitigation: Implement credible medium-term fiscal adjustment strategy to bolster investor confidence.
  - Weaker-than-expected global growth: Relative likelihood: High (ST, MT). Expected impact: High. Mitigation: Implement competitiveness-enhancing structural reforms and further diversify export market locations.
- Regional and domestic risks:
  - Surge of insecurity in the region: Relative likelihood: High (ST, MT). Expected impact: High. Mitigation: Prudent budgetary management to contain financing need.
  - Socio-political tensions: Relative likelihood: Medium (ST, MT). Expected impact: Medium. Mitigation: Accelerate measures towards growth-inclusiveness; communicate and discuss structural reforms with stakeholders.
  - Lingering weaknesses of public banks: Relative likelihood: Medium. Expected impact: Medium. Mitigation: Accelerate privatization of public banks to fit-and-proper buyers.
  - Setback in fiscal adjustment and reforms: Relative likelihood: Medium (ST). Expected impact: Medium. Mitigation: Persevere in fiscal consolidation and accelerate structural reforms; implement social programs to protect vulnerable groups.

*Sources: IMF staff estimates and projections; Togolese authorities.*

### Annex IV. Capacity Development Strategy

### Annex IV. Capacity Development Strategy

### Alignment with authorities’ policy objectives
- The CD strategy is aligned with the authorities’ policy objectives set at the start of the ECF arrangement in 2017: (i) reduce the overall fiscal deficit substantially to ensure long-term debt and external sustainability; (ii) refocus policies on sustainable and inclusive growth through targeted social and infrastructure spending; and (iii) resolve existing financial sector weaknesses, especially in the two public banks.
- The current CD strategy gives priority to measures that aim to:
  - (i) improve fiscal revenue and particularly domestic revenue generation, which is weaker than projected at the start of the ECF arrangement in 2017;
  - (ii) strengthen budget preparation, particularly to improve efficiency and safeguard fiscal space for social spending and public investment;
  - (iii) build capacity at the new Debt Directorate and develop a medium-term debt strategy in line with best international practice; and
  - (iv) improve economic data compilation and dissemination.
- Capacity building in customs administration will both support revenue generation and help Togo keep its position as an efficient and competitive regional transportation hub.
- The current CD strategy is mainly a continuation of the previous strategy; financial sector TA needs will be covered by the 2020 WAEMU FSAP.

### Key overall CD priorities going forward
- Tax Administration Core Functions
  - Increase domestic revenue generation, including by rationalizing tax expenditure and operationalizing the tax policy unit; develop and implement post-TADAT strategy; and reap the full benefits from merging the tax and customs directorates.
- Customs Administration Core Functions
  - Facilitate trading across borders including through automation of customs clearance procedures to reduce opportunities for corruption; risk-based selection of merchandise to improve the efficiency of controls and the accuracy of declarations; and cross checks with international databases to prevent customs under-valuation.
- Budget preparation
  - Accelerate implementation of PIMA recommendations; improve public investment efficiency, including by revising and enforcing the multi-year public investment program; and prepare the 2021 budget directly in program-based format.
- Debt Management
  - Further refine the medium-term debt strategy, including more detailed guidelines for the preferred direction of specific indicators (interest rates, refinancing, foreign currency risks, etc.), and train the staff at the new Debt Directorate.
- Statistics
  - Pursue improvement and publication of key statistics (e-GDSS); follow up on the GDP rebasing.

### Main risks and mitigation
- Implementation of TA recommendations has been somewhat uneven due mostly to capacity constraints and lack of resources.
- Mitigation measures:
  - Fund staff will discuss the importance and sequencing of TA with technical counterparts and political decision makers.
  - Resident advisors in key areas would be essential to help relax capacity constraints.
  - Outreach to Togo’s development partners could help increase available TA funding, including for long-term resident advisors.
  - The authorities have requested a resident advisor in debt management.

### Authorities’ views
- The authorities agree with the thrust of the CD strategy and see the CD as aligned with their reform agenda.
- They state the IMF CD has helped in the design and implementation of their reform agenda by providing specific measures and supporting the roll-out.
- The authorities indicate that implementation and absorption of recommendations could be improved through more training and outreach.

*1tgoea2020001 - Annex IV. Capacity Development Strategy*

### 11.      For 2020, our primary focus is to preserve the hard-won fiscal achievements in recent

### 11.      For 2020, our primary focus is to preserve the hard-won fiscal achievements in recent

### 2020 fiscal framework and targets
- The 2020 budget approved by Parliament envisaged continued fiscal consolidation to achieve an overall fiscal deficit of 1.9 percent of GDP.
- The budget would limit primary current spending at 13.6 percent of GDP (1.8 percent of GDP less than in 2019) through:
  - discontinuing urgent spending of 0.9 percent of GDP (from 1.2 to 0.3 percent of GDP) in 2020;
  - savings from measures in the recently completed spending review;
  - actions to strengthen the quality and efficiency of public procurement with technical assistance from the World Bank.
- The budget plans on improving tax revenue by about 0.6 percent of GDP to reach 17.8 percent of GDP in 2020, with customs collections stabilizing at around 8 percent of GDP.
- Domestic tax collections supported by continuing tax administration reforms, tax policy measures, and continued recovery of part of the large stock of tax arrears.

### COVID-19 response and fiscal adjustment for 2020
- Because of COVID-19, the 2020 fiscal framework needs adjustment to accommodate additional health spending.
- Emphasis on prevention and preparedness given Togo’s position as regional logistic hub, commercial ties with affected countries, and weaknesses in the healthcare system (low access to medical services and lack of specialized care).
- Institutional response:
  - set up a high-level committee and developed an action plan including multi-sectoral coordination; public awareness; epidemiological surveillance (border health screening, COVID-19 hotline); and patient care at entry points (gear and isolation facilities).
- Operational challenges: diagnostic testing, availability of emergency personnel and equipment, detection/isolation of virus carriers.
- Epidemiological status at the time of report: So far, twenty infected cases have been detected in Togo.
- Estimated additional health spending:
  - required additional health spending is estimated at about CFAF 20 billion;
  - total cost to improve the health system to strengthen resilience against pandemic and chronic diseases is estimated at about CFAF70 billion (or about 2 about 2 percent of GDP).
- Fiscal impact: envisaged that the 2020 fiscal deficit may widen to about 3.7 percent of GDP.

### Medium-term fiscal consolidation and debt objectives
- Beyond 2020, commitment to keep the overall fiscal deficit below 2 percent of GDP, within the WAEMU convergence criterion (deficit ceiling of 3 percent of GDP).
- Debt trajectory targets:
  - public debt falling below 70 percent of GDP (including SOEs) starting in 2020;
  - net present value of public debt falling below 55 percent of GDP (benchmark for countries with medium debt carrying capacity) starting in 2022.
- Policy intent: once debt has declined to a sufficiently low level, the fiscal balance will gradually be relaxed to address development needs.

### Fiscal risk reduction, PPP framework, and contingency planning
- Plan to further reduce fiscal risks and prepare contingency measures.
- Address weaknesses in the financial sector, including two weak public banks, to mitigate potential fiscal costs.
- Establish legal and institutional framework for Public-Private Partnership (PPP) management, including preparation of a specific PPP legislation (PPP Act).
- Ensure PPP unit is provided with necessary legal and institutional tools and becomes operational.
- PPP projects to be gradually included in the PIP following positive budget process decision and application of same review standards as conventionally funded projects.

### Social protection and monitoring of social expenditure
- Strengthen social protection programs and support most vulnerable groups.
- Redesign management of Programme d’Urgence de Développement Communautaire: management shifted from a centrally-based non-government entity to decentralized elected officials to accelerate execution and improve targeting.
- Accelerate deployment of a monitoring system for social expenditure and strengthen data processing capacity.
- Initiated coordination among stakeholders (ministry of finance, line ministries, development partners) to identify/implement corrective measures, such as:
  - appointment of a manager dedicated to monitoring execution of social spending at the Ministry of Finance;
  - monthly coordination between sectoral ministries and Ministry of Finance of commitment plans, procurement plans, and cash plan;
  - prioritizing execution of social spending among investment spending.

### Structural fiscal policies — domestic resource mobilization and tax administration
- Continued reforms supported by IMF technical assistance and TADAT deployment.
- Progress on revenue administration: creation/harmonization of tax identification numbers, voluntary compliance, tele-procedures, withholding and provisional deposits, internal controls against corruption.
- Customs and tax enforcement measures expected to increase compliant taxpayers, including:
  - implementation by the customs administration of the 15-percent deposit on imports by inactive taxpayers at the tax administration;
  - customs clearance restriction on imports belonging to tax debtors.
- Electronic payment system launched for large and medium-sized companies:
  - By end-December 2019 expected that 200 large enterprises use the electronic payment.
- Plans to extend online reporting to all companies, introduce online telepayment and online request for tax clearance.
- Proposal to collect revenue directly on the treasury single account in collaboration with BCEAO, Directorate General of the Treasury and Public Accounting (DGTCP), and SEGUCE.

### Customs reforms and controls
- Finalize action plan for complete dematerialization of customs declarations and activation of ASYCUDA World functionality.
- Tackle deficiencies in risk-based selection of merchandise, progressively automate customs clearance procedures to reduce corruption and strengthen traceability of goods in the free port.
- Cross-check with international databases to prevent customs under-valuations.
- Improve customs valuation procedures by implementing advance declaration procedures; internalizing valuation function; and applying the transaction value.

### Voluntary compliance, land reform, and tax base broadening
- Priorities for 2020:
  - automatic processing of key revenue administration functions (filing, tax control, disputes, tax arrears recovery);
  - development of a model for forecasting tax and customs revenues;
  - advance the land reform;
  - broaden the tax base;
  - automated accounting system for accurate accounting of tax revenue;
  - audits of operational and financial activities by an external state auditing entity;
  - study of perception of corruption across the OTR;
  - publication of financial and operational reports and the strategic plan.
- Land reform actions:
  - estimate cadastral values of surveyed properties;
  - digitize cadastral plans and set up a land information system;
  - conduct a tax census; control and approve remainder of area plans during transitional period of the one-stop shop (Guichet foncier unique, GFU);
  - continue land surveys on Greater Lomé by calculation of cadastral values of buildings of Greater Lomé.
- Broaden tax base by formalizing informal operators and identifying/registering overnight taxpayers not registered.
- Assess tax expenditures and append this assessment as an annex to the budget law.

### Public financial management (PFM) reforms, program budgeting, and PIP rationalization
- Prepare to switch to program budgeting starting with 2021:
  - prepare the 2021-23 budget directly in program-based format while strengthening multi-year PIP.
  - prerequisites for shift to program budgeting are in place at technical level; finalize rewriting the information system to make it operational for program-based budget in 2021.
  - contingency: if rewritten information system is not ready by June 2020, use upgraded IS for transition while finalizing rewrite in parallel.
  - provide required human resources capacity and decentralize oversight via appointment of controllers delegated to sectoral ministries.
- Accelerate implementation of key recommendations of 2016 PIMA and recent PIMA follow-up on rationalizing PIP.
  - PIP committee is set up and operational.
  - Medium-term PIPs prepared for 2019-21 and 2020-22.
  - Circular for 2019-21 mandated only investment projects in the PIP can be included in the budget.
  - Circular for 2020-22 mandated strict application of cost-benefit analysis methodology before projects considered for the PIP.
  - Improve execution rate of investment budget and align PIP to realistic medium-term resource envelopes.
  - Integrate PPP decision-making structures into those of conventionally funded projects.
  - Gradually extend scope of the PIP to coordinate investment policy of central government and other public sector entities (local authorities and public enterprises).

### Cash management and Treasury Single Account (TSA)
- Strengthen cash management and gradually expand TSA coverage:
  - fully anchor the cash flow plan with commitment plan and procurement plans of line ministries.
  - strengthen collaboration among line ministries to reduce public procurement delays and align spending forecasts (cash flow plans) with actual spending.
  - complete integration of Treasury bank accounts at BCEAO after appropriate studies, including autonomous bodies, local authorities accounts, and donor project accounts (in consultation with donors).

### Borrowing policy and debt management
- Continue a prudent borrowing policy to safeguard debt sustainability.
- Targets reiterated:
  - bring total public debt below 70 percent of GDP starting in 2020;
  - bring NPV of public debt below 55 percent of GDP starting in 2022.
- Borrowing constraints:
  - will not contract any non-concessional external debt, except for possible debt reprofiling operation;
  - will continue to meet all debt service obligations;
  - will not issue any guarantees to domestic suppliers or contractors, nor pre-finance any public investment;
  - continue repayment of domestic arrears and strive not to accumulate new domestic arrears.

### Debt reprofiling operation (first tranche) and recent transaction
- First tranche executed with marginal reduction in NPV of total public debt while preserving external debt risk rating.
- Transaction details:
  - borrowed EUR 103.6 million (CFAF 68 billion) externally in December 2019 with a guarantee from the African Trade Insurance Agency;
  - terms: interest rate of 4.68 percent, maturity of 10 years, and grace period of 2 years.
  - with proceeds repaid CFAF66.6 billion of domestic and regional debt with interest rates of about 7 percent and maturity of 3 and 8 years in January 2020.
- Expected benefits: reduced NPV marginally; smoothened debt service payments in near future; alleviated risk of fiscal crowding out; strengthened regional foreign exchange reserves at time of transaction.
- Acknowledgement of risks and commitment to necessary safeguards.

### Strengthening debt management capacity
- Improve Medium-Term Debt Strategy and refine guidelines for indicators (interest rates, refinancing, foreign currency risks).
- Maintain systematic exchange of information on project loan disbursements among stakeholders.
- Make new Debt Management Directorate fully operational and strengthen debt management practices.
- Integrate debt service forecasts with budget forecasts to reduce forecast-performance discrepancies.

### Financial sector policies, bank privatization, and stability monitoring
- Complete privatization process of two state-owned banks:
  - prequalifying offers received; some bidders asked to add missing information by mid-January;
  - prequalified bidders given confidentiality agreement to access data room;
  - final tendering process delayed because of Presidential election period in February 2020 and COVID-19 uncertainty.
  - pay attention to fit-and-proper requirement given systemic importance (combined 17.5 percent of market share at end-September 2019).
- Monitor liquidity situation of banks in collaboration with BCEAO and WAMU Banking Commission; ensure senior management of public banks keep BCEAO and Banking Commission informed.

### Financial sector vulnerabilities and NPLs
- System NPL ratio:
  - 17 percent in June 2019 (and 13 percent excluding the two state-owned banks), above WAEMU average of 11.7 percent.
- Recovery challenges:
  - recovery rate by state-owned entity SRT of NPLs from previous privatization rounds was less than 10 percent during last decade.
- Loan concentration:
  - loan concentration rate of banking system at end-2018 was 169 percent, above regulatory 65 percent ceiling and 82.6 percent WAEMU average.
- Capital adequacy:
  - overall capital adequacy ratio dropped to 5.9 percent in 2018 due primarily to regulatory capital needs at two publicly owned banks;
  - excluding the two state-owned banks, the ratio is 16.1 percent.
- Regulatory developments:
  - move to Basel II/III since January 2018 revealed weaknesses in two public banks.
  - WAMU Banking Commission issued injunctions in 2018 and made capital restoration calls toward two very small private banks undergoing restructuring to be taken over by private strategic investors; one small bank has restored compliance with regulatory standards.

### NPL reduction, regulation compliance, and credit information
- Emphasis on reducing NPLs and assessing compliance with Basel II-III standards.
- Priority actions:
  - strengthen legal and institutional frameworks for NPL recovery, including enforcing BCEAO instruction on accounting and reporting of NPLs;
  - finalize full application of revised accounting framework for banks, including writing off debts of NPLs not recovered after 5 years;
  - design strategy to improve efficiency and governance of publicly-owned debt collection agency (SRT).
- Support Credit Information Bureau (BIC) and capacity building for commercial courts.
  - increase adult population coverage ratio (currently at 16 percent) by encouraging customers to give prior consent to sharing credit information;
  - set up collaborative work forum for banks and BIC to provide relevant information.

### Structural reforms to improve business environment and promote growth
- Continue structural reforms to improve business environment, attract investment, and support growth.
- Doing Business indicators progress:
  - rankings improved from 156 in 2017 to 137 in 2018 and to 97 in 2019.
  - largest improvements in registering property and dealing with construction permits (gained 56 and 47 places, respectively), starting a business (49 places), and getting electricity (42 places).
- Ongoing reform priorities:
  - accelerate land reforms;
  - strengthen insolvency resolution (informal debt restructuring, regulation of insolvency professionals);
  - facilitate trading across borders;
  - improve access to credit and relax constraints to financial inclusion for firms;
  - accelerate implementation of reforms in National Development Plan (NDP) and Compact with Africa (CwA) to bolster private investment and promote inclusive growth.

*IMF — TOGO country content unit*

### 29.      We will accelerate institutional reforms to strengthen governance and reduce

### 29.      We will accelerate institutional reforms to strengthen governance and reduce 

### Governance and anti-corruption reforms
- Ensure fair and effective execution of existing laws and regulations.
- Fully operationalize:
  - the new anti-corruption agency; and
  - the first two commercial courts to deal with business conflicts.
- Strengthen and enforce the legal framework for asset declaration based on the draft law adopted by the government as of November 27, 2019 setting the conditions for the declaration of property and assets of high officials, senior officials and other public officials.
- Adopt the legal framework for the United Nations Convention on Corruption, and the code of ethics and conduct.
- Legislative aims: meet international good practices including on comprehensiveness of disclosed information, its publication and verification.

### Money laundering / Countering the financing of terrorism (ML/FT, AML/CFT)
- Continue fight against ML/FT in accordance with regulatory provisions in force within WAEMU.
- Publish the summary of the multisectoral national risk assessment on ML/FT carried out with the support of the World Bank.
- Implement recommended action plan to address identified vulnerabilities, particularly in preparation for the assessment by the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA).
- Undertake to adopt all implementing legislation related to the 2018 Act on Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) and to formalize the National Coordination Committee.
- Implement recommendations of the 2018 report of the United Nations Counter-Terrorism Executive Directorate (CTED) and encourage banks to strengthen their AML/CFT efforts.

### Program financing and monitoring (ECF-supported program)
- Continue monitoring policy implementation using the framework of the ECF-supported program.
- Key indicators to guide fiscal policy: domestic primary balance and net domestic financing.
- Continue close monitoring of revenue collection and social spending indicators.
- Request augmentation of access under the current ECF arrangement to address COVID-19 implications:
  - Request financial support equivalent to SDR 25.1 million plus an augmentation of this drawing of 48.7 percent of our quota.
  - Augmentation to be made available in the form of budget support under the sixth (and last) review of the program.
  - The amount of the augmentation (SDR 71.67 million) will be used to fill in the financing gap stemming from the COVID-19 pandemic in Togo.

### Institutional capacity and statistics
- Strengthen institutional capacity via the Permanent Secretariat for Reform Policies and Financial Programs (Secrétariat permanent chargé des politiques de réformes et des programmes financiers—SP-PRPF) to provide:
  - technical monitoring of policies and quarterly progress reports;
  - liaison between national structures and technical and financial partners; and
  - coordination of technical assistance.
- Improve quality of statistics by strengthening staffing within the National Statistics and Accounting Institute (Institut national de la Statistique et des Études économiques et démographiques—INSEED).
- Achievements and plans:
  - Reduced lags in production of final national accounts.
  - Rebasing GDP according to the 2008 system of national accounts for the new base year (2016); first estimates will be available in the first half of 2020.
  - Continue to improve data quality.
  - Refined presentation of fiscal data, particularly the government financial operations table (Tableau des Opérations Financières de l’Etat).
  - Improved quality of balance of payments data.
- Make full use of technical assistance in: tax and customs administration; public financial management (including program-based budgeting and selection of public investments); debt management; and generation and publication of statistics.

### Policy commitments and safeguards
- Confident that economic policy measures in the memorandum will achieve the objectives of the ECF-supported program.
- Stand ready to take further measures if necessary, after consultation with the IMF.
- For the remainder of the program period, commit to:
  - neither introduce nor intensify restrictions on payments and transfers for current international transactions nor introduce or modify any multiple currency practice without the IMF’s prior approval;
  - not conclude bilateral payment agreements that are incompatible with Article VIII of the IMF’s Articles of Agreement; and
  - not introduce or intensify import restrictions for balance of payments reasons.

### Key quantitative performance criteria and indicative targets (September and December 2019; Billions of CFA Francs)
- Domestic primary fiscal balance (floor):
  - Adjusted Actual: -3.2
  - Status: Met
  - Indicative Targets Adjusted Estimate Prel.: 52.3 / 44.0 / 44.0 / 49.0 – Met
- Non-accumulation of arrears on external public debt:
  - Adjusted Actual: 0.0 – Met
  - Indicative Targets: 0.0 / 0.0 – Met
- Net domestic financing (ceiling):
  - Adjusted Actual: 53.3
  - Status: Met
  - Indicative Targets Adjusted Estimate Prel.: 53.3 / 20.1 / 5.2 / -63.7 – Met
- Government contracting or guaranteeing of nonconcessional external debt (ceiling):
  - Adjusted Actual: 0.0 – Met
  - Indicative Targets: 0.0 / 68.0 – Met
- Government guaranteeing of domestic loans to suppliers and contractors (ceiling): 0.0 – Met
- Government guarantees on bank prefinancing for public investments (ceiling): 0.0 – Met
- Indicative targets:
  - Total fiscal revenue (floor): 445.1 Adjusted Actual; 457.4 Status: Met; 635.9 / 624.5 Not met
  - Total domestically financed social spending (floor): 164.0 Adjusted Actual; 143.8 Status: Not met; 218.6 / 222.4 Met
  - Net domestic arrears accumulation (ceiling): 0.0 Adjusted Actual; -131.8 Status: Met; 0.0 / -73.2 / -141.6 Met
- Memorandum item:
  - Overall primary balance: -61.9 / 20.7 / -13.9 / 49.0 (values listed in table)
  - Government contracting or guaranteeing of nominal concessional external debt: 58.8 / 31.7 / 78.3 / 98.9 / 260.3 / 0.0 / 260.3 / 66.5 (as listed)

### Structural benchmarks for the 6th (Final) Review (selected items, deadlines, status)
- Revenue administration:
  - Formalize creation and reinforce risk-analysis role of Revenue Collection and Receivables Recovery Unit to increase recovery rates (from 66 percent in 2017 to 70 percent in 2019 for the large taxpayers’ unit; from 48 percent in 2017 to 60 percent in 2019 for the medium-sized taxpayers’ unit). Deadline End-October 2019. Status: Met.
  - (i) Start deploying hardware and software for establishment of cash registers; (ii) formulate strategy for selection of risk-based spot checks; (iii) appoint focal points in large and medium-sized taxpayers’ unit to centralize results of spot checks. Deadline End-October 2019. Status: Met.
  - Make mandatory the online submission of declarations and supporting documents for customs clearance of imports for the 30 largest importers or filers. Deadline End-October 2019. Status: Met.
- Expenditure and investment management:
  - Revise and enforce the multi-year public investment program. Deadline End-October 2019. Status: Met.
  - Develop a standard framework of performance indicators for transition to program budgeting and train stakeholders. Deadline End-October 2019. Status: Met.
- Financial sector:
  - Close the submission of preliminary bidding documents for the privatization of both public banks. Deadline End-December 2019. Status: Not met.

### Debt sustainability assessment and public debt coverage
- Joint Bank-Fund Debt Sustainability Analysis (DSA) conclusions:
  - Risk of external debt distress: Moderate
  - Overall risk of debt distress: High
  - Granularity in the risk rating: Substantial space to absorb shocks on external debt
  - Application of judgment: Yes — Historical vulnerability to multiple shocks
- DSA summary:
  - Confirms moderate risk of external debt distress and high risk of overall public debt distress—unchanged from the previous DSA update published in October 2019.
  - Mechanical results point to low risk of external debt distress, but judgment applied given domestic debt vulnerabilities; external debt distress therefore considered moderate.
  - Overall risk assessed as high because the present value (PV) of total public and publicly guaranteed (PPG) debt-to-GDP ratio breaches the debt distress benchmark through 2021 under the baseline scenario.
  - Highlights need for sustained fiscal consolidation, improved debt management, and strong macroeconomic policies to reduce public debt to prudent levels over the medium term.
- Public debt coverage: includes obligations of central government and public entities; debt data include external and domestic obligations of central government, arrears to suppliers, guaranteed debt, and external and domestic debt of state-owned enterprises (SOEs), including the Caisse Nationale de Sécurité Sociale (CNSS).
- Definition notes:
  - Domestic debt: debt denominated in franc de la Communauté Financière d’Afrique (CFAF).
  - External debt: debt contracted or serviced in a currency other than the CFAF.
  - Coverage choice based on currency due to difficulty of monitoring residency of creditors for debt traded in the WAEMU regional market.

### Public debt levels and composition (selected historical figures)
- Debt ratio trajectory:
  - 2016 total public debt: 81.4 percent of GDP.
  - 2019 total public debt: 70.9 percent of GDP.
- Domestic debt:
  - 2016: 61.2 percent of GDP (record high) declining to 47.1 percent of GDP in 2019.
  - Drivers of decline: reimbursement of domestic arrears (including CNSS in 2019) and early repayment of costlier domestic obligations.
- 2020 projections:
  - Debt ratio expected to be further reduced by about 4 percentage points in 2020, mainly due to early reimbursement of domestic loans enabled by reprofiling operation (1.9 percentage points) and GDP growth, despite the detrimental effect of the Coronavirus outbreak on growth.
  - External debt ratio expected to increase from 23.7 percent of GDP at end-2019 to 25.2 percent of GDP at end-2020.
  - Projected increase in official external financing (including additional IMF ECF financing) partly offset by reduction in external borrowing from commercial banks—assuming no other reprofiling operations in 2020.
  - Government external borrowing in December 2019 to reimburse domestic loans in January 2020: proceeds supposed to have been saved as financial assets in 2019, with reimbursement financed by a reduction in financial assets in 2020.
  - Any further accumulation of financial assets would contribute to increase the debt ratio compared to the projections.
  - By end of projection period, continued fiscal consolidation expected to substantially reduce domestic debt and total PPG debt.

### Composition of public debt (end-2016 to end-2019, selected figures)
- Total Public Debt (Billions of CFAF; Percent of public debt; Percent of GDP):
  - End-2016: 2,155; 100.0; 81.4
  - End-2017: 2,118; 100.0; 76.0
  - End-2018: 2,266; 100.0; 76.2
  - End-2019: 2,266; 100.0; 70.9
- External Debt (Billions of CFAF; Percent of public debt; Percent of GDP):
  - End-2016: 535; 24.8; 20.2
  - End-2017: 562; 26.5; 20.1
  - End-2018: 610; 26.9; 20.5
  - End-2019: 759; 33.5; 23.7
- Domestic Debt (Billions of CFAF; Percent of public debt; Percent of GDP):
  - End-2016: 1,621; 75.2; 61.2
  - End-2017: 1,556; 73.5; 55.8
  - End-2018: 1,656; 73.1; 55.7
  - End-2019: 1,508; 66.5; 47.1
- Components (end-2019 highlights):
  - Multilateral external debt: 331; 14.6 percent of public debt; 10.3 percent of GDP.
  - IMF external debt: 27; 1.2 percent of public debt; 4.0 percent of GDP.
  - Commercial banks external debt: 387; 17.1 percent of public debt; 12.1 percent of GDP.
  - Bonds (Emprunts Obligataires) domestic: 1,070; 47.2 percent of public debt; 33.4 percent of GDP.
  - Domestic arrears: 68; 3.8 percent of public debt; 2.7 percent of GDP.
  - Banking system domestic: 240; 10.6 percent of public debt; 7.5 percent of GDP.

*Prepared by the staffs of the International Monetary Fund and the International Development Association, March 26, 2020.*

### 4.      The baseline macroeconomic assumptions for the present DSA rely on sustainable real GDP

### 4.      The baseline macroeconomic assumptions for the present DSA rely on sustainable real GDP

### Key macroeconomic assumptions and baseline projections
- Real GDP growth:
  - 3 percent for 2020.
  - 4 percent in 2021.
  - Annual average of 5.5 percent over 2022-30 (long-term potential growth).
- Inflation:
  - Projected to remain below the WAEMU criterion of 3 percent.
  - Average inflation was 0.7 in 2019 and 0.9 percent in 2018.
  - Inflation is expected to reach 2 percent in the medium-term.
- Current account:
  - Projected to stabilize in the range of 4 percent of GDP over the medium term.
  - Projected current account balance: -4.9 percent of GDP in 2020 and -4.0 percent of GDP over 2021-30 (Current DSA, Table).
- Fiscal stance:
  - Overall primary balance (commitment basis, including grants) anchored on a surplus of 1.0 percent of GDP over 2021-30.
  - Primary balance projected at -0.7 percent of GDP in 2020.
  - After 2029 the overall primary balance would decrease and approach a deficit of around 2 percent of GDP by 2040.
- Public debt projections:
  - Total PV of PPG debt declines below the new benchmark (PV of debt-to-GDP ratio of 55 percent) in 2022.
  - PV of total public debt-to-GDP ratio projected to be 30.6 percent by 2030 and around 24.3 percent by 2040.
  - PV of PPG external debt projected at 19.5 percent of GDP in 2020 and to decline to around 12.8 percent of GDP by 2030 (baseline).

### Box 1 — Main assumptions in the macroeconomic framework
- Growth and inflation:
  - Near term reduced due to Coronavirus outbreak: 3 percent for 2020 and 4 percent in 2021.
  - Long term (2022-40) potential growth estimated at 5.5 percent annually.
  - Medium-term inflation projections unchanged; expected to reach 2 percent.
- Public investment and financing:
  - Public investment projected at 9.6 percent of GDP in 2020.
  - Projected to grow and reach 11 to 14 percent of GDP in the medium and long term.
  - Project loans expected to grow in line with GDP; project grants grow with GDP up to 2028 and then remain constant in nominal terms.
  - Share of domestically-financed investment grows over time.
- Commodity prices and revenues:
  - Key commodity price projections through 2025 sourced from the April 2020 WEO and assumed constant in real terms thereafter.
  - Total revenue and grants projected to average about 25 percent of GDP over 2021-30.
  - Tax revenue projected at 17.5 percent of GDP in 2020.
  - Total revenue (including grants) projected: 23.8 percent of GDP in 2020 (Current DSA) and 25.3 percent over 2021-30 (Current DSA, Table).
  - Revenue criteria of 20 percent of GDP in 2028 and stabilize around 22 percent of GDP starting in 2031 (revenue path described).
  - Measures to improve revenue: phasing out of reduced VAT rates, enhancement of property taxation, reduction of tax exemptions, cross-checking taxpayers between tax and customs administrations, control over import valuations, efforts to recover large stocks of tax arrears.
- External flows and FDI:
  - Net FDI outflows expected to decrease and stabilize at 2 percent of GDP in 2022 and evolve in line with GDP over the medium term.
  - FDI flows and grants are subject to significant risks that may alter baseline debt dynamics.

### Key macroeconomic table highlights (Current DSA vs DSA Update October 2019)
- Real GDP Growth (percent): Current DSA — 3.0 (2020) and 5.5 (2021-30); DSA Update October 2019 — 5.5 (2020) and 5.5 (2021-30).
- Inflation (average, percent change): Current DSA — 2.0; DSA Update October 2019 — 2.0.
- Total Revenue (percent of GDP, total revenue including grants): Current DSA — 23.8 (2020) and 25.3 (2021-30); DSA Update October 2019 — 23.7 (2020) and 25.4 (2021-30).
- Fiscal Primary Balance (commitment basis, incl. grants, percent of GDP): Current DSA — -0.7 (2020) and 1.0 (2021-30); DSA Update October 2019 — 1.0 and 1.0.
- Exports of goods and services (percent of GDP): Current DSA — 28.4 (2020) and 28.9 (2021-30); DSA Update October 2019 — 32.0 (2020) and 34.5 (2021-30).
- Current Account Balance (percent of GDP): Current DSA — -4.9 (2020) and -4.0 (2021-30); DSA Update October 2019 — -6.0 (2020) and -5.3 (2021-30).

### Debt financing, reprofiling, and debt management assumptions
- New external disbursements:
  - Expected to evolve in line with GDP starting in 2021.
  - New external financing assumed to come solely from official creditors until 2020 included (end of current ECF).
  - Commercial banks projected to provide one fifth of new external financing starting in 2021.
  - Grant element of new public sector external borrowing projected to decrease from 35.3 percent in 2020 to around 32 percent in 2021 and remain stable afterwards.
- Domestic debt issuance:
  - Issued as mix with maturities: 1-3 years (15 percent of total), 4-7 years (60 percent of total), over 8 years (25 percent of total).
  - Total new domestic issuances projected to decrease as share of GDP from about 6 percent a year over 2020-25 to about 3 percent a year over 2036-40.
- Debt reprofiling operation (2019):
  - Borrowed EUR 103.6 million (2.0 percent of GDP) externally at interest rate of 4.7 percent.
  - Repaid domestic and regional debt in January 2020 (FCFA 65 bn, or 1.9 percent of GDP) with interest rate of around 7 percent.
  - Program conditionality modified in 2018 to allow non-zero non-concessional borrowing limits for debt management operations that reduce NPV of total public debt and do not lead to an external risk rating downgrade.
  - Authorities’ program includes a debt reprofiling operation of up to CFAF 260 billion in total (about $447 million or 8 percent of GDP) estimated to keep external debt risk rating unchanged at moderate.
  - Recent operation marginally reduced NPV of total public debt by FCFA 1.3 billion (EUR 2 million), or 0.04 percent of GDP.
  - Current DSA does not include assumptions of further reprofiling operations in 2020.

### Debt carrying capacity, classification, and stress testing
- Debt carrying capacity:
  - Composite indicator (CI) value: 2.91.
  - CI rating: Medium.
  - CI components include CPIA, real growth rate, import coverage of reserves (and squared), remittances, and world economic growth (component coefficients and contributions detailed in Text Table 3).
- Applicable thresholds for 'Medium' debt-carrying capacity:
  - PV of total public debt as percent of GDP benchmark: 55.
  - Other thresholds noted (exports, GDP, debt service in % of exports, revenue) in Text Table 4.
- Standardized stress tests:
  - Six standardized tests assuming shocks to real GDP growth, the primary balance, exports, other flows and exchange rate; include combined shock scenario.
  - Contingent liability stress test assumes shock of 11.8 percent of GDP (5 percent for financial markets, 6.8 percent for PPPs, 0 percent for SOE debt).
  - Baseline and stress-test projections are assessed against thresholds determined by the medium debt carrying capacity (threshold of 55 percent of GDP for PV of total public debt).
  - Togo does not have prominent features requiring additional tailored stress tests.

### Model-based external debt sustainability analysis — findings
- Risk assessment:
  - Model signals a low risk of external debt distress: none of Togo’s PPG external debt burden indicators breach thresholds under the baseline nor under the most extreme shocks.
- PV of PPG external debt:
  - Projected at 19.5 percent of GDP in 2020; decline to around 12.8 percent of GDP by 2030 in baseline.
- PV of PPG external debt relative to exports:
  - Projected at 68.6 percent in 2020; decline to 43.5 percent by 2030.
- Debt service indicators:
  - Remain well below thresholds in baseline and under stress tests.
- Historical scenario:
  - Under the historical scenario (key macro parameters set to 10-year historical averages), external debt indicators breach thresholds in outer years; PV of debt-to-GDP breaches threshold from 2026.
- Sources of resilience:
  - Improvements in debt-management practices under the Fund-supported program and World Bank technical assistance expected to increase resilience to shocks affecting debt service needs.

### How the baseline deviates from historical trends and risks
- Non-interest current account deficit:
  - Historically large deficits driven by imports for big public investment projects; current fiscal consolidation and reforms aim to keep public investment within sustainable limits.
- Export growth:
  - Baseline assumes higher export growth based on National Development Plan goals (regional commercial and transportation hub; manufacturing base).
  - Recent structural reforms and export diversification (e.g., plastic products, organic produce) support the assumption.
- Non-debt creating flows:
  - Baseline projects average FDI outflows of 2 percent of GDP starting in 2021 versus historical outflows of 3.7 percent of GDP on average.
  - Net FDI outflows in 2018-19 attributed to a specific company with acquisitions abroad; this influences historical residuals.
- Risks noted:
  - FDI flows and grants subject to significant risks that could alter debt dynamics.
  - The Coronavirus outbreak reduces short-term projections and affects revenues, exports of services, and investment dynamics.

*Source: 1tgoea2020001 - 4.      The baseline macroeconomic assumptions for the present DSA rely on sustainable real GDP (TOGO, INTERNATIONAL MONETARY FUND).*

### 12.      Togo’s  overall  risk  of  public  debt  distress  remains  high,  as  the  PV  of  total  public  debt

### 12.      Togo’s  overall  risk  of  public  debt  distress  remains  high,  as  the  PV  of  total  public  debt

### Debt outlook and scenarios
- Baseline:
  - Overall public debt is forecasted at 67.1 percent of GDP in 2020, falling below 70 percent that year.
  - By 2040, continued fiscal consolidation (primary surplus assumed at about 1 percent of GDP up to 2029) coupled with favorable growth rates are expected to significantly reduce domestic debt and total public and publicly guaranteed debt.
  - All PPG external debt sustainability indicators are expected to remain below their indicative thresholds throughout the projection period (2020-40) under the baseline.
- Most extreme shock scenario:
  - The ratio of PV of overall public debt-to-GDP would briskly rise in 2021 and decline below the indicative benchmark in 2025.
- Historical scenario:
  - The ratio of PV of overall public debt-to-GDP would remain above the indicative threshold during the entire projection period.
- Conclusion:
  - The analysis highlights the need for sustained fiscal consolidation, improved debt management, and macroeconomic policies aiming to reduce the level of public debt to prudent levels over the medium term.

### Application of judgment on external debt risk
- Fund and Bank staff view:
  - The risk of external debt distress should be maintained at moderate, unchanged from the rating at the time of the last DSA update of October 2019.
- Rationale:
  - Mechanical DSA results point to a low risk of external debt distress because all PPG external debt sustainability indicators remain below indicative thresholds throughout 2020-40 under the baseline and the most extreme stress test.
  - Judgment was applied to raise the assessment to moderate risk of external debt distress because of vulnerabilities arising from high domestic debt.
- Specific vulnerabilities cited:
  - Risks related to local-currency debt owed to non-residents (currently integrated as domestic debt—defined on a currency basis).
  - Possible further debt reprofiling operations.
  - The need to incur fiscal costs to facilitate the privatization of the two public banks.

### Risk rating and vulnerabilities (summary of key statistics)
- End-2019 levels:
  - Togo’s overall public debt stood at 70.9 percent of GDP at end-2019 (68.7 percent of GDP excluding debt of SOEs).
- NPV ratios and benchmarks:
  - The ratio of NPV of overall public debt-to-GDP remains above the indicative benchmark through 2021—but on a steady declining trend, under the assumption of a continued primary surplus of about 1 percent of GDP and substantial reduction in the domestic debt.
- External debt indicators:
  - For external debt, under the baseline scenario, all PPG external debt sustainability indicators are expected to remain well below their indicative thresholds throughout the projection period (2020–40).
- Judgmental adjustment:
  - Despite mechanical results indicating low risk, vulnerabilities from high domestic debt and other factors justify a moderate risk assessment for external debt distress.

### Space to absorb external shocks
- Granularity module result:
  - Togo is considered to have substantial space to absorb shocks on external debt.
  - All baseline external debt indicators are well below their respective thresholds.
  - Only shocks in the upper quartile of the observed distribution of shocks would downgrade Togo to high risk of debt distress.

### Policy implications and recommendations
- Maintain sustained fiscal consolidation (primary surplus of about 1 percent of GDP assumed through 2029 in baseline).
- Improve debt management to reduce domestic debt and overall public and publicly guaranteed debt.
- Design macroeconomic policies to reduce public debt to prudent levels over the medium term.
- Manage vulnerabilities associated with local-currency debt owed to non-residents, potential debt reprofiling, and fiscal costs linked to privatization of the two public banks.

*Source: 1tgoea2020001 - 12.      Togo’s  overall  risk  of  public  debt  distress  remains  high,  as  the  PV  of  total  public  debt — https://www.imf.org/-/media/files/publications/cr/2020/english/1tgoea2020001.pdf*

### 16.       The authorities broadly agreed with staff's assessment of Togo's public debt situation and

### 1tgoea2020001 - 16.       The authorities broadly agreed with staff's assessment of Togo's public debt situation and

### Authorities' assessment and policy stance
- The authorities "broadly agreed with staff's assessment of Togo's public debt situation and recommendations."
- They "concurred with staff’s assessment of risk ratings and distress level."
- Given that "Togo's overall risk of debt distress remains high," the authorities recognize that "the fiscal consolidation must continue in order to bring public debt down below the relevant benchmark."

### 2020–24 medium-term debt strategy (authorities' plan)
- Objective: increase the share of foreign currency debt over total debt "towards 50 percent in 2024."
- Instruments and channels cited:
  - Reprofiling operations.
  - Continued concessional external financing (from the World Bank and African Development Bank).
  - Semi-concessional financing (Eximbank India, Kuwaiti Funds, and Saudi Funds — "projects are under execution").
  - Domestic issuances to cover remaining financing needs through a mix of 1 to 10-year maturity obligations.
- Maturity target: "The average maturity of total debt is expected to increase from around 5 years in 2019 to 7 years in 2024."

### External Debt Sustainability Framework — selected baseline indicators and projections (2017–2040)
- External debt (nominal), PPG and total:
  - 2017: "20.1" (percent of GDP)
  - 2018: "20.5"
  - 2019: "23.7"
  - 2020: "25.2"
  - 2021: "24.5"
  - 2022: "23.8"
  - 2023: "22.9"
  - 2024: "22.0"
  - 2025: "21.0"
  - 2030: "17.9"
  - 2040: "19.7"
- Identified net debt-creating flows (percent of GDP):
  - 2017: "-1.9"
  - 2018: "6.0"
  - 2019: "7.4"
  - 2020: "8.0"
  - 2021: "6.5"
  - 2022: "5.2"
  - 2023: "5.1"
  - 2024: "4.9"
  - 2025: "4.8"
  - 2030: "5.2"
  - 2040: "7.7"
- Non-interest current account deficit (percent of GDP):
  - 2017: "1.6"
  - 2018: "3.2"
  - 2019: "4.0"
  - 2020: "4.6"
  - 2021: "4.0"
  - 2022: "4.1"
  - 2023: "4.0"
  - 2024: "3.7"
  - 2025: "3.5"
  - 2030: "3.7"
  - 2040: "6.2"
- Exports and imports (percent of GDP):
  - Exports: 2017: "33.1"; 2018: "31.8"; 2019: "31.3"; 2020: "28.4"; 2024: "28.8"; 2030: "29.3"
  - Imports: 2017: "43.5"; 2018: "43.5"; 2019: "43.4"; 2020: "41.3"; 2024: "40.8"; 2030: "41.0"
- Net FDI (negative = inflow), percent of GDP:
  - 2017: "-2.5"
  - 2018: "4.7"
  - 2019: "3.6"
  - 2020: "3.7"
  - 2021–2025: "3.1", "2.0", "2.0", "2.0", "2.0"
  - 2030: "2.0"
- Endogenous debt dynamics contribution (percent of GDP):
  - 2017: "-1.0"
  - 2018: "-1.8"
  - 2019: "-0.1"
  - 2020: "-0.3"
  - 2021: "-0.6"
  - 2022: "-0.9"
  - 2023: "-0.8"
  - 2024: "-0.8"
  - 2025: "-0.7"
  - 2030: "-0.6"
- Selected sustainability indicators:
  - PV of PPG external debt-to-GDP ratio (projections section): values include "18.4", "19.5", "19.0", "18.5", "17.8", "17.0", "16.1", "12.8", "14.0" (table entries).
  - PV of PPG external debt-to-exports ratio (projection snapshot): "58.9", "68.6", "67.0", "65.1", "62.3", "59.0", "55.5", "43.5", "48.3".
  - PPG debt service-to-exports ratio: 2017: "5.9"; 2018: "4.8"; 2019: "4.9"; 2020: "4.8"; 2024: "6.3"; 2025: "6.7"; 2030: "4.6".
  - PPG debt service-to-revenue ratio: 2017: "10.7"; 2018: "7.5"; 2019: "7.8"; 2020: "6.9"; 2024: "8.9"; 2025: "9.3"; 2030: "5.7".
  - Gross external financing need (Billion of U.S. dollars): sample values across years include "0.3", "0.0", "0.1", "0.1", "0.1", "0.2", "0.3", "0.3", "0.3", "0.4", "1.6".
- Key macro assumptions:
  - Real GDP growth (in percent): 2017: "4.4"; 2018: "4.9"; 2019: "5.3"; 2020: "3.0"; 2021–2025 and beyond: "4.0", "5.5", "5.5", "5.5", "5.5"; 2030: "5.5"; 2040: "5.7"; Average: "5.1".
  - GDP deflator in US dollar terms (change in percent): 2017: "2.9"; 2018: "6.4"; 2019: "-3.2"; 2020: "4.1"; 2021: "5.5"; 2022: "3.4"; 2023: "3.2"; 2024: "3.1".
  - Effective interest rate (percent): 2017: "2.0"; 2018: "1.7"; 2019: "1.4"; 2020: "1.5"; 2024: "1.8"; 2030: "2.1".
  - Grant element of new public sector borrowing (in percent): projection entries include "35.3", "31.8", "31.8", "31.8", "31.8", "31.8", "31.8", "31.9", "32.1", "32.1".
  - Government revenues (excluding grants, percent of GDP): 2017: "18.2"; 2018: "20.3"; 2019: "19.5"; 2020: "19.7"; 2024: "20.5"; 2025: "21.0"; 2030: "23.2"; projection average: "21.2".
  - Grant-equivalent financing (in percent of GDP): projections sample: "5.6", "4.8", "4.8", "4.8", "4.8", "4.8", "4.2", "2.3".
  - Grant-equivalent financing (in percent of external financing): sample projections "66.3", "74.7", "74.7", "74.7", "74.7", "74.7", "72.0", "58.3", "73.6".
- Memorandum items:
  - PV of external debt (percent of GDP) projection sequence includes "18.4", "19.5", "19.0", "18.5", "17.8", "17.0", "16.1", "12.8", "14.0".
  - PV of PPG external debt (in Billion of US dollars): series includes "1.0", "1.1", "1.2", "1.3", "1.4", "1.4", "1.5", "1.7", "4.3".

### Public Sector Debt DSA — selected baseline indicators and projections (2017–2040)
- Public sector debt (percent of GDP):
  - 2017: "76.0"
  - 2018: "76.2"
  - 2019: "70.9"
  - 2020: "67.1"
  - 2021: "63.1"
  - 2022: "59.3"
  - 2023: "55.9"
  - 2024: "52.6"
  - 2025: "49.5"
  - 2030: "35.8"
  - 2040: "30.1"
  - Historical/average note: "63.8" and "50.2" appear in table context.
- Change in public sector debt (percent of GDP): 2017: "-5.4"; 2018: "0.2"; 2019: "-5.3"; 2020: "-3.7"; 2021: "-4.1"; 2022: "-3.7"; 2023: "-3.4"; 2024: "-3.3"; 2025: "-3.1"; 2030: "-2.4"; 2040: "0.6".
- Identified debt-creating flows (percent of GDP): sample series includes "-5.7", "-1.8", "-7.8", "-1.7", "-3.8", "-3.5", "-3.2", "-3.1", "-3.0", "-2.3".
- Primary deficit (percent of GDP): 2017: "-1.5"; 2018: "-1.6"; 2019: "-4.8"; 2020: "0.7"; 2021: "-1.0"; 2022: "-1.0"; 2023: "-1.0"; 2024: "-1.0"; 2025: "-1.0"; 2030: "-0.8"; 2040: "2.0".
- Revenue and grants (percent of GDP): 2017: "21.4"; 2018: "23.9"; 2019: "23.4"; 2020: "23.8"; 2024: "24.5"; 2025: "25.1"; 2030: "26.7"; projection average: "25.1".
- Grants component of revenues (percent of GDP): 2017: "3.2"; 2018: "3.6"; 2019: "3.8"; 2020: "4.0"; projections keep "4.0" through 2025; 2030: "3.4"; 2040: "1.5".
- Automatic debt dynamics (percent of GDP) and contributions:
  - Total automatic dynamics: 2017: "-4.2"; 2018: "-1.4"; 2019: "-1.9"; 2020: "-2.4"; 2021: "-2.8"; 2022: "-2.5"; 2023: "-2.2"; 2024: "-2.1"; 2025: "-2.0".
  - Contribution from interest rate/growth differential: 2017: "-2.3"; 2018: "-2.3"; 2019: "-2.3"; 2020: "-1.5"; 2021: "-2.1"; 2022: "-2.2"; 2023: "-2.0"; 2024: "-1.9".
  - Contribution from average real interest rate: 2017: "1.1"; 2018: "1.2"; 2019: "1.6"; 2020: "0.6"; 2021: "0.5"; 2022: "1.0".
  - Contribution from real GDP growth: 2017: "-3.4"; 2018: "-3.6"; 2019: "-3.8"; 2020: "-2.1"; 2021: "-2.6"; 2022: "-3.3".
- Residual and other flows: 2017 residual "0.3"; 2018 "2.0"; 2019 "2.5"; 2020 "-3.0"; 2021 "-1.0".
- Sustainability indicators (selected):
  - PV of public debt-to-GDP ratio (projection series): "65.7", "61.4", "57.6", "54.1", "50.8", "47.6", "44.6", "30.6", "24.3".
  - PV of public debt-to-revenue and grants ratio (projection snapshot): "281.3", "258.4", "240.7", "224.6", "209.1", "194.5", "177.9", "114.9", "95.4".
  - Debt service-to-revenue and grants ratio: "101.7", "57.7", "66.5", "52.7", "46.7", "53.3", "32.2", "36.7", "32.8", "21.3", "12.1".
  - Gross financing need 4/: 2017: "20.3"; 2018: "13.4"; 2019: "9.6"; 2020: "13.3"; 2021: "10.2"; 2022: "11.8"; 2023: "6.8"; 2024: "8.0"; 2025: "7.2"; 2030: "4.9"; 2040: "5.0".
- Key macro and fiscal assumptions (selected):
  - Real GDP growth: same series as external DSA (2017: "4.4"; 2018: "4.9"; 2019: "5.3"; 2020: "3.0"; projection average "5.1").
  - Average nominal interest rate on external debt (percent): 2017: "2.1"; 2018: "1.6"; 2019: "1.5"; 2020: "1.5"; 2024: "1.8"; 2030: "2.1".
  - Average real interest rate on domestic debt (percent): 2017: "1.9"; 2018: "2.6"; 2019: "3.0"; 2020: "1.2"; 2021: "1.4"; 2022: "3.1"; 2023: "3.6"; 2024: "3.4"; 2025: "3.5".
  - Inflation rate (GDP deflator, in percent): 2017: "0.9"; 2018: "1.7"; 2019: "2.1"; 2020: "4.6"; 2021: "4.4"; projection stable at "2.9".
  - Growth of real primary spending (percent, deflated): 2017: "-27.7"; 2018: "17.6"; 2019: "-12.5"; 2020: "36.0"; subsequent years project positive growth (e.g., 2024: "6.3", 2025: "8.0").
  - Primary deficit that stabilizes the debt-to-GDP ratio (percent): series includes "3.9", "-1.8", "0.5", "4.4", "3.1", "2.7", "2.4", "2.3", "2.1", "1.6", "1.4", "0.9", average "2.4".

### Sensitivity analysis and stress tests — key findings
- Tables 3 and 4 and Figures 1–5 present multiple stress-test results and shock scenarios for 2020–30 for external PPG and public debt indicators.
- Bound tests include shocks to:
  - Real GDP growth (B1).
  - Primary balance (B2).
  - Exports (B3).
  - Other flows including official and private transfers and FDI (B4).
  - One-time 30 percent nominal depreciation (B5).
  - Combination of B1–B5 (B6).
- Tailored tests include combined contingent liabilities (C1); natural disasters, commodity prices, and market financing tests are listed as "n.a." where not applicable.
- Sample threshold and baseline comparisons (selected examples from tables and figures):
  - PV of debt-to-GDP threshold: "40" (table context).
  - Baseline PV of debt-to-GDP values and stress results show values above and below thresholds under different shocks (tables show numeric series for baseline and scenarios; bold entries indicate breaches of thresholds where applicable).
- Most extreme shocks (figure annotations):
  - Debt service-to-revenue ratio: "Most extreme shock is One-time depreciation."
  - PV of debt-to-exports ratio: "Most extreme shock is Exports."
  - PV of debt-to-GDP ratio: "Most extreme shock is Non-debt flows."
  - Debt service-to-exports ratio: "Most extreme shock is Exports."
- Stress-test assumptions for borrowing under shocks: "All the additional financing needs generated by the shocks under the stress tests are assumed to be covered by PPG external MLT debt in the external DSA." Default terms of marginal debt are based on baseline 10-year projections.

### Analytical diagnostics and realism tools
- Figure 3 and Figure 4 provide decomposition of drivers of debt dynamics and realism checks:
  - Drivers include primary deficit, nominal interest rate, real GDP growth, price and exchange rate changes, other debt-creating flows, and residuals.
  - Fiscal adjustment realism: projected 3-year adjustments and historical distributions for Fund-supported programs are depicted; fiscal multipliers shown (examples: Multiplier = "0.2", "0.4", "0.6", "0.8") in growth-path sensitivity charts.
  - Public and private investment rates and contributions to real GDP growth are included in realism diagnostics.

### Policy implications and priorities (as reflected in the text)
- Continue fiscal consolidation to reduce public debt "below the relevant benchmark."
- Implement the 2020–24 medium-term debt strategy to manage currency composition (increase foreign currency share to "50 percent in 2024"), lengthen maturities (average maturity target "7 years in 2024"), and rely on concessional and semi-concessional external financing alongside domestic issuances (1 to 10-year).
- Use reprofiling operations and concessional/semi-concessional financing to achieve objectives while monitoring debt-service and sustainability indicators under stress scenarios.

*Statement by Mr. Raghani, Executive Director for Togo and Mrs. Boukpessi, Advisor to the Executive Director, April 3, 2020.*

### Introduction

### Introduction

### Program performance
- Authorities request completion of the Sixth and final Review under the ECF arrangement and augmentation of access of 48.7 percent of Togo’s quota (SDR 71.67 million) to help meet urgent financing needs due to the COVID-19 pandemic.
- Over the 3-year program period, fiscal consolidation of 8.3 percentage points of GDP was achieved.
- All continuous and end-September 2019 quantitative performance criteria (QPCs) were met, including the floor on domestic primary balance which recorded a surplus of 1.2 percent of GDP (an overperformance of 1.7 percentage points of GDP).
- End-September 2019 indicative targets (ITs) on total fiscal revenue and non-accumulation of net domestic arrears were met; the IT on social spending was missed.
- Preliminary data indicate all fiscal ITs set for end-December 2019 were met including social spending, although the IT on the floor of total fiscal revenue was missed despite improved tax revenue collection.
- All five end-October 2019 structural benchmarks (SBs) were met, including revenue administration, program budgeting, and the public investment plan. The end-December SB on privatization of the two public banks was not completed; authorities expect launch of the final tender and submission of offers by shortlisted bidders once context improves.

### Recent economic developments and outlook
- Real GDP growth: estimated at 5.3 percent in 2019 from 4.9 percent in 2018.
- Headline inflation turned negative at end-2019.
- Current account deficit: 4.2 percent of GDP in 2019 (impacted by elevated imports for PND-related investments).
- Overall fiscal deficit: estimated at 1.2 percent of GDP at end-December 2019, compliant with WAEMU fiscal deficit criterion of 3 percent of GDP over the entire program period.
- Public debt-to-GDP ratio excluding SOEs: declined from 73.6 percent in 2018 to 68.7 percent in 2019.
- Public debt-to-GDP ratio including SOEs: declined from 76.2 percent in 2018 to 70.9 percent in 2019.
- COVID-19 impact (initial assessment): as of March 31, 2020, 34 cases and 1 fatality recorded; growth forecast for 2020 revised downward from 5.5 to 3.0 percent; fiscal deficit and balance of payments financing gap projected to expand significantly; more severe impact if COVID-19 spreads further.
- Balance of payments pressure due to COVID-19: expected to amount to CFAF 58 billion (1.7 percent of GDP), equivalent to about 48.7 percent of Togo’s quota.

### Measures to mitigate the impact of COVID-19
- Three-fold action plan: strengthen public health system, contain virus spread, and mitigate humanitarian and social effects.
  - Prevention: closure of land borders, enhanced airport and border controls, barriers and social distancing; mobility restrictions, temporary closure of schools and universities, temporary ban of religious, cultural and other public events.
  - Detection: tests and identification of potential COVID-19 cases.
  - Treatment: containment, dedicated hotels and hospitals, mobile clinics.
- Overall COVID-19 financing needs: estimated at about CFAF 70 billion (about $130 million or 2 percent of GDP).
- Discussions with development partners underway; about CFAF 7 billion from both the state and the World Bank already made available.
- 2020 fiscal framework widened by 1.7 percentage points of GDP to integrate COVID-19 spending needs (1.3 percent of GDP) and revenue losses (0.4 percent of GDP).

### Regional and banking sector responses
- BCEAO measures: increase in resources made available to banks and broadening of mechanisms to access Central Bank refinancing to limit adverse impact on banking system and financing of economic activity within WAEMU.
- Bank credit to the private sector in Togo: 4-percent increase in 2019 compared to the previous year.

### Building on hard-won fiscal achievements
- Authorities intend to reinforce fiscal sustainability by enhancing domestic revenue mobilization, rationalizing expenditures, and increasing social spending.
- Revenue-side measures:
  - Continue benefits of tax and customs merger under Office Togolais des Recettes.
  - Implement recommendations of the TADAT mission and Fund technical assistance.
  - New tax identification numbers, increased automatizations, tele-procedures, introduction of a new electronic payment system, and implementation of a 15-percent deposit on imports by inactive taxpayers.
  - Complete total dematerialization of customs declarations and supporting documents and improve customs valuation; streamline tax expenditures.
- Expenditure-side measures:
  - Reinforce expenditure chain and cash management through the Treasury Single Account (TSA).
  - Increase application of cost-benefit analysis for project selection.
  - Improve alignment of the public investment program with medium-term resources.
  - Transition to a complete program-based budgeting by 2021.
  - Follow through recommendations of the 2016 PIMA and 2019 follow-up and implement measures from the recent comprehensive review.

### Safeguarding debt sustainability
- Priority: bring total public debt below 70 percent of GDP starting in 2020 and below the benchmark for countries with medium debt carrying capacity of 55 percent of GDP beginning in 2022.
- Recent debt reprofiling operation endorsed by the African Trade Insurance Agency reduced the net present value of total public debt stock while preserving external debt risk rating.
- Measures being taken to address new risks from the operation: improved Medium-Term Debt Strategy to guide borrowing decisions and enhancement of debt management capacity and unit.

### Ensuring financial sector stability
- Authorities committed to:
  - Pursue privatization of the two public banks; prequalified bidders have received confidentiality agreements to access the data room and meet with bank management ahead of the final tendering process.
  - Reduce non-performing loans in collaboration with the WAEMU Banking Commission.
  - Ensure banks’ compliance with Basel II-III regulatory standards.
  - Strengthen banking oversight and regulation.

### Enhancing the business climate and governance
- Continued focus on reforms to improve the business climate; Togo ranked among the top-ten improvers in the World Bank Doing Business 2020 report and the top reformer in Sub-Saharan Africa.
- Future reform areas: land reforms, insolvency resolution, cross-border trade facilitation, and access to finance.
- Governance and anti-corruption measures:
  - Institutional reforms under HAPLUCIA (Haute Autorité de Prévention et de Lutte contre la Corruption et les Infractions Assimilées).
  - Finalization of legislation on (i) property and assets declaration of high-ranked officials; (ii) the fight against corruption; and (iii) civil servants’ code of conduct.
  - Improvements to the AML/CFT framework in line with WAEMU and FATF norms, considering recommendations of the recent multisectoral national risk assessment and the 2018 UN Counter-Terrorism Executive Directorate report.

### Conclusion and request
- The authorities have made significant progress under the ECF-supported program, enhancing macroeconomic stability and completing structural reforms.
- Immediate priority: respond to COVID-19 while preserving macroeconomic stability, addressing financial sector vulnerabilities, and promoting higher and more sustainable growth over the medium term.
- Authorities request Executive Directors’ support for completion of the Sixth and final review under the ECF arrangement and the augmentation of access to catalyze additional financing from development partners.

*Source: Introduction (1tgoea2020001 - Introduction)*

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_Source: https://www.imf.org/-/media/files/publications/cr/2020/english/1tgoea2020001.pdf_