## Appendix I: Debt Management ## Source details **Canonical URL:** [Appendix I: Debt Management](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2011/_cr1128.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2011/_cr1128.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2011/_cr1128.pdf.json) --- ### Executive summary and key debt relief findings - In November 2008, the Boards of Executive Directors of IDA and the IMF agreed that the Republic of Togo had met the requirements for reaching the decision point under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative. - Amount of debt relief committed at the decision point: $270 million in end-2007 present value (PV) terms; calculated to reduce the NPV of eligible external debt to 250 percent of revenue at end-2007. Implied common reduction factor: 19 percent. - Following debt reconciliation for the completion point, PV of eligible external debt at end-2007 after traditional debt relief revised from $1,410.8 million to $1,422.8 million. - HIPC assistance in PV terms estimated at $282 million: $155 million delivered by multilateral creditors and $127 million by bilateral and commercial creditors. - Togo does not qualify for topping-up under the enhanced HIPC Initiative based on end-2009 debt data. - Creditors accounting for 98 percent of total HIPC eligible debt have given satisfactory assurances of participation. - MDRI: Debt relief would reduce nominal debt service by $749 million over a period of 39 years, covering almost all remaining debt service obligations to IDA and AfDF. - Total debt relief in PV terms provided through arrears clearance operations and debt service reduction before the completion point: $239 million. - Staff recommendation: Executive Directors of IDA and the IMF approve the completion point for Togo under the Enhanced HIPC Initiative. ### Debt sustainability projections and sensitivities - PV of debt-to-revenue ratio: 272.0 percent at end-2009; falls to 77.2 percent at end-2010 thanks to delivery of MDRI assistance. - PV of debt-to-revenue ratio subsequently projected to increase gradually to 114.6 percent at end-2029 due to new borrowing. - Future evolution sensitive to macroeconomic assumptions, particularly exports and terms of new external financing. - Baseline macroeconomic assumptions (Box 3 summary): - Real GDP growth projected to reach estimated potential of 4 percent by 2012. - Long-term inflation projected to remain stable at 2.5 percent. - Current account deficit roughly stable at around 6.7 percent of GDP. - Total government revenue projected to average around 18.5 percent of GDP. - External financing concessionality declines: average grant element of new external borrowing falls from 35 percent in 2010 to 22 percent at end of projection period. ### Completion point criteria and implementation status (information as of November 2, 2010) - Staffs judge that Togo has met the floating completion point triggers specified at decision point. Summary status for main triggers: - PRSP and Poverty Monitoring - Full PRSP approved by Council of Ministers on July 6, 2009. APR submitted to IDA and IMF staffs in October 2010. Status: Completed. - Macroeconomic stability - Maintain macroeconomic stability as shown by satisfactory performance under an ECF-supported program. Status: In compliance. - Public Financial Management - Adopt mechanism to track poverty-reducing expenditures and publish at least two quarterly reports: Status: Completed. - Appoint judges for Court of Accounts; submit draft Budget Execution Law and draft General Treasury Balance for at least one fiscal year: Status: Completed. - Adopt decree creating Procurement Regulatory Authority; publish monthly summaries of signed contracts for at least six months: Status: Completed. - Governance (phosphates sector transparency) - Regular public reporting of payments and revenues for the phosphates sector (EITI-related): Status: Completed. Togo became an EITI candidate in October 2010. - Debt management - Consolidate external and domestic debt data under single unit: Status: Completed. Public Debt Directorate (PDD) responsible. - Publish annual report on external and domestic public debt within six months after year-end for at least one year: Status: Completed (2008 and 2009 reports published). - Social sectors - Adopt medium-term National Health Development Plan and Health Sector Human Resources Development and Management Plan after costing: Status: Completed. - Start implementation of national education sector plan: train at least 500 new teachers and remedial training of at least 4,000 existing teachers: Status: Completed (511 new teachers; 4,909 remedial trainees). - DeMPA assessments: DeMPA mission late 2007 and follow-up July 2010; preliminary 2010 observations indicate improvements in completion point trigger–related areas and legal framework; further reforms needed. ### PRSP adoption, structure, monitoring, and implementation outcomes - PRSP milestones and structure: - Interim PRSP adopted March 2008; full PRSP approved July 6, 2009. - Four strategic pillars: (i) strengthening of governance; (ii) consolidation of bases for strong and sustained growth; (iii) development of human capital; (iv) reduction of regional imbalances and promotion of community development. - Cross-cutting themes: environment, HIV/AIDS, gender, human rights. - Assessment by IMF and IDA Boards and JSAN findings: - PRSP judged credible framework for poverty reduction (discussed Nov/Dec 2009). - Strengths: strong ownership, results-based framework, link to medium-term budget. - Issues: need for detailed implementation plans for critical aspects; risks include capacity constraints, political tensions, adverse shocks. - Monitoring, evaluation, statistical capacity: - Progress in operationalizing participatory M&E institutional framework. - Urgent needs: enhance availability of reliable statistics; improve information systems. - Constraints: lack of financial resources; administrative and technical capacity limits. - Implementation progress and outcomes (2009–10): - Staffs consider implementation satisfactory in 2009 and 2010. - APR prepared participatorily; APR and JSAN considered by IDA and IMF Boards with this document. - Institutional progress: Truth, Justice and Reconciliation Commission established; Constitutional Court strengthened; actions on agricultural development; SOE management improvements; banking sector restructuring. - Poverty-reducing spending has grown significantly under interim and complete PRSPs. - Remaining challenges: external environment, mobilizing external resources, inadequate administrative capacity. ### Macroeconomic outlook, growth, and fiscal stance (selected numeric projections) - Growth performance and projections: - Real GDP: 2.4 (2008 actual), 3.2 (2009 est.), 3.3 (2010 4th. Rev.), 3.4 (2011 proj. 4th. Rev.), 3.5 (2012 proj.), 3.7 (2011 proj.), 4.0 (potential) - Real GDP per capita: -0.1 (2008 actual), 0.7 (2009 est.), 0.7 (2010 4th. Rev.), 0.8 (2011 proj. 4th. Rev.), 1.0 (2012 proj.), 1.2 (2011 proj.), 1.4 (2012 proj.) - Consumer price index: 8.7 (2008 actual), 2.0 (2009 est.), 2.1 (2010 4th. Rev.), 2.2 (2011 proj. 4th. Rev.), 2.1 (2012 proj.), 2.0 (2011 proj.), 1.8 (2012 proj.) - Balance of payments and fiscal: - Current account balance (percent of GDP): -6.4 (2008), -7.1 (2009), -7.6 (2010 4th. Rev.), -7.7 (2011 proj. 4th. Rev.), -6.7 (2012 proj.) - Gross domestic investment (percent of GDP): 17.3 (2008), 18.0 (2009), 16.8 (2010 4th. Rev.), 16.7 (2011 proj. 4th. Rev.), 18.6 (2012 proj.) - Total revenue and grants (percent of GDP): 17.0 (2008), 18.5 (2009), 19.6 (2010 4th. Rev.), 19.6 (2011 proj. 4th. Rev.), 22.1 (2012 proj.) - Total expenditure and net lending (percent of GDP): 17.9 (2008), 21.3 (2009), 22.6 (2010 4th. Rev.), 22.4 (2011 proj. 4th. Rev.), 24.2 (2012 proj.) - GDP (CFAF billion): 1,417 (2008), 1,491 (2009), 1,558 (2010 4th. Rev.), 1,562 (2011 proj. 4th. Rev.), 1,646 (2012 proj.) ### Public Financial Management (PFM) reforms and completion point triggers - Required actions and achievements: - Mechanism to track poverty-reducing public expenditures established; quarterly reports and monthly Tableau de Bord since January 2009. - Court of Accounts: judges nominated July 2009; took office September 24, 2009; workspace, equipment, materials provided; 2007 and 2008 Budget Execution Laws transmitted. - Procurement: public procurement code adopted November 11, 2009; decree creating Procurement Regulatory Authority adopted December 30, 2009; managerial staff nominated March 2010; monthly summaries published since June 2009. - Reduction in number of public bank accounts from 966 to 256 between July 2009 and July 2010. - Independent audit of domestic arrears completed February 2009; more than half of validated claims cleared as of mid-2010. - Ongoing priorities (2010–12 Action Plan pending Council approval): - Prepare sectoral Medium Term Expenditure Frameworks. - Further simplify and shorten expenditure chain while strengthening controls. - Full roll out of SIGFiP including accounting module to all ministries, institutions, and regions. ### Social sectors: health and education triggers, costs, and outcomes - Poverty incidence: 62 percent (2006 Core Welfare Indicators Questionnaire). - Health sector: - National Health Development Plan estimated cost: approximately CFAF 317 billion. - Health Sector Human Resources Development and Management Plan estimated cost: approximately CFAF 10.2 billion. - Estimated less than 8,000 health professionals for population of 6.5 million; 80 percent concentrated in main cities. - First round of recruitment completed in 2009; second round planned for 2010 delayed for lack of financing. - Education sector: - Initial training of 511 new teachers completed July 2009–March 2010. - Remedial training of 4,909 teachers completed December 2009–August 2010. - In Education for All Project, 10,800 teachers expected to receive remedial training. - Abolition of school fees led to enrolment increases: pre-school +54 percent between 2008 and 2009; Grade 1 primary +27 percent between 2008 and 2009. Access rate to Grade 1: 107 percent in 2007 to 129 percent in 2009. - National Education Sector Plan adopted March 2010; objective: universal quality primary education by 2020. ### Updated debt relief analysis and creditor participation (decision point revisions) - End-2007 revisions: - Nominal stock of debt increased from $2,208.2 million to $2,217.5 million. - PV of debt after traditional debt relief revised from $1,410.8 million to $1,422.8 million. - PV of multilateral debt as of end-2007 decreased by $2.1 million (BOAD and IFAD corrections). - PV of Paris Club debt after traditional relief revised from $922.7 million to $917.1 million (decrease $5.6 million). - PV of stock owed to other official bilateral creditors increased from $66.1 million to $81.3 million (Kuwaiti loans). - Decision point database includes cancelled Chinese claims of $20.35 million (equivalent to $18.5 million in PV after traditional debt relief); reinstated to account for creditor’s debt relief efforts made before decision point. - Commercial debt stock at end-2007 increased by $0.6 million. - Fiscal revenue estimate for 2007 unchanged at $456 million. - Exports 2005–07 average revised from $947 million to $778 million (transit trade removed). ### Revision of HIPC assistance as of decision point and creditor participation - Required HIPC assistance in end-2007 PV terms revised upward from $270 million to $282 million. - Common reduction factor marginally increased from 19 percent to 20 percent. - At completion point, financing assurances obtained from creditors accounting for 98 percent of PV of HIPC assistance estimated at decision point. - Multilateral creditors account for 55 percent of total HIPC assistance; AfDF, EIB, IDA, IsDB and OFID (88 percent of multilateral HIPC assistance) fully delivered their share through arrears clearance and concessional rescheduling. - Paris Club creditors account for 36 percent of total HIPC assistance; all Paris Club creditors have confirmed participation. - China delivered relief through 2007 debt cancellation; Kuwait through 2009 loan rescheduling. - Authorities pursuing agreements with Saudi Arabia and commercial creditors. - Adjustment note: Amount of adjustment is $12 million, larger than $11.41 million (1 percent of targeted PV of debt relief). ### Multilateral creditors: revised enhanced HIPC assistance and modalities (selected exact figures) - Revised enhanced HIPC assistance from multilateral creditors: $155.2 million in end-2007 PV terms. - IDA: - Executive Directors approved provision of full amount through a Development Policy Grant on May 29, 2008. - Grant used to repay a bridge loan that cleared Togo’s arrears to IDA, amounting to $156 million in nominal terms through end-2008. - IMF: - IMF assistance amounts to SDR 0.22 million in NPV terms ($0.32 million). - SDR 0.08 million approved as interim assistance; remaining SDR 0.14 million to be delivered at completion point through stock-of-debt operation. - AfDB Group: - Fully provided share through clearance of arrears amounting to $24 million; AfDF’s Fragile States Facility financed 99 percent of cost. ### Bilateral, Paris Club, and commercial creditors (status and estimates) - Paris Club: - Estimated share of enhanced HIPC assistance: $101 million in end-2007 PV terms. - Interim assistance delivered through Cologne flow rescheduling in June 2008; participating creditors ready to provide full share at completion point through stock-of-debt reduction. - Some Paris Club creditors indicated additional relief beyond HIPC estimated at about $372 million in end-2009 PV terms. - Non-Paris Club bilateral creditors: - PV of relief at end-2007 estimated at $95.3 million. - Major creditors: China (4 percent of HIPC-eligible debt), Kuwait (2.8 percent), Saudi Arabia (0.1 percent). - China cancelled claims nominal $20.35 million (July 2007); Kuwait reached agreement translating into full delivery in May 2009. - Commercial creditors: - Negotiations ongoing; some SOE creditor statements allow inclusion of claims. - Cotecna settled via domestic arrears clearance with 20 percent discount; agreed in principle to deliver remaining share. - CBAO Senegal (0.6 percent of nominal stock at decision point) repaid in full automatically through BCEAO. ### Debt stock and composition (end-2009 DRA update; selected exact shares) - Nominal stock external debt at end-2009: $1,748.2 million. - Multilateral creditors: $998.6 million (57 percent of total debt). IDA: 33.5 percent of total debt. IMF: 5.2 percent. AfDB Group: 7.2 percent. - Paris Club creditors: 34.7 percent of total outstanding nominal debt at end-2009. - Non-Paris Club bilateral creditors: 6.8 percent of total debt (main creditors: China and Kuwait). ### Consideration for exceptional topping-up assistance - Togo does not qualify for topping-up. - PV of debt-to-revenue ratio at end-2009 after full delivery of HIPC assistance committed at decision point: 229.2 percent. - PV of debt-to-revenue ratio after full delivery of additional bilateral debt relief beyond HIPC: 158.5 percent. - Both figures below topping-up threshold of 250 percent. - PV ratio at end-2009 is 6.4 percentage points above projection at time of decision point. - Decomposition of factors affecting PV debt-to-revenue ratio at end-2009: - Unanticipated change in the ratio: 6.4 percentage points (100.0 percent of total change). - Changes in parameters: 22.7 percentage points (355.6 percent), of which discount rates: 19.1 percentage points (299.1 percent), exchange rates: 3.6 percentage points (56.5 percent). - Unanticipated new borrowing: -13.5 percentage points (-211.3 percent), of which higher than expected disbursements: -15.7 percentage points (-245.5 percent), lower concessionality of loans: 2.2 percentage points (34.2 percent). - Unanticipated changes in revenue: 2.8 percentage points (43.5 percent). - Changes in HIPC relief and other factors: -5.6 percentage points (-87.8 percent). - PV of debt-to-revenue ratio after full delivery of HIPC assistance and bilateral debt relief beyond HIPC (actual): 158.5. ### Creditor participation under MDRI (conditional on completion point) - IDA (MDRI): - IDA would provide debt stock relief amounting to $564 million in nominal terms ($407 million in end-2009 PV terms). - MDRI relief applies to credits disbursed as of December 31, 2003 and still outstanding at end-2010. - MDRI debt relief from IDA implies average debt service savings of $21 million per year over next 29 years. - AfDF (MDRI): - AfDF MDRI relief amounting to $123 million in nominal terms ($81 million in end-2009 PV terms). - Calculated from debt disbursed as of December 31, 2004 and still outstanding at completion point. - IMF (MDRI): - No MDRI relief from IMF: only loan outstanding at end-2004 fully repaid in January 2008. Presently outstanding ECF loan disbursed after end-2004 not eligible. ### Debt sustainability outlook 2010–30 (baseline, projections, and scenarios) - Baseline (after full delivery of HIPC, additional bilateral assistance beyond HIPC, and MDRI): - PV of debt-to-revenue ratio falls from 272.0 percent at end-2009 to 77.2 percent at end-2010 (scenario VI, Table A7). - Projected to increase gradually to 114.6 percent at end-2029, mainly due to new borrowing. - PV of debt-to-GDP ratio: decline from 46.1 percent at end-2009 to an average of 16.8 percent in 2009–19 and 18.5 percent in 2020–29. - PV of debt-to-exports ratio: decline from 142.5 percent at end-2009 to an average of 53 percent in 2009–19 and 64 percent in 2020–29. - Debt service ratios (after HIPC, beyond-HIPC assistance and MDRI): - Debt service-to-revenue ratio: 11.9 percent in 2010; falls to 5.1 percent in 2012 (scenario VI); later peaks around 7.9–7.6 percent in 2015–17; from 2020 onwards rises steadily and gradually due to projected new borrowing. - Debt service-to-exports ratio: projected to fall from 6.0 percent to an average of 3.9 percent in 2010–19 and 3.0 percent in 2020–29. ### Sensitivity analysis: alternative scenarios and implications (selected outcomes) - Alternative Scenario 1: Permanently lower GDP growth (real GDP growth reduced by 2.5 percentage points relative to baseline) - PV of debt-to-revenue ratio would deteriorate up to 204.0 percent in 2029 (baseline 114.6 percent in 2029). - Debt service-to-revenue ratio would reach 11.9 percent in 2029 (baseline 6.7 percent). - Alternative Scenario 2: Permanently lower export growth (exports grow 2.5 percentage points less than baseline) - PV of debt-to-revenue ratio would deteriorate to 131.4 percent in 2029. - Alternative Scenario 3: Lower average concessionality on new borrowing (average concessionality falls from 27 percent to 14 percent) - PV of debt-to-revenue ratio would be 156.1 percent in 2029. - Policy implications from sensitivity analysis: - Need for strong efforts to diversify the economy and pursue prudent debt management to maintain low debt vulnerabilities. - Rely on highly concessional external financing where possible; limit non-concessional financing to high-return investment within clear pre-defined limits. - Target public spending and structural reforms to address bottlenecks hampering private investment, including in the export sector. ### LIC-DSA overview and public sector debt findings (Appendix II summary) - LIC-DSA uses reconciled completion point DRA database; methodological differences from DRA include discount rate (LIC-DSA fixed at 4 percent) and exchange rate and exports treatment. - Country policy metric: average World Bank CPIA for 2007–09 = 2.7 ("weak performer"); indicative thresholds: NPV debt-to-GDP 30 percent; debt-to-exports 100 percent; NPV debt-to-revenue 200 percent; debt service-to-exports 15 percent; debt service-to-revenue 25 percent. - Nominal debt stock: fell from $2.2 billion end-2007 to $1.7 billion end-2009; reaching completion point end-2010 will decrease nominal stock below $0.4 billion. - PV of PPG external debt at end-2010 (assuming full delivery of HIPC, MDRI and beyond HIPC assistance): $392 million; creditor composition: around 74 percent multilateral; 26 percent bilateral and commercial. - LIC-DSA baseline: PV of PPG external debt equals 12.8 percent of GDP in 2010 and remains below 30 percent threshold through projection period; PV ratios increase toward end of projection period due to declining grant financing and concessionality. - Vulnerabilities: under alternative stress tests and shocks thresholds could be breached in latter years (e.g., breach of PV external debt to GDP threshold in 2024 under most extreme shock; breaches of PV debt-to-exports in 2026 and 2030 under different shocks). - Public sector debt: domestic public debt large; PV of total public debt projected to decrease until 2018 then pick up, averaging around 25 percent of GDP over period; vulnerability to growth shocks noted. - Overall LIC-DSA assessment: Togo at moderate risk of debt distress. Policy recommendation: prudent approach to new borrowing as Togo exits HIPC. ### Institutional findings, PDD responsibilities, capacity, and recommended actions - Public Debt Directorate (PDD) is main unit responsible for debt management; maintains external debt data in DMFAS, updates domestic debt data, and publishes debt reports (end-2008, end-2009, mid-2010). - Identified weaknesses: - Differences in composition versus HIPC reconciliation; gaps in communication with project-executing departments; lack of regular debt reconciliation with creditors. - PDD lacks comprehensive up-to-date framework for external loans to SOEs; has begun setting up SOE reporting system. - Staffing: no job descriptions for key positions; no formal training plan; training needs identified (debt management, loan conventions, risk analysis, debt reporting, negotiations, DSA, English). - Ongoing technical assistance: DeMPA, IMF AFRITAC-West assistance (3–4 missions a year); continued assistance focused on capacity for sustainable debt management post-HIPC. - Recommended targets and actions going forward: - Formalize functions and responsibilities of PDD. - Improve debt management strategy: include all debt types, expand analytical content. - Improve coordination and information flows with departments and line ministries. - Consolidate remaining spreadsheet-held debt data into DMFAS (Treasury bills, SOE debt). - Maintain quarterly publication frequency of debt reports and expand analysis (debt by currency and maturity; rudimentary risk analysis). - Increase communication with donors for frequent debt data reconciliations. ### Conclusions and staff recommendations - Staff assessment: - Satisfactory progress in implementing reforms for reaching completion point; all floating triggers fully implemented. - First PRSP approved July 6, 2009; implementation satisfactory per JSAN on first APR. - Fifth review under ECF to be considered by IMF Executive Board on December 10, 2010, together with completion point document and JSAN; IMF staff to recommend completion of fifth ECF review based on broadly satisfactory 2010 implementation and appropriate 2011 policy framework. - Debt sustainability analysis demonstrates substantial reduction in external public debt and improvement in indicators after full delivery of HIPC, MDRI and additional assistance. - PV of debt-to-revenue ratio projected to fall from 272.0 percent at end-2009 to 77.2 percent at end-2010 after delivery of MDRI and beyond-HIPC assistance; projected to remain flat until 2016 then increase gradually due to new borrowing. - Maintaining moderate debt vulnerabilities depends on: - Sound fiscal policies, prudent debt strategy, sustainable fiscal balances. - Promoting economic growth and exports via business climate and sectoral reforms. - Vigilance against shocks, notably lower growth and lower concessionality of new financing. - Staff recommendation: Executive Directors of IDA and the IMF determine that Togo has reached the completion point under the Enhanced HIPC Initiative. *IMF/IDA staff Completion Point Document (information as of November 2, 2010).* ### Appendix I: Debt Management ............................................................................................ ### Appendix I: Debt Management ### Executive summary and key debt relief findings - In November 2008, the Boards of Executive Directors of IDA and the IMF agreed that the Republic of Togo had met the requirements for reaching the decision point under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative. - The amount of debt relief committed at the decision point was $270 million in end-2007 present value (PV) terms, calculated to reduce the NPV of eligible external debt to 250 percent of revenue at end-2007. This implied a common reduction factor of 19 percent. - As a result of the debt reconciliation exercise for the completion point, the present value (PV) of eligible external debt at end-2007 after traditional debt relief has been revised from $1,410.8 million to $1,422.8 million. - The HIPC assistance in PV terms is estimated at $282 million, of which $155 million would be delivered by multilateral creditors and $127 million by bilateral and commercial creditors. Togo does not qualify for topping-up under the enhanced HIPC Initiative based on end-2009 debt data. - Creditors accounting for 98 percent of total HIPC eligible debt have given satisfactory assurances of their participation in the enhanced HIPC Initiative. Nearly all multilateral creditors and all Paris Club creditors have agreed to participate. - Debt relief under the Multilateral Debt Relief Initiative (MDRI) would reduce nominal debt service by $749 million over a period of 39 years, covering almost all remaining debt service obligations to IDA and the African Development Fund (AfDF). - Total debt relief in PV terms provided through arrears clearance operations and debt service reduction in the period before the completion point amounts to $239 million. - Staffs recommend that the Executive Directors of IDA and the IMF approve the completion point for Togo under the Enhanced HIPC Initiative. ### Debt sustainability projections and sensitivities - The PV of debt-to-revenue ratio would fall from 272.0 percent at end-2009 to 77.2 percent at end-2010 thanks to the delivery of MDRI assistance. - Subsequently, the PV of debt-to-revenue ratio is expected to increase gradually to 114.6 percent at end-2029 due to new borrowing. - The future evolution of these indicators will be sensitive to the macroeconomic assumptions, particularly exports and the terms of new external financing. ### Completion point criteria and implementation status - The staffs of IDA and the IMF judge that Togo has met the triggers for reaching the completion point. The decision point had specified a set of floating completion point triggers; the main criteria and their implementation status (information as of November 2, 2010) are summarized below: - PRSP and Poverty Monitoring - Prepare a full PRSP through a participatory process and implement satisfactorily its recommended actions for at least one year, as shown by an Annual Progress Report (APR) submitted to IDA and the IMF. - Status: Completed. The Full PRSP was approved by the Council of Ministers on July 6, 2009. Authorities submitted the APR to IDA and IMF staffs in October 2010. A workshop to determine monitoring indicators was held in Lomé on April 2010. No further action required. IDA and IMF staffs will issue a JSAN on the document in November 2010. - Macroeconomic stability - Maintain macroeconomic stability as shown by satisfactory performance under an ECF-supported program. - Status: In compliance. On track for successful completion of fifth ECF review. The government is committed to maintaining macroeconomic stability and fully implementing ECF-related macro-critical reforms. - Public Financial Management - Adopt a mechanism to track public expenditures for poverty reduction on the basis of a functional expenditure classification and publish at least two quarterly reports on these expenditures covering a period of at least two consecutive quarters preceding the completion point. - Status: Completed. A mechanism has been adopted; monthly tables of fiscal operations have been regularly elaborated since January 2009. Quarterly expenditure reports for 2009 and 2010 were published on the SP-PRPF website. No further action required. - Appoint the judges for the Court of Accounts and provide work space, equipment, materials; submit draft Budget Execution Law and draft General Treasury Balance to the Court of Accounts and Parliament for at least one fiscal year preceding the completion point. - Status: Completed. Judges were nominated in July 2009 and took office on September 24, 2009. Treasury Balances and the Budget Execution Laws for 2007 and 2008 were transmitted to the Court of Accounts for review and to the Parliament for information. No further action required. - Adopt a decree creating the Procurement Regulatory Authority in conformity with the WAEMU Procurement Directives; nominate managerial staff; provide budget; publish monthly summaries of signed contracts (including sole source contracts and public concessions) for at least six months immediately preceding the completion point. - Status: Completed. Public procurement code adopted by the National Assembly on November 11, 2009. Decree creating the public procurement authority adopted by the Council of Ministers on December 30, 2009. Managerial staff nominated in March 2010. Monthly summaries published since June 2009 on the SP-PRPF website and in the Chamber of Commerce newsletter. No further action required. - Governance - Implement regular public reporting of payments to, and revenues received by, the government for the phosphates sector in line with this aspect of the EITI criteria, with a recent annual report during at least the year immediately preceding the year in which the completion point is reached. - Status: Completed. Reports auditing payments to, and revenues received by, the government for the phosphates sector for 2008 and 2009 have been prepared and are published on the SP-PRPF website. No further action required. - Debt management - Consolidate external and domestic debt data under a single unit charged with all public debt management tasks. - Status: Completed. The Public Debt Directorate is responsible for these tasks. No further action required. - Publish an annual report on a government website giving accurate and complete data on external and domestic public debt, including information on debt stocks, actual debt service, and new loans within six months after the end of the year, for at least one year immediately preceding the completion point. - Status: Completed. The report for 2008 has been published on the SP-PRPF website (www.togoreforme.com). The report for 2009 was completed in March 2010 and published on the website. No further action required. - Social sectors - Adopt the medium-term National Health Development Plan and the medium-term Health Sector Human Resources Development and Management Plan after costing of the plans has been completed. - Status: Completed. Both plans were adopted by the Council of Ministers in July 2009 and include detailed costing. No further action required. - Start implementation of the national education sector plan by training at least 500 new teachers and conducting remedial training of at least 4,000 existing teachers. - Status: Completed. Initial training of 511 new teachers was completed between July 2009 and March 2010, and remedial training of 4,909 teachers was completed between December 2009 and August 2010. No further action required. ### Institutional and procedural notes - At the decision point, Boards agreed to provide Togo with relief through arrears clearance and interim debt relief until Togo reached the completion point. Relief through concessional arrears clearance and loan rescheduling was granted by AfDF, EIB, IsDB and OFID. Paris Club creditors provided debt relief through flow rescheduling on Cologne terms. - Executive Directors had determined that the floating completion point would be reached when the triggers in Box 2 of the Decision Point Document had been met. This paper assesses Togo’s performance in reaching the completion point and provides an updated debt relief analysis (DRA), including the status of creditor participation, and delivery of debt relief under the Enhanced HIPC and MDRI Initiatives. *IMF/IDA staff Completion Point Document (information as of November 2, 2010).* ### 5. In July 2009, Togo adopted its first full PRSP, covering the period 2009–11. The ### 5. In July 2009, Togo adopted its first full PRSP, covering the period 2009–11. ### PRSP adoption, structure, and cross-cutting themes - The PRSP was prepared through an extensive participatory process involving civil society, the private sector, development partners, and communities representing the country’s different regions. - An interim poverty reduction strategy document was adopted in March 2008 and served as a basis for re-engagement with the international community. - The full PRSP was approved by the Council of Ministers on July 6, 2009. - The PRSP is based on four strategic pillars: - (i) strengthening of governance; - (ii) consolidation of the bases for strong and sustained growth; - (iii) development of human capital; - (iv) reduction of regional imbalances and promotion of community development. - The PRSP also integrates cross-cutting themes related to the environment, HIV/AIDS, gender and human rights. ### Assessment by IMF and IDA Boards and JSAN findings - The Boards of the IMF and IDA concluded that the PRSP provided a credible framework for poverty reduction (discussed in November and December 2009). - Strengths highlighted: - strong ownership from a broad participatory process; - use of a results-based framework; - clear and consistent link between the reform agenda and the medium-term budget at the aggregate level. - Issues for further attention noted in the JSAN: - need for a detailed implementation plan for some critical aspects of the growth and poverty reduction agenda; - risks to implementation including capacity constraints, political tensions, and adverse economic and natural disaster shocks. ### Monitoring, evaluation, and statistical capacity - Progress made in operationalizing institutional framework for participatory monitoring and evaluation of PRS implementation. - Urgent needs identified: - enhance availability of reliable up-to-date statistics; - improve information systems as planned under the PRSP and other strategy documents. - Constraints causing delays: - lack of financial resources; - administrative and technical capacity constraints. - Government recognizes need to: - implement monitoring and evaluation units in all line ministries; - create sectoral committees linked to a central coordinating structure for effective tracking of PRSP implementation. ### Implementation progress and outcomes (2009–10) - Staffs consider PRSP implementation satisfactory in 2009 and 2010. - The first Annual Progress Report (APR) was prepared through a participatory process; APR and corresponding JSAN considered by IDA and IMF Boards with this document. - APR highlights progress in political and economic governance and public financial management. - Specific actions and institutional progress in 2009–10: - establishment of a Truth, Justice and Reconciliation Commission; - strengthening of democratic institutions such as the Constitutional Court ahead of March 2010 presidential elections; - actions to promote agricultural development; - enhanced management of state-owned enterprises (SOEs) in natural resource extraction sectors; - restructuring of the banking sector. - Conclusion: PRSP implementation and monitoring were satisfactory; poverty-reducing spending has grown significantly under the interim and complete PRSPs (see Figure 1 in source). - Remaining challenges: - impact of changing international environment; - difficulty mobilizing external resources to finance key activities; - inadequate administrative capacity. - Policies related to HIPC completion point triggers reviewed elsewhere in Section II. ### Macroeconomic stability and outlook - Macroeconomic stability maintained since the decision point in November 2008; outlook for 2011 and 2012 described as favorable. - Government maintained a prudent fiscal stance anchored by targets on the domestic primary balance despite adverse external and sensitive political environment. - Solid implementation of the ECF-supported program contributed to improving confidence and stabilizing political and economic situation. - Banking sector rehabilitation improved confidence, leading to growth in deposits and credit to the private sector since Q2 2009. - After a short-lived surge in prices linked to global food and oil prices, consumer price index inflation dropped sharply and stabilized around 2 percent. ### Growth performance, drivers, and projections - Acceleration of growth initially envisaged in the PRSP did not fully materialize, largely due to exogenous shocks. - Growth details and projections (from Table 2 and narrative): - Economic growth in 2008 was depressed by flood damage and surges in international oil and food prices. - Growth is estimated to have exceeded 3 percent in 2009 and 2010. - Projected increase to 3.7 percent in 2011. - Estimated potential growth of 4 percent expected to be reached only in 2012. - Over 2009–12, real GDP per capita growth is projected to be 0.8 percent on average. - Main drivers of growth in 2009–12: agricultural sector (especially food production), secondary sector (in particular, clinker and cement), construction and public works linked to increased public investment. - External pressures: - the global recession increased balance of payments pressures with current account deficits averaging about 7½ percent of GDP in 2009 and 2010 and projected to remain high through 2012; - falls in remittances inflows and foreign direct investment; - moderate impact on export growth while import growth was sustained partly because of countercyclical fiscal policy. ### Fiscal stance and public investment - Fiscal performance in 2009 and 2010 described as satisfactory. - Fiscal stance provided some stimulus to the economy for social and countercyclical reasons and to address post-domestic crisis infrastructure needs. - Implementation of fiscal program broadly on target over 2009–10 despite modest slippages: - missed fiscal balance and domestic financing performance criteria for end-2009 by 0.2 percent and 0.7 percent of GDP, respectively. - 2010 budget framework tightened compared to previous plans to offset slippages. - Macroeconomic framework for 2011 considered appropriate: - domestically financed investment spending projected to rise to 5.0 percent of GDP from 3.3 percent in 2010 to reduce deficit in basic infrastructure. - increase to be financed by a strong improvement in revenue mobilization and the sale of a third mobile telephone license; current spending to remain stable as proportion of GDP. - financing equal to 0.3 percent of GDP still needs to be identified; authorities prepared to cut spending if adequate financing not forthcoming. - Staffs consider Togo fully implemented the trigger on maintenance of macroeconomic stability as evidenced by broadly satisfactory implementation of the ECF-supported program. - All quantitative targets through June 2010 were achieved; good progress made on structural reforms under the ECF-supported program. ### Select numeric indicators (selected entries from Table 2) - Real GDP: 2.4 (2008 actual), 3.2 (2009 est.), 3.3 (2010 4th. Rev.), 3.4 (2011 proj. 4th. Rev.), 3.5 (2012 proj.), 3.7 (2011 proj.), 4.0 (potential) - Real GDP per capita: -0.1 (2008 actual), 0.7 (2009 est.), 0.7 (2010 4th. Rev.), 0.8 (2011 proj. 4th. Rev.), 1.0 (2012 proj.), 1.2 (2011 proj.), 1.4 (2012 proj.) - Consumer price index: 8.7 (2008 actual), 2.0 (2009 est.), 2.1 (2010 4th. Rev.), 2.2 (2011 proj. 4th. Rev.), 2.1 (2012 proj.), 2.0 (2011 proj.), 1.8 (2012 proj.) - GDP (CFAF billion): 1,417 (2008), 1,491 (2009), 1,558 (2010 4th. Rev.), 1,562 (2011 proj. 4th. Rev.), 1,646 (2012 proj.), 1,656 (2011 proj.), 1,754 (2012 proj.) - Current account balance (percent of GDP): -6.4 (2008), -7.1 (2009), -7.6 (2010 4th. Rev.), -7.7 (2011 proj. 4th. Rev.), -6.7 (2012 proj.), -7.4 (2011 proj.), -6.9 (2012 proj.) - Gross domestic investment (percent of GDP): 17.3 (2008), 18.0 (2009), 16.8 (2010 4th. Rev.), 16.7 (2011 proj. 4th. Rev.), 18.6 (2012 proj.), 20.2 (2011 proj.), 20.5 (2012 proj.) - Total revenue and grants (percent of GDP): 17.0 (2008), 18.5 (2009), 19.6 (2010 4th. Rev.), 19.6 (2011 proj. 4th. Rev.), 22.1 (2012 proj.), 22.6 (2011 proj.), 22.7 (2012 proj.) - Total expenditure and net lending (percent of GDP): 17.9 (2008), 21.3 (2009), 22.6 (2010 4th. Rev.), 22.4 (2011 proj. 4th. Rev.), 24.2 (2012 proj.), 25.3 (2011 proj.), 25.1 (2012 proj.) - External public debt (percent of GDP): 60.9 (2008), 51.8 (2009), 14.3 (2010 4th. Rev.), 14.6 (2011 proj. 4th. Rev.), 15.7 (2012 proj.), 15.1 (2011 proj.), 15.6 (2012 proj.) ### Public Financial Management (PFM) reforms and HIPC completion point triggers - Completion point triggers required the Togolese authorities to: - adopt a mechanism to track public expenditures for poverty reduction on the basis of a functional expenditure classification and publish at least two quarterly reports on these expenditures covering at least two consecutive quarters preceding the completion point; - appoint judges for the Court of Accounts (Cour des Comptes), provide work space, equipment, and materials; and submit the draft Budget Execution law and draft General Treasury Balance to the Court of Accounts and Parliament for at least one fiscal year preceding the completion point; - adopt a decree creating the Procurement Regulatory Authority in conformity with the WAEMU Procurement Directives, nominate its managerial staff, provide an adequate budget; and publish monthly summaries of all signed contracts, including sole source contracts and public concessions, for at least six months immediately preceding the completion point. - Achievements: - mechanism to track poverty-reducing public expenditures established and reporting published; - monthly tables of fiscal operations (Tableau de Bord) elaborated regularly since January 2009; - TOFE and budget execution reports published on the website of the Permanent Secretariat for the Monitoring of Reforms (SP-PRPF, www.togoreforme.com); - budget office and sectoral ministry staff trained to track poverty-reducing expenditures based on functional classification despite capacity constraints; - Court of Accounts operational since Q4 2009; judges nominated in July 2009 and took office in September 2009; Court received space, equipment, and materials; 2010 budget and 2011 draft budget allocate resources to Court of Accounts; - treasury accounts and drafts of the Budget Execution Laws for 2007 and 2008 transmitted to the Court of Accounts and Parliament for review/information. - Constraints: - training for judges expected in 2010 postponed to 2011 due to lack of financing. ### Box 1 — Recent PFM reform highlights (summary) - Diagnostic studies: two PEMFARs (2006 and 2009) and a PEFA assessment (2008) undertaken. - Institutional and procedural reforms: - unified and strengthened institutional framework for budget preparation; more time for ministries to prepare 2011 budget proposals; - January 2009 adoption of budget nomenclature based on WAEMU recommendations; - introduction in 2009 of SIGFiP on pilot basis at central level and five regional Treasury offices; - rationalization and simplification of the expenditure chain: removal of Finance Directorate’s redundant control on commitments; increase of Financial Control staff from 20 to 54; - improved expenditure tracking including poverty-reducing spending; - strengthened procurement authority and procedures; - establishment of Court of Accounts and appointment of 27 judges; - reduction in number of bank accounts held by public administration entities from 966 to 256 between July 2009 and July 2010; - monthly treasury plan accompanied the 2010 budget to the National Assembly; - independent audit of domestic arrears completed February 2009; strategy adopted to clear validated arrears; more than half of validated claims cleared as of mid-2010; - strengthened debt management; - improved public accounting and reporting: budget execution laws and monthly reports prepared regularly; 2007 and 2008 Budget Execution Laws transmitted to Court of Accounts and Parliament. - Ongoing priorities (2010–12 Action Plan awaiting final Council of Ministers approval): - prepare sectoral Medium Term Expenditure Frameworks by all line ministries as building blocks of the Medium Term Budget Framework; - further simplify and shorten the expenditure chain while strengthening internal and external control capacity; - full roll out of SIGFiP in all functionalities, including accounting module, to all ministries, institutions, and regions to improve coordination and better track priority spending. *Italic: IMF staff report text as provided in the source content unit.* ### 18. The public procurement code in conformity with the WAEMU Procurement ### _cr1128 - 18. The public procurement code in conformity with the WAEMU Procurement ### Public procurement and institutional setup - The public procurement code in conformity with the WAEMU Procurement Directives was adopted by the National Assembly in November 2009. - The Procurement Regulatory Authority and the National Directorate for the Audit of Public Procurement were established in December 2009. - Managerial staffs of these structures have been nominated and a functional budget structure allocated. - Summaries of procurement contracts, including sole source contracts, have been published since June 2009 on a monthly basis on the Chamber of Commerce newsletter and on the SP-PRPF website (www.togoreforme.com). - A dedicated journal for procurement is under preparation and a first issue is expected this calendar year. - A dedicated website is also being prepared and expected to be operational before end December 2010. - The staffs of IDA and the IMF consider that Togo has fully implemented the triggers on public financial management. ### Governance and transparency in the phosphates sector - Since the decision point in November 2008, substantial progress has been achieved in governance to increase transparency in the phosphate industry. - Completion point trigger required regular public reporting of payments to, and revenues received by, the government for the phosphates sector in line with this aspect of the EITI criteria, with a recent annual report during at least the year immediately preceding the year in which the completion point is reached. - Final reports on the collection and reconciliation of the sector flows for 2008 and 2009 have been prepared and published on the SP-PRPF website. - Togo became an EITI candidate in October 2010. - EITI implementation activities are documented in the national work plan discussed and agreed by stakeholders. - An audit exercise published 2008 and 2009 payments and revenues as an introduction to the EITI program. - An external financial and strategic audit of the sector was concluded in September 2009. - Based on that report, the government adopted on March 30, 2010 a strategy for the long-term development of the sector, which could include the participation of a strategic partner in the future. - In light of these actions, staffs consider that the trigger on governance has been fully implemented. ### Debt management: consolidation and reporting - First debt management trigger: government to consolidate external and domestic debt data under a single unit charged with all public debt management tasks. - The Public Debt Directorate (PDD) keeps debt records of the entire stock of the public debt: external debt, Treasury bonds and bills, advances from the central bank and arrears to domestic suppliers. - External debt, Treasury bonds and advances from the central bank are maintained in the DMFAS debt management system. - PDD responsibilities: - Responsible for making payments on external debt. - Updates domestic debt data on the scheduled repayment date for domestic securities (which are paid automatically from the central bank's accounts). - Maintains other domestic debt data in separate spreadsheet files, including Treasury bills and data on domestic arrears to suppliers, social funds and banks. - Treasury is responsible for repaying domestic arrears and informs the PDD monthly of arrears repaid, after which the PDD updates the spreadsheet file. - PDD maintains data on external loans to SOEs (not formally required by the trigger) but lacks a comprehensive and up-to-date framework; PDD has begun setting up a reporting system to track debt service payments, disbursement, and new borrowing by SOEs. ### Debt management: publication and data quality - Second trigger: government to publish an annual report providing accurate and complete data on external and domestic public debt. - The PDD has published reports on the total outstanding external and domestic debt as of end-2008, end-2009 and mid-2010. - These reports record: - External debt (outstanding, disbursements, new loans agreements, and actual and projected debt service). - Domestic securities and advances from the central bank (outstanding and debt service projections). - Other domestic debt (outstanding and arrears). - Long-run projections of key debt ratios. - The PDD plans to increase the frequency of this publication to quarterly. - Data quality notes: - Data is generally accurate and complete, but with some weaknesses. - Total external stock of debt at end-2009 published in the March 2010 report is close to the reconciled debt stock used in this document, but there are notable differences in composition across multilateral, bilateral and commercial creditors compared with the HIPC reconciliation. - Differences exist in debt service projections, especially debt service to the Paris Club. - Causes: lack of communication between project-executing departments and the PDD (leading to underestimation of disbursements and therefore debt outstanding) and lack of regular debt reconciliation between PDD and creditors. - These weaknesses stem from administrative capacity constraints and the newness of procedures. - Staffs expect continued strengthening of debt data and reporting given authorities’ commitment and ongoing technical assistance. - IDA and IMF staffs conclude that both triggers on debt management have been fully implemented. ### DeMPA assessments (Box 2) - Togo conducted a Debt Management Performance Assessment (DeMPA) mission in late 2007 and a follow-up DeMPA mission in July 2010. - DeMPAs assess debt management performance through a set of 15 indicators covering debt management functions. - Preliminary observations from the 2010 assessment indicate improvements in: - Completion point trigger–related areas. - High-level legal framework (including creation of a National Public Debt Committee as required by the WAEMU). - A basic debt management strategy. - Coordination with fiscal and monetary policy. - More reforms will be needed to ensure debt management remains sound and sustainable going forward. - The follow-up DeMPA will establish a new benchmark for monitoring progress going forward, particularly as the country moves beyond the HIPC Initiative completion point. ### Social sectors: health and education triggers and outcomes - Context: poverty incidence is 62 percent (According to the 2006 Core Welfare Indicators Questionnaire). - Completion point triggers required: - (i) Adopt the medium-term National Health Development Plan and the medium-term Health Sector Human Resources Development and Management Plan after costing of the Plans has been completed. - (ii) Start implementation of the national education sector plan as evidenced by completing the training of at least 500 new teachers and the remedial training of at least 4,000 existing teachers. - Health sector: - Both the National Health Development Plan and the Health Sector Human Resources Development and Management Plan were adopted by the Council of Ministers in July, 2009. - Both plans include detailed costing plans. - Estimated costs: - National Health Development Plan: approximately CFAF 317 billion. - Health Sector Human Resources Development and Management Plan: approximately CFAF 10.2 billion. - Lack of adequate human resources and unequal distribution: - Estimated less than 8,000 health professionals for a population of 6.5 million habitants. - 80 percent of health professionals are in the main cities. - Health sector Human Resources Development and Management Plan approved in 2009 aims to recruit new professionals and retain health professionals, especially in rural areas. - First round of recruitment completed in 2009; second round planned for 2010 delayed due to lack of financial resources. - Both health plans face a lack of financial resources for implementation. - Education sector: - Training provided to pre-school and primary school teachers to improve quality. - Initial training of 511 new teachers completed between July 2009 and March 2010. - Remedial training of 4,909 teachers completed between December 2009 and August 2010. - In the context of the Education for All Project, 10,800 teachers are expected to receive remedial training. - Major improvements in the last 12 months: - Abolition of school fees led to enrolment increases: - Pre-school enrolment increased by 54 percent between 2008 and 2009. - Grade 1 primary school enrolment increased by 27 percent between 2008 and 2009. - Access rate to Grade 1 jumped from 107 percent in 2007 to 129 percent in 2009. - Most new enrollees are from the most disadvantaged groups. - National Education Sector Plan (ESP) adopted in March 2010 and endorsed by development partners and the Education For All-Fast Track Initiative (EFA-FTI). - ESP objectives: achieve universal quality primary education by 2020; balanced development of education and training system with emphasis on improving quality and external efficiency of post-basic education. ### Health outcomes and challenges - PRSP implementation report and WHO figures indicate health situation remains precarious and country is far from achievement of the MDGs, mainly due to pervasive poverty and the long socio-political crisis that affected resources allocated to social sectors. - Improvements over the past ten years: - Decrease in infant mortality rate from 80 per thousand in 1998 to 74 per thousand in 2008. - Increase in vaccine coverage. - Increase in number of children correctly treated for malaria (more than doubled in ten years). ### Updated debt relief analysis: revision of data reconciliation as of the decision point - Stock of HIPC-eligible external debt in PV terms at end-2007 revised upward slightly following debt reconciliation. - Nominal stock of debt increased from $2,208.2 million to $2,217.5 million. - PV of debt after traditional debt relief revised upward from $1,410.8 million to $1,422.8 million. - Upward revision attributable to increases in debt of other official, bilateral and commercial creditors, partly offset by decreases in debt of multilateral and Paris Club creditors. - Multilateral creditors: - Total PV of multilateral debt as of end-2007 decreased by $2.1 million due mainly to data revisions by the West-African Development Bank (BOAD) and a correction in calculation of arrears to IFAD. - Paris Club creditors: - PV of debt to Paris Club creditors at end-2007 after traditional debt relief revised downward from $922.7 million to $917.1 million (decrease of $5.6 million) attributable to revised creditor data. - Other official bilateral creditors: - PV of stock owed to other official bilateral creditors increased from $66.1 to $81.3 million due mainly to new information on the Kuwaiti loans. - Decision point database includes cancelled Chinese claims of $20.35 million (equivalent to $18.5 million in PV values after traditional debt relief); this amount was reinstated to account for creditor’s debt relief efforts made before the decision point in the form of outright debt cancellations. - Commercial creditors: - Commercial debt stock at end-2007 slightly increased by $0.6 million due to creditors’ statements allowing the addition of claims. - Fiscal revenue estimate: - Estimates of fiscal revenue in 2007 remain unchanged at $456 million. - Exports of goods and services used for HIPC assistance estimate were revised downward: - 2005–07 average exports of goods and services revised from $947 million to $778 million. - Transit trade, especially of petroleum products, was included in previous export figures; revised by removing transit trade. ### Revision of HIPC assistance as of the decision point and creditor participation - Required HIPC assistance in end-2007 PV terms revised upward from $270 million estimated at the decision point to $282 million. - Common reduction factor marginally increased from 19 percent to 20 percent. - At completion point, Togo has received financing assurances by creditors accounting for 98 percent of the PV of HIPC assistance estimated at the decision point. - Multilateral creditors account for 55 percent of total HIPC assistance; almost all multilateral creditors confirmed participation. - AfDF, EIB, IDA, IsDB and OFID (88 percent of the multilateral HIPC assistance) have fully delivered their share of HIPC assistance through arrears clearance and concessional rescheduling of arrears. - All Paris Club creditors (36 percent of total HIPC assistance) have confirmed participation. - China delivered its share of relief through a 2007 debt cancellation; Kuwait delivered through a 2009 loan rescheduling agreement. - Authorities are making good faith efforts to reach agreements on provision of debt relief at the completion point with Saudi Arabia and with commercial creditors. - Adjustment note: - Debt relief approved at the decision point may be adjusted upward or downward on the basis of revised information prior to the completion point when adjustment in US dollar terms is at least 1 percent of the targeted PV of debt after HIPC relief. - In Togo’s case, the amount of adjustment is $12 million, which is larger than $11.41 million (1 percent of targeted PV of debt relief). *IMF staff report content as presented in the source PDF.* ### 38. The revised amount of enhanced HIPC assistance from multilateral creditors is ### _cr1128 - 38. The revised amount of enhanced HIPC assistance from multilateral creditors is ### Multilateral creditors: revised enhanced HIPC assistance and delivery modalities - The revised amount of enhanced HIPC assistance from multilateral creditors is $155.2 million in end-2007 PV terms. - IDA - The Executive Directors approved provision of the full amount of debt relief through a Development Policy Grant operation on May 29, 2008. - The grant was used to repay a bridge loan from a bilateral partner that cleared Togo’s arrears to IDA, amounting to $156 million in nominal terms through end-2008. - IMF - IMF assistance amounts to SDR 0.22 million in NPV terms ($0.32 million). - SDR 0.08 million has been approved as interim assistance to meet Togo’s debt service to the Fund. - The remaining SDR 0.14 million (in PV terms), together with any unused interim assistance, would be delivered to Togo at the completion point through a stock-of-debt operation. - AfDB Group - Fully provided its share of HIPC Initiative assistance through clearance of arrears amounting to $24 million, incorporating debt service falling due up to December 2008. - The AfDF’s Fragile States Facility (FSF) financed 99 percent of the cost; bilateral donor assistance financed the remainder in recognition of Togo’s limited payment capacity. - Other multilateral creditors - Modalities of assistance by BADEA, BOAD, EIB, FEGECE, IFAD, IsDB and OFID are summarized in Table A11. ### Bilateral and commercial creditors: status and estimates - Paris Club creditors - Agreed in principle to provide their share of enhanced HIPC assistance, estimated at $101 million in end-2007 PV terms (per the revised assistance, Table A4). - Interim assistance delivered through a flow rescheduling on Cologne terms during the interim period, agreed in June 2008. - Participating Paris Club creditors declared readiness to provide their full share at the completion point through a stock-of-debt reduction. - Some Paris Club creditors indicated they would provide additional debt relief under voluntary bilateral initiatives beyond HIPC; this additional relief is estimated at about $372 million in end-2009 PV terms. - Non-Paris Club bilateral creditors - Assumed to provide relief on HIPC-eligible debt on terms comparable to Paris Club. - PV of such relief at end-2007 is estimated at $95.3 million. - Major non-Paris Club creditors: China (4 percent of HIPC-eligible debt), Kuwait (2.8 percent), Saudi Arabia (0.1 percent). - China cancelled 100 percent of its outstanding claims due before December 31, 2005, amounting to $20.35 million in nominal value (July 2007). - In May 2009, authorities and the Kuwaiti Fund reached an agreement translating into full delivery of its expected share of HIPC relief. - Authorities are working toward reaching agreements with Saudi Arabia for remaining relief at the completion point. - Commercial creditors - Negotiations ongoing. - Some SOE creditor statements obtained allowing claims to be included in the stock of debt. - Togo settled debt to Cotecna via domestic arrears clearance with a discount of 20 percent (falling short of expected HIPC share); Cotecna agreed in principle to deliver remaining share. - CBAO Senegal (0.6 percent of nominal stock at the decision point) was repaid in full automatically through the BCEAO. - Authorities contacting remaining commercial creditors to seek treatment comparable to Paris Club. ### Debt stock and composition (end-2009, DRA update) - Nominal stock of external debt at end-2009: $1,748.2 million. - Multilateral creditors: $998.6 million (57 percent of total debt). - IDA: 33.5 percent of total debt. - IMF: 5.2 percent of total debt. - AfDB Group: 7.2 percent of total debt. - Paris Club creditors: 34.7 percent of total outstanding nominal debt at end-2009. - Non-Paris Club bilateral creditors: 6.8 percent of total debt (main creditors: China and Kuwait). ### Consideration for exceptional topping-up assistance - Togo does not qualify for topping-up. - PV of debt-to-revenue ratio at end-2009 after full delivery of HIPC assistance committed at the decision point: 229.2 percent. - PV of debt-to-revenue ratio after full delivery of additional bilateral debt relief beyond the HIPC Initiative: 158.5 percent. - Both figures are well below the topping-up threshold of 250 percent. - The PV ratio at end-2009 is 6.4 percentage points above the projection at time of the decision point. - Factors affecting the PV debt-to-revenue ratio at end-2009 (Table 3): - Unanticipated change in the ratio: 6.4 percentage points (100.0 percent of total change). - Due to changes in parameters: 22.7 percentage points (355.6 percent of total change). - Of which due to changes in the discount rates: 19.1 percentage points (299.1 percent). - Of which due to changes in the exchange rates: 3.6 percentage points (56.5 percent). - Due to unanticipated new borrowing: -13.5 percentage points (-211.3 percent). - Of which due to higher than expected disbursements: -15.7 percentage points (-245.5 percent). - Of which due to lower concessionality of the loans: 2.2 percentage points (34.2 percent). - Due to unanticipated changes in revenue: 2.8 percentage points (43.5 percent). - Due to changes in HIPC relief and other factors: -5.6 percentage points (-87.8 percent). - PV of debt-to-revenue ratio after full delivery of HIPC assistance and bilateral debt relief beyond HIPC (actual): 158.5. ### Creditor participation under MDRI (conditional on reaching completion point) - IDA (MDRI) - IDA would provide debt stock relief under the MDRI amounting to $564 million in nominal terms ($407 million in end-2009 PV terms, Table A9). - MDRI relief applies to credits disbursed as of December 31, 2003 and still outstanding at end-2010. - MDRI debt relief from IDA would imply average debt service savings of $21 million per year over the next 29 years. - MDRI would result in full cancelation of remaining IDA credits after HIPC relief. - AfDF (MDRI) - AfDF would provide debt relief under the MDRI amounting to $123 million in nominal terms ($81 million in end-2009 PV terms), starting from the completion point. - Calculated based on debt disbursed as of December 31, 2004 and still outstanding at the completion point. - MDRI would cancel practically all Togo’s post-completion-point repayment obligations to the AfDF. - Includes loans to a joint venture 50 percent owned by the Togolese state (treated as publicly guaranteed loans). - IMF (MDRI) - No MDRI relief from the IMF: the only loan outstanding at end-2004 was fully repaid in January 2008. - The presently outstanding ECF loan was disbursed after end-2004 and is not eligible for MDRI relief. ### Debt sustainability outlook, 2010–30 (baseline and projections) - Baseline macroeconomic framework assumes gradual economic recovery consistent with ECF arrangement (key assumptions summarized in Box 3). - After full delivery at completion point of HIPC, additional bilateral assistance beyond HIPC and MDRI: - PV of debt-to-revenue ratio would fall from 272.0 percent at end-2009 to 77.2 percent at end-2010 (scenario VI, Table A7). - Thereafter projected to increase gradually to 114.6 percent at end-2029, mainly due to new borrowing. - PV of debt-to-GDP ratio: decline from 46.1 percent at end-2009 to an average of 16.8 percent in 2009–19 and 18.5 percent in 2020–29. - PV of debt-to-exports ratio: decline from 142.5 percent at end-2009 to an average of 53 percent in 2009–19 and 64 percent in 2020–29. - Debt service ratios (after HIPC, beyond-HIPC assistance and MDRI) - Debt service-to-revenue ratio: decrease from 11.9 percent in 2010 to 5.1 percent in 2012 (scenario VI); thereafter rise and peak around 7.9–7.6 percent in 2015–17 due to IMF ECF debt service and expected commercial loan repayments; from 2020 onwards rise steadily but gradually due to projected new borrowing. - Debt service-to-exports ratio: projected to fall from 6.0 percent to an average of 3.9 percent in 2010–19 and 3.0 percent in 2020–29. ### Box 3: Key baseline macroeconomic assumptions (summary of projections and anchors) - Real GDP growth projected to reach estimated potential of 4 percent by 2012 and then remain around that level. - Commodity price projections (oil, cotton, cocoa, coffee) through 2015 based on WEO September 2010 and assumed constant in real terms thereafter. - Long-term inflation projected to remain stable at 2.5 percent. - Current account deficit roughly stable at around 6.7 percent of GDP. - Domestic primary fiscal deficit assumed to stay close to zero over the projection period. - FDI and donor flows expected to increase over the medium term. - Total government revenue projected to average around 18.5 percent of GDP (compared to 17.7 percent for 2007–09 outturns). - External financing expected to become less concessional: average grant element of new external borrowing falls from 35 percent in 2010 to 22 percent at end of projection period. ### Sensitivity analysis and long-term debt sustainability (scenarios and implications) - Analysis considers three alternative scenarios (baseline assumes delivery of HIPC, MDRI and beyond-HIPC assistance): - Alternative Scenario 1: Permanently lower GDP growth - Assumes real GDP growth reduced by 2.5 percentage points relative to baseline (baseline average 4 percent). - PV of debt-to-revenue ratio would deteriorate up to 204.0 percent in 2029 (compared to baseline 114.6 percent in 2029). - Debt service-to-revenue ratio would reach 11.9 percent in 2029 (compared to 6.7 percent under baseline). - Alternative Scenario 2: Permanently lower export growth - Exports grow 2.5 percentage points less than baseline. - PV of debt-to-revenue ratio would deteriorate to 131.4 percent in 2029 (compared to baseline). - Debt service-to-revenue ratio and PV of debt-to-exports and debt service-to-exports ratios would be worse in 2029 than in 2010. - Alternative Scenario 3: Lower average concessionality on new borrowing - Average concessionality of new borrowing from 2010 to 2029 falls from 27 percent (baseline) to 14 percent. - PV of debt-to-revenue ratio would be 156.1 percent in 2029 (much higher than baseline). - Debt service-to-revenue and debt service-to-exports ratios would be worse in 2029 than in 2010. - Policy implications from sensitivity analysis - Need for strong and continued efforts to diversify the economy and pursue prudent debt management to maintain low debt vulnerabilities. - Reliance on highly concessional external financing as much as possible; non-concessional financing only for high-return investment and within a clear pre-defined limit consistent with debt sustainability. - Public spending and structural reforms should be well-targeted to address bottlenecks hampering private investment, including in the export sector. ### Conclusions (staff assessments and recommendations) - IDA and IMF staffs consider that satisfactory progress has been made in implementing reforms for reaching the completion point. - All floating triggers have been fully implemented. - First PRSP approved by Council of Ministers on July 6, 2009; implementation satisfactory per JSAN on first APR. - Fifth review under the ECF arrangement to be considered by IMF Executive Board on December 10, 2010, together with the completion point document and JSAN; IMF staff will recommend completion of the fifth ECF review based on broadly satisfactory program implementation in 2010 and appropriate policy framework for 2011. - All other triggers (public financial management, governance, debt management, social sectors) have been fully implemented. - Debt sustainability analysis demonstrates substantial reduction in external public debt and improvement in external debt indicators after full delivery of debt relief (HIPC, MDRI, additional multilateral and bilateral beyond-HIPC). - PV of debt-to-revenue ratio projected to fall from 272.0 percent at end-2009 to 77.2 percent at end-2010 after delivery of MDRI and beyond-HIPC assistance; projected to remain flat until 2016 then increase gradually due to new borrowing. - Sensitivity analysis and LIC DSA (Appendix II) highlight that maintaining moderate debt vulnerabilities depends on: - Sound fiscal policies, especially prudent debt strategy and sustainable fiscal balances. - Promoting economic growth and exports through business climate and sectoral reforms. - Continued vigilance against shocks, notably lower growth and lower concessionality of new financing. *Italic: IMF staff report content as provided in the source document.* ### 56. In light of the above, the staffs recommend that the Executive Directors of IDA ### _cr1128 - 56. In light of the above, the staffs recommend that the Executive Directors of IDA ### Recommendation - The staffs recommend that the Executive Directors of IDA and the IMF determine that Togo has reached the completion point under the Enhanced HIPC Initiative. ### Issues for Discussion - V. ISSUES FOR DISCUSSION *Source: _cr1128 - 56. In light of the above, the staffs recommend that the Executive Directors of IDA and the IMF determine that Togo has reached the completion point under the Enhanced HIPC Initiative.* ### 57. Executive Directors may wish to consider the following questions: ### _cr1128 - 57. Executive Directors may wish to consider the following questions: ### Executive Directors' questions - Completion Point: Do Directors agree that Togo has reached the Completion Point under the Enhanced HIPC Initiative? - Creditor Participation: Do Directors agree that Togo’s creditors have given sufficient assurances to irrevocably commit Enhanced HIPC Initiative assistance to Togo? - Data Revision: Do Directors agree with staffs’ recommendation that the updated stock of debt in end-2007 PV terms warrants a revision in the proposed amount of HIPC assistance from $270 million to $282 million in end-2007 PV terms? ### External debt composition (selected exact shares) - Nominal stock end-2007: US$2.218 billion - World Bank 34.5% - AfDB Group 6.7% - IMF 0.1% - Other Multilateral 9.5% - Other Official Bilateral 4.5% - Paris Club 43.2% - Commercial 1.5% - Nominal stock end-2009: US$1.748 billion - World Bank 33.5% - AfDB Group 7.2% - IMF 5.2% - Other Multilateral 11.2% - Other Official Bilateral 6.8% - Paris Club 34.7% - Commercial 1.4% ### Debt sustainability indicators and scenario channels (figures summary) - Indicators shown: PV of Debt to Revenue (in percent of revenue) and Debt Service to Revenue (in percent of revenue) for 2009–2029 under: - Before traditional debt relief and multilateral arrears clearance 1/ - After conditional HIPC Assistance - After unconditional HIPC assistance - After HIPC and MDRI assistance - After HIPC, MDRI and beyond HIPC assistance - Sensitivity analysis scenarios (2009–29) after delivery of Enhanced HIPC, MDRI and beyond HIPC assistance: - Baseline scenario - Permanently lower growth - Permanently lower export growth - Less concessional new borrowing ### Discount and exchange rate assumptions (end-2007 and end-2009, selected entries) - Discount rates (percent per annum) and exchange rates (currency per U.S. dollar), examples: - Canadian Dollar: At decision point end-December 2007 = 5.42 (discount), at completion point end-December 2009 = 3.79 (discount); exchange rates 0.99 and 1.05 respectively - CFA Franc: Discount 5.35 (2007) and 4.31 (2009); exchange rates 445.59 and 455.34 - U.S. Dollar: Discount 5.64 (2007) and 4.09 (2009); exchange rates 1.00 and 1.00 - Memorandum item: Paris Club cutoff date January 1, 1983 - Notes: 1/ The discount rates used are the average commercial interest reference rates over the six-month period prior to end-December 2007 and 2009. 2/ Exchange rates expressed as national currency per U.S. dollar in end-of-period terms. 3/ IsDB uses the Islamic dinar (ISD) with the same exchange and discount rates as the SDR. ### Nominal stock and PV of debt as of end-2007 (selected exact figures) - Total nominal/PV totals shown (multiple legal/base/revised columns); total nominal around 2,208.2 and 2,217.5 in different columns (US$ million) with breakdowns: - Multilateral total around 1,127.5 (51.1%) and 1,126.3 (50.8%) in two columns - World Bank 764.8 (34.6%) / 764.8 (34.5%) - AfDB Group 148.9 (6.7%) - IMF 1.7 (0.1%) - Bilateral and Commercial around 1,080.7 (48.9%) / 1,091.2 (49.2%) - Paris Club 964.3 (43.7%) / 958.5 (43.2%) - Post-cutoff date 108.7 (4.9%) - Commercial 32.6 (1.5%) / 33.2 (1.5%) - Table notes: 1/ Includes arrears. 2/ Includes a hypothetical stock-of-debt operation on Naples terms at end-2007 and at least comparable treatment by other official bilateral and commercial creditors on eligible debt (pre-cutoff and non-ODA). 3/ Includes debt by the European Investment Bank and loans administered on behalf of the European Union. 4/ Loans cancelled in 2007 have been added back to the PV of debt as of end 2007 in line with HIPC methodology. ### Nominal stock and PV of debt as of end-2009 (selected exact figures) - Total nominal stock end-2009: US$1,748.2; legal situation PV totals and post-HIPC columns: - Total 1,748.2 (100.0); PV legal situation 1,410.9 (100.0); PV after enhanced HIPC relief 1,228.7 (850.0?) and 703.9 shown under multilateral - Multilateral 998.6 (57.1%) with PV 731.5 (51.9%); World Bank 586.1 (33.5%) / PV 417.8 (29.6%) - IMF 90.9 (5.2%) with PV 69.1 (4.9%) - Bilateral and Commercial 749.7 (42.9%) / PV 679.3 (48.1%); Bilateral 725.5 (41.5%) / PV 653.6 (46.3%) - Paris Club 605.9 (34.7%) / PV 555.2 (39.3%) - Notes: 1/ Includes arrears. 2/ Assumes full delivery of HIPC assistance as of end-December 2010. 3/ IDA, AfDF, EIB, IsDB and OFID have already given full debt relief through arrears clearance and concessional arrears rescheduling before end-2009. 5/ Fortis Bank became BNP Paribas Fortis in March 2009. ### Revised HIPC assistance (Table A4, proportional burden-sharing approach; exact figures) - Total revised HIPC assistance (at decision point / at completion point / at decision point / at completion point / at decision point at completion point): 141 / 114 / 231 / 141 / 114 / 1270 / 282 (table shows multiple columns; key stated revision to $282 million end-2007 PV terms) - As percent of revenue: 30 / 93 / 12 / 50 / 25 / 0 / 5962 (table lists "3093122502505962" across columns) - Of which (selected): - Multilateral: 78 / 47 / 82 / 63 / 41 / 62 / 150 / 155 (table shows "Multilateral784782634627150155") - Bilateral: 59 / 56 / 09 / 48 / 14 / 48 / 114 / 121 (table shows "Bilateral595609481488114121") - Paris Club: 51 / 15 / 10 / 41 / 30 / 40 / 98 / 101 (table shows "Paris Club:51151041340898101") - Commercial: 3 / 13 / 22 / 25 / 25 / 66 (table shows "Commercial 3132252566") - Memorandum items (exact figures): - Common reduction factor (percent) 3/19 20 - Revenue 4/456456 - Exports 5/947757 - Revenue/ GDP (3 year average)17 17 - Exports/ GDP (3 year average)4233 - Notes: 1/ Proportional burden sharing approach per IDA/SEC M 97-306, 7/7/97. 2/ Includes a hypothetical Naples operation (end-December 2007). 3/ Each creditor's PV reduction in percent of its exposure at the reference date is calculated as (A-B)/A. 4/ 2007 central government revenues excluding grants. 5/ Exports defined per IMF BPM5 (1993). ### Present value of external debt and key projections (Table A5; selected exact series and averages) - I. Before traditional debt relief and multilateral arrears clearance: - PV of total debt 2009 = 1,769.4; 2019 = 2,182.3; 2029 = 2,811.0 - PV of outstanding debt 2009 = 1,769.4; 2019 = 974.6; 2029 = 774.6 - PV of new borrowing 2009 = 0.0; 2010 = 95.7; 2011 = 137.2; 2029 = 304.7; 2009-2019 total 1,319.4 - II. After traditional debt relief and multilateral arrears clearance: - PV of total debt 2009 = 1,373.4; 2019 = 1,701.3; 2029 = 2,209.5 - III. After conditional delivery of enhanced HIPC assistance: - PV of total debt 2009 = 1,458.8; PV of outstanding debt 2009 = 1,458.8; PV of total debt 2019 = 1,624.3 - IV. After unconditional delivery of enhanced HIPC assistance: - PV of total debt 2009 = 1,228.7; PV of outstanding debt 2009 = 1,228.7 - V. After conditional delivery of enhanced HIPC and MDRI assistance: - PV of total debt 2009 = 1,458.8; PV of outstanding debt 2009 = 1,458.8 - VI. After conditional additional bilateral and multilateral relief beyond enhanced HIPC and MDRI assistance: - PV of total debt 2009 = 1,458.8; PV of outstanding debt 2009 = 1,458.8 - Notes: Tables include detailed breakdowns by creditor groups (World Bank, AfDB Group, IMF, Other multilateral, Official bilateral, Paris Club, Commercial) and assume various delivery modalities (HIPC, MDRI, additional bilateral relief). ### External debt service projections (Table A6; selected exact figures and ratios) - I. Before traditional debt relief and multilateral arrears clearance (US$ millions): - Total 2010 = 96.7; 2011 = 98.8; 2012 = 96.8; 2019 = 150.2; 2029 = 111.8 - Existing debt 2010 = 95.7; New debt 2010 = 0.9 - Debt service to exports ratio 2010 = 9.1; 2019 = 10.2; 2029 = 5.0 - Debt service to revenue ratio 2010 = 18.1; 2019 = 8.1; 2029 = 8.2 - II. After traditional debt relief and multilateral arrears clearance: - Total 2010 = 98.0; 2019 = 189.2; 2029 = 135.5 - III. After HIPC assistance: - Total 2010 = 65.0; 2011 = 89.4; Debt service to exports after HIPC 2010 = 6.1; debt service to revenue after HIPC 2010 = 12.2 - Reduction in debt service as a result of HIPC Initiative assistance (selected series): 33.0, 28.2, 18.9, 5.7, -6.1, 10.3... - IV. After HIPC and MDRI assistance: - Total 2010 = 65.0; 2011 = 57.0; Debt service to exports after HIPC and MDRI 2010 = 6.1; debt service to revenue after HIPC and MDRI 2010 = 12.2 - MDRI assistance reduction series (selected): 0.0, 32.4, 32.4, 32.8... - V. After conditional additional bilateral and multilateral relief beyond enhanced HIPC and MDRI assistance: - Total 2010 = 63.4; Total 2019 = 119.2; Debt service to exports ratio after HIPC and MDRI 2010 = 6.0; debt service to revenue ratio after HIPC and MDRI 2010 = 11.9 - Memorandum items (selected exact figures): - Exports of goods and nonfactor services 2009 = 1,060.9; 2019 = 2,822.5; 2029 = 2,215.3 - Government revenues 2009 = 533.3; 2019 = 1,789.2; 2029 = 1,353.3 - Notes: 1/ All debt indicators refer to public and publicly guaranteed (PPG) debt. Fiscal year ends in December. 2/ Includes principal and interest due on debt outstanding as of 12/31/2007 and excludes projected penalty interest. 5/ Bilateral and commercial creditors assumed to provide Cologne flow rescheduling and Cologne stock operation. 7/ MDRI applies to World Bank and AfDB Group and starts after completion point (December 2010). ### External debt indicators (Table A7; selected exact ratios) - I. Before traditional debt relief and multilateral arrears clearance (percent): - PV of debt-to-GDP ratio 2009 = 55.9; 2019 = 45.0? (table series); 2029 = 29.3? (series across years) - PV of debt-to-exports ratio 2009 = 172.8; 2019 = 137.8; 2029 = 105.4 - PV of debt-to-revenue ratio 2009 = 329.9; 2019 = 227.5; 2029 = 157.1 - Debt service-to-exports ratio 2010 series = 9.2...; Debt service-to-revenue ratio 2010 series = 18.4... - II. After traditional debt relief and multilateral arrears clearance: - PV of debt-to-GDP ratio 2009 = 43.4; 2019 = 31.9; 2029 = 24.6 - PV of debt-to-exports ratio 2009 = 134.1; 2019 = 104.4; 2029 = 82.8 - PV of debt-to-revenue ratio 2009 = 256.1; 2019 = 172.3; 2029 = 123.5 - III.–VI. After HIPC, MDRI, and additional relief: tables present multiple scenario-specific PV-to-GDP, PV-to-exports, PV-to-revenue, and debt-service ratios for 2009–2029 (baseline, conditional delivery, unconditional delivery, MDRI, additional bilateral/multilateral relief). Selected baseline year 2009 ratios after conditional HIPC: - PV of debt-to-GDP ratio 2009 = 46.1 - PV of debt-to-exports ratio 2009 = 142.5 - PV of debt-to-revenue ratio 2009 = 272.0 - Notes define exports and revenue measures and describe assumptions on delivery and rescheduling. ### Sensitivity analysis (Table A8; selected exact outcomes for 2009–2029) - I. Baseline scenario (after additional bilateral and multilateral relief beyond HIPC and MDRI): - PV of debt-to-GDP ratio 2009 = 46.1; 2019 = 13.8; 2029 = 18.5 - PV of debt-to-exports ratio 2009 = 142.5; 2019 = 45.3; 2029 = 64.0 - PV of debt-to-revenue ratio 2009 = 272.0; 2019 = 77.2; 2029 = 74.5 - II. Permanently lower growth: - PV of debt-to-GDP ratio 2009 = 46.1; 2019 = 16.4; 2029 = 27.0 - Debt service-to-revenue ratio series shows higher values versus baseline - III. Permanently lower export growth and IV. Loans instead of grants: tables present alternative paths with exact ratios for each year and scenario. ### Delivery of IDA and IMF assistance (selected exact figures) - IDA (Table A9): - Debt service before HIPC assistance (selected): 2010 = 26.9; 2011 = 28.3; 2019 = 29.0 - Projected stock of IDA credits outstanding at implementation date 4/ = 563.6 - Debt stock reduction on eligible credits due to MDRI = 563.6 - Debt service to IDA covered by HIPC assistance and MDRI (in percent) = 100.0 (series across years) - IDA debt service relief under the MDRI (in SDR) cumulative totals: 241.9 (2010-2023) and 391.6 (2010-44) - IMF (Table A10): - Total IMF assistance under the enhanced HIPC Initiative amounts to SDR 0.219 million (US$ 0.324 million) in NPV terms (slightly higher than decision point SDR 0.211 million / US$0.312 million). - Completion point (CP) assumed December 9, 2010. A final disbursement of SDR 0.14 million will be deposited into Togo's Umbrella Account at CP. - Debt service due on IMF obligations after HIPC and MDRI shows series: 2010 = 0.03 (SDR), 2011 = 0.17, and rising in later years (e.g., 2016 = 1.35; 2017 = 8.21; 2018 = 11.75; 2019 = 14.57). - Notes: 1/ Total IMF assistance under enhanced HIPC amounts to SDR 0.219 million (US$0.324 million) in NPV; 4/ Interest charges on concessional loans waived through 12/31/11; 5/ Final disbursement SDR 0.14 million at CP. ### Status of creditor participation (Table A11; selected exact entries) - World Bank: Debt relief in PV terms = 102 (US$ millions); Percentage of total assistance = 36; Modalities: IDA provided the full amount through a Development Policy Grant operation in May 2008 used to repay a bridge loan that cleared Togo’s arrears to IDA. - AfDB Group: Debt relief PV = 186; AfDB assistance fully delivered through concessional arrears clearance under the Fragile States Facility. - BOAD: Debt relief PV = 145; Assistance to be delivered at completion point. - EIB: Debt relief PV = 93; Full HIPC assistance delivered through concessional arrears clearance of EU loans administered by EIB; remaining arrears/debt service to be cleared under the EU's LDC Initiative; EIB Board rescheduled remaining EIB loan on concessional terms. - IsDB: Debt relief PV = 52; Assistance fully delivered through concessional rescheduling of all arrears and remaining debt service on loans outstanding at end-2008. - IFAD: Debt relief PV = 41; Togo and IFAD agreed an arrears repayment schedule starting in the second half of [text truncated in source]. *Italic: Source — Togolese authorities; and Fund and World Bank staff estimates and projections (content unit: _cr1128 - 57).* ### 2011. Af ter the completion point, IFAD w ill of f er HIPC relief through the partial cancellation ### _cr1128 - 2011. Af ter the completion point, IFAD w ill of f er HIPC relief through the partial cancellation of the arrears payment installments. ### HIPC relief delivery and creditor actions - IFAD: After the completion point, IFAD will offer HIPC relief through the partial cancellation of the arrears payment installments. - OFID: Most of the arrears have been cleared in 2009. It is expected that Togo and OFID will conclude an agreement on the repayment of the remaining arrears. - IMF: The IMF has extended interim assistance immediately following the approval of the decision point in the form of debt-service reduction. At completion point the balance of remaining HIPC resources (SDR 0.14 million in the Umbrella Account and SDR 0.02 million of unused interim assistance) will be disbursed to Togo. - BADEA: Assistance to be delivered at completion point. - FEGECE: FEGECE has indicated that it will not participate in the HIPC Initiative. ### Creditor-by-creditor numeric delivery (as presented) - Total multilateral15555 - Paris Club Creditors 10136 - In principle, Paris Club creditors aggred to provide HIPC assistance. Interim assistance will be delivered through a Cologne flow during the interim period. - Non-Paris Club Creditors 207 - China 114 — China delivered its share of HIPC relief through some loans' cancellation in 2007. - Kuwait 83 — Kuwait delivered its share of HIPC relief through a 2009 loan rescheduling agreement. - Saudi Arabia 00 - Commercial creditors 62 - of which CBEAO Senegal 31 — CBEAO Senegal was fully repaid through the BCEAO automatic payment window. - of which Cotecna 10 — Cotecna has delivered over 90 percent of its HIPC relief and agreed in principle to deliver its remaining share of HIPC relief. - Total bilateral and commercial12745 - TOTAL282100 - Memorandum item: Estimated satisfactory assurances98 ### Paris Club summary notes (selected points from Table A12) - Several Paris Club creditors provide "100 percent" cancellation for HIPCs under various modalities (flow, stock, case-by-case), with creditor-specific conditions and timing differences. - Examples of creditor-specific modalities as noted: - Australia: post-cutoff date non-ODA relief to apply to debts incurred before a date to be finalized; timing details for both flow and stock relief are to be finalized. - Canada: moratorium of debt service as of January 2001 on all debt disbursed before end-March 1999 for 13 out of 17 HIPCs; 100% cancellation will be granted at completion point. - France: cancellation of 100 percent of debt service on pre-cutoff date commercial claims on the government as they fall due starting at decision point; at completion point, debt relief on ODA claims will go to a special account for specific development projects. - United Kingdom: "beyond 100 percent" full write-off of all debts of HIPCs as of their decision points, and reimbursement at decision point of any debt service paid before the decision point. - United States: 100 percent post-cutoff date non-ODA treated on debt assumed prior to June 20, 1999 (the Cologne Summit). ### HIPC Initiative status summary (selected figures from Table A13) - Completion point reached under enhanced framework (30 countries) — sample entries: - Afghanistan Jul. 07 / Jan. 10 — (selected numeric columns shown in table) - Benin Jul. 00 / Mar. 03 — (selected numeric columns shown in table) - (Full table lists country-level decision/completion dates and multiple debt and assistance metrics.) - Decision point reached under enhanced framework (6 countries) — sample entry: - Togo Nov. 08 / Floating — entries include "250270 120 150 0.3 98 19 360" (as presented in the table). - Total assistance provided/committed: 43,576 22,134 20,947 3,408 3/9,794 71,967 ### Appendix I — Togo: current state of debt management (key findings) - Institutional setup and responsibilities - Debt management operations involve sectoral ministries, the Ministry of Economy and Finance (MEF), the Department for the Execution and Oversight of the Development Plan, and benefiting line ministries. - The Public Debt Directorate (PDD), part of the Treasury Department, is the main unit responsible for debt management. PDD responsibilities include keeping the external debt database, forecasting external debt service, preparing payment invoices for external debt, and monitoring overall public debt. The PDD is also involved in an advisory capacity in the process of negotiating and contracting loans in some but not all cases. - The PDD (Direction de la Dette Publique) was created in 2000, when the responsibility for debt management was transferred from the National Investment Company (Société Nationale d’Investissement). - Legal and strategic framework - High-level legal framework delegates responsibility for signing loan agreements to the Minister of Finance. - A National Public Debt Committee (CNDP) has been created following WAEMU rules to improve cooperation among entities involved in debt management. - At the level of the PDD, updated legal documents concerning the responsibilities of the PDD have not yet been signed. - The government is required to attach a debt management strategy to its annual budget law submitted to Parliament; currently the strategy is brief, lacks analysis, does not include domestic public debt, and is not always respected in practice. - Coordination, information flows, and data management - Formal channels of interaction among entities are complex, leading to weaknesses in coordination and information flows. Example: the Department for the Execution and Oversight of the Development Plan does not systematically communicate donor disbursement information to the PDD, complicating projection of future disbursements and debt service and leading to underestimation of debt outstanding to some creditors. - PDD maintains external debt data in DMFAS and has files on all public debt as required by HIPC floating completion point triggers. Domestic securities and central bank advances are also kept in DMFAS, although payments are done by the Treasury. - The PDD has published regular reports on domestic and external debt on the website of the Permanent Secretariat for Monitoring of Reforms (SP-PRPF). - Capacity and staffing - Debt management staff is characterized as rather reactive. PDD staff is qualified for basic DMFAS operations, but there are no job descriptions for key positions and no formal training plan. - The DDP has identified training needs including debt management, loan conventions, risk analysis, debt reporting, negotiations, debt sustainability and English language. - Ongoing technical assistance - Togo benefits from DeMPA and IMF AFRITAC-West assistance (3–4 missions a year), including help developing post-HIPC projections of debt service. Assistance will continue with increasing focus on capacity for sustainable debt management after HIPC (e.g., conducting debt sustainability analyses to inform debt management strategy). - Planned changes and scope expansion - As part of TMU changes approved with the fifth review of the ECF, the external debt definition will cover the government and public enterprises, requiring the PDD to develop systematic communication channels with public enterprises for monthly debt service obligations and monitoring new loan projects. ### Appendix I — Recommended targets and actions going forward - Formalize the functions and responsibilities of the PDD. - Improve the debt management strategy to: - include all types of debt (external and domestic), - expand analytical content beyond the current brief format. - Improve coordination and information flows with other departments and line ministries. - Consolidate all remaining debt data kept in separate spreadsheets into DMFAS, in particular: - Treasury bills and debt by state-owned enterprises. - Maintain current quarterly publication frequency of debt reports. - Gradually expand analysis in debt reports to: - show debt by currency and maturity, - include a rudimentary form of risk analysis. - Increase communication with donors to enable frequent debt data reconciliations. ### Appendix II — Debt Sustainability Analysis (summary) - Framework: Joint IMF-World Bank debt sustainability framework for low-income countries. - Overall assessment: The analysis shows that Togo is at moderate risk of debt distress. - Post-assistance outlook: - After full HIPC assistance, MDRI and beyond HIPC assistance, Togo’s external and public debt indicators improve significantly through the projection period, helped by a stable economic, political and social climate and rehabilitation of key sectors. - Vulnerabilities and scenarios: - Togo remains vulnerable to certain shocks and could breach the policy-related thresholds for the PV of debt-to-GDP and PV of debt-to-exports ratios under some alternative scenarios in the latter years. *Sources: Togolese authorities; and Bank-Fund staff estimates.* ### 1. This debt sustainability analysis (LIC-DSA) for Togo assesses its external and ### _cr1128 - 1. This debt sustainability analysis (LIC-DSA) for Togo assesses its external and ### Overview - This debt sustainability analysis (LIC-DSA) for Togo assesses its external and public debt using the forward-looking debt sustainability framework (DSF) for low-income country framework. - The LIC-DSA uses the reconciled debt database prepared for the completion point HIPC-Debt Relief Analysis (DRA), and incorporates the impact of HIPC, additional multilateral and bilateral assistance beyond HIPC, and MDRI relief in the baseline scenario consistent with the DSF guidelines for LIC-DSAs done at the completion point. - Key methodological differences between the LIC-DSA and the DRA: - Discount rate: LIC-DSA fixed at 4 percent; DRA uses currency-specific 6-month averages of commercial interest reference rates. - Exchange rates: LIC-DSA uses exchange rate projections from the World Economic Outlook; DRA used the actual exchange rate of end-2009. - Exports for debt burden indicators: LIC-DSA uses latest projections; DRA used three-year backward-looking averages. - Baseline financing composition: LIC-DSA assumes IDA assistance delivered in the form of concessional loans rather than mainly grants as in the DRA. - Country policy metric and indicative thresholds: - Togo’s average World Bank CPIA for 2007–09: 2.7, placing it as a “weak performer”. - Corresponding indicative thresholds: NPV of debt-to-GDP ratio 30 percent; debt-to-exports ratio 100 percent; NPV of debt-to-revenue ratio 200 percent; debt service-to-exports ratio 15 percent; debt service-to-revenue ratio 25 percent. ### Historical debt relief and stocks - Since November 2008, Togo has been in the interim period of the HIPC Initiative. - Nominal debt stock changes: - Fell from $2.2 billion at end-2007 to $1.7 billion at end-2009. - Reaching the completion point at end 2010 will decrease the nominal stock of debt to below $0.4 billion. - Present value of PPG external debt at end-2010 (assuming full delivery of HIPC, MDRI and beyond HIPC assistance): $392 million. - Creditor composition: around 74 percent multilateral creditors; 26 percent bilateral and commercial creditors. ### Baseline macroeconomic assumptions - Real GDP growth: - Projected to reach estimated potential of 4 percent by 2012 and then vary around that level. - Potential estimated based on population growth rate of 2.5 percent. - Commodity price projections: - Projections for oil, cotton, cocoa, and coffee through 2015 based on WEO September 2010 and assumed constant in real terms afterwards. - Inflation: - Projected to remain stable at 2.5 percent over the long-term. - Current account: - Expected to remain roughly stable over the medium-term; higher exports insufficient to fully offset strong import growth. - Fiscal stance: - Domestic primary fiscal deficit assumed to stay close to zero during the projected period. - FDI and donor flows: - Expected to increase over the medium-term. - External financing concessionality: - Grant element of new financing decreases from 35 percent in 2010 to 22 percent at the end of the projection period. - Baseline also reports grant financing decrease from 5.6 percent of GDP in 2010 to 3.1 percent of GDP in 2030 and concessionality of loans decreases from nearly 35 percent to 21.6 percent over the same period. ### External Debt Sustainability Analysis — Baseline findings - Under the baseline scenario, external debt indicators remain below their relevant indicative thresholds. - PV of PPG external debt: - Equals 12.8 percent of GDP in 2010 and remains below the 30 percent threshold until the end of the projected period. - PV of external debt relative to revenues and exports: - Stay below their respective indicative thresholds until 2030. - Notable trajectory: - The three PV ratios increase significantly toward the end of the projected period, approaching thresholds, reflecting conservative assumptions on declining grant financing and declining concessionality. ### External Debt — Alternative scenarios and stress tests - Vulnerabilities: - External debt outlook remains vulnerable to numerous shocks, especially toward the end of the projected period. - Scenario outcomes (threshold breaches): - Most extreme shock: PV of external debt to GDP breaches threshold in 2024. - New loans on less favorable terms shock: threshold breached in 2026. - PV of debt-to-exports ratio breaches threshold in 2026 for the new loans on less favorable terms shock and in 2030 for the most extreme shock. - Risk assessment: - IDA and IMF staffs conclude that Togo is at moderate risk of debt distress. ### Public Sector Debt Sustainability — Baseline findings - Domestic public debt: - Inclusion of large domestic public debt emphasizes vulnerability of the baseline scenario. - Domestic debt burden is comparatively large due to weak fiscal management, domestic arrears accumulation, and bank recapitalization needs. - PV of total public debt ratios: - Projected to decrease until 2018 before picking up slowly until the end of the projected period, averaging around 25 percent of GDP over the overall period. - Debt service ratios: - Would remain below their end-2010 levels under the baseline. ### Public Sector Debt — Alternative scenarios and stress tests - Sensitivity to growth shock: - Most extreme shock (growth) would raise debt level and debt service over the long run. - Total public debt dynamics especially vulnerable to a growth shock, keeping the PV of debt to GPD ratio over 30 percent over the entire projected period. - Policy implication: - Highlights importance of reform agenda to improve business environment, support foreign investment and growth. ### Conclusion and policy implications - Risk rating: - The DSA shows that Togo will be at moderate risk of debt distress after reaching the completion point. - Baseline vs. alternatives: - Under the baseline, debt ratios remain below thresholds for the projected period; alternative scenarios breach thresholds only in latter years. - Key concern: - Upward trend of all scenarios is cause for concern despite conservative assumptions. - Policy recommendation: - Stresses the need for a prudent approach to new borrowing as Togo is exiting the HIPC initiative. - Authorities engagement: - Assumptions and conclusions were discussed with the authorities, who broadly concurred and expressed strong interest in implications for external borrowing policy. *IMF–World Bank joint LIC-DSA for Togo (completion point HIPC-DRA baseline and scenarios).* ### 11. Maintaining a robust external debt outlook will depend on a sustained pick-up ### 11. Maintaining a robust external debt outlook will depend on a sustained pick-up ### Key findings and vulnerabilities - Maintaining a robust external debt outlook will depend on a sustained pick-up of real GDP growth, exports and foreign direct investment, as well as prudent debt management and solid fiscal performance. - Alternative scenarios and bound tests highlight the vulnerability of Togo’s external debt outlook. - The inclusion of Togo’s large domestic debt in the analysis reinforces the conclusions of the external DSA and stresses the risks to Togo’s debt prospects. - It is essential that the Togolese authorities continue current efforts to: - strengthen public finance management; - restructure the banking system and promote financial development; - reform state-owned enterprises; - improve the investment climate to lay the foundation for accelerating growth prospects. ### Stress tests, scenarios, and sensitivity analysis - The most extreme stress test is defined as the test that yields the highest ratio in 2020; specific extreme shocks identified in the figures include: - One-time depreciation shock (figures b, d, f). - Exports shock (figures c, e). - Specific scenario used in sensitivity tables: - One-time 30 percent nominal depreciation relative to the baseline in 2011. - Alternative scenarios and bound tests reported include (selected labels as presented): - A1. Key variables at their historical averages in 2010-2030. - A2. New public sector loans on less favorable terms in 2010-2030. - B1–B6. Bound tests including real GDP growth, export value growth, U.S. dollar GDP deflator, net non-debt creating flows, combinations of shocks, and one-time depreciation. ### Policy recommendations (as stated) - Continue current efforts to: - strengthen public finance management; - restructure the banking system and promote financial development; - reform state-owned enterprises; - improve the investment climate. ### Selected key statistics and projections (preserved exactly as in source) - External/public indicators and dynamics (selected lines from tables and text): - External debt (nominal) 1/79.161.653.116.517.618.619.620.421.225.132.3 - o/w public and publicly guaranteed (PPG)79.160.951.814.615.115.616.216.717.120.327.8 - Change in external debt-1.9-17.5-8.5-36.51.01.01.10.80.71.10.4 - Identified net debt-creating flows -3.4-11.16.34.95.84.74.44.24.03.12.2 - Non-interest current account deficit7.15.96.86.51.07.47.26.76.56.46.46.06.9 - Exports 36.033.834.434.133.233.333.032.832.531.629.3 - Imports 51.444.544.246.246.446.646.246.346.245.444.6 - Net current transfers (negative = inflow)-11.4-9.6-9.1-9.21.9-10.4-11.2-11.9-11.7-11.9-12.1-12.1-13.0-12.5 - Net FDI (negative = inflow)-2.0-1.3-1.0-3.11.4-1.0-1.0-1.5-1.7-1.8-2.0-2.5-4.0-2.6 - Endogenous debt dynamics 2/-8.5-15.80.6-1.5-0.4-0.4-0.4-0.4-0.4-0.4-0.7 - PV of external debt 4/......11.314.716.818.920.822.322.524.029.1 - PV of PPG external debt......10.012.814.315.917.418.518.419.224.6 - PV of PPG external debt (in percent of exports) ......29.237.543.147.752.756.556.860.683.9 - PV of PPG external debt (in percent of government revenues)......59.374.674.086.494.0100.299.6103.6131.4 - Debt service-to-exports ratio (in percent)9.45.74.45.72.92.73.14.04.12.64.4 - PPG debt service-to-revenue ratio (in percent)20.112.49.011.44.94.85.57.27.24.47.0 - Total gross financing need (Billions of U.S. dollars)0.20.20.20.30.30.20.30.30.30.40.6 - Non-interest current account deficit that stabilizes debt ratio 9.023.515.343.96.25.65.55.65.65.06.4 - Key macroeconomic assumptions (selected lines preserved exactly): - Real GDP growth (in percent)2.32.43.21.72.23.43.74.04.13.94.03.93.84.24.0 - GDP deflator in US dollar terms (change in percent)12.122.8-3.46.310.3-4.90.20.30.41.21.6-0.22.52.42.5 - Effective interest rate (percent) 5/2.50.70.61.70.70.61.21.41.71.92.11.52.01.91.9 - Growth of exports of G&S (US dollar terms, in percent)19.817.91.49.213.7-2.51.24.73.74.44.72.75.95.95.9 - Growth of imports of G&S (US dollar terms, in percent)34.88.9-1.010.317.72.84.44.73.75.35.74.46.16.66.3 - Grant element of new public sector borrowing (in percent)...............34.737.835.234.734.233.635.029.621.627.2 - Government revenues (excluding grants, in percent of GDP)16.815.616.917.119.318.418.518.518.518.718.6 - Aid flows (in Billions of US dollars) 7/0.10.10.10.20.20.20.20.20.20.30.3 - Grant-equivalent financing (in percent of GDP) 8/.........5.65.44.95.04.94.94.43.14.0 - Grant-equivalent financing (in percent of external financing) 8/.........74.081.880.778.777.176.371.056.866.6 - Public sector debt and other indicators (selected lines preserved exactly): - Public sector debt 1/105.689.372.834.330.927.626.224.823.623.729.6 - o/w foreign-currency denominated79.160.951.814.615.115.616.216.717.120.327.8 - Change in public sector debt-2.0-16.3-16.5-38.5-3.4-3.3-1.4-1.4-1.10.80.4 - Revenue and grants18.517.819.921.724.022.722.722.722.622.121.1 - of which: grants1.72.23.04.64.64.34.24.24.13.62.4 - Primary (noninterest) expenditure18.517.220.721.424.524.324.124.324.224.023.3 - PV of public sector debt26.528.331.032.530.127.827.326.625.022.626.4 - PV of public sector debt-to-revenue and grants ratio (in percent)143.3159.7155.9149.6125.5122.6120.2117.5110.4102.2 125.1 - Gross financing need 2/3.82.63.84.64.84.94.54.94.83.23.8 ### Indicators under alternative scenarios (selection of table labels and magnitudes) - Tables present PV of debt-to-GDP, PV of debt-to-exports, PV of debt-to-revenue, debt service-to-revenue and debt service-to-exports under baseline, alternative scenarios (A1, A2) and bound tests (B1–B6) for 2010-2030 with values reported in the chapter tables and figures. - Memorandum items and scenario-specific parameterizations include: - Grant element assumed on residual financing (i.e., financing required above baseline) 6/29292929292929 - Assumptions and definitions footnoted in the tables include formulas for endogenous debt dynamics, treatment of private sector debt, exceptional financing, and definition of grant-equivalent financing. *Source: Country authorities; and staff estimates and projections.* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2011/_cr1128.pdf_