## _cr13171 ## Source details **Canonical URL:** [_cr13171](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2013/_cr13171.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2013/_cr13171.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2013/_cr13171.pdf.json) --- ### Executive summary and ECF arrangement - Extended Credit Facility (ECF) arrangement approved: three-year ECF for SDR 390.24 million (120 percent of quota) on November 4, 2011. - Third review: - Staff supports completion of the third review and authorities’ requests for a waiver for nonobservance of the continuous performance criterion on new non-concessional external debt, and for modifications of performance criteria. - Completion of the review will result in disbursement equivalent to SDR 48.78 million under the ECF arrangement. - Reviews concluded: first and second reviews concluded in May and November, 2012 respectively. - Document date: May 22, 2013. ### Socio-political context and short-term risks - Political reconciliation: - Political dialogue resumed; Front Populaire Ivoirien (FPI) refused to participate in local and regional elections on April 21. - Dialogue, Truth and Reconciliation Commission (CDVR) advancing slowly. - Security: improved somewhat; incidents continue, particularly along border with Liberia; security apparatus reform under way with international support. - Social pressures: - Public sector unions initiated strikes seeking sizeable wage increases. - High public perception of cost of living constrains politically-sensitive measures. - Short-term risks: fragile socio-political context and structural weaknesses in infrastructure and business environment could dampen private sector engagement and delay reforms. ### Recent economic developments — key figures - Growth and inflation: - GDP growth in 2012: 9.8 percent (program had projected 8.6 percent). - Average annual inflation in 2012: 1.3 percent. - External sector: - Current account: preliminary estimate shows a deficit of about 2 percent of GDP in 2012. - Foreign direct investment: rise in FDI flows helped finance the current account deficit. - At end-2012, Côte d’Ivoire no longer had any outstanding arrears to its external creditors. - Monetary and banking sector: - Net domestic credit expansion in 2012: 16 percent. - Net foreign assets decline in 2012: -14percent. - Money supply increased less than nominal GDP in 2012. - Banking sector: non-performing loans 15.7 percent of total loans (gross terms); capital-adequacy ratios remained above prudential threshold of 8 percent. - Prudential breaches at end-2012: 7 out of 23 banks below regional minimum capital requirement; 10 banks violated single large exposure limit; 7 banks breached liquidity ratio (compared with 4 banks in 2011). ### Program performance (quantitative outcomes & structural reforms) - Quantitative targets (end-December 2012): - All but one performance criterion and all but one indicative target were met. - Total revenue exceeded program target by 0.2 percent of GDP. - Expenditure below program limit largely due to lower than programmed investment spending; pro-poor spending exceeded target. - Overall budget deficit for 2012: -3.4 percent of GDP (actual) versus -4.3 percent of GDP (program). - Continuous PC on new non-concessional external debt missed due to two small commercially-priced aircraft leasing arrangements guaranteed by the government in late-2012. - Indicative target on floor for net reduction of government amounts payable missed because planned issuance of treasury bonds and bills in November and December could not take place. - Floating debt: rose from CFAF 99 billion to CFAF 204 billion at end-December 2012 (a 0.75 percent of GDP increase). - Structural benchmarks: - Only 8 out of 16 structural benchmarks for the third review were met. - Achievements: cocoa sector reform completed; noticeable progress in reducing energy subsidies (rationalization of social tariffs in Q1 2013; increase in gasoline and butane prices in January 2013; implementation of automatic fuel price mechanism in April 2013). - Missed/delayed benchmarks (selected): stock-take of VAT exemptions; medium-term strategy to control the wage bill; action plan for restructuring public sector banks; financial sector reform and development strategy; adoption of new electricity code; plans to settle domestic arrears; law on competition. - Government taking corrective actions for missed benchmarks (see MEFP paragraphs 24–27). ### Policy discussions and macro outlook - Growth projections: - Authorities: GDP growth of 9 percent in 2013 and 10 percent in 2014–15. - Staff: GDP growth of 8 percent in 2013 and staff revised upward real GDP growth to 8 percent in 2014 for the medium term. - Risks: balanced—upside from stronger-than-expected FDI and announced projects; downside from socio-political insecurity, potential global downturn (notably euro area), weak business environment, and weak public infrastructure. - Fiscal policy and 2013 adjustments: - Authorities requested accommodation for higher capital spending: increase of 0.4 percent of GDP in programmed investment. - Priority additional capital spending: domestic component for Soubré hydroelectric dam; completion of Abidjan-Yamoussoukro highway; renovation of building for African Development Bank headquarters. - Revenue adjustments: lower oil and cocoa prices and suspension of windfall gain tax in mining reduce revenues; expected offsets include higher social security contributions and dividends unpaid last year by Petroci. - Net effect: total revenue expected to increase in nominal terms but to be 0.2 percent of GDP lower than previously projected, reflecting upward revision of nominal GDP. - Structural reform priorities: contain fiscal risks, strengthen revenue collection, improve public financial management and business climate, regularize domestic debt. ### Fiscal targets and financing (2013) - Revised fiscal targets: - Overall balance deficit: 3.2 percent of GDP (from 2.9 percent of GDP). - Primary basic balance: -0.3 percent of GDP (from 0.2 percent of GDP). - Financing: - Required additional financing described as small and manageable. - Financing requirement for 2013 expected to be filled almost entirely by external support from bilateral and multilateral lenders. - Net financing on regional money market limited given large redemptions due December 2013; government intends to exchange existing securities for longer maturity bonds and pre-finance amounts needed for cash redemptions. ### Revenue performance and VAT/customs collection - Authorities note VAT and customs revenue collection efficiency needs strengthening to achieve 2013 revenue objective. - VAT and import taxes collected in first two months of 2013 were described as somewhat disappointing due to temporary factors (exemptions granted in 2012 now suspended) and expected to be reversed over the year. - Measures adopted by tax and customs directorate: better monitoring of tax compliance. - Planned VAT reform: adopt VAT reform strategy in fall 2013 and start implementation with 2014 budget law, focusing on streamlining exemptions per IMF Fiscal Affairs Department recommendations. - Additional revenue mobilization reforms: - Broaden scope of large taxpayer office; create medium taxpayer office. - Implement one-stop window for international trade. - Create anti-fraud units and reinforce Customs’ post-clearance audits. ### Arrears, floating debt, and cash management - Authorities committed to regularizing domestic arrears and reducing floating debt accumulated in 2012. - Staff urged strengthening cash management and budget control to avoid further accumulation. - Prior action for third review: adoption of main principles of an arrears clearance strategy. - 2013 programmed cash payments for reducing outstanding obligations doubled: 0.36 percent of GDP instead of 0.18 percent of GDP. - Arrears categories and actions: - Arrears to suppliers: first audit in late-2012 of arrears through end-2010; second supplementary audit underway with results expected by end-August; government to decide by end-2013 on amount to be paid in cash in 2013 and reprofiling of remaining arrears. - Arrears on domestic debt: arrears exist due to past constraints; clearance strategy to define modalities. - Floating debt: government intends to pay off all floating debt accumulated at end-2012 in 2013 but anticipates new floating debt on a rolling basis and possible overflow of accounts payable from end-2013 into 2014; up to three fiscal cycles might be necessary to reduce it to a practical minimum (MEFP, ¶24). - Note: No treasury bills or bonds are in arrears. ### Wage bill and public employment - Government committed to containing wage bill. - Medium-term wage bill strategy delayed; due to be completed with Fund technical assistance by end-November 2013. - Strategy objective: progressively reduce wage bill as share of tax revenue to align with WAEMU convergence criteria (35 percent of tax revenue), while accounting for staffing needs of priority social sectors and prior wage promises. - Government committed to respecting the wage bill envelope appropriated in 2013 budget despite trade union demands. ### SOE reform and electricity sector - SOE reform advancing slowly; acceleration needed. - Diagnostic studies for public banks expected by end-September 2013. - Studies for restructuring non-financial SOEs underway; results expected June 2014. - Electricity sector measures: - Further progress needed to reduce remaining subsidies (see MEFP ¶14&27). - Government plans to adopt electricity code in third quarter of 2013 to facilitate bill collection and prosecution of fraud. - Tariff structure review in 2014 to avoid regressivity; other revenue measures considered based on sector financial evolution. - Investments in hydropower and gas plants and distribution network expected to reduce production costs. ### Public financial management and business climate reforms - Planned PFM reforms on track: - Adoption of draft organic laws for fiscal transparency and budget framework law transposing WAEMU directives planned for July 2013. - Medium-term expenditure framework (MTEF) to serve as basis for 2014 budget law and be attached to 2014 budget documentation. - Consolidated commitment and procurement plan to be prepared to smooth 2014 execution and facilitate cash management. - Business climate measures: - Early 2013 action plan adopted: commerce tribunal; one-stop window for company incorporation within 48 hours; drastic reduction of fees/taxes for company creation. - Simplification of customs clearance: one-stop window for international trade; reductions of fees at Port of Abidjan. - Draft law on competition intended by end-June 2013. - Government committed to fully implement public procurement legal framework and monitor share of single sourcing contracts; competitive process currently represents 61 percent of contract value. - Quarterly public procurement report to Council of Ministers. ### External debt, new borrowing, and debt management - HIPC completion provided sizeable debt relief; authorities intend to rely predominantly on grants and concessional loans. - Two 2012 government-guaranteed commercially-priced lease agreements by Air Côte d’Ivoire combined contract values: $10.3 million — inconsistent with zero limit on new non-concessional borrowing at the time. - Soubré dam loan: - Terms finalized on a large loan ($500 million) from Export Import Bank of China; loan non-concessional for Fund program purposes due to annual modification of discount rate—grant element changed from 35.58 percent to 33.35 percent. - Loan not yet effective; authorities requested program limit on new non-concessional debt be raised by amount of the loan. - Authorities requested increase in 2013 ceiling on new non-concessional debt to $800 million (from $100 to $300 million increase for other limited projects and $500 million for Soubré dam). - Authorities requested broadening use of non-concessional borrowing under program limit to include transport sector in addition to energy and infrastructure. - Staff cautioned against overly rapid and large increase in public debt that could jeopardize debt sustainability and increase debt service pressures. - Debt sustainability analysis including Soubré project and proposed increases shows risk of debt distress (moderate) would not change, but highlights potential debt service pressures under severe adverse shocks. - Government to adopt medium-term debt strategy by end-September 2013; MTDS to be attached to 2014 budget. - Debt management reforms: reorganize debt management unit along front-, middle-, back-office lines with Fund TA; limit use of government guarantees and consult IMF staff before contracting. ### Program monitoring, performance criteria, and structural benchmarks - Authorities requested modifications: - Change fiscal PC from overall fiscal balance to basic primary fiscal balance starting end-June 2013. - Change program definition of external debt for limits on non-concessional debt to exclude debt denominated in CFA francs. - Increase ceiling on new non-concessional debt in 2013 to $800 million. - Establish PCs for end-December 2013. - Staff supports changes and modifications of quantitative PCs on fiscal balance, net domestic financing and nonconcessional external borrowing for end-June 2013 and supports proposed quantitative PCs for end-December 2013. - TMU provides definitions and operational rules. - Structural benchmarks for period through end-December 2013 focus on tax policy/administration, public expenditure management, energy and financial sectors, and business climate. ### Risks to program implementation - Risks described as balanced. - Main downside risk: investment, especially foreign investment, materializing more slowly than expected due to socio-political disturbance, security developments, slowdown in reform momentum, changing global environment (particularly euro area), or other factors—could reduce growth and increase social pressures. - Upside risk: stronger-than-programmed FDI could raise employment and fiscal revenue and consolidate socio-economic context. ### Staff appraisal and recommendations - Commendations: - Authorities credited for jump-starting growth via surge in public investment and elimination of external debt arrears. - Economic activity recovered quickly; inflation declined; fiscal position improved. - Program performance: largely on track — all but one PC and all but one indicative target met at end-December 2012. - Structural reform progress: checkered — important reforms completed but only half of sixteen SBs for third review observed. - Staff urges respecting new deadlines for delayed structural reforms, accounting for capacity constraints and TA needs. - Policy recommendations: - Maintain growth momentum while preserving fiscal discipline. - Fast-track structural reforms to improve business climate and increase private sector participation. - Reinforce efforts to improve PFM and domestic revenue mobilization: finalize MTEF, adopt draft organic laws for fiscal transparency and budget system law; improve VAT yield by limiting exemptions, modernizing refund system, reorganizing tax department. - Preserve debt sustainability by favoring grants and concessional loans and strengthening debt management. ### Recommendation and Fund Action - Staff recommends completion of the third review and disbursement of SDR 48.78 million. - Proposed ECF disbursement schedule (selected): - 15 percent = 48.78 (April 1, 2013): observance of performance criteria for December 2012 and completion of third review. - 15 percent = 48.78 (October 1, 2013): observance of performance criteria for June 2013 and completion of fourth review. - Total ECF amount listed = 390.24 (SDR millions). ### Key macroeconomic projections and indicators (selected series as shown) - Real GDP growth (GDP at constant prices): 2011: -4.7; 2012 Prog.: 8.6; 2013 Est.: 9.8; 2014 Prog.: 8.0; 2015 Proj.: 8.0; 2016 Proj.: 8.1; 2017 Proj.: 7.8; 2018 Proj.: 7.5; 2019 Proj.: 7.0. - Consumer price index (annual average): 4.9; 2.0; 1.3; 2.5; 3.1; 2.5; 2.5; 2.5; 2.5; 2.5 (series as shown). - Nominal GDP (CFAF billions): 11,360; 12,460; 12,600; 13,765; 14,035; 15,531; 17,182; 18,908; 20,757; 22,647 (series as shown). - Current account balance (including official transfers) (percent of GDP): 12.9; -3.2; -1.3; -3.4; -2.9; -2.6; -3.6; -3.8; -4.0; -4.2 (series as shown). - Gross public debt (percent of GDP): 71.2; 49.5; 45.6; 45.7; 43.2; 41.2; 39.7; 38.6; 37.6; 36.5 (series as shown). - Public external debt (percent of GDP): 55.1; 34.3; 30.8; 32.0; 29.9; 28.7; 27.7; 26.8; 26.0; 25.0 (series as shown). - Public external debt-service due (CFAF billions): 364; 245; 245; 249; 259; 365; 396; 420; 480; 513 (series as shown). ### External sector, DSA, and debt sustainability - LIC-DSA key findings: - Results confirm Côte d’Ivoire’s debt dynamics are sustainable. - Stress tests reaffirm vulnerabilities to shocks to growth, exports and fiscal performance. - Net impact versus previous LIC-DSA: slight improvement in debt indicators where higher growth dominates; slight worsening of debt-service indicators where higher borrowing dominates. - Large project loan information reported: - Soubré hydroelectric dam: $500 million. - Extension of port of Abidjan: about $800 million. - Extension/rehabilitation of electricity distribution network: about $900. - Inclusion of domestic debt in LIC-DSA: - With inclusion, public debt situation deteriorates modestly; public debt ratios fall over long run owing to projected macro improvement. - Public debt indicators particularly sensitive to GDP growth assumptions and shocks. - Debt stock composition (end-2012, selected): - Total external debt: 7,814 Million US dollars (31.6 percent of GDP). - Multilateral creditors: 1,344 Million US dollars (17.2 percent of total). - Official bilateral creditors: 3,851 Million US dollars (49.3 percent of total). - Commercial creditors (Eurobond): 2,619 Million US dollars (33.5 percent of total). - External debt sustainability indicators (selected baseline results): - External debt (nominal) (percent of GDP series): 76.3; 76.9; 51.3; 45.6; 43.0; 40.3; 37.8; 35.1; 32.6; 23.3; 15.1 (series shown). - PV of PPG external debt (percent of GDP) and PV-to-revenue ratios presented in tables; stress tests and alternative scenarios reported as in LIC-DSA. ### Performance criteria, targets, and compliance highlights (selected) - Continuous PC: Ceiling on new nonconcessional external debt (in $ million): - 2012 targets: 0.0 (Met for March, Sept., Dec. tests). - 2013 tests: 0.0 (March), 9.9 (June) — Not met for the June test date. - Ceiling values in tables listed as 100.0 and 800.0 (Original PC / New PC). - Continuous PC: Ceiling on accumulation of new external arrears: targets 0.0 throughout and shown as Met. - Indicative targets and actuals (selected): - Floor on pro-poor expenditure (Billions of CFA francs): target 980.0; execution 1,080.3 (Met). - Floor on government revenue (Billions of CFA francs): targets and series shown as Met (e.g., 1,697.3 target; actual 2,492.2 etc.). ### Structural benchmarks and timelines (selected) - Tax policy/administration: - Quarterly report on DGI action plan on VAT optimization — Status: Met (continuous). - Stocktaking of VAT exemptions — SB end-February 2013 — Status: Not met. - Public expenditure management: - Update and implement medium-term strategy for controlling wage bill — SB end-February 2012 — Status: Not met. - Energy sector: - Adopt electricity code in Council of Ministers — PA November 15, 2012 and SB end-March 2013 — Mixed status. - Collection-rate target in former CNO zone: increase from 40 percent in 2012 to at least 60 percent in 2013. - Financial sector: - Adopt time-bound action plan for restructuring public banks based on audit recommendations — SB end-October 2013 (rescheduled). - Prepare financial sector reform and development strategy — SB end-December 2013 (rescheduled). ### Capacity building and technical assistance priorities - AFRITAC West inauguration noted as evidence of priority on capacity building. - Technical assistance needs in coming 12 months focus on: - (i) preparing national debt policy document; - (ii) preparing government wage bill strategy; - (iii) designing tax policy strategy; - (iv) assessing budget risks of PPP projects; - (v) preparing balance of payment forecasts. - Statistics and capacity: - Authorities committed to improving statistical system; law on national statistics expected to be presented to National Assembly before July 2013 and implemented before end-2013. - Statistics master plan 2012–15 approved and includes quarterly national accounts, HCPI update, and other initiatives. ### IMF Executive Board — Third ECF review (Press Release No. 13/201, June 7, 2013) — outcomes - Executive Board completed third review and approved disbursement: SDR 48.78 million (about US$74.1 million). - Total disbursements under arrangement after decision: SDR 260.16 million (about US$395.4 million). - ECF arrangement approved: November 4, 2011 for SDR 390.24 million (120 percent of quota). - Macro outcomes reiterated: 2012 growth 9.8 percent; 2012 inflation 1.3 percent; fiscal position improved; current account swung into deficit due to investment-related imports, financed in part by higher FDI; external arrears eliminated. *Source: IMF staff report — EXECUTIVE SUMMARY and selected chapters (Côte d’Ivoire), May 22, 2013.* ### EXECUTIVE SUMMARY ### EXECUTIVE SUMMARY ### Extended Credit Facility arrangement - The Executive Board approved a three-year ECF arrangement for SDR 390.24 million (120 percent of quota) on November 4, 2011 to support the authorities’ medium-term program. - The first and second reviews under the Extended Credit Facility (ECF) arrangement were concluded respectively in May and November, 2012. - Staff supports the completion of the third review under the ECF and the authorities’ requests for a waiver for nonobservance of the continuous performance criterion on new non-concessional external debt, and for modifications of performance criteria. - Completion of the review will result in disbursement of an amount equivalent to SDR 48.78 million under the ECF arrangement. - The authorities have consented to publication of the staff report, Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding. - Date on the document: May 22, 2013. ### Socio-political context and short-term risks - Political reconciliation: political dialogue between the government and main opposition parties has resumed, but the Front Populaire Ivoirien (FPI) refused to participate in local and regional elections on April 21; the Dialogue, Truth and Reconciliation Commission (CDVR) is advancing slowly. - Security: the security situation has improved somewhat but incidents—particularly along the border with Liberia—continue; reform of the security apparatus is under way with international support. - Social pressures: public sector unions have initiated strikes seeking sizeable wage increases; high public perception of the cost of living constrains politically-sensitive measures. - Short-term risks: fragile socio-political context and structural weaknesses in infrastructure and the business environment could dampen private sector engagement and delay reforms. ### Recent economic developments (key figures and indicators) - Growth and inflation: - GDP growth in 2012: 9.8 percent (program had projected 8.6 percent). - Average annual inflation in 2012: 1.3 percent. - External sector: - Current account: preliminary estimate shows a deficit of about 2 percent of GDP in 2012 driven primarily by a surge in investment-related imports. - Foreign direct investment: a rise in FDI flows helped finance the current account deficit. - At end-2012, Côte d’Ivoire no longer had any outstanding arrears to its external creditors. - Monetary and banking sector: - Net domestic credit expansion in 2012: 16 percent. - Net foreign assets decline in 2012: -14percent. - Money supply increased less than nominal GDP in 2012. - Banking sector: capital-adequacy ratios slightly deteriorated in 2012 but remained above the prudential threshold of 8 percent; non-performing loans remained high at 15.7 percent of total loans (in gross terms) and were relatively well provisioned. - Prudential breaches: 7 out of 23 banks did not observe the regional minimum capital requirement at end-2012; 10 banks violated the single large exposure limit; 7 of the 23 banks were in breach of the liquidity ratio (compared with 4 banks in 2011). ### Program performance (quantitative outcomes and structural reforms) - Quantitative targets: - All but one performance criterion and all but one indicative target at end-December 2012 were met. - Total revenue exceeded program target by 0.2 percent of GDP. - Expenditure was below program limit largely due to lower than programmed investment spending, while pro-poor spending exceeded target. - Overall budget deficit for 2012: -3.4 percent of GDP (actual) versus -4.3 percent of GDP (program). - Continuous performance criterion on new non-concessional external debt was missed due to two small commercially-priced aircraft leasing arrangements guaranteed by the government in late-2012. - The indicative target on the floor for net reduction of government amounts payable was missed because planned issuance of treasury bonds and bills in November and December could not take place. - Floating debt: volume of floating debt at end-December 2012 rose from CFAF 99 billion to CFAF 204 billion (a 0.75 percent of GDP increase). - Structural benchmarks: - Only 8 out of the 16 structural benchmarks for the third review were met. - Achievements: cocoa sector reform completed; noticeable progress in reducing subsidies to the energy sector (rationalization of social tariffs of electricity in Q1 2013; increase in gasoline and butane prices in January 2013; implementation of an automatic fuel price mechanism in April 2013). - Delays and missed benchmarks included: - Stock-take of VAT exemptions (pending further studies). - Preparation of a medium-term strategy to control the wage bill (pending the conclusion of the social forum). - Adoption of an action plan for restructuring public sector banks (due to ongoing audits). - Preparation of financial sector reform and development strategy (awaiting more detailed World Bank studies). - Adoption of a new electricity code (still under discussion with the World Bank). - Adoption of plans to settle domestic arrears (due to a second round of audits). - Adoption of the law on competition (delayed by administrative factors). - Government is taking corrective actions for missed structural benchmarks (see MEFP paragraphs 24–27). ### Policy discussions and outlook - Growth projections: - Authorities’ projections: GDP growth of 9 percent in 2013 and 10 percent in 2014–15. - Staff projection: GDP growth of 8 percent in 2013 and staff revised upward real GDP growth to 8 percent in 2014 for the medium term. - Staff view: risks to growth outlook are balanced—upside from stronger-than-expected FDI and announced projects; downside from socio-political insecurity, potential global downturn (notably euro area), weak business environment, and weak public infrastructure. - Fiscal policy: revised 2013 fiscal targets to accommodate more public investment - Rationale: the authorities argued for reflecting the December 2012 Consultative Group meeting outcome by accommodating somewhat higher capital spending (an increase of 0.4 percent of GDP in programmed investment). - Priority projects for additional capital spending include: the domestic component for construction of the Soubré hydroelectric dam, completion of the Abidjan-Yamoussoukro highway, and renovation of a building to host the new headquarters of the African Development Bank. - Revenue adjustments: lower oil and cocoa prices and suspension of the windfall gain tax in the mining sector would reduce revenues; these shortfalls are expected to be offset by higher social security contributions and dividends unpaid last year by Petroci. - Net effect: total revenue is expected to increase in nominal terms, but to be 0.2 percent of GDP lower than previously projected, reflecting the upward revision of nominal GDP. - Structural reform agenda: continued focus on containing fiscal risks, strengthening revenue collection, improving public financial management and the business climate, and regularizing domestic debt. ### Program monitoring, financing and risks - The program monitoring schedule and detailed performance criteria, indicative targets, and technical memoranda are set out in the main report appendices and tables (performance criteria and indicative targets, proposed schedule of disbursements, and indicators of capacity to repay the Fund). *Source: IMF staff report — EXECUTIVE SUMMARY (Côte d’Ivoire), May 22, 2013.* ### 14. While the proposed adjustments result in a slightly higher fiscal deficit, the required ### _cr13171 - 14. While the proposed adjustments result in a slightly higher fiscal deficit, the required ### Fiscal targets and financing - Revised fiscal targets: - Overall balance deficit: 3.2 percent of GDP (from 2.9 percent of GDP). - Primary basic balance: -0.3 percent of GDP (from 0.2 percent of GDP). - The proposed adjustments lead to a slightly higher fiscal deficit, but the required additional financing is described as small and manageable. - The financing requirement for 2013 is expected to be manageable and is expected to be filled almost entirely by external support from bilateral and multilateral lenders. - Net financing on the regional money market is limited given the large redemptions falling due in December 2013; government intends to exchange existing securities for longer maturity bonds and pre-finance amounts needed for cash redemptions. ### Revenue performance and VAT/customs collection - Authorities recognized that achieving the 2013 revenue objective requires strengthening the efficiency of VAT and customs revenue collection. - Revenues from VAT and import taxes collected in the two first months of 2013 were described as somewhat disappointing, attributed largely to temporary factors (exemptions granted in 2012 and suspended since) and expected to be reversed over the rest of the year. - The tax and customs directorate have adopted measures to better monitor tax compliance. - The government will adopt a VAT reform strategy in the fall of 2013 and start implementing it with the 2014 budget law, with a focus on streamlining exemptions following IMF Fiscal Affairs Department recommendations. - Additional revenue mobilization reforms include: - Broadening the scope of the large taxpayer office and creating a medium taxpayer office. - Implementing a one-stop window for international trade. - Creation of anti-fraud units and reinforcement of Customs’ post-clearance audits. ### Arrears, floating debt, and cash management - Authorities committed to regularizing domestic arrears and reducing floating debt accumulated in 2012. - Staff urged strengthening cash management and budget control to avoid further accumulation of floating debt or arrears. - Prior action for the third review: adoption of main principles of an arrears clearance strategy. - 2013 programmed amount of cash payments for reducing outstanding obligations doubled compared to previous program objective: 0.36 percent of GDP instead of 0.18 percent of GDP. - Arrears categories to be addressed: - Arrears to suppliers: a first audit in late-2012 of arrears accumulated through end-2010; a second supplementary audit is underway with results expected by end-August. Government will decide by end-2013 on amount to be paid in cash in 2013 and reprofiling of remaining arrears. - Arrears on domestic debt: arrears exist due to past financial constraints; the arrears clearance strategy will define modalities for regularization. - Floating debt: government intends to pay off in 2013 all floating debt accumulated at end-2012, but cash flow constraints in 2013 will result in new floating debt being accumulated on a rolling basis and ultimately an overflow of accounts payable from end-2013 into 2014. Government allocates financial resources from 2013 to reduce floating debt stock but envisages up to three fiscal cycles might be necessary to reduce it to a practical minimum (MEFP, ¶24). - Note: No treasury bills or bonds are in arrears. ### Wage bill and public employment - Government committed to containing the wage bill. - Delayed medium-term wage bill strategy due to be completed with Fund technical assistance by end-November 2013. - Strategy aim: progressively reduce the wage bill as a share of tax revenue to align with WAEMU convergence criteria (35 percent of tax revenue), while accounting for staffing needs of priority social sectors and prior wage promises. - Meanwhile, government committed to respecting the wage bill envelope appropriated in the 2013 budget despite trade union demands. ### SOE reform and electricity sector - Reform of SOEs is advancing slowly and needs acceleration. - Diagnostic studies for public banks expected to be completed by end-September 2013. - Studies for restructuring options for non-financial SOEs underway, results expected in June 2014. - Electricity sector financial sustainability efforts: - Several steps taken, but further progress needed to gradually reduce remaining subsidies (see MEFP paragraphs 14&27). - Government plans to adopt the electricity code in the third quarter of 2013 to facilitate bill collection and prosecution of fraud. - Tariff structure to be reviewed in 2014 to avoid regressivity; other revenue generating measures considered based on sector financial evolution. - Government expects investments in hydropower and gas plants, and in the distribution network, will significantly contribute to reducing electricity production costs. ### Public financial management and business climate - Planned reforms to improve public financial management are on track: - Adoption of draft organic laws for fiscal transparency and budget framework law transposing WAEMU directives planned for July 2013. - Medium-term expenditure framework (MTEF) to serve as basis for 2014 budget law and be attached to 2014 budget documentation. - Consolidated commitment and procurement plan to be prepared to smooth 2014 budget execution and facilitate cash management. - Reforms to boost private sector confidence continue: - Early 2013 action plan adopted to improve business climate, including creation of a commerce tribunal and a one-stop window for company incorporation within 48 hours, and drastic reduction of fees and taxes for creation of new companies. - Planned simplification of customs clearance procedures with one-stop window for international trade and reductions in various fees at the Port of Abidjan. - Intention to adopt a draft law on competition by end-June 2013. - Government committed to fully implement public procurement legal framework and monitor share of single sourcing contracts in total public procurement; currently contracts issued through competitive process represent 61 percent of contract value. Government will present a quarterly public procurement report to the Council of Ministers. - Intends to award future exploration rights in the hydrocarbon sector through competitive bidding. ### External debt, new borrowing, and debt management - HIPC completion provided sizeable debt relief and scope for new borrowing to finance public investment program; authorities intend to rely predominantly on grants and concessional loans. - Two 2012 government-guaranteed commercially-priced lease agreements by Air Côte d’Ivoire with combined contract values of $10.3 million were inconsistent with program’s then zero limit on new non-concessional borrowing. - Terms finalized on a large loan ($500 million) from the Export Import Bank of China to finance Soubré hydroelectric dam; loan was non-concessional for Fund program purposes due to annual modification of discount rate—grant element changed from 35.58 percent to 33.35 percent. - Loan not yet effective; authorities requested program limit on new non-concessional debt be raised by amount of the loan. - Authorities seeking an additional $200 million increase in existing program limit on new non-concessional debt in 2013 to accommodate borrowing for high priority projects not available on 35 percent grant element terms. - Authorities requested increase in 2013 ceiling on new non-concessional debt to $800 million to accommodate Soubré dam ($500 million) and additional limited borrowing (an increase from $100 to $300 million) for high priority projects. - Authorities also requested broadening use of non-concessional borrowing under program limit to include transport sector projects in addition to energy and infrastructure. - Staff cautioned against overly rapid and large increase in public debt that could jeopardize debt sustainability and increase debt service pressures on the budget. - Debt sustainability analysis including Soubre project and proposed increases shows Cote d’Ivoire’s risk of debt distress (moderate) would not change, but highlights potential debt service pressures under severe adverse shocks. - Government plans by end-September 2013 to adopt a medium-term debt strategy to maintain debt sustainability; strategy will be attached to the 2014 budget. - Government intends to reorganize the debt management unit along functional lines (front-, middle-, back-office) with Fund technical assistance. - Authorities developing capacity for evaluating and monitoring PPPs and have requested technical assistance from Fiscal Affairs Department. - Government intends to restrict use of government guarantees and will consult with IMF staff on possible guarantees before contracting; Ministry of Finance will ensure debt directorate involvement prior to extension of guarantees on external debt. - The two lease agreements mentioned are considered sufficiently small to have no material impact on program performance or debt sustainability. ### Program monitoring, performance criteria, and structural benchmarks - Authorities requested changes to program performance criteria: - Change fiscal performance criterion from overall fiscal balance to basic primary fiscal balance, starting with end-June 2013 targets. - Change program definition of external debt for limits on non-concessional debt to exclude debt denominated in CFA francs. - Increase ceiling on new non-concessional debt in 2013 to $800 million. - Changes in fiscal performance criteria for end-June 2013 to accommodate fiscal program revisions. - Establish performance criteria for end-December 2013. - Staff supports changes and modifications of quantitative performance criteria on fiscal balance, net domestic financing and nonconcessional external borrowing for end-June 2013, and supports proposed set of quantitative PCs for end-December 2013. Definitions provided in the Technical Memorandum of Understanding (TMU). - Structural benchmarks proposed (see MEFP, Table 3) covering period through end-December 2013, focusing on tax policy/administration, public expenditure management, the energy and financial sectors, and the business climate. ### Risks to program implementation - Risks described as balanced. - Main downside risks: - Investment, especially foreign investment, materializing more slowly than expected due to socio-political disturbance, security developments, slowdown in reform momentum, changing global environment (particularly in the euro area), or other factors; could reduce growth and increase social pressures. - Upside risk: - Stronger-than-programmed foreign direct investment could raise employment and fiscal revenue and consolidate socio-economic context. ### Staff appraisal and recommendations - Authorities commended for jump-starting growth via surge in public investment and elimination of all external debt arrears; economic activity recovered quickly, inflation declined, and fiscal position improved. - Quantitative program largely on track: all but one performance criterion and all but one indicative targets were met at end-December 2012. - Progress on structural reform agenda checkered: important reforms completed (reducing energy subsidies, improving cocoa sector incentives, strengthening business climate), but only half of sixteen structural benchmarks for third review were observed; many earlier benchmarks delayed. - Staff urges authorities to respect new deadlines for delayed structural reforms, reprogrammed accounting for capacity constraints and technical assistance needs. - Macroeconomic prospects positive: continued public investment increase supports strong growth momentum in 2013 and beyond; with sustained policy discipline fiscal position should improve and inflation remain moderate; moderate widening of external current account deficit due to investment-related imports projected to be financed by higher FDI inflows. - To maintain growth momentum, increased private sector participation required; staff encourages fast-tracking structural reforms to improve business climate. - Staff welcomes authorities’ commitment to regularizing domestic arrears and reforming financial sector. - Ongoing efforts to improve public financial management and domestic revenue mobilization need reinforcement: finalize MTEF, adopt draft organic laws for fiscal transparency and budget system law; improve VAT yield via limitation of exemptions, modernization of refund system, and reorganization of tax department. - Authorities should preserve debt sustainability achieved after HIPC Completion Point by avoiding overly rapid increases in public debt and debt service; staff welcomes measures to strengthen debt management and preference for grants and concessional loans to finance public investment plan. *Italic: IMF Staff Report content provided in the source PDF.* ### 39. Staff supports the authorities’ requests for a waiver for nonobservance of the ### Staff supports the authorities’ requests for a waiver for nonobservance of the continuous performance criterion on new non-concessional external debt, the modifications of performance criteria for end-June 2013, and the proposed performance criteria for end-December 2013. ### Recommendation and Fund Action - Staff recommends completion of the third review and a disbursement of an amount equivalent to SDR 48.78 million under the ECF arrangement. - Proposed ECF disbursement schedule (selected): - 15 percent = 48.78 (April 1, 2013): Observance of performance criteria for December 2012 and completion of the third review under the ECF arrangement. - 15 percent = 48.78 (October 1, 2013): Observance of performance criteria for June 2013 and completion of the fourth review under the ECF arrangement. - Total ECF amount listed = 390.24 (SDR millions). ### Key macroeconomic projections and indicators (selected) - Real GDP growth (GDP at constant prices): - 2011: -4.7 - 2012 Prog.: 8.6 - 2013 Est.: 9.8 - 2014 Prog.: 8.0 - 2015 Proj.: 8.0 - 2016 Proj.: 8.1 - 2017 Proj.: 7.8 - 2018 Proj.: 7.5 - 2019 Proj.: 7.0 - GDP deflator (annual percent changes): 5.0; 1.2; 1.3; 2.2; 3.2; 2.7; 2.7; 2.2; 2.3; 2.1 (series as shown). - Consumer price index (annual average): 4.9; 2.0; 1.3; 2.5; 3.1; 2.5; 2.5; 2.5; 2.5; 2.5 (series as shown). - Nominal GDP (CFAF billions): 11,360; 12,460; 12,600; 13,765; 14,035; 15,531; 17,182; 18,908; 20,757; 22,647 (series as shown). - Nominal GDP at market prices (US$ billions): 24.1; 24.1; 24.7; 26.0; 28.4; 31.2; 34.3; 37.5; 40.8; 46.0 (series as shown). - Population (million): 2.7; 2.7; 3.4; 3.4; 4.1; 4.1; 4.8; 5.2; 6.3; 7.1 (series as shown). ### External sector and balance of payments (selected) - Trade balance (Billions of CFA francs): 2,744.6 (2011); 1,449.3 (2012 Prog.); 1,285.8 (2013 Est.); 1,403.5 (2014 Prog.); 1,071.2 (2015 Prog.); 1,164.6; 1,099.2 (further series shown). - Exports, f.o.b. (Billions of CFA francs): 5,806.9; 5,927.4; 6,006.0; 6,611.5; 6,084.9; 6,599.3; 6,986.9 (series as shown). - Imports, f.o.b. (Billions of CFA francs): -3,062.3; -4,478.2; -4,720.2; -5,208.0; -5,013.7; -5,434.7; -5,887.7 (series as shown). - Current account balance (including official transfers) (percent of GDP): 12.9; -3.2; -1.3; -3.4; -2.9; -2.6; -3.6; -3.8; -4.0; -4.2 (series as shown). - Gross public debt (percent of GDP): 71.2; 49.5; 45.6; 45.7; 43.2; 41.2; 39.7; 38.6; 37.6; 36.5 (series as shown). - Public external debt (percent of GDP): 55.1; 34.3; 30.8; 32.0; 29.9; 28.7; 27.7; 26.8; 26.0; 25.0 (series as shown). - Public external debt-service due (CFAF billions): 364; 245; 245; 249; 259; 365; 396; 420; 480; 513 (series as shown). - Percent of exports of goods and services: 5.7; 3.8; 3.6; 3.5; 3.7; 4.7; 4.8; 4.7; 4.9; 4.8 (series as shown). - Percent of government revenue: 22.1; 9.8; 9.7; 9.7; 9.4; 11.5; 10.8; 10.4; 10.7; 10.4 (series as shown). ### Fiscal operations (central government) — aggregates and selected items - Total revenue and grants (Billions of CFA francs): 1,725.9 (2011); 2,553.9 (2012 Prog.); 2,621.4 (2013 Est.); 2,988.5 (2014 Prog.); 2,992.0 (2015 Prog.); 3,448.7; 3,929.1 (series as shown). - Total revenue (Billions of CFA francs): 1,693.0; 2,492.2; 2,540.2; 2,742.4; 2,764.5; 3,183.4; 3,649.5 (series as shown). - Total expenditure (Billions of CFA francs): 2,208.7; 3,090.3; 3,054.0; 3,387.2; 3,445.4; 3,928.0; 4,464.9 (series as shown). - Overall balance, including grants (Billions of CFA francs): -482.9; -536.4; -432.7; -398.7; -453.4; -479.3; -535.8 (series as shown). - Overall balance (percent of GDP): -5.7; -4.3; -3.4; -2.9; -3.2; -3.1; -3.1 (series as shown). - Primary basic balance (Billions of CFA francs) listed as: -248.0; -235.9; -170.4; 23.3; -44.0; -3.2; 101.8 (series as shown). - Tax revenue (Billions of CFA francs): 1,493.2; 2,159.9; 2,213.0; 2,409.6; 2,391.4; 2,810.6; 3,210.4 (series as shown). - Direct taxes (Billions of CFA francs): 507.9; 697.1; 720.4; 692.3; 693.6; 821.7; 977.0. - Profit tax on oil (Billions of CFA francs): 154.9; 202.7; 213.5; 140.2; 126.4; 189.5; 227.4. - Wages and salaries (Billions of CFA francs): 719.7; 940.4; 934.6; 1,038.9; 1,038.9; 1,164.8; 1,271.8. - Interest due (Billions of CFA francs): 219.3; 235.0; 233.0; 212.7; 196.2; 228.3; 253.8. - On domestic debt: 89.6; 80.8; 79.6; 106.7; 96.6; 110.2; 118.7. - On external debt: 129.7; 154.2; 153.4; 106.1; 99.6; 118.1; 135.1. ### Monetary aggregates and banking sector (selected) - Broad money (M2) (Billions of CFA francs): 4,705.1; 5,663.6; 4,911.6; 6,372.8; 5,705.2; 6,391.4; 7,070.7 (series as shown). - Money and quasi-money (percent changes): 12.5; 20.4; 4.4; 12.5; 16.2; 12.0; 10.6; 10.0; 9.8; 9.1 (series as shown). - Net foreign assets (changes in percent of beginning-of-period broad money): 9.8; 10.0; -5.4; 5.5; 8.1; 5.2; 2.8; 3.0; 2.5; 2.6 (series as shown). - Credit to the economy (Billions of CFA francs): 2,142.8; 2,426.4; 2,326.4; 2,718.9; 2,617.6; 2,918.0; 3,261.3 (series as shown). ### External financing requirements and financing gaps - External financing requirements (Billions of CFA francs): -638.5; -695.8; -234.7; -687.1; -667.3; -789.4; -829.1 (series as shown). - Financing gap (Billions of CFA francs): 0.0; -581.7; 0.0; -158.3; -163.8; -186.4; -80.2 (series as shown). - Available financing (Billions of CFA francs): 638.5; 114.0; 234.7; 528.8; 503.5; 603.0; 748.9 (series as shown). - Possible IMF ECF (residual gap portion) listed: 0.0; 75.1; 75.1; 61.2; 0.0 (as shown in related tables). ### Performance criteria, targets, and compliance highlights - Continuous PC: Ceiling on new nonconcessional external debt (in $ million): - 2012 targets: 0.0 (Met for March, Sept., Dec. tests). - 2013 tests show: 0.0 (March), 9.9 (June) — Not met for the June test date. - Ceiling values repeatedly listed as 100.0 and 800.0 in the table configuration (columns labeled Original PC / New PC). - Continuous PC: Ceiling on accumulation of new external arrears: - Targets listed as 0.0 throughout and shown as Met for tests. - Indicative targets and selected actuals: - Floor on the overall fiscal balance (including grants) (Billions of CFA francs): -395.5; -197.7 (Met at one test); actuals include -536.4; -432.7 (Met). - Floor on pro-poor expenditure (Billions of CFA francs): 676.9; 775.6 (Met at a test); later series show 980.0; 1,080.3; 1,152.8; 1,309.1 (Met in tests reported). - Floor on government revenue (Billions of CFA francs): 1,697.3; 1,901.3 (Met at tests); 2,492.2; 2,540.2; 2,742.4; 2,764.5 (series shown as Met). ### Financial soundness and banking sector indicators (selected, end-period) - Risk-weighted capital to assets ratio (percent): 9.5; 9.3; 10.2; 12.5; 9.8; 9.4 (series shown). - NPLs/total loans (percent): 21.5; 19.5; 17.0; 16.4; 16.3; 16.1 (series shown). - Provisioning rate (percent): 88.3; 77.3; 75.9; 74.9; 67.3; 78.9 (series shown). - Liquid assets/total assets (percent): 41.9; 42.0; 42.1; 42.6; 50.3; 47.1 (series shown). - Loans/deposits (percent): 80.3; 95.8; 92.8; 87.2; 71.3; 75.7 (series shown). *Source: Ivoirien authorities; and IMF staff estimates and projections (selected tables and text from the provided document).* ### Appendix I. Letter of Intent ### Appendix I. Letter of Intent ### Political and institutional context - January 2013 visit coincided with end of the social and political normalization phase and start of the economic expansion phase of the post-crisis experience. - Judiciary and public administration re-established throughout the territory; National Assembly became fully operational in 2012 and held its two regular sessions. - National reconciliation advanced through the Dialogue, Truth and Reconciliation Commission (CDVR) and launch of local commissions. - Security improved owing to enhanced arrangements and cooperation with neighboring countries, facilitating refugee returns. - New government appointed November 2012 committed to continue peace-building and economic recovery in line with the 2011–14 economic and financial program supported by the Extended Credit Facility (ECF). ### Macro outcomes for 2012 - GDP growth: 9.8 percent in 2012 (vs. forecasted 8.6 percent). - Inflation: annual average 1.3 percent (within community norm of 3 percent). - Sector growth contributions: secondary sector 19.2 percent; tertiary sector 13.5 percent. - Investment: - Investment rate rose to 13.7 percent of GDP in 2012 (vs. 8.2 percent in 2011 and 9 percent in 2010). - Investment increase driven by 83.3 percent rise in investment (public infrastructure and private plant and equipment renewal). - Money and credit: - Money supply grew by 4.4 percent at end-December 2012. - Net credit to the economy increased by 12.4 percent. - Net government position increased by 29.4 percent. - Net foreign assets declined by 14.1 percent but remained at an adequate level. - External accounts: current external deficit of 2.2 percent (largely financed by FDI flows). - External public debt stock at end-2012 (excluding C2D with France) equivalent to 19 percent of GDP after HIPC completion point on June 26, 2012. - C2D debt at end-2012 equivalent to 11.8 percent of GDP. ### Fiscal outcomes and program performance - Overall budget deficit: 3.4 percent of GDP (targeted 4.3 percent). - Basic primary balance: -1.4 percent of GDP (forecast -1.9 percent). - Revenues: - Tax revenue increased by 0.4 percent of GDP due to profit taxes, capital gains, and improved collection on oil product duties/tariffs. - Shortfalls in some VAT and registration fee on coffee and cocoa. - Expenditures: - Wage bill and subsidies/transfers in line with targets. - Current expenditures exceeded target by CFAF 30.2 billion (mainly additional security costs). - Capital expenditure: CFAF 615.8 billion (budget target CFAF 667.5 billion; realization rate 92.2 percent), including CFAF 506.7 billion in domestically financed investment. - Financing: - Postponement of planned bond issues of CFAF 175 billion led to lower net domestic financing: forecast CFAF 443.7 billion vs. actual net domestic financing CFAF 216.9 billion. - Floating debt of CFAF 203.9 billion at end-December 2012 (double end-2011 level). - Performance criteria: - All but one performance criterion and four of five indicative targets observed as of December 31, 2012. - Continuous performance criterion on new nonconcessional debt not observed due to an extended government guarantee for a relatively small amount. - Indicative target on the ceiling for net reduction of amounts payable not observed because of non-issuance of government bonds. - Pro-poor expenditures: execution reached CFAF 1,080.3 billion (above minimum target CFAF 980 billion). - Public enterprises and banks: - Cumulative results of 84 state-owned companies: net profits of CFAF 139.76 billion in 2011 (vs. deficit CFAF 50.03 billion in 2010). - Provisional data at December 31, 2012 show improvement in profitability of banks with majority public capital versus 2011. ### Development strategy, 2013 outlook, and investment plans - Government objective: make Côte d’Ivoire an emerging country by 2020. - Growth targets: - GDP growth expected 9 percent in 2013. - Target of double-digit growth beginning in 2014. - Investment targets: - Overall investment: 13.7 percent of GDP in 2012 → 17.8 percent in 2013 → 19.6 percent in 2014 → 21.1 percent in 2015. - Public investment: 4.9 percent in 2012 → 7.5 percent in 2013 → 8.5 percent in 2014 → 9.5 percent in 2015. - Priority sectors: agriculture, infrastructure and transportation, industry, health, education, environment. - Financing the National Development Plan (PND 2012–15): - Consultative Group in Paris (December 4–5, 2012) resulted in commitments of CFAF 4,319 billion. - Public-private partnership projects attracted international private investors. ### Structural reforms and policy priorities - Continue 2011–14 ECF-supported program with emphasis on: - Regularizing public sector financial situation, including restructuring public banks. - Restoring financial viability of the electricity sector. - Improving business climate and competitiveness. - Strengthening public financial management, especially debt management. - Deepening tax policy reform and modernizing the government sector. - Consolidating and developing the financial sector. - Enhancing good governance and regional integration. ### Requests and program modifications submitted to the IMF - Requests to the IMF: - Replacement, as of the third review, of the performance criterion on the overall budget balance by the primary basic balance, and conversion of the overall balance into an indicative target for public finance monitoring. - Modifications of program performance criteria and indicative targets for end-June 2013. - Setting of performance criteria for end-December 2013. - Change in the definition of external debt for program limits on non-concessional debt to exclude debt denominated in CFA francs. - Higher ceiling for new non-concessional external debt, in line with the MEFP and Technical Memorandum of Understanding (TMU). - Waiver requested for non-observance of continuous performance criterion on new non-concessional external debt contracted or guaranteed by the government (attributed to misunderstanding of paragraph 12 of the TMU; involved a relatively small amount of government-guaranteed debt). - Measures to prevent recurrence: - Deepen debt management reforms with IMF technical assistance. - Strengthen procedures to centralize all requests for financing. - Continue consultations with IMF staff on possible new external debts and government guarantees. - Financing request: - Request for fourth ECF disbursement of SDR 48.78 millions. ### Social and poverty-reduction measures (Box 1 highlights) - Employment: - Formal sector employment grew by 4.2 percent in 2012 over 2011. - Strengthened job creation institutions: INIE, AGEFOP, AGEPE. - PEJEDEC (World Bank financed) placed 4,857 youths in labor-intensive jobs. - Support for women: - Côte d’Ivoire Women’s Support Fund (FAFCI) set up in 2012 to facilitate micro-credit access; facility makes one-year reduced-rate loans, renewable once. - Agriculture: - Cocoa and coffee producers (around 700,000) to receive 60 percent of CIF price as the farm-gate price. - Education and health: - Education: teacher hiring and classroom construction reduced class size to 43 for 2011-2012; “free school for all” policy increased gross enrollment rate from 76.2 percent in 2008/2009 to 89.3 percent in 2011/2012. - Health: targeted free health care program for mothers and children; free malaria treatment for entire population; reduction of other paid services by 30 percent; rehabilitation and construction of health centers and hiring of medical staff. - Infrastructure and water: - 830.3 km of roads resurfaced and 1,138 km of new roads built. - Abidjan district: installation of a 2,000 m3/h drinking water treatment station, a 10,000 m3 surface reservoir, and twelve (12) large-diameter producing wells. Attachments included with the Letter of Intent: - Memorandum of Economic and Financial Policies - Technical Memorandum of Understanding *Appendix I. Letter of Intent (May 21, 2013).* ### 13. Côte d’Ivoire has benefitted from debt relief on a large part of its external debt, and ### 13. Côte d’Ivoire has benefitted from debt relief on a large part of its external debt, and ### Debt relief and normalization of external debt - Achievement of the HIPC Initiative completion point in June 2012 led to a reduction in the stock of debt of CFAF 3,981.6 billion, of which CFAF 1,486.2 billion under the debt reduction-development contract (C2D), equivalent to 63.6 percent of outstanding external debt at end-2011. - An agreement for joint restructuring of external commercial debt owed to Standard Bank (former BNI securities) and Sphynx (2007 and 2008) creditors was concluded in November 2012; that debt was exchanged for Eurobonds maturing in 2032. - Payment arrears of Eurobond coupons not included in the restructuring total US$96.3 million; these were handled under a creditor-accepted settlement plan being executed on schedule: - Good-faith payment of US$11.3 million made in December 2012. - Remaining balance scheduled for repayment in 2013 (40 percent) and 2014 (60 percent). ### Structural reforms implemented (energy, business climate, coffee/cocoa, governance) - Reform of the energy sector: - On November 7, 2012, the Council of Ministers adopted a strategy for restoring financial equilibrium to the electricity sector. - Operating deficit of the electricity sector declined from CFAF 107 billion in 2011 to CFAF 44 billion in 2012. Contributing factors: reduction in the cost of CI-27 (Foxtrot) block gas; a 10 percent tariff increase in May 2012 for industries; improved invoice collection nationwide including former Center-North-West (CNO) zones; efforts to combat fraud and reduce technical losses; upward renegotiation of export rates in October and December 2012 to levels higher than production costs. - To ensure viability of the butane gas subsidy mechanism, fuel price adjustments implemented since January 1, 2013: - Price of super increased by CFAF 15/liter. - Sales price of a bottle of B6 gas raised from CFAF 1,800 to CFAF 2,000. - Sales price of a bottle of B12 gas raised from CFAF 4,000 to CFAF 5,200. - These measures aim to ensure monthly equilibrium of the butane subsidy account. - Reform of the business climate: - CEPICI designated single investment window in Côte d’Ivoire (Decree N° 2012-867 of September 6, 2012). CEPICI includes a “one-stop shop for business formalities” operational and able to complete all formalities to create a business in less than 48 hours. - Decree to create commercial courts and a law on foreign recognition (exequatur) of arbitration decisions adopted in 2012. The first commercial court opened in October 2012 in Abidjan and began rendering decisions within 90 days. - National workshop in January 2013 produced an action plan focusing on taxes, financing the economy, granting construction permits, property transfers, access to electricity, cross-border trade, performance of contracts and protection of investors. - Reform of the coffee/cocoa sector: - Program for future sales implemented; established a minimum guaranteed producer price for October 2012–March 2013 of CFAF 725 per kilogram, respected nationwide. - Reserve fund financed with CFAF 40 billion. - At end December 2012, stabilization fund had a positive balance of CFAF 16 billion; reserve fund increased by CFAF 16 billion. - Ongoing studies examining possibility of additional allocations to the reserve fund. - Improvement in governance of state structures: - Ethics charter and ethics code for government employees adopted by the Council of Ministers on September 19, 2012. - Management of government corporations improved by restructuring boards of directors and harmonizing executive salaries and attendance fees for board members. - National public entities (EPN): management boards introduced and meeting regularly; annual consolidated financial performance reports produced; financial and operational audits conducted by private firms to strengthen EPN management. ### Implementation delays and pending structural measures - Government portfolio reduction by 25 percent (privatizations, mergers, restructurings) delayed due to need for valuation studies, privatization modality studies, and strategic/operational merger procedures. 2012 developments included: - Creation of Air Côte d’Ivoire. - Liquidation of SOGEPE and SOPIE. - Creation of Energies de Côte d’Ivoire. - Creation of Office National de l’Assainissement et du Drainage (ONAD). - Restructuring of public banking portfolio began due to financial situations of certain banks with public capital; separate valuation studies decided for banks with minority and majority government shareholdings. - Design of a strategy to manage the wage bill delayed pending conclusion of discussions on civil servants’ salary increases; strategy needed to aim toward WAEMU convergence criterion of a ratio of the wage bill to tax revenue of 35 percent over the medium term. - Audit on supplier arrears of the Treasury at end-2010 completed; government decided on a second audit to confirm service delivery and value as basis for settlement. ### Macroeconomic outlook for 2013 (PND-aligned projections) - Government projects an economic growth rate of 9 percent in 2013 (PND objective). - Sectoral growth projections for 2013: - Primary sector: 2.7 percent, driven by subsistence crops, National Agricultural Investment Program (PNIA), and large investments in mines and hydrocarbons via PPPs. - Secondary sector: 16 percent, reflecting improved business climate, increased national and regional demand, and investor confidence. - Tertiary sector: 11.8 percent, due to dynamic performance across components and gradual return of the African Development Bank to Abidjan. - Inflation: - Expected to rise to 3 percent on average in 2013 compared to 1.3 percent in 2012. - From December 2012 to December 2013, expected price change about 2 percent (statistical base effect from 2011 price spike). - External sector and balance of payments: - External current account deficit expected to widen due to import trends linked to public and private investments. - Exports expected to rise by 6 percent, with increased sales of rubber, oil products, palm oil, processed food and manufacturing products. - Balance of capital and financial operations projected in surplus, driven by higher projected grants and rebound in foreign direct investment. - Overall balance of payments projected surplus of CFAF 48 billion. - Money supply: - Expected growth of 12.7 percent, primarily from increased credit to the private sector and net foreign assets. ### Primary objectives of the PND (Box 2) - PND 2012–15 objectives (consistent with the Extended Credit Facility-supported program): - Achieve growth rate of 9 percent in 2013 and 10 percent in 2014 and 2015 as a result of substantial growth in investment (investment share expected to climb from 13.7 percent of GDP in 2012 to 20.8 percent in 2015, with public investments accounting for 9.2 percent). - Halve the poverty rate and return to group of African countries with best UNDP Human Development Index ranking. - Attain the Millennium Development Goals by 2015 or move considerably closer to them. - Create one of the best business climates in Africa and make the economy more competitive. - Rejoin the group of top African countries in terms of good governance and anti-corruption efforts. - Investment projections for 2013–2015: - Total investments expected to rise to CFAF 9,509.9 billion, with public sector CFAF 4,185.6 billion and private sector CFAF 5,324.3 billion. - Commitments by development partners at the Consultative Group meeting on December 4 and 5, 2012 expected to cover most financing of these investments. - Local committees of local authorities and civil society set up to disseminate and monitor PND projects. - Sectoral objectives and strategies assigned to ministries with targets for regular monitoring. ### 2013 Budget framework and fiscal measures - Revised budget to be adopted and submitted to the National Assembly in 2013 to take into account: - Impact of Consultative Group meeting results on 2013 investment program. - Increase in resources for inadequately funded ongoing projects and inclusion of new basic socioeconomic infrastructure projects, especially in rural areas. - New measures (including suspension of tax on windfall profits in mining) leading to downward revision of anticipated tax revenue. - Fiscal balance projections: - Overall budget balance expected to deteriorate from a programmed deficit of 2.9 percent to 3.2 percent of GDP. - Basic primary budget balance expected to move from 0.2 percent to -0.3 percent of GDP. - Reasons for revenue revision: - Revenue losses from the oil sector, the registration fee and the single export tax on coffee-cocoa, and the suspension of the tax on windfall mining profits. - Upward revisions of nominal GDP, revenue from social security contributions and dividends unpaid last year by Petroci noted. - New expenditures: - Updating credit appropriations for projects including the Soubré hydroelectric dam and other priority projects not fully taken into account in the initial budget. - Financing strategy: - Continued borrowing on the regional market. - Increased mobilization of foreign financing in line with Consultative Group meeting results. - Domestic revenue mobilization measures: - Ongoing study on tax exemptions; a VAT reform strategy will be devised and presented as annex to the 2014 proposed budget law to modernize the VAT legal system, improve yield by reducing exemptions and limit exemptions to legislative or regulatory measures alone. - First steps to be taken in fiscal annex to the 2014 proposed budget law. - Tax collection to be further differentiated based on IMF technical assistance recommendations. - Fiscal and customs post-clearance controls to be stepped up; adoption by decree of a procedural manual on customs inquiries to formalize business controls. - Creation of a one-stop shop for foreign trade (GUCE) to improve business climate. - Strengthened efforts to combat tax fraud, including creation of special brigades. - Public procurement: - Priority to competitive procedures in awarding public procurement contracts. - Quarterly reports of the Council of Ministers on public contract execution to be adopted at most 45 days after the end of the quarter to assess procurement procedures used. - Public procurements department to strengthen control to ensure competitive procedures are followed. ### Regularization of domestic debt and arrears clearance - Supplier arrears at end-2010: - Ongoing audit to be completed to determine amount of government debt to suppliers, confirm service delivery and fair price of invoiced services. - Settlement plan to be drawn up and implemented as of September 2013. - Securitized domestic debt: - Government will prepare a plan for settlement of arrears on securitized domestic debt. - Cash reduction in arrears and payables: - Provision for a CFAF 10 billion reduction in arrears by cash payment in 2013. - Net cash reduction in payables (excluding possible rescheduling effects) increased to CFAF 50 billion in 2013 (including CFAF 10 billion for the aforesaid arrears), compared with CFAF 25 billion initially anticipated. - Liabilities: - An audit will be performed at an early date; based on results, a settlement plan will be prepared. - Floating debt inherited from 2012: - Plan to clear it over a maximum period of 30 months to be implemented beginning in 2013. - The main principles of arrears clearance strategy were reported to the IMF on May 15, 2013 (prior action). ### Restructuring of the public sector and public banking - Government to accelerate implementation of strategy to downsize government portfolio by 25 percent. - Studies for nonfinancial sector modalities to be finalized; expected to yield restructuring options and financial implications for government revenue and expenditures, leading to modality decisions and implementation timetable. - Introduction of performance contracts between government and public enterprises to improve profitability; pilot phase to begin in September 2013. - Privatization committee to be reactivated before end-September 2013 to implement privatization policy. - Public banks: - Government to adopt and implement recommendations of studies on restructuring public capital banks and on strategic and operational modalities. - Appraisal studies expected to be completed during third quarter of 2013. - On that basis, government to adopt a report on study results and implement reforms aimed at creating a well-performing public banking hub. *Source: IMF staff report text.* ### 27. The government intends to complete the reform process initiated in 2011, and to ### The government intends to complete the reform process initiated in 2011, and to ### Governance, reform focus, and timelines - Objective: complete reform process initiated in 2011 and strengthen good governance and transparency in public finance management and the public sector. - Key deadline references: end-2013; end-September 2013; end-October 2013. ### Coffee-cocoa sector - Maintain minimum guaranteed producer price at not less than 60 percent of the CIF reference price. - Complete evaluation of cooperatives aimed at strengthening capacity of professional agricultural organizations by end-2013. - Terms of reference for hiring a research firm prepared and recruitment procedure launched. - Ongoing studies to assess need for additional financing of the reserve fund. ### Mining sector - Adopt a new mining code by the Council of Ministers by end-September 2013 at the latest. ### Public finance, MTEFs, and budget management - Transpose WAEMU directives and adopt a draft organic law on the transparency code and on the budget law before the end of 2013. - Extend sectoral MTEFs to five new ministries, bringing total ministries under MTEFs to sixteen. - Draw up an overall MTEF and use it to prepare the 2014 budget; annex overall and sectoral MTEF documents to the proposed budget law. - Specific provisions to support and monitor budget execution in light of surge in investment spending in 2013: - Strengthen project management and assist/monitor line ministries’ administrative and finance directorates (DAAF). - Prepare a consolidated commitment plan and a contracting and procurement plan to be completed in 2014 to ensure fluid budget execution and cash management. ### Electricity sector measures and targets - Aim: promote sector development and achieve financial equilibrium. - Social-tariff customers consuming over 200 kWh every two months reclassified at the general tariff since January 2013 for bills issued as of March 2013. - Utility company’s remuneration revised downward by CFAF 8.5 billion a year over the next three years (2013-2015). - Government reduced selling price of its gas share from the CI-26 field (CNR), effective January 2013. - Collection-rate target in former CNO zone: increase from 40 percent in 2012 to at least 60 percent in 2013. - Continue efforts to fight fraud and reduce technical losses nationwide. - Sector production capacity to increase when a 100 MW thermal power plant begins operating in April 2013. - Adopt new electricity code in the Council of Ministers by end-September 2013 at the latest. - Fourth review of the ECF-supported program will review implementation of recovery and financial equilibrium measures for 2013 and 2014. - Examine possible need to increase low-voltage electricity rates if sector does not attain equilibrium. ### Hydrocarbon sector - Measures taken in January 2013 to control deficit linked to the butane subsidy. - Adopted an oil product price structure in November 2012 as basis for implementing automatic petroleum pump-price setting mechanism as of April 1, 2013. - Complete procedures for dealing with SIR claims on the government before the end of June 2013. ### Financial sector development strategy - Prepare proposal in cooperation with the World Bank; present to members of CODESFI for approval. - Upon government approval, organize a financing roundtable to implement the strategy. - CODESFI to be responsible for implementing the strategy. ### Wage bill strategy - Finalize and adopt a strategy for keeping the wage bill under control over the medium term by end-October 2013, with IMF technical assistance. - Objective: comply over time with WAEMU regional convergence criterion of a wage bill equivalent to 35 percent of tax revenue. - Pursue measures to control size and salaries of the civil service. - Capitalize on impact of the civil service census and effective implementation of SIGFAE (Côte d’Ivoire Civil Service Management System). ### Business climate and Millennium Challenge Corporation (MCC) eligibility - Consolidate significant progress made in 2012 via an action plan to: - Create a one-stop shop for foreign trade. - Reduce cost of moving goods at the autonomous port of Abidjan. - Lower costs of the property transfer procedure. - Reduce cost of publishing notices of establishment of new businesses. - Action plan to help improve “Doing Business” indicators. - Proposed law on competition adopted by the government in early May 2013. - MCC: country must satisfy five additional criteria in 2013 (of which at least one in “good governance”) beyond five already being observed. - Prime Minister chairs bimonthly meetings to review progress and implement reforms to improve indicator levels. ### Debt strategy and public debt management - Objective: improve fiscal sustainability and debt sustainability; adopt and monitor a national debt policy to minimize risks and costs. - Re-profile domestic debt over medium- and long-term horizon; give priority to concessional financing for external debt. - IMF technical assistance requested to prepare draft national debt policy as frame of reference for debt and public debt management strategy. - Reorganize operational framework of debt management to include front office, middle office, and back office covering domestic and external debt. - Strengthen Ministry in charge of Economy and Finance’s monitoring and evaluation capacity for future debts and government guarantees. - Ensure debt directorate involvement prior to extension of guarantees on external debt. ### Medium-Term Debt Management Strategy (MTDS) - Finalize MTDS before the end of September 2013. - CNDP organized workshops in September 2012 and January 2013 with IMF and World Bank technical assistance to build capacity in debt management strategies and debt sustainability analysis. - Provisional version of MTDS available and will be updated prior to the end of September 2013 based on Debt Sustainability Analysis with final data for end-2012. - MTDS to be adopted by the Council of Ministers and annexed to the 2014 budget law. - MTDS will take into account the use of Public-Private Partnerships (PPPs) to minimize costs and risks. ### Non-concessional financing, large loans, and IMF window requests - Priority to concessional financing sources, but a non-concessional funding envelope will be needed. - Ensure all public borrowing, including non-concessional loans, contracted under a debt policy aimed at maintaining sustainability of public debt. - Chinese Exim-Bank loan to finance Soubré dam signed in early 2013; loan is not effective and was negotiated on concessional terms but did not respect performance criteria on new non-concessional debt because of a change in the discount rate at signature. - Loan will follow normal standard disbursement procedures. - Feasibility studies indicate Soubré project is profitable; loan important to support economic growth and control electricity sector deficit. - Government intends to request IMF approval to expand cumulative nonconcessional loan window: - From USD 100 million to USD 800 million at end-2013. - From USD 200 million to USD 900 million at end-2014. - Increase size of the window for other such loans from USD100 million to USD 300 million in 2013. - Request to expand use of non-concessional borrowing under this window to include transport sector (in addition to existing sectors for energy and infrastructure). - Intention to negotiate concessional terms for two other large Chinese Exim-Bank loans for extension of the Autonomous Port of Abidjan and rehabilitation of the electricity network, scheduled to begin in 2013. ### Program monitoring definition change - Government requests IMF to amend criterion for defining external debt for program monitoring under the Extended Credit Facility: - Under new definition, a debt denominated, or reimbursed, in a currency other than the CFAF would be considered as constituting foreign debt. ### Financing the 2013 program and domestic market measures - Estimated financing requirement for the 2013 program: CFAF 453.4 billion or 3.2 percent of GDP; to be financed primarily by net mobilization of external resources. - External financing for 2013 largely acquired following Consultative Group meeting and signing of the C2D with the French Development Agency. - Consultative Group meeting in Paris on December 4–5, 2012 indicated financing needs should be fully covered in the medium term. - Plans to revitalize recourse to financing from the WAEMU market by: - Increasing share of insurers in domestic market financing. - Attracting investors from the CEMAC zone and other investors. - Developing regional cooperation to increase liquidity on the WAEMU money and financial market. - For bond maturities in December 2013: develop a settlement program based on cash payments and security swaps; hold discussions with creditors to make swaps attractive. ### Program monitoring, performance criteria, and review schedule - Program to be monitored semi-annually by IMF Executive Board based on quantitative performance criteria, indicative targets, and structural benchmarks. - After the third review, the basic primary balance will become the performance criterion for monitoring public finance; the overall budget balance will become an indicative target. - Performance criterion for the basic primary balance and the indicative target for the overall budget balance and pro-poor expenditures were defined on basis of an average rate of execution of 95 percent of investment expenditures included in the 2013 supplementary budget law. - Indicators defined in the attached Technical Memorandum of Understanding (TMU). - Semi-annual reviews based on data at end-June and end-December. - Fourth (fifth) program review based on performance criteria at end-June 2013 (end-December 2013) and should be completed by October/November 2013 (April/May 2014) at the latest. - Government commitments for program monitoring: - Refrain from accumulating new domestic arrears and any kind of advance against revenues and from obtaining nonconcessional external loans other than those specified in the TMU. - Issue government securities only by auction through the BCEAO or other competitive bidding in the local financial market and the WAEMU and consult with Fund staff regarding any new domestic financing. - Not introduce or tighten restrictions on payments and transfers pertaining to current international transactions; not introduce multiple exchange rate practices; not conclude bilateral payment agreements not in compliance with Article VIII of the IMF Articles of Agreement; not impose or tighten restrictions on imports for balancing the balance of payments. - Adopt all new financial or structural measures as needed to ensure successful implementation of policies in consultation with the IMF. ### Statistics and capacity building - Commitment to improve statistical system to produce quality economic and financial data on a regular basis. - Adopted a proposed law on organization, regulation, and coordination of the national statistics system by the Council of Ministers in December 2012. - Bill expected to be taken up by the National Assembly before July 2013; government will ensure implementation before the end of 2013. - Statistics master plan for 2012–15 (consistent with the National Development Plan (PND)) approved by adoption of the 2012-2015 PND on March 28, 2012. - Statistics master plan provides for: - Support for conducting national and sectoral surveys; - Improving the range and monitoring of economic outlook indicators; - Holding workshops on setting up the data base for the Integrated Information Management System; - The preparation of quarterly national accounts; - Changing the base year of the national accounts; - Updating the Harmonized Consumer Price Index (HCPI); - Preparing a directory of ministerial statistical services. *IMF staff report excerpt (CÔTE D’IVOIRE).* ### 37. The government will support capacity building. The inauguration of the AFRITAC West ### _cr13171 - 37. The government will support capacity building. The inauguration of the AFRITAC West ### Capacity building and technical assistance needs - The inauguration of the AFRITAC West technical assistance center in Abidjan is presented as evidence of Ivoirien authorities' priority on national capacity-building. - Technical assistance needs in the coming 12 months focus on: - (i) preparing the national debt policy document; - (ii) preparing the government wage bill strategy; - (iii) designing the tax policy strategy; - (iv) assessing the budget risks of PPP projects; and - (v) preparing balance of payment forecasts. ### Quantitative framework for program monitoring (2013 ECF) - Performance criteria (PC) and indicative targets (IT) are set for June 30, 2013, and December 31, 2013; indicative targets also for March 31, 2013, and September 30, 2013. - Performance criteria include: - a floor on the primary basic fiscal balance; - a ceiling for net domestic financing (including issuance in the WAEMU financial market); - a ceiling on new nonconcessional external debt; - a zero ceiling for the accumulation of new external arrears; - a zero ceiling for the accumulation of new domestic arrears. - Indicative targets include: - a floor on the overall fiscal balance (including grants); - a ceiling on expenditures by treasury advance; - a floor on “pro-poor” expenditures; - a floor on the net reduction of the government amounts payables; - a floor on total government revenue. - PCs, ITs, and adjustors are calculated as the cumulative change from December 31, 2012, for the 2013 targets. ### Definitions and operational rules (selected) - Government for program purposes: central government of Côte d’Ivoire including CNPS and CGRAE, and Treasury operations for public companies in liquidation; excludes local governments, BCEAO, and other government-owned entities with separate legal status. - Total government revenue (IT): all revenue collected by DGI, DGTCP, DGD, CNPS, CGRAE, and other nontax revenue as defined in the TOFE. - Pro-poor expenditures (IT): derived from the detailed list of “pro-poor expenditures” in SIFBUD/SIGFIP system. - Treasury advances (IT): spending paid for by the Treasury outside normal and simplified execution and control procedures; cumulative amount of expenditures by treasury advance will not exceed the cumulative quarterly ceilings representing 10 percent of quarterly budget allocations (excluding externally financed expenditures, wages, subsidies and transfers, and debt service). Eligible expenditures are as defined by ministerial Decree No. 178/MEF/CAB-01/26 of March 13, 2009. - Primary basic fiscal balance (PC) definition: - Tax and nontax revenue (excluding grants) – {Expenditure + Net lending – Interest payments – Externally-financed capital expenditure (on a payment order basis for all expenditure items)} - Floor on the primary basic fiscal balance will be adjusted downward (upward) for an excess (shortfall) of external budget support (program grants/loans) relative to the programmed amount. - Overall fiscal balance (including grants) (IT) definition: - Tax and nontax revenue + (Grants – World Bank budget support grants – AfDB budget support grants) – {Expenditure + Net lending (on a payment order basis for all expenditure items)} - Floor on the overall fiscal balance will be adjusted downward (upward) for an excess (shortfall) of project loans relative to the programmed amount. - Net domestic financing (PC) definition and ceiling: - Net domestic financing = Domestic financing (TOFE) – Net change in amounts payable + Treasury bonds from abroad (WAEMU) + Treasury bills placed abroad (WAEMU) + Treasury bonds placed abroad (WAEMU) + IMF drawings + Financing gap - Ceiling includes a margin of CFAF 10 billion above the net cumulative flow projected for each quarter. - The ceiling does not apply to new agreements on restructuring domestic debt and securitization of domestic arrears or to new project loans from BIDC of ECOWAS. - For any new borrowing over and above a cumulative amount of CFAF 35 billion over 2013, the government undertakes not to issue government securities except by auction through the BCEAO or through public auction (appel d’offres competitif) on the domestic or WAEMU financial markets registered with CREPMF, in consultation with Fund staff. - New nonconcessional external debt (PC) follows Executive Board Decision No.6230-(79/140) as revised on August 31, 2009 (Decision No. 14416-(09/91)); debt is defined to include loans, suppliers' credits, and leases (present value at inception), and includes arrears, penalties, and judicially awarded damages arising from failure to make payment under a contractual obligation that constitutes debt. ### Structural benchmarks and reform priorities (selected items extracted from Tables) - Tax policy / tax administration benchmarks (2012–13): - Produce a quarterly report on implementation of the DGI action plan on VAT optimization no later than 45 days after the quarter ends — Status: Met (SB continuous). - Review taxes on petroleum products and prepare a gradual adjustment strategy with a price-smoothing mechanism — Prior Action - Before November 15, 2012; subsequent implementation — SB end-March 2013 — Status: Met. - Increase prices of liquid petroleum products by a maximum of CFAF 15 per liter to contribute to financing the butane stabilizer — SB end-November 2012 — Status: Met. - Undertake stocktaking of VAT exemptions (including identifying those inconsistent with the WAEMU VAT directive) — SB end-February 2013 — Status: Not met. - Public expenditure management: - Update and implement a medium-term strategy for controlling the wage bill — SB end-February 2012 — Status: Not met. - No new injection of public funds in the five public banks in difficulty outside a restructuring plan discussed with the IMF and the World Bank — SB continuous — Status: Met. - Energy sector reforms: - Adopt the electricity code in the Council of Ministers and submit it to Parliament — PA- November 15, 2012 (and SB end-March 2013) — Mixed status: some deadlines Met, others Not met as noted in the table. - Financial sector reform (selected 2013 benchmarks): - Adopt a time-bound action plan for restructuring the public banks based on audit recommendations — SB end-October 2013 (rescheduled from end-February 2013). - Prepare a financial sector reform and development strategy — SB end-December 2013 (rescheduled from end-February 2013). - Business environment benchmarks: - Limit the current fiscal year’s VAT arrears pending refund to under CFAF 10 billion — SB continuous — Status: Met. - Adopt the law on competition in the Council of Ministers — SB end-May 2013 (rescheduled from end-March 2013) — Status: Not met in earlier table entries. *Source: IMF staff and Ivoirien authorities, Technical Memorandum of Understanding (May 21, 2013) and accompanying program tables.* ### 14. External debt is defined as debt borrowed or serviced in a currency other than the CFA franc. ### 14. External debt is defined as debt borrowed or serviced in a currency other than the CFA franc. ### Definitions and coverage - External debt: "debt borrowed or serviced in a currency other than the CFA franc." This definition also applies to debt among WAEMU countries. - The quantitative performance criterion concerning external debt applies to all nonconcessional external debt, irrespective of maturity, and whether it has been contracted or guaranteed by the government. It also applies to commitments contracted or guaranteed for which no value has been received. - Exemptions from the external-debt performance criterion: - normal import-related commercial debts having a maturity of less than one year; - rescheduling agreements; - debts to the BIDC, up to the equivalent of CFAF 20 billion, for the period from January 1 to December 31, 2013; and - drawings on the IMF. ### Concessionality rules and discount rates - A debt is concessional if its grant element is at least 35 percent. - Net present value (NPV) discount rates: - For debt with maturity of at least 15 years: discount rate based on the average of the OECD Commercial Interest Reference Rates (CIRRs) over the last 10 years. - For debt with maturity of less than 15 years: NPV based on the average CIRRs of the preceding six-month period (February 15 to August 14 or August 15 to February 14). - Margins added to both the 10-year and 6-month averages: - 0.75 percentage point for repayment periods of less than 15 years, - 1 percentage point for 15 to 19 years, - 1.15 percentage points for 20 to 29 years, - 1.25 percentage points for 30 years or more. ### Government undertakings on new nonconcessional external debt - The government undertakes not to contract or guarantee nonconcessional external debt under the conditions defined in paragraphs 13–15, except: - rescheduling of maturities, - new debt contracted or guaranteed by the government as specified in paragraph 15 and 18. - The government will consult with IMF staff on the terms and concessionality of any proposed new debt in advance of contracting such external debt. ### Ceiling on new nonconcessional external debt (cumulative) - A cumulative ceiling beginning January 1, 2013 applies to new nonconcessional external debt other than specified exclusions: - up $ 800 million to December 31, 2013, - $900 million to December 31, 2014. - The ceiling is applicable to debt-financing of priority projects in the energy, infrastructure and transport sectors. - Government reporting and prior information requirements for such debt: - inform staff in a timely manner before contracting any debt of this type; - provide information on the terms of the new debt and a brief summary of the projects to be financed and their profitability, including an independent evaluation; - report the use of funds and project implementation in subsequent MEFPs or to staff. ### External payment arrears (performance criterion) - External arrears: nonpayment of any interest or principal amounts on their due dates (taking into account relevant contractual grace periods, if any). - This performance criterion applies to arrears under external debt of the government and external debt guaranteed by the government for which the guarantee has been called by creditors. - Monitoring: continuous basis. ### Amounts payable, domestic payment arrears, and floating debt - "Amounts payable" (or "balances outstanding") include domestic arrears and floating debt and represent the government’s overdue obligations; defined as expenditures assumed by the public accountant but yet to be paid. - For program definition, these obligations represent: - (i) bills due and not paid to non financial public and private companies, and - (ii) the domestic debt service (excluding the BCEAO). - Domestic payment arrears (program purposes): - balances outstanding to nonfinancial public and private companies and the domestic debt service (excluding the BCEAO). - Arrears to non financial and private companies: payment date exceeds the deadline of 90 days; arrears on domestic debt service: payment date exceeds 30 days. - Floating debt: - balances outstanding for which the payment date does not exceed the deadline stipulated (90 days for debt to nonfinancial public and private companies; 30 days for debt service to commercial banks, insurance companies, other financial institutions). - Balances broken down by payer/type and by maturity and length of overdue period (< 90 days, 90–365 days, > 1 year for nonfinancial companies; <30 days, 30-365 days, > 1 year for financial companies). ### Domestic arrears reduction and no-new-arrears commitment - Government undertakes: - to reduce the stock of amounts payable by CFAF 50 billion in 2013 (of which CFAF 10 billion of arrears payment in cash); - not to accumulate new domestic payment arrears in the fiscal year starting January 1, 2013. ### Program monitoring and data reporting timelines - A quarterly assessment report on monitoring of quantitative performance criteria, indicative targets, and structural benchmarks will be produced by the authorities within 45 days of the end of each quarter. - The government will report the information specified in Table 2 on a monthly basis, within 45 days of month-end or quarter-end, unless otherwise indicated. - The government will report final data provided by the BCEAO within 45 days of the end of the period in question. The information will include a complete, itemized listing of public sector liabilities and assets with: - (i) the BCEAO; - (ii) the National Investment Bank (Banque Nationale d’Investissement, BNI); - (iii) the banking sector (including the BNI). - Authorities will consult with Fund staff on any proposed new external debt contracts or government guarantees on new external debt, including leases. - Authorities will inform Fund staff, following signature, of any new external debt contracted or guaranteed by the government, including the terms of these contracts or guarantees. - Data on new external debt, amount outstanding, and accumulation and repayment of external payment arrears: reported monthly within six weeks of the end of each month. - More generally, authorities will report any information needed for effective monitoring of policy implementation. ### LIC-DSA update—debt sustainability assessment and projections - Risk assessment: - Côte d’Ivoire continues to be assessed at a moderate risk of debt distress. - The moderate rating is primarily due to vulnerability to adverse shocks to exports and growth and to fiscal performance. - Policy implication: - Need to implement sound macroeconomic policies, ensure public investment in sound projects, improve implementation capacity and the business climate. - Borrow predominantly on concessional terms to meet large public investment needs without compromising debt sustainability. - Pay close attention to impact on debt service from new borrowing on the budget, especially over the next ten years. - Careful monitoring of PPPs to ensure manageable budgetary costs. - C2D (debt-for-development swap) role and profile: - Claims under the C2D amount to $3.7 billion (15 percent of 2012 GDP). - Share in total external debt service paid under C2D: around 40 percent through 2015 before declining to 15 percent by 2027. - The profile of C2D debt service should be reviewed periodically by the authorities and the French Development Agency (AFD). - External public debt levels and recent changes: - External public debt amounted to $7.8 billion (31.6 percent of GDP) at end-2012. - External public debt was $12.6 billion (52.2 percent of GDP) at end-2011. - Baseline debt assumption changes versus previous LIC-DSA: - Upward revision in projected external borrowing and government disbursements with corresponding increase in projected investment. - Introduction of updated information on three major projects and their loan terms. - An increase in the program limit on new non-concessional borrowing of $200 million in 2013. - Large project loan information (as reported): - Soubré hydroelectric dam: $500 million. - Extension of the port of Abidjan (Port Autonome Abidjan): about $800 million. - Extension and rehabilitation of the electricity distribution network: about $900. - Impact of new information: - Increase in projected new borrowing by about $360 million during 2014–16 and more favorable terms on the three loans compared to the previous LIC-DSA. - As in the previous LIC-DSA: during 2015–17 the main source of new borrowing would be concessional; thereafter concessional lending gradually declines while non-concessional borrowing steadily rises to about 3 percent of GDP near the end of the projection period. *Source: Ivorien authorities; International Monetary Fund.* ### 5. The results of the external DSA confirm that Côte d’Ivoire’s debt dynamics are ### 5. The results of the external DSA confirm that Côte d’Ivoire’s debt dynamics are sustainable ### Key findings from the external DSA - The results confirm that Côte d’Ivoire’s debt dynamics are sustainable (Figures 1 and 2; Tables 3 and 4). - The stress tests reaffirm that Côte d’Ivoire continues to have vulnerabilities to macroeconomic shocks, in particular from shocks to growth, exports and fiscal performance. - The stress tests and the alternative scenarios also yield results similar to the previous LIC-DSA. ### Scenarios and drivers - Historical average scenario: - Illustrates clearly the vulnerabilities arising from macroeconomic shocks. - Changes in baseline between the current and previous LIC-DSA: - Changes in the growth projections (which feed into higher fiscal revenues) imply a reduction in ratios. - Changes in the baseline debt assumptions (higher borrowing) broadly imply an increase in ratios. - In total, the net impact in the baseline compared to the previous LIC-DSA is: - a slight improvement in the debt indicators in which the higher growth effect dominates, - but a slight worsening of the debt-service indicators where the higher borrowing effect dominates. ### Project financing and loan terms (footnotes) - Footnote 4: The additional non-concessional borrowing is not an increase in borrowing as compared to the previous baseline but rather is a change in the composition of borrowing; it is assumed that disbursements from the additional borrowing in 2013 are made during 2013 and 2014. - Footnote 5: Some of the anticipated disbursements and associated borrowing for these projects had been included in the previous LIC-DSA. The loan for Soubré hydroelectric project was signed in January 2013 and the terms are known (and it has a grant element of 33.3 percent). For the other two projects, recent discussions between the authorities and creditors on the financing has provided updated information on the possible terms of the resulting loans; the authorities are seeking concessional terms. *Source: IMF staff assessment in the external DSA (Figures 1 and 2; Tables 3 and 4).* ### 6. With the inclusion of domestic debt in the LIC-DSA, Côte d’Ivoire’s debt situation ### 6. With the inclusion of domestic debt in the LIC-DSA, Côte d’Ivoire’s debt situation deteriorates modestly ### Main findings and summary conclusion - With the inclusion of domestic debt in the LIC-DSA, Côte d’Ivoire’s debt situation deteriorates modestly. - Public debt ratios would fall over the long run owing to the projected improvement in the macroeconomic outlook. - Debt service indicators parallel those for external debt. - The public debt indicators are particularly sensitive to the assumptions on GDP growth and shocks to growth. - These results are similar to those in the last LIC-DSA. ### Key macroeconomic projections (selected from LIC DSA assumptions and projections) - Nominal GDP ($ billion): 26.0; 28.3; 30.7; 39.2; 57.5; 130.4 (presented in Table 2 as sequences across years) - Real GDP (percentage change): 8.0; 7.3; 7.0; 6.1; 5.1; 5.1; 8.0; 8.0; 8.1; 7.0; 5.1; 5.1 (presented across reference periods) - Revenue and grants (percent of GDP): 21.7; 22.0; 22.1; 22.3; 22.8; 23.4; 21.3; 22.2; 22.9; 23.1; 23.1; 23.2 - Primary expenditure (percent of GDP): 22.9; 23.1; 23.8; 24.1; 24.0; 24.6; 23.1; 24.0; 24.7; 24.4; 24.6; 24.8 - Capital expenditure (percent of GDP): 7.5; 7.7; 8.1; 8.0; 8.0; 7.9; 7.9; 8.2; 9.0; 8.6; 9.0; 9.0 - Primary fiscal balance (percent of GDP): 1.2; 1.1; 1.7; 1.8; 1.2; 1.2; 1.8; 1.8; 1.8; 1.3; 1.4; 1.6 - New external borrowing (percent of GDP): 0.8; 0.9; 1.0; 1.1; 1.4; 4.1 (series in Table 2) - Grant element of new external borrowing (%): 10.3; 30.6; 24.0; 2.8; -6.5; -18.9; 14.5; 18.6; 13.8; 1.9; 1.3; -16.1 - Exports of goods and services (percent of GDP): 51.7; 51.9; 51.7; 52.8; 59.6; 61.1; 50.5; 49.7; 47.9; 47.4; 47.4; 53.0; 55.2 (presented across periods) - Imports of goods and services (percent of GDP): 50.6; 50.5; 50.4; 52.3; 59.9; 63.8; 48.3; 47.5; 46.7; 46.7; 46.4; 53.2; 57.5 - Current account, incl. official transfers (percent of GDP): -3.4; -3.8; -3.7; -4.6; -5.3; -6.5; -2.9; -2.6; -3.6; -4.2; -5.3; -6.6 - Foreign direct investment (percent of GDP): 3.1; 3.1; 3.2; 3.3; 3.6; 3.7; 3.0; 3.0; 3.0; 2.9; 2.5; 1.7 ### Debt stocks and composition (as of end-2012, nominal) - Total external debt: 7,814 Million US dollars, 100.0 percent, 31.6 percent of GDP (table header) - Multilateral creditors: 1,344 Million US dollars, 17.2 percent of total, 5.4 percent of GDP - IMF: 791 Million US dollars, 10.1 percent of total, 3.2 percent of GDP - World Bank: 119 Million US dollars, 1.5 percent of total, 0.48 percent of GDP - AfDB group: 44 Million US dollars, 0.6 percent of total, 0.18 percent of GDP - Other multilaterals: 390 Million US dollars, 5.0 percent of total, 1.58 percent of GDP - Official bilateral creditors: 3,851 Million US dollars, 49.3 percent of total, 15.59 percent of GDP - Paris Club: 3,693 Million US dollars, 47.3 percent of total, 14.95 percent of GDP - Non-Paris Club: 158 Million US dollars, 2.0 percent of total, 0.64 percent of GDP - Commercial creditors: 2,619 Million US dollars, 33.5 percent of total, 10.60 percent of GDP - Eurobond: 2,604 Million US dollars, 33.3 percent of total, 10.54 percent of GDP - Other commercials: 15 Million US dollars, 0.2 percent of total, 0.06 percent of GDP ### External debt sustainability indicators (selected baseline scenario results, 2010–33) - External debt (nominal) series (percent of GDP across years): 76.3; 76.9; 51.3; 45.6; 43.0; 40.3; 37.8; 35.1; 32.6; 23.3; 15.1 (Table 3) - o/w public and publicly guaranteed (PPG) external debt (percent of GDP): 50.6; 55.1; 30.8; 28.7; 28.4; 27.8; 26.9; 25.7; 24.3; 19.5; 15.1 - Change in external debt (percent of GDP): -4.9; 0.6; -25.6; -5.7; -2.6; -2.7; -2.5; -2.6; -2.5; -1.5; -0.2 - PV of external debt (percent of GDP): 54.1; 48.0; 44.7; 41.5; 38.8; 36.0; 33.4; 23.3; 15.8 (selected entries) - PV of PPG external debt (percent of GDP): 33.7; 31.1; 30.1; 29.0; 28.0; 26.5; 25.1; 19.4; 15.8 - PV of PPG external debt (in percent of government revenues): 167.1; 157.9; 146.7; 136.5; 130.2; 122.3; 114.9; 87.2; 69.0 - Debt service-to-exports ratio (percent): 14.4; 26.6; 9.7; 12.4; 12.4; 12.8; 11.5; 10.5; 10.4; 8.7; 5.5 - PPG debt service-to-exports ratio (percent): 3.4; 5.0; 1.9; 3.8; 4.5; 4.7; 4.8; 5.3; 5.5; 5.2; 5.5 - PPG debt service-to-revenue ratio (percent): 9.5; 19.5; 5.2; 9.7; 10.8; 10.6; 10.7; 11.5; 12.0; 12.4; 13.1 - Total gross financing need (Billions of U.S. dollars): 1.5; 0.8; 1.7; 2.1; 2.2; 2.6; 2.6; 2.7; 2.9; 4.7; 11.7 ### Public sector debt sustainability (baseline scenario, 2010–33; selected results) - Public sector debt (percent of GDP): 66.4; 71.2; 45.6; 42.0; 41.2; 40.3; 39.2; 37.7; 36.2; 31.3; 15.1 - o/w foreign-currency denominated (percent of GDP): 50.6; 55.1; 30.8; 28.7; 28.4; 27.8; 26.9; 25.7; 24.3; 19.5; 15.1 - Change in public sector debt (percent of GDP): 0.0; 4.7; -25.6; -3.6; -0.7; -0.9; -1.1; -1.5; -1.5; -0.8; -11.0 - Identified debt-creating flows (percent of GDP): -1.0; 4.3; -24.0; -1.5; -0.8; -0.7; -0.5; -0.5; -0.3; 0.3; 0.6 - Primary deficit (percent of GDP): 1.3; 2.5; 2.4; 0.5; 1.3; 1.8; 1.8; 1.8; 1.6; 1.5; 1.3; 1.6; 1.4; 2.2; 1.6 (series presented) - Automatic debt dynamics (percent of GDP): 0.4; 1.9; -6.0; -3.3; -2.5; -2.4; -2.1; -2.0; -1.6; -1.1; -1.6 - Other identified debt-creating flows (percent of GDP): -2.6; -0.1; -20.3; 0.0; 0.0; 0.0; 0.0; 0.0; 0.0; 0.0; 0.0 (includes debt relief) - PV of public sector debt (percent of GDP): 48.4; 44.4; 42.9; 41.5; 40.2; 38.5; 37.0; 31.2; 15.8 - PV of public sector debt-to-revenue and grants ratio (percent): 232.8; 208.2; 193.4; 181.6; 175.2; 167.2; 160.2; 134.8; 68.1 - Gross financing need (percent of GDP): 4.2; 6.8; 4.4; 4.6; 4.7; 4.7; 4.6; 4.6; 4.6; 4.8; 5.2 ### Sensitivity analysis and stress-test results (selected) - Table 4 and Table 6 present sensitivity analyses for key indicators (PV of debt-to-GDP, PV of debt-to-exports, PV of debt-to-revenue, debt service-to-exports, debt service-to-revenue, and public debt indicators). - Selected baseline and scenario outcomes (examples reported exactly as in tables): - PV of debt-to-GDP ratio (baseline, 2013–18 average and 2023–33 average): Baseline 31 (2013); 30 (2014); 29 (2015); 28 (2016); 27 (2017); 25 (2018); 19 (2023); 16 (2033) (Table 4 entries) - PV of debt-to-exports ratio (baseline, 2013–18 average and 2023–33 average): Baseline 62; 61; 59; 59; 56; 53; 37; 29 (selected entries in Table 4) - PV of debt-to-revenue ratio (baseline): 158; 147; 137; 130; 122; 115; 87; 69 (selected entries in Table 4) - Debt service-to-exports ratio (baseline): 44; 45; 56; 56 (selected entries in Table 4) - Debt service-to-revenue ratio (baseline): 10; 11; 11; 11; 12 (selected entries in Table 4) - Bound tests and alternative scenarios include: - A1. Key variables at their historical averages in 2013-2033 - A2. New public sector loans on less favorable terms in 2013-2033 (assumes interest rate on new borrowing is 2 percentage points higher than in the baseline, while grace and maturity periods are the same as in the baseline) - B1. Real GDP growth at historical average minus one standard deviation in 2014-2015 - B2. Export value growth at historical average minus one standard deviation in 2014-2015 - B3. US dollar GDP deflator at historical average minus one standard deviation in 2014-2015 - B4. Net non-debt creating flows at historical average minus one standard deviation in 2014-2015 - B5. Combination of B1-B4 using one-half standard deviation shocks - B6. One-time 30 percent nominal depreciation relative to the baseline in 2014 (depreciation defined as percentage decline in dollar/local currency rate) - Table 6 reports public debt sensitivity scenarios (PV of Debt-to-GDP Ratio, PV of Debt-to-Revenue Ratio, Debt Service-to-Revenue Ratio) with baseline and stress scenarios including one-time 30 percent real depreciation in 2014 and a 10 percent of GDP increase in other debt-creating flows in 2014. ### Figures and scenario interpretation (as described) - Figures compare the current LIC DSA update with the second ECF Review LIC DSA across indicators: PV of debt-to-GDP ratio; PV of debt-to-exports ratio; PV of debt-to-revenue ratio; debt service-to-exports ratio; debt service-to-revenue ratio. - Figures illustrating public and publicly guaranteed external debt under alternative scenarios, 2013–33, identify the "most extreme stress test" as the test that yields the highest ratio in 2023 (or 2022 for the second ECF review LIC DSA). Specific shocks driving the most extreme tests vary by indicator (Combination shock, Exports shock, etc., as footnoted in figures). - Figure 3 shows indicators of public debt under alternative scenarios, 2013–22, with panels for PV of Debt-to-Revenue Ratio, PV of Debt-to-GDP Ratio (with Baseline, Fix Primary Balance, Most extreme shock, Growth, Historical scenario), and Debt Service-to-Revenue Ratio. *Source: IMF staff estimates and projections as presented in the LIC-DSA chapter.* ### 1. Post-Crisis Multisector ### 1. Post-Crisis Multisector ### Project portfolio — ongoing grants and status - Institutional Support Project (PAIMSC) - Objectives: (i) rehabilitation of school and health infrastructures; and (ii) institutional capacity building and caring for women who are victims of violence. - Disbursement rate: 88 percent. - Undisbursed balance to date: UA 1.5 million. - Bank granted new extension to 31 December 2011 to allow continuation of activities already initiated and deemed relevant. - Targeted Capacity Building Support - Approved: December 2009 under the Fragile States Facility. - Disbursement rate: 57 percent. - Objectives: (i) strengthen the coordination framework for government interventions; (ii) support implementation of the PRSP; (iii) improve the efficiency of public financial management; and (iv) strengthen good governance. - Humanitarian assistance to the victims of post-electoral violence - Amount: USD 1 million. - Allocation: assistance to the victims of violence, particularly in the west of the country. - Management: Red Cross International Committee. - Gourou Basin Integrated Management Project (Sanitation of Indenié junction and the Lagoon) - Approved grant: UA 23 million (ADF Board of Directors, November 24, 2010). - Signing delay due to elections; grant put in place in June, 2011. - Effective launch of the project expected in October 2011. ### Status of portfolio as of April 2012 (selected operations and amounts in UA million) - Emergency Programme to Restore Basic Social and Administrative Services (PURSSAB) and Targeted support to strengthen the capacity of the administration - Amount: 100.5 (95 + 5.5). - Approved: June 3, 2011. - Purpose: contribute in the national budget to restoring basic social and administrative services, social cohesion and reconciliation; restoration of basic health, educational and social welfare services, water and sanitation networks, public administration services, and dialogue, social cohesion and reconciliation mechanisms. - Budget support disbursed: UA 95 million. - Remaining UA 5.5 reserved for capacity building and will be disbursed as needs arise on government requests. - Agricultural infrastructure support project in Indéné-Djuablin Région (PAIA-ID) - Amount: 21.6. - Objective: improve food security and reduce poverty in rural areas; increase, on a sustainable basis, the production and productivity of major crops; improve marketing conditions. - Project construction of bridge toll Henri Konan BEDIE - Amount: 50. - Structure: public private partnership (PPP) based on a Build Operate Transfer (BOT) concession of 30 years. - Description: building of a toll bridge over the Ebrié Lagoon linking the South and North shores of Abidjan. - Azito power expansion project - Amount: 26. - Description: convert existing simple-cycle power plant of 2 x 144 MW gas-fired turbines to a combined-cycle power plant, increasing capacity to approximately 430 MW. ### Strategy for Re-engagement by AfDB in Côte d’Ivoire - Objective: assist Côte d’Ivoire in addressing its immense needs through rapid operational re-engagement. - Framework: consistent with the AfDB’s Fragile States Facility; Country Brief defines rapid re-engagement for 2011–12. - Two pillars (consulted with Ivoirian authorities): - (i) restoring infrastructure and basic social services. - (ii) improving governance and capacity building. - Forward planning: a full Country Strategy Paper is planned for the period 2013–17 to assist the country with its quest for strong and inclusive growth. - Indicative Work Program for 2013 (amounts in UA million) - Project to support training and professional integration: 17 (Year: 2013). - Côte d’Ivoire, Liberia, Sierra Leone and Guinea interconnection Project (Multinational): TBD (Year: 2013). ### Statistical issues (As of May 2013) — data adequacy and gaps - General assessment: Data provision has some shortcomings, but is broadly adequate for surveillance. Weaknesses in national accounts, balance of payments, public finance statistics, and reconciliation of fiscal and monetary data. - National Accounts: - Comprehensive national accounts data for 1996 onwards compiled in line with the 1993 System of National Accounts methodologies, using 1996 as the base year. - Technical assistance from AFRITAC West to implement a new base year and update implicit deflators. - Ongoing work on quarterly national accounts with Fund support. - Price statistics: - A harmonized consumer price index (CPI) adopted by all WAEMU members. - New base year (2008) adopted in 2010. - Labor market statistics: - No such statistics are published regularly. - Government finance statistics: - Authorities provide annual data on the budgetary central government for publication in the Government Finance Statistics Yearbook. - Monthly or quarterly fiscal data are not provided for publication but are made available to the IMF African Department; metadata is lacking. - Authorities committed to addressing weaknesses in coverage of general government units and public enterprises and improving reconciliation of fiscal and monetary data. - Authorities seeking Afritac assistance to improve compilation of government finance statistics. - Report on financial operations executed by the government over the crisis period (January–April 2011) is still not available. - Monetary and financial sector statistics: - Monetary data prepared by the national agency of the BCEAO and officially released by BCEAO headquarters. - Some shortcomings common to all eight WAEMU members and systemic issues in bank and nonbank financing of central government and public sector operations. - Recent improvements in timeliness of reporting data on depository corporations and interest rates. - External sector statistics: - National agency of the BCEAO in Abidjan compiles and disseminates annual balance of payments statistics and the international investment position. - BCEAO headquarters delineates methodology and calculates international reserves managed for WAEMU countries. - Merchandise trade: customs computer system allows satisfactory monitoring of trade data. - Coverage shortcomings: services and transfers (particularly workers’ remittances), foreign assets of the private nonbanking sector, reporting of private capital flows (especially foreign direct investment), private debt stocks and debt service flows. - Data Standards and Quality: - Côte d’Ivoire has participated in the General Data Dissemination System (GDDS) since May 2000 and has posted metadata on the Data Standards Bulletin Board. - No data ROSC is available. - Reporting to STA: - Côte d’Ivoire regularly reports data to STA for re-dissemination in IMF statistical publications. ### Table of Common Indicators Required for Surveillance (As of May 2013) — selected date/frequency entries - Exchange Rates: Date of latest observation: Current; Date received: Current; Frequency of Data: M; Frequency of Reporting: M; Frequency of Publication: M. - International Reserve Assets and Reserve Liabilities of the Monetary Authorities: Date of latest observation: 03/13; Date received: 05/15; Frequency of Data: M; Frequency of Reporting: M; Frequency of Publication: M. - Reserve/Base Money: 03/13; 05/15; M; M; M. - Broad Money: 03/13; 05/15; M; M; M. - Central Bank Balance Sheet: 03/13; 05/15; M; M; M. - Consolidated Balance Sheet of the Banking System: 03/13; 05/15; M; M; M. - Interest Rates: 03/13; 05/15; I; M; M. - Consumer Price Index: 03/13; 10/15; M; M; M. - Revenue, Expenditure, Balance and Composition of Financing – General Government: 03/13; 10/15; M; M; M. - Stocks of Central Government and Central Government-Guaranteed Debt: 12/2012; 03/2013; M; M; M. - External Current Account Balance: 12/2012; 03/2013; A; A; A. - Exports and Imports of Goods and Services: 12/2012; 03/2013; A; A; A. - GDP/GNP: 2012; 03/2013; A; A; A. - Gross External Debt: 12/2012; 03/2013; M; M; M. ### IMF Executive Board — Third ECF review and program assessment (Press Release No. 13/201, June 7, 2013) - Action: Executive Board completed the third review of Côte d’Ivoire’s economic performance under the ECF and approved disbursement. - Disbursement approved: amount equivalent to SDR 48.78 million (about US$74.1 million). - Total disbursements under the arrangement after this decision: amount equivalent to SDR 260.16 million (about US$395.4 million). - ECF arrangement approved: November 4, 2011 for an amount equivalent to SDR 390.24 million (120 percent of the country’s quota). - Recent macro developments and outcomes: - Growth rate in 2012: 9.8 percent. - Average annual inflation in 2012: 1.3 percent. - Fiscal position: improved. - Current account: swung into deficit due to sharp rise in investment-related imports; financed in part by higher foreign direct investment (FDI). - External arrears: Côte d’Ivoire no longer has any outstanding arrears to its external creditors. - Program implementation: - Macroeconomic program: broadly on track; all but one performance criteria were met at end-December 2012. - Structural reform progress: uneven. - Achievements: important steps taken to reduce subsidies to the energy sector, improve incentives in the cocoa sector, and strengthen the business climate. - Delays: preparing the medium-term strategy to control the wage bill; adopting a new electricity code; developing a strategy to settle domestic arrears; action plan for restructuring public banks. - 2013 prospects and risks: - Growth prospects: positive, with robust growth underpinned by a rise in public investment. - Inflation: expected to remain moderate at about 3 percent. - Fiscal position: expected to continue improving. - External current account: projected moderate widening financed by higher FDI inflows. - Policy recommendations and priorities: - Maintain growth momentum. - Implement the National Development Plan for 2012–15, which replaces the Poverty Reduction Strategy Paper (2009–15), focusing on scaling up investment while preserving fiscal and debt sustainability. - Increase private sector participation to achieve higher and sustainable growth. - Implement measures to further improve the business climate, regularize domestic arrears, and reform the financial sector to foster private sector expansion. - IMF and World Bank staffs recommend fleshing out sectoral strategies more concretely, integrating them into a medium-term expenditure framework, and linking them to targeted outcomes. *Document: _cr13171 - 1. Post-Crisis Multisector (excerpt provided).* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2013/_cr13171.pdf_