## Djibouti: 2003 Article IV Consultation—Staff Report; and Public Information Notice on the Executive Board Discussion for Djibouti

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### Purpose and documents released
- Staff report for the 2003 Article IV consultation, based on discussions that ended on September 30, 2003; staff report completed on December 4, 2003.  
- Staff statement of January 7, 2004 updating information on recent developments.  
- Public Information Notice (PIN) summarizing Executive Board discussion on January 7, 2004.  
- Selected Issues Paper and Statistical Appendix noted as separately released.

### Summary of staff representative statement (January 7, 2004)
- Statement summarizes discussions on future Fund involvement in Djibouti held during a staff visit from December 7–14, 2003, and after the staff report was circulated to the Executive Board on December 5, 2003.  
- The statement does not change the thrust of the staff appraisal.

### Staff assessment and conditionality for future support
- Staff view: a period of decisive policy implementation is required before possibly entering into a new arrangement under the Poverty Reduction and Growth Facility (PRGF).  
- Staff noted that, provided donors continue to grant Djibouti nonmilitary budgetary aid in support of its economic reforms, there would not be a balance of payments financing need in 2004.

### Agreed transitional approach: Staff Monitored Program (SMP)
- Authorities agreed to move to a Staff Monitored Program (SMP) covering at least twelve months to:
  - establish a strong track record of policy reform; and
  - mobilize adequate external financial assistance.
- Under the SMP, authorities intend to complete the unfinished reform agenda of the previous PRGF arrangement, including:
  - measures to strengthen the fiscal position;
  - measures to increase competitiveness (such as privatization and adoption of new labor and investment codes).
- The SMP would also include additional measures to improve governance and transparency, including:
  - periodic publication of government accounts audit; and
  - reports on expenditures in priority social areas.
- The SMP would seek to strengthen social safety nets.

### Preconditions to finalize the SMP
- Staff would return to Djibouti to finalize discussions on a SMP after two conditions are fulfilled:
  1. adoption by the national assembly of a 2004 budget along the lines discussed with staff; and
  2. transmittal by the authorities to the staff of a draft Memorandum of Economic and Financial Policies (MEFP) that clearly incorporates measures and a timetable to complete the unfinished reform agenda of the previous PRGF.

### Status of 2004 budget and outstanding assessment items
- The 2004 budget was approved by the national assembly on December 29, 2003.  
- As of the statement, staff had not yet received all details of the approved budget to assess whether it fully reflects the December 2003 staff visit discussions, including:
  - achieving the objective of a 2.5 percent of GDP surplus in the domestic fiscal balance; and
  - the demobilization of 500 military at end-March 2004.

*International Monetary Fund. March 2004. IMF Country Report No. 04/73. Statement by the IMF Staff Representative, January 7, 2004.*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2004/_cr0473.pdf_