## _cr13367 ## Source details **Canonical URL:** [_cr13367](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2013/_cr13367.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2013/_cr13367.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2013/_cr13367.pdf.json) --- ### Background and context - Post-conflict recovery and objectives: - Authorities pursuing objective of boosting medium-term growth to raise living standards and transform the economy into an emerging market by 2020. - 2012–15 National Development Plan (NDP) targets: double-digit growth and halving the poverty rate. - Human development and social indicators: - Real per capita income in 2011 was about 57 percent of its peak 1978 level. - Poverty rate: 37.0 (1995), 34.0 (2000), 49.0 (2011). - 2013 UNDP Human Development Report rank: 168 out of 186 (low human development). - Official unemployment rate: about 9½ percent in late 2012. - Political normalization and security: - Administrative reunification and a full election cycle completed after the 2010/11 crisis; insecurity declined substantially. - UN Security Council approved gradual scaling down of ONUCI’s military presence. - Political reconciliation and restoring social cohesion remain difficult. ### Recent macroeconomic developments and outlook - 2011–2013 performance highlights: - Real GDP growth: -4.7 (2011 Est.), 9.8 (2012), 8.7 (2013 Proj.). - Consumer price inflation (average): 4.9 (2011 Est.), 1.3 (2012), 2.9 (2013 Proj.). - Overall fiscal deficit (payment order basis, incl. grants): -5.7 (2011 Est.), -3.4 (2012), -2.7 (2013 Proj.). - Primary basic fiscal balance: -2.9 (2011 Est.), -1.4 (2012), -0.2 (2013 Proj.). - Total public debt: 73.5 (2011 Est.), 48.9 (2012), 42.6 (2013 Proj.). - Current external balance (incl. official transfers): 12.9 (2011 Est.), -1.3 (2012), -3.4 (2013 Proj.). - Overall balance of payments: 1.0 (2011 Est.), -0.5 (2012), 2.1 (2013 Proj.). - Near-term projections (staff baseline): - Growth: 8.7 percent in 2013 and 8.2 percent in 2014. - Inflation projected to remain below the 3-percent regional convergence criterion. - Overall fiscal deficit: -2.7 percent of GDP in 2013 and -2.3 percent of GDP in 2014. - Primary basic fiscal deficit: -0.2 percent of GDP in 2013 to -0.1 percent of GDP in 2014. - Current account deficit: about -1.8 (2013) and -3.1 (2014) (percent of GDP). - Balance of payments projected to record a small surplus, supported by higher FDI and project loans. - Medium-term baseline (staff projections): - High growth about 8 percent through 2015, gradually declining to about 7 percent by 2018. - Inflation moderate (2.5 projected for 2014–2018). - Fiscal deficit around 3 percent of GDP; current account deficit widens due to high imports of capital goods, partly financed by FDI and project loans. ### Growth decomposition and productivity - Total factor productivity (TFP) contributions to annual Real GDP growth: - 1980–90: Real GDP 2.8; Capital stock 0.3; Adjusted labor 2.9; Education 0.2; Total factor productivity -0.6. - 1990–2000: Real GDP 2.1; Capital stock 0.1; Adjusted labor 2.2; Education 0.3; Total factor productivity -0.5. - 2000–10: Real GDP 0.7; Capital stock 0.3; Adjusted labor 1.4; Education 0.2; Total factor productivity -1.2. - 2011–13: Real GDP 3.6; Capital stock 1.1; Adjusted labor 1.9; Education 0.2; Total factor productivity 0.4. - Note: TFP returned to positive for 2011–13 but remains below best-performing fast-growing African countries. ### Fiscal policy, public financial management, and arrears - Fiscal performance and 2014 budget stance: - Draft 2014 budget: total revenue and grants projected to increase from 21.3 percent of GDP (2013) to 22.0 percent of GDP (2014). - Grants projected to rise to 2.4 percent of GDP in 2014 from 1.7 percent of GDP in 2013. - Wage bill expected to increase by +0.2 percent of GDP; current expenditures to decline by 0.1 percent of GDP; capital expenditure to increase by +0.5 percent of GDP focused on energy and roads. - Fiscal adjustment: primary basic deficit projected to edge down to 0.1 percent of GDP in 2014 from 0.2 percent in 2013; overall fiscal deficit projected to decline from -2.7 (2013) to -2.3 (2014). - Arrears audit and settlement plan: - Second wave of audits validated arrears owed to creditors: CFAF 152.9 billion (1.1 percent of GDP). - Initial arrears in treasury books before audits: CFAF 356 billion; 57.1 percent rejected by audits. - Council of Ministers decision (November 22, 2013): pay cash to small creditors by end-2013; remaining arrears options for creditors: (i) cash in early 2014 with 50 percent reduction; (ii) over three years with 30 percent reduction; (iii) over 5 years with 20 percent reduction. - Program target: reduce stock of amounts payable by at least CFAF 50 billion in 2013 and at least 50 billion in 2014. - Public financial management reforms: - Ten out of 14 structural benchmarks met through end-October 2013. - Adoption of organic laws for fiscal transparency and budget system law; MTEF 2014–16 attached to budget. - Remaining delays: medium-term wage bill strategy, medium-term debt strategy, finalizing new mining code, restructuring public banks, regularizing domestic arrears. - VAT and revenue mobilization: - Staff recommended continued VAT reform; September 2013 FAD mission estimated the VAT gap at 7.9 percent of GDP (based on 2012 household consumption analysis). - Authorities cautious on VAT reform due to social impacts; draft 2014 budget includes a 0.3 percent of GDP rise in various taxes (including excise taxes, the tax on telecommunications). ### Medium-term debt strategy, Eurobond, and DSA findings - Debt and external borrowing: - Public and publicly guaranteed external debt: $7.73 billion at end-2012. - External debt declined from 54.6 percent of GDP at end-2011 to 30.5 percent of GDP at end-2012 (HIPC completion). - Domestic debt: 18.4 percent of GDP at end-2012; outstanding T-bills rolled over by BCEAO: 5.3 percent of GDP (about CFAF 607 billion). - Medium-Term Debt Strategy (MTDS) and Eurobond plans: - Authorities considering issuing a Eurobond equivalent to US$500 million in 2014 to broaden investor base and lengthen maturities. - Staff supports consideration but cautions issuance only if offered rates are reasonable and recommends obtaining a sovereign rating first. - Program adjustor: issuance would revise upward the ceiling on new nonconcessional external debt (by US$500 million) and lower the ceiling on net domestic financing by an equivalent amount. - End-June 2014 PCs: ceiling on new nonconcessional external debt increased by US$100 million (from US$800 million at end-December 2013 to US$900 million at end-June 2014). - DSA conclusions: - Baseline: debt dynamics sustainable; Côte d’Ivoire assessed at moderate risk of debt distress. - Eurobond effect: slight deterioration in external public debt indicators but reduces domestic financing risks and lengthens average maturity. - Low-growth scenario: if growth lower than baseline, external public debt would increase substantially (example: external public debt increases by 1.5 percentage points to 29.2 percent of GDP by 2018 and by 18.5 percentage points to 46.2 percent of GDP by 2033 under specified lower-growth assumptions). - Stress tests indicate vulnerability to shocks in growth, exports, net FDI, and fiscal performance; debt service-to-revenue can breach thresholds under adverse scenarios. ### Financial sector: vulnerabilities and reforms - Structure and access: - Banking system holds about 80 percent of financial sector assets; insurance about 10 percent; pension funds about 7 percent; microfinance about 2 percent. - Access to financial services: "Only about 6.7 percent of the population has bank accounts and 4 percent has accounts in microfinance institutions." - 25 banks: 18 subsidiaries of international/regional groups; foreign banks hold about 57 percent of banking assets. - Soundness indicators (selected): - Risk-weighted capital to assets ratio: 9.3 (2008); 10.2 (2009); 12.5 (2010); 9.7 (2011); 8.8 (2012); 9.4 (2013 June). - NPLs/total loans: 19.5 (2008); 17.0 (2009); 16.4 (2010); 16.3 (2011); 16.1 (2012); 16.6 (2013 June). - Provisions/NPLs: 77.3 (2008); 75.9 (2009); 74.9 (2010); 67.3 (2011); 78.9 (2012); 79.6 (2013 June). - Liquid assets/total assets: 42.0 (2008); 42.1 (2009); 42.6 (2010); 50.3 (2011); 47.1 (2012); 47.9 (2013 June). - Loans/deposits: 95.8 (2008); 92.8 (2009); 87.2 (2010); 71.3 (2011); 75.7 (2012); 72.7 (2013 June). - Constraints and reforms: - Private sector credit-to-GDP: about 18 percent (2012). - Loans predominantly short-term: ~60 percent short-term, ~30 percent medium-term, ~5 percent long-term (June 2013). - Weaknesses: land and property registry insufficiencies; judicial debt recovery difficulties; lack of widely used borrower’s registry. - Authorities actions: preparing a financial sector development strategy with World Bank support; financial/strategic audits and planned restructuring of public banks; intend to adopt action plan for resolving troubled public banks before end-2013; draft budget includes funding for bank resolution costs in 2014. - Staff recommendations: prompt restructuring of public banks where resolution strategies exist; minimize contingent liabilities; implement BCEAO decision on primary dealers and establishment of a credit bureau; broaden financing for SMEs potentially without relying on public banks. ### Risks, scenarios, and recommended responses - Downside risks (Staff’s Views): - Public investment surge may fail to crowd in private investment leading to lower growth and reduced fiscal space. - Political reconciliation setbacks, especially ahead of 2015 presidential elections. - Social unrest from demand for improved living standards and wage increases. - External shocks: higher financing costs post-US monetary policy tightening; deterioration in trading partners/donors; regional security shocks. - Weather shocks and higher imported staple prices (e.g., rice). - Upside risks: - Higher-than-projected FDI flows and stronger crowding-in of private investment if NDP reforms materialize early. - Risk Assessment Matrix (selected items, likelihood, impact, recommended response): - Global oil shock: Relative Likelihood: Low; Impact if realized: Medium; Response: Continue automatic fuel price adjustment mechanism; strengthen social safety net. - Protracted slower European growth: Relative Likelihood: High; Impact: Low; Response: Develop regional domestic markets; strengthen business climate; reinforce competitiveness. - Sharp slowdown in China: Relative Likelihood: Medium; Impact: High; Response: Strengthen business climate to attract other investors. - Protracted emerging-market volatility: Relative Likelihood: High; Impact: Low; Response: Re-assess Eurobond issuance pros/cons vs. alternative funding. - Unfavorable local weather: Relative Likelihood: Low to Medium; Impact: Medium; Response: Monitor inflation second-round effects; allow moderate fiscal deficit relaxation for targeted spending. - Deterioration in socio-political/security: Relative Likelihood: Low; Impact: High; Response: Allow moderate fiscal deficit relaxation to cushion economic activity. - Demand for strong public sector wage increases: Relative Likelihood: High; Impact: Medium; Response: Keep wage bill within 2014 budget limits; adopt medium-term wage bill strategy (end-October structural benchmark). ### Program performance, IMF engagement, and financing - Program performance and reviews: - All quantitative performance criteria and indicative targets at end-June 2013 were met. - Considerable progress in key structural reform areas; some structural benchmarks delayed or missed. - IMF Executive Board completed the fourth review under the ECF and approved a US$75 million disbursement (equivalent to SDR 48.78 million). - Total disbursements under the ECF arrangement amount to SDR 308.94 million (US$475.2 million). - IMF support for authorities’ requests: - Staff supports completion of fourth review under the ECF. - Staff supports authorities’ request for increase in program’s limit on new nonconcessional external debt to allow issuance of a Eurobond equivalent to US$500 million (subject to assessable conditions). - Completion of the review will result in disbursement equivalent to SDR 48.78 million under the ECF arrangement. - TMU and performance criteria highlights: - PCs include: floor on primary basic fiscal balance; ceiling on net domestic financing; ceiling on new nonconcessional external debt; zero ceiling on new external and domestic arrears. - Quantitative ceilings: cumulative ceiling for new nonconcessional external loans of US$800 million to December 31, 2013 and US$900 million to December 31, 2014; ceiling increase possible by amount of Eurobond issuance (up to US$500 million). - Net domestic financing includes banking system’s net claims, net non-bank financing, and FCFA borrowing, with a CFAF 10 billion financing margin per quarter. - Authorities’ financing and projects: - Mobilization on the sub-regional market: CFAF 321 billion (39.8 percent of expected domestic financing). - External financing: CFAF 309.8 billion (Grants: CFAF 132.9 billion; Borrowing: CFAF 140.3 billion; Budget support: CFAF 36.6 billion). - Nonconcessional loan agreements signed in 2013: USD 680 million; loans that became effective: USD 500 million (Soubré hydroelectric power plant). ### Key quantitative indicators and selected projections (preserve values exactly) - Real GDP (percentage change): -4.7 (2011 Est.), 9.8 (2012), 8.7 (2013 Proj.), 8.2 (2014), 8.1 (2015), 7.8 (2016), 7.5 (2017), 7.0 (2018). - Consumer price inflation (average): 4.9 (2011 Est.), 1.3 (2012), 2.9 (2013 Proj.), 2.5 (2014–2018 constant at 2.5). - Overall fiscal balance (incl. grants, percent of GDP): -5.7 (2011 Est.), -3.4 (2012), -2.7 (2013 Proj.), -2.3 (2014), -3.1 (2015–2017), -3.0 (2018). - Primary basic fiscal balance (percent of GDP): -2.9 (2011 Est.), -1.4 (2012), -0.2 (2013 Proj.), -0.1 (2014), -0.3 (2015), 0.0 (2016), 0.2 (2017), 0.4 (2018). - Total public debt (percent of GDP): 73.5 (2011 Est.), 48.9 (2012), 42.6 (2013 Proj.), 40.5 (2014), 38.4 (2015), 36.8 (2016), 35.0 (2017), 33.8 (2018). - Current external balance (incl. official transfers, percent of GDP): 12.9 (2011 Est.), -1.3 (2012), -3.4 (2013 Proj.), -3.1 (2014), -3.9 (2015), -5.1 (2016), -5.8 (2017), -6.7 (2018). - Overall balance of payments (percent of GDP): 1.0 (2011 Est.), -0.5 (2012), 2.1 (2013 Proj.), 1.5 (2014–2018 range 1.2–1.5). - Nominal GDP (Billions of US dollars): 2013 = 32.1 (baseline in Text Table 3); 2014 = 35.9; 2018 = 48.6 (baseline). - Debt service-to-revenue ratio (percent): 2013 = 15.4; 2014 = 15.4; 2018 = 17.8 (lower-growth scenario shows higher debt-service pressure). - External debt (percent of GDP): 2013 = 39.9; 2014 = 32.1; 2018 = 44.2. - Net FDI (percent of GDP): 2013 = 3.0; 2014 = 3.0; long-run lower-growth scenario: 1.7. ### Staff appraisal and core policy recommendations - Staff appraisal: - Côte d’Ivoire achieved considerable progress and a strong recovery under the authorities’ program. - Policies have removed infrastructure bottlenecks, improved business climate, and achieved sustained high growth with low inflation. - Medium-term outlook positive if reform momentum is sustained; downside risks if high growth rates do not materialize. - Key staff recommendations: - Strengthen fiscal sustainability and increase fiscal space through enhanced revenue mobilization (tax policy and administration reform) and curtailing exemptions. - Strengthen public financial management: reform exceptional spending procedures; significantly strengthen cash management and cash planning to manage year-end domestic debt payment bunching. - Put electricity sector on a sound financial footing and contain budget subsidies to it. - Obtain a sovereign rating prior to market issuance to help obtain best issuance terms; weigh Eurobond implications for overall debt service and maturity concentration. - Continue to improve the business climate and governance; enforce rule of law; significantly reduce non-competitive public procurement; ensure effective implementation of procurement code. - Rapidly implement financial sector development strategy; promptly restructure troubled public banks where resolution strategies exist; minimize contingent liabilities. *International Monetary Fund — Côte d’Ivoire: Article IV / ECF-related assessment and program update (document dated November 21, 2013).* ### 2011. Since end-2011, the focus of policy has shifted from short-term crisis recovery to ### _cr13367 - 2011. Since end-2011, the focus of policy has shifted from short-term crisis recovery to ### Background and context - Côte d’Ivoire recovering from long period of economic stagnation and political conflict; authorities pursuing objective of boosting medium-term growth to raise living standards and transform the economy into an emerging market by 2020. - Reforms and public investment focus: - Renew and expand public infrastructure. - Improve business climate, strengthen energy and financial sectors, and reduce poverty. - Human development and social indicators: - Real per capita income in 2011 was about 57 percent of its peak 1978 level. - Poverty rate increased from 37 percent in 1995 to almost 50 percent in recent years. - 2013 UNDP Human Development Report rank: 168 out of 186 (low human development). - Official unemployment rate estimated about 9½ percent in late 2012 (higher among youth, women, and in Abidjan). - Political situation: - Administrative reunification and a full election cycle completed after the 2010/11 post-electoral crisis; insecurity declined substantially. - UN Security Council approved gradual scaling down of ONUCI’s military presence. - Political reconciliation and restoring social cohesion remain difficult. ### Policy objectives and reforms (2012–15 NDP) - Government’s 2012–15 National Development Plan (NDP) objectives: - High growth and reducing poverty. - Double-digit growth and halving the poverty rate. - Key policy measures under implementation: - Surge in public investment to tackle infrastructure bottlenecks. - Reforms to improve business climate. - Cocoa sector reform increasing income of about 700 thousand farmers. - Raised pro-poor spending. - Programs to expand mining output, boost rice production, guarantee minimum price for cotton and cashew. - Establishment of a universal health insurance scheme. - Remaining gaps: - Need to maintain sustained reform effort over the medium term. - Decisive measures to deepen the financial sector and restructure state-owned banks not yet in place. - Governance and expenditure management remain weak. ### Recent macroeconomic developments (post-2011) - 2011–2013 performance highlights: - 2011 recession limited to -4.7 percent. - 2012 rebound: 9.8 percent growth. - Projected 2013 growth: 8.7 percent. - Average inflation: 4.9 percent in 2011 to 1.3 percent in 2012. - Overall fiscal deficit: 5.7 percent of GDP in 2011 to 3.4 percent of GDP in 2012. - Current account moved into deficit due to investment-related imports and strong rebound. - Sectoral and activity indicators in 2013 (preliminary): - Rise in business starts, increased employment in formal sector. - Robust domestic energy consumption. - Strong activity in construction and public works, retail, energy, and agro-food sectors. ### Outlook and risks - Near-term projections: - Growth projected at 8.7 percent in 2013 and 8.2 percent in 2014, driven by strong public investment and rising private sector investment. - Inflation projected to remain below the 3-percent regional convergence criterion. - Overall fiscal deficit expected to decline to 2.7 percent of GDP in 2013 and 2.3 percent of GDP in 2014. - Primary basic fiscal deficit expected to narrow from 0.2 percent of GDP in 2013 to 0.1 percent of GDP in 2014. - Current account deficit projected to increase to about 1.8 percent in 2013 and 3.1 in 2014. - Balance of payments projected to record a small surplus, supported by higher FDI and project loans. - Medium-term baseline scenario (staff projections): - High growth rates about 8 percent through 2015, gradually declining to about 7 percent over the medium term. - Inflation to remain moderate. - Growth drivers: private investment in agriculture, mining, housing, food processing, services; public investment in infrastructure; improved business climate. - Fiscal deficit around 3 percent of GDP. - Current account deficit widens due to high imports of capital goods, partly financed by FDI and project loans. - Baseline assumes sustained reform momentum and significant reforms to improve business climate and governance. - Notable medium-term projections (Text Table 2, selected): - Real GDP growth: -4.7 (2011 Est.), 9.8 (2012), 8.7 (2013 Proj.), 8.2 (2014), 8.1 (2015), 7.8 (2016), 7.5 (2017), 7.0 (2018). - Consumer price inflation (average): 4.9 (2011 Est.), 1.3 (2012), 2.9 (2013 Proj.), 2.5 (2014–2018 constant at 2.5). - Overall fiscal balance (payment order basis, incl. grants): -5.7 (2011 Est.), -3.4 (2012), -2.7 (2013 Proj.), -2.3 (2014), -3.1 (2015–2017), -3.0 (2018). - Primary basic fiscal balance: -2.9 (2011 Est.), -1.4 (2012), -0.2 (2013 Proj.), -0.1 (2014), -0.3 (2015), 0.0 (2016), 0.2 (2017), 0.4 (2018). - Total public debt: 73.5 (2011 Est.), 48.9 (2012), 42.6 (2013 Proj.), 40.5 (2014), 38.4 (2015), 36.8 (2016), 35.0 (2017), 33.8 (2018). - Current external balance (incl. official transfers): 12.9 (2011 Est.), -1.3 (2012), -3.4 (2013 Proj.), -3.1 (2014), -3.9 (2015), -5.1 (2016), -5.8 (2017), -6.7 (2018). - Overall balance of payments: 1.0 (2011 Est.), -0.5 (2012), 2.1 (2013 Proj.), 1.5 (2014–2018 range 1.2–1.5). - Risks (Staff’s Views): - Downside risks: - Public investment scaling-up may fail to deliver high growth if private sector crowding-in is insufficient; lower growth would narrow fiscal space and reduce resources for public investment and social spending. - Lack of progress toward political reconciliation, particularly ahead of 2015 presidential elections. - Social unrest risk from population anxious for tangible improvements in living standards and higher wages; promise of higher civil service salaries from 2014 reduced earlier work stoppages but resurgence possible. - External risks: higher financing costs following end of accommodative US monetary policy; deterioration in outlook of trading partners and donors; regional security shocks (though Mali crisis in 2013 had no measurable impact on Côte d’Ivoire economy). - Higher prices for imported basic staples (e.g., rice) and adverse weather shocks present significant risks. - Upside risks: - Higher-than-projected FDI flows and stronger crowding-in of private investment if NDP objectives on business climate and governance materialize early. ### Growth decomposition and productivity - Total factor productivity (TFP) growth returned to positive for 2011–13 after decades of negative growth: - Period contributions to annual Real GDP growth and TFP (Text Table showing contribution): - 1980–90: Real GDP 2.8; Capital stock 0.3; Adjusted labor 2.9; Education 0.2; Total factor productivity -0.6. - 1990–2000: Real GDP 2.1; Capital stock 0.1; Adjusted labor 2.2; Education 0.3; Total factor productivity -0.5. - 2000–10: Real GDP 0.7; Capital stock 0.3; Adjusted labor 1.4; Education 0.2; Total factor productivity -1.2. - 2011–13: Real GDP 3.6; Capital stock 1.1; Adjusted labor 1.9; Education 0.2; Total factor productivity 0.4. - Note: While recent reforms have produced a return to positive TFP growth, Côte d’Ivoire has not yet achieved the TFP growth rates of the best-performing fast-growing African countries. ### Program performance and IMF engagement - Côte d’Ivoire reached the HIPC Initiative Completion point in 2012. - Exchange regime and Article VIII status: - Member of WAEMU; accepted obligations under Article VIII. - Maintains exchange system free of restrictions on payments and transfers for current international transactions. - WAEMU’s exchange regime is a conventional peg to the euro. - Program performance as of end-June 2013: - All quantitative performance criteria and indicative targets at end-June 2013 were met. - Considerable progress in key structural reform areas; some structural benchmarks delayed or missed. - IMF staff support: - Staff supports completion of the fourth review under the ECF. - Staff supports authorities’ request for an increase in the program’s limit on new nonconcessional external debt to allow issuance of a Eurobond equivalent to US$500 million. - Completion of the review will result in disbursement equivalent to SDR 48.78 million under the ECF arrangement. ### Key quantitative indicators (selected from Text Table 3 and other tables) - Baseline and lower-growth scenario highlights (selected, percent of GDP unless otherwise indicated): - Real GDP (percentage change): - 2013: 8.7 (baseline), 8.7 (lower-growth scenario column shows same for 2013). - 2014: 8.2 (baseline), 6.5 (lower-growth scenario for later years). - 2015: 8.1 (baseline), 6.5 (lower-growth scenario decreasing over horizon). - Nominal GDP (Billions of US dollars): - 2013: 32.1 (baseline). - 2014: 35.9 (baseline). - 2018: 48.6 (baseline). - Total revenue: - 2013: 21.3 (percent of GDP). - 2014: 22.0. - 2015: 21.5. - Debt service-to-revenue ratio (in percent): - 2013: 15.4. - 2014: 15.4. - 2018: 17.8 (lower-growth scenario shows higher debt-service pressure). - Overall fiscal deficit (including grants): - 2013: -2.7 (baseline). - 2014: -2.3. - 2018: -3.1 (baseline) and -6.1 (lower-growth scenario long-run). - External sector: - Current account, incl. official transfers: - 2013: -1.8 (baseline). - 2014: -3.1. - 2018: -6.7 (baseline). - External debt: - 2013: 39.9 (percent of GDP). - 2014: 32.1. - 2018: 44.2. - Net Foreign direct investment: - 2013: 3.0 (percent of GDP). - 2014: 3.0. - Long-run lower-growth scenario: 1.7. ### Program timeline and mission - Discussions took place during September 17–October 2 in Abidjan. - Staff team: Messrs. Lazare (head) and Koulet-Vickot, Ms. Macario (all AFR), and Messrs. Dicks-Mireaux (SPR) and Queyranne (FAD). Ms. Coulibaly from resident representative's office assisted the mission. - Approved by A. Aemro Selassie (AFR) and Peter Allum (SPR). - Date on document: November 21, 2013. *International Monetary Fund — Côte d’Ivoire: Article IV / ECF-related assessment and program update (document dated November 21, 2013).* ### 10. The authorities viewed staff projections as too conservative. ### 10. The authorities viewed staff projections as too conservative. ### Growth Projections and Authorities' Position - Authorities' own real growth projections: 9 percent in 2013 and 10 percent in 2014–15, driven by higher private investment. - Authorities noted staff had revised its growth projections upward on several occasions. - Authorities reiterated commitment to implement reforms required to reach high private investment levels in the NDP and indicated readiness to adopt measures to address downside risks if they materialize. ### Box 1 — Côte d’Ivoire: Inclusive Growth (findings and context) - Poverty and data constraints: - Poverty increased following a marked decline in real per capita income since the late 1970s and the period of conflict through 2010–11. - Poverty indicators have not been updated since 2008 because the National Statistics Institute could not carry out a new Living Standard Measurement Survey during the crisis. - Authorities estimate slightly more than half the population lived below the poverty line in 2011 due to displacement and deterioration of social services. - The 2013 human development report estimates that 61.5 percent of the population lives in multidimensional poverty. - Policy actions and pro-poor measures already adopted: - Cocoa reform and setting a minimum price for cotton and cashew. - Strong increase in pro-poor spending, prioritizing health and education for new hiring and renovation of facilities. - Consideration of creating a universal health insurance system. - Labor force and structural challenges: - Population growth about 3 percent per year. - Employment dominated by agriculture in subsistence and low productivity activities. - Key policy priorities: addressing infrastructure gaps, strengthening agricultural productivity, investing in health, education, and vocational training, upgrading skills, supporting access to credit for smaller/newer enterprises, facilitating market creation with supporting infrastructure, and strengthening basic social protection. - Selected Human Development Indicators (1995, 2000, 2011) - Poverty rate: 37.0, 34.0, 49.0 - Life expectancy at birth: 51.0, 50.1, 54.7 - Expected years of schooling: 6.1, 6.3, 6.3 - Primary school enrollment ratio (% net): 53.0, 57.0, 61.0 - Ratio: girls to boys in primary education (%): 73.0, 75.0, 83.0 - Mortality rate, under 5 (per 1,000): 152.0, 145.0, 111.0 - Prevalence of HIV, total (% of pop. Aged 15-49): 7.3, 6.6, 3.0 - Access to an improved water source (% of pop.): 77.0, 77.0, 80.0 - Sources for indicators: UNDP, World Development Indicators; Authorities. ### Risk Assessment Matrix — Key risks, likelihood, impact, and recommended responses - Global oil shock triggered by geopolitical events - Relative Likelihood: Low - Impact if realized: Medium - Impact summary: Low impact on BoP; likely negative fiscal impact via politically sensitive decision on fuel pump prices. - Recommended response: Continue automatic fuel price adjustment mechanism; strengthen social safety net. - Protracted period of slower European growth - Relative Likelihood: High - Impact if realized: Low - Impact summary: Reduced ability to attract new FDI; potential reduction in donor support from European countries. - Recommended response: Develop regional domestic markets; strengthen business climate; reinforce competitiveness. - Sharp slowdown in growth in China - Relative Likelihood: Medium - Impact if realized: High - Impact summary: Could curtail/delay investment projects financed by loans from China. - Recommended response: Strengthen business climate to attract other investors. - Protracted economic and financial volatility, especially for emerging markets - Relative Likelihood: High - Impact if realized: Low - Impact summary: Could hinder plans to issue a Eurobond and complicate debt management. - Recommended response: Re-assess pros and cons of Eurobond issuance versus alternative funding. - Unfavorable local weather conditions - Relative Likelihood: Low to Medium - Impact if realized: Medium - Impact summary: Would reduce agricultural output, exports, fiscal revenue, and foster inflationary pressures. - Recommended response: Monitor second-round inflation effects; allow moderate fiscal deficit relaxation to accommodate well-targeted spending to cushion impact on poor. - Deterioration in socio-political and security situation - Relative Likelihood: Low - Impact if realized: High - Impact summary: Would discourage investors; slow pace of some structural reforms (energy); impact growth and employment. - Recommended response: Allow moderate relaxation of fiscal deficit to cushion impact on economic activity. - Demand for strong increases in public sector wages - Relative Likelihood: High - Impact if realized: Medium - Impact summary: If met, investment and pro-poor spending would be crowded out. - Recommended response: Keep wage bill within 2014 budget limits; adopt medium-term wage bill strategy (end-October structural benchmark). ### Policy Discussions — Building the foundations for strong growth (major themes and staff vs. authorities views) A. Policy Theme #1: Ensuring Long-Term Fiscal Sustainability - Context and risks: - Fiscal stance since 2011 reduced the fiscal deficit and increased public investment but faces headwinds. - Revenue erosion from incentives in the 2012 investment code and other sector codes. - Spending pressures from wage demands and subsidies to the electricity sector. - Complications from settling longstanding domestic arrears, rollover risk of regional market financing, contingent liabilities, and fiscal risks from a planned universal health insurance system. - Staff recommendations: - Continued VAT reform aimed at enlarging the tax base and mobilizing the full potential of VAT in Côte d’Ivoire. (September 2013 FAD mission estimated the VAT gap at 7.9 percent of GDP based on 2012 household consumption analysis.) - Strengthen tax policy and refrain from granting further special tax regimes; improve revenue administration (strengthen large taxpayer office, set up medium-size taxpayer office, reinforce tax and customs controls and audits). - Ensure wage bill strategy can bring the wage bill down as a share of tax revenue over the medium to long term (in compliance with the WAEMU convergence criterion); front-load the strategy and concentrate new hiring on health and education in the longer run. - Proceed with caution on universal health insurance, balancing inclusiveness benefits with potentially large fiscal costs. - Strengthen cash planning and cash management to manage tight cash flow from bunching of domestic debt repayments in the last two months of the year in 2013 and 2014 (and in 2016). - Continue electricity sector reform: restructure regressive tariffs to make them progressive and introduce periodic automatic adjustments. - Authorities’ views and actions: - Broad agreement with staff recommendations but cautious on VAT due to social impacts. - Draft 2014 budget includes a 0.3 percent of GDP rise in various taxes (including excise taxes, the tax on telecommunications). - Considered the wage bill strategy capable of delivering sustainability while addressing commitments after a 20-year freeze of public sector wages. - Undertaking studies to keep fiscal costs of universal health insurance under control. - Acknowledged tight cash positions toward end-2013 and 2014 but view them as manageable; will actively manage cash and expenditure pace to ensure timely domestic debt repayments that may not be rolled over. - Cautious on prompt electricity sector reform; noted measures passed in 2012–13 and decision to bring export prices closer to marginal cost in 2014 improved short-term financial position of the electricity sector. B. Policy Theme #2: Reducing Financial Sector Vulnerabilities and Fostering Financial Deepening - Objectives: - Strengthen soundness of the banking sector and enhance contribution to NDP growth objectives. - Situation and constraints: - Public banks and a couple of small domestic banks do not meet most prudential requirements and are largely undercapitalized. - Private sector credit-to-GDP ratio about 18 percent. - Limited access to financial services: 11 percent of the population (including microfinance). - Loans are predominantly short-term and concentrated on larger companies; limited credit to medium- and small-size enterprises. - Weaknesses: land and property registry insufficiencies, creditor difficulties in judicial debt recovery, lack of a widely used borrower’s registry. - Reforms and support: - Gradual reform program supported by Fund TA to eliminate constraints to private credit and help banks manage liquidity. - Authorities have started reforming land registration laws and established commercial courts (first operating in Abidjan). - Authorities support BCEAO regional reforms: establishment of a credit bureau by end 2013 and regulations allowing primary dealers to operate. - Reform allowing primary dealers would facilitate emergence of a secondary market for government securities and bank liquidity management. - Authorities preparing a comprehensive financial sector development strategy with World Bank support and undertaking financial/strategic audits and restructuring of public banks. - Staff’s views: - Urged prompt restructuring of public banks where clear resolution strategies exist, drawing on recent audits and the September 2013 MCM TA mission. - Stressed importance of minimizing contingent liabilities and including full cost of resolution in the budget. - Encouraged leadership in implementing BCEAO decision on primary market dealers and establishment of a credit bureau. - Encouraged creating an environment to broaden financing for small-and medium-sized enterprises, potentially without relying on public banks. - Authorities’ views: - Intend to adopt an action plan for resolving troubled public banks before end-2013; draft budget incorporates funding for bank resolution costs to be incurred during 2014. - Emphasized financial sector’s key role for strong growth and aim to broaden access to medium- and long-term credit. - Still considering retaining some public banks to channel credit to specific sectors. - Plan to extend commercial courts outside Abidjan and support BCEAO regulations on primary dealers and credit bureaus. C. Policy Theme #3: Maintaining External Stability - Staff assessment: - Real effective exchange rate broadly in line with fundamentals and WAEMU real effective exchange rate assessment. - Current account deficit projected to widen driven by investment-led growth strategy; large part financed through FDI and project loans. - External debt profile improved after HIPC Completion Point in 2012 (external debt declined from 54.9 percent of GDP in 2011 to 30.5 percent in 2012), creating scope for new borrowing. - Economy remains vulnerable to macroeconomic shocks (lower exports and GDP growth). - Authorities’ medium-term debt strategy (MTDS) and Eurobond plans: - MTDS aims to diversify investor base and lengthen maturities. - Considering issuing a Eurobond equivalent to US$500 million in 2014. - Authorities do not see a sovereign rating as a precondition for the Eurobond. - Note: This issuance would not result in additional budget spending; borrowing on the regional market would be reduced in 2014 by a similar amount, and some borrowing space could be used to retire domestic arrears in cash. - Non-price competitiveness and business climate: - Côte d’Ivoire ranks relatively poorly on several business environment indicators (World Bank Doing Business, Global Competitiveness Index, Global Enabling Trade Index). - Key issues: difficulty accessing financing, corruption, inadequate infrastructure, legal uncertainty. - Authorities’ measures to strengthen competitiveness: - New investment code approved June 2012; electricity and mining codes being finalized. - Establishment of a Centre de Promotion des Investissements en Côte d’Ivoire providing a one-stop facility for investors. - Measures to reduce cost and time to open businesses and creation of a commercial court in Abidjan. - Planning another one-stop facility to streamline import procedures. *Source: IMF staff report content as provided in the supplied document.* ### 20. A medium-term debt strategy that focuses on debt sustainability ### 20. A medium-term debt strategy that focuses on debt sustainability ### Medium-term debt strategy and Eurobond issuance - Staff welcomed the preparation of the medium-term debt strategy to better guide financing decisions and ensure prudent borrowing. - Replacing regional financing with a Eurobond would: - leave unchanged Côte d’Ivoire’s risk of debt distress (moderate, see DSA), - contribute to broadening the investor base and lengthening maturities. - Staff cautioned that issuance should take place only if offered rates are reasonable and recommended waiting until Côte d’Ivoire has obtained a sovereign rating to secure greater access to capital markets and better rates. - Program adjustments and ceilings: - In case of issuance, a program adjustor would revise upward the ceiling of nonconcessional debt (by US$500 million) and downward the ceiling on net domestic financing (by an equivalent amount). - For end-June 2014 PCs, the ceiling on new nonconcessional external debt is being raised by US$100 million (from US$800 million at end-December 2013 to US$900 million at end-June 2014). - Authorities’ view: final decision on the Eurobond will depend on the foreseeable market yield, considering the foreseen unwinding of unconventional monetary policies in the US. - Staff view: supports consideration of a Eurobond to improve asset-liability management but emphasizes weighing implications for overall debt service costs and avoiding too high a concentration of external maturities in the mid-2020s; urges obtaining a sovereign rating first. ### Business climate, competitiveness, and private investment - Staff assessment: - Recent reforms have improved the business climate, but competitiveness rankings have not fully reflected these changes (some rankings still based on 2010–11 data). - Even accounting for recent reforms, significant bottlenecks remain in the business climate, rule of law, governance, and anti-corruption efforts; much remains to be done to encourage private investment required in coming years. - Authorities’ view: - The authorities indicated that the 2014 Doing Business ranking improved (from 173rd in 2013 to 167th in 2014) and reiterated commitment to continue reforms consistent with the NDP objective of creating one of the best business climates in Africa. - Staff recommendation: - Further significant improvements are needed to strengthen competitiveness and encourage strong private investment. ### Governance and public procurement - Recent governance actions: - Two ordinances adopted in September 2013: one improving the legal framework to prevent and fight corruption; the other establishing the High Authority for Good Governance (Haute Autorité pour la Bonne Gouvernance). - Côte d’Ivoire became EITI compliant in May 2013. - Concerning practices: - Amount of public procurement granted on a non-competitive basis reached about 80 percent in the first semester of 2013. - Staff’s views and recommendations: - Welcomed governance improvements and urged forceful enforcement of anti-corruption legislation and whistle-blower protections. - Highlighted need to significantly reduce non-competitive public procurement and to apply both the spirit and the letter of the procurement code effectively. - Authorities’ view: - Intend to reduce the share of non-competitive public sector contracts and to grant most on a competitive basis; noted some cases necessitate non-competitive awards to move fast on key projects or because projects are tied to pre-selected companies due to limited concessional financing. ### Fiscal performance in 2013 and outlook for 2014 - 2013 performance through end-June: - All performance criteria and indicative targets at end-June were met. - Revenue slightly exceeded the program target despite VAT and import tax shortfalls owing mostly to higher-than-anticipated cost of exemptions under the new investment code adopted in 2012. - Expenditures fell below the programmed objective; externally-financed investment exceeded its target while domestically-financed investment was executed at a slower pace. - 2013 full-year projections: - Primary basic deficit projected to decline from 0.3 percent of GDP to 0.2 percent of GDP. - Overall deficit projected to decrease from 3.2 percent of GDP to 2.7 percent of GDP. - Cash position at end-December expected to be tight but manageable due to large domestic debt redemptions from the end-2011 T-bill restructuring. - 2014 budget and fiscal stance: - Draft 2014 budget built on a conservative macroeconomic scenario and prudent revenue projections. - Total tax revenue projected to remain stable in percent of GDP relative to 2013. - Grants from France and other development partners expected to rise to 2.4 percent of GDP in 2014 from 1.7 percent of GDP in 2013. - Total revenue and grants projected to increase from 21.3 percent of GDP in 2013 to 22 percent of GDP in 2014. - Authorities committed to containing current expenditure to allow capital spending to grow: - Wage bill expected to increase by +0.2 percent of GDP, - Current expenditures expected to decline by 0.1 percent of GDP owing to reduced spending on subsidies, - Capital expenditure expected to increase by +0.5 percent of GDP, focused on energy and roads. - Fiscal adjustment in 2014: - Primary basic deficit projected to edge down to 0.1 percent of GDP in 2014 from 0.2 percent in 2013. - Overall fiscal deficit projected to decline from 2.7 percent of GDP in 2013 to 2.3 percent in 2014. - Deficit financing projected by net mobilization in the regional market: 2.3 percent of GDP in 2014 (against 2.4 percent in 2013), and net external financing: 0.4 percent of GDP in 2014 (against 0.7 percent in 2013). - If additional resources become available, a supplementary budget would be considered. ### Structural reforms, public financial management, and arrears - Structural benchmark progress: - Ten out of 14 structural benchmarks were met through end-October 2013. - Progress made on public financial management: adoption of organic laws for fiscal transparency and the budget system law transposing WAEMU directives; MTEF 2014–16 attached to budget documentation. - New electricity code adopted by the Council of Ministers and awaiting transmission to the National Assembly. - Delays noted in completing some reforms by their due dates: - Medium-term strategy for controlling the wage bill, - Medium-term debt strategy, - Finalizing a new mining code, - Preparing action plans for restructuring public banks and regularizing domestic arrears. - Domestic arrears audit results and plans: - Second wave of audits completed in October 2013 validated arrears owed to several thousand creditors: CFAF 152.9 billion (1.1 percent of GDP). - Initial amount of arrears in the treasury books before the two waves of audits stood at CFAF 356 billion; audits resulted in 57.1 percent of these arrears being rejected. - Council of Ministers approved next steps on November 22, 2013: government will, by end-2013, pay an amount in cash to all creditors to allow settlement of debt owed to small creditors; remaining arrears to be paid depending on creditor choice: (i) option 1: in cash in early 2014 (with a 50 percent reduction of the amount due); (ii) option 2: over three years (30 percent reduction); or (iii) option 3: over 5 years (20 percent reduction). - As of end-September 2013, the planned reduction of domestic arrears and debt float foreseen under the 2013 program (CFAF 50 billion) was on track. - Authorities’ commitments for reform completion: - Adoption of the medium-term wage bill strategy, - Reorganization of the debt management unit along functional lines (front-, middle-, back-office), - Regularization of domestic arrears to suppliers in line with the action plan, - Restructuring of public banks (financial and strategic audits completed), - Adoption of a financial sector development strategy. ### Financial sector and public banks - Staff view: - Developing the financial sector is important for inclusive growth, financing options for medium- and small-enterprises, and wider access to financial services. - Welcomes intention to adopt a financial sector reform strategy and urges rapid implementation. - Encouraged by progress in preparing options for restructuring public banks and recommends rapid implementation of the first steps of the action plan expected by end-November 2013. ### Staff appraisal and policy recommendations - Macro and growth outlook: - Côte d’Ivoire has achieved considerable progress and is experiencing a strong recovery under the authorities’ program. - Policies have led to removal of infrastructure bottlenecks, improvements in business climate, sustained high growth, and low inflation. - Medium-term outlook is positive if reform momentum is sustained; downside risk exists if foreseen high growth rates do not materialize. - Key staff recommendations: - Strengthen fiscal sustainability and increase fiscal space for infrastructure and social spending through enhanced revenue mobilization (additional tax policy and administration reform) and curtailing widespread exemptions. - Strengthen public financial management: reform exceptional spending procedures, significantly strengthen cash management and cash planning to better manage bunching of domestic debt payments toward year-end. - Put the electricity sector on a sound financial footing and contain budget subsidies to it. - Obtain a sovereign rating prior to market issuance to help obtain the best issuance terms. - For any Eurobond issuance, weigh implications for overall debt service costs and avoid excessive concentration of maturities. - Continue to improve the business climate and governance, enforce the rule of law, significantly reduce non-competitive public procurement, and ensure effective implementation of the procurement code. *Source: IMF staff report excerpt — "A medium-term debt strategy that focuses on debt sustainability and high quality projects will be critical for maintaining external stability."* ### 44. Program performance has been good. All end-June performance criteria and indicative ### Program performance and staff recommendations ### Program performance - "Program performance has been good." - "All end-June performance criteria and indicative targets have been met and progress on structural reforms has been solid, although with some delays and missed structural benchmarks." ### Staff recommendations and actions - Staff recommends completion of the fourth review and a disbursement of an amount equivalent to "SDR 48.78 million under the ECF arrangement." - Staff "supports the authorities’ request for raising the ceiling for new nonconcessional external debt and the proposed performance criteria for end-June 2014." - It is proposed that "the next Article IV consultation take place in accordance with the Decision on Article IV consultation cycles for program countries (Decision No. 14747-(10/96), as amended)." --- ### Box 2 — Côte d’Ivoire: High-Growth in Non-Natural Resource Producing African Countries ### Context and question - Côte d’Ivoire "will need to implement a comprehensive reform strategy to reach the ambitious medium-term growth and poverty reduction objectives it is targeting over the medium term." - The Regional Economic Outlook analyzes the experience of six LICs in sub-Saharan Africa that "experienced the fastest sustained growth during 1995–2010, although they were not natural resource producers during that time." ### Countries in the sample - "Burkina Faso, Ethiopia, Mozambique, Rwanda, Tanzania, and Uganda" ### Core lesson - While these countries followed different paths, their experience demonstrates that "a shift in macroeconomic policy making, combined with comprehensive structural reforms and sustained external financing can create the fiscal space to finance productive investment and generate a growth dividend." ### Key points that contributed to sustained high growth - Macroeconomic stability: - "Improved macroeconomic policies, structural reforms, and a greater degree of overall stability are crucial for economic growth." - "Greater fiscal space—reflecting expenditure prioritization and a combination of debt relief, aid, and greater domestic resource mobilization—can translate into higher levels of social and investment spending, supporting growth in both the near-and medium term." - "Lower inflation and a more predictable economic environment reduce risks and transaction costs, encouraging private sector activity." - "Improved macroeconomic policies also help to attract foreign financing, both in the form of foreign aid and private resources, such as FDI." - Effective use of foreign aid: - "The increased level and predictability of foreign aid enabled a greater focus on medium-term planning and greater opportunities for alignment with national poverty-reduction strategies." - Strong national policy-making institutions: - "Identifying and translating increased fiscal space into sustainable growth requires effective macro policymaking and strong institutions, in particular regarding PFM capacity." - High investment levels: - "Sustained high investment levels are crucial to increase the capital stock and boost overall productivity levels." - "Investment in infrastructure is particularly important, as it promotes private sector development through lowering overall business costs." - "The lack of an adequate transport infrastructure can bar large segments of the population from access to markets, in particular in rural areas, where poverty is concentrated." - Deeper financial markets: - "Deeper financial markets support growth by enhancing domestic savings to finance investment." - "Financial inclusion has tended to lag, and could—including through use of new technologies—be prioritized to make the growth process more inclusive." *Excerpt from AFR’s Fall 2013 REO,“Drivers of Growth in Non-resource-Rich Sub-Saharan African Countries”, IMF, Washington DC.* ### Box 2. Côte d’Ivoire: High-Growth in Non-Natural Resource Producing ### _cr13367 - Box 2. Côte d’Ivoire: High-Growth in Non-Natural Resource Producing ### Output growth decomposition (Table 1 — memo item for Côte d’Ivoire) - 1980–90: Real GDP 2.8; Capital stock 0.3; Adjusted labor 2.9; Education 0.2; Total factor productivity -0.6 - 1990–2000: Real GDP 2.1; Capital stock 0.1; Adjusted labor 2.2; Education 0.3; Total factor productivity -0.5 - 2000–10: Real GDP 0.7; Capital stock 0.3; Adjusted labor 1.4; Education 0.2; Total factor productivity -1.2 - 2011–13: Real GDP 3.6; Capital stock 1.1; Adjusted labor 1.9; Education 0.2; Total factor productivity 0.4 ### Real and external sectors, 2009–14 (Figure 1 highlights) - Real GDP Growth: "The economy of Côte d'Ivoire is projected to grow above regional averages in 2014..." - Investment: "helped by a surge in public and private investment" (public investment and private investment series shown 2009–2014) - Monetary sector: "while broad money growth also remains moderate." (broad money, credit to the economy, net foreign assets series shown 2009–2014) - External: "The external current account deficit is projected to continue widening in 2014..." (current account balance series shown 2009–2014) - Inflation: "Inflation remains moderate..." (Overall Index, Food, Non Food series shown 2009–2014) - Export/Import performance: ".... driven by investment-related imports." (Exports and imports of goods and services series shown 2009–2014) ### Fiscal developments, 2009–14 (Figure 2 highlights) - Overall balance (incl. grants): "Overall balance (incl. grants) will improve..." - Financing mix: "...mainly financed by external sources." (Domestic borrowing and Foreign borrowing series shown) - Revenues and expenditures: "Total revenue: Revenues are projected to increase slightly... Total expenditure: ...while total expenditure remains stable... Current expenditure ...is offset by declining current expenditure. Capital Expenditure ...as increasing capital spending..." - Wages and Other current expenditure: series shown 2009–2014 ### Medium-term outlook, 2011–18 (Figure 3 highlights) - Real GDP growth: "Real GDP growth is projected to remain strong..." (2011–2018) - Inflation: "...while inflation remains moderate." (Consumer Price Index, 2011–2018) - Current account: "The current account widens due to increasing imports of capital goods..." (2011–2018) - Fiscal performance: "...while overall fiscal deficit increases somewhat..." with revenue, expenditure, and overall balance series (2011–2018) - Government expenditure: "...owing to higher capital spending..." (Current expenditure and Capital expenditure series) - Financing mix: "...supported by external financing." (Foreign borrowing and Domestic borrowing series) ### Selected economic indicators, 2011–18 (Table 1 — selected rows) - GDP at constant prices (annual percent change): 2011 -4.7; 2012 9.8; 2013 9.8; 2014 8.0; 2015 8.7; 2016 8.2; 2017 8.1; 2018 7.8; 2019 7.5; 2020 7.0 - GDP deflator (annual percent change): 2011 5.0; 2012 1.3; 2013 1.4; 2014 3.2; 2015 2.6; 2016 2.7; 2017 2.5; 2018 2.1; 2019 2.2; 2020 2.1 - Consumer price index (annual average): 2011 4.9; 2012 1.3; 2013 1.3; 2014 3.1; 2015 2.9; 2016 2.5; 2017 2.5; 2018 2.5; 2019 2.5; 2020 2.5 - Exports, f.o.b., at current prices: 2011 5.3; 2012 3.4; 2013 5.2; 2014 1.3; 2015 4.9; 2016 9.3; 2017 9.0; 2018 10.0; 2019 11.5; 2020 13.0 - Imports, f.o.b., at current prices: 2011 -20.4; 2012 54.1; 2013 41.0; 2014 6.2; 2015 15.5; 2016 12.0; 2017 12.9; 2018 14.0; 2019 14.7; 2020 14.1 - Gross investment (percent of GDP): 2011 8.2; 2012 13.7; 2013 13.7; 2014 17.8; 2015 17.6; 2016 19.2; 2017 19.6; 2018 20.9; 2019 21.8; 2020 22.5 - Current account balance (including official transfers, percent of GDP): 2011 12.9; 2012 -1.3; 2013 -1.3; 2014 -2.9; 2015 -1.8; 2016 -3.1; 2017 -3.9; 2018 -5.1; 2019 -5.8; 2020 -6.7 - Gross public debt (percent of GDP): 2011 73.5; 2012 45.6; 2013 48.9; 2014 43.2; 2015 42.6; 2016 40.5; 2017 39.2; 2018 38.1; 2019 37.0; 2020 36.0 - Nominal GDP (CFAF billions): 2011 11,360; 2012 12,600; 2013 12,600; 2014 14,035; 2015 14,094; 2016 15,593; 2017 17,216; 2018 18,917; 2019 20,748; 2020 22,617 - Nominal GDP at market prices (US$ billions): 2011 24.1; 2012 24.7; 2013 24.7; 2014 28.4; 2015 28.5; 2016 32.1; 2017 35.9; 2018 39.9; 2019 44.2; 2020 48.6 - Population (million): 2011 22.7; 2012 23.4; 2013 23.4; 2014 24.1; 2015 24.1; 2016 24.8; 2017 25.5; 2018 26.3; 2019 27.1; 2020 27.9 - Real GDP per capita growth (percent): 2011 -7.7; 2012 6.8; 2013 6.8; 2014 5.0; 2015 5.7; 2016 5.2; 2017 5.1; 2018 4.8; 2019 4.5; 2020 4.0 ### Balance of payments highlights (Table 2 — selected items, in billions of CFA francs) - Trade balance: 2011 2,744.2; 2012 1,285.8; 2013 1,787.7; 2014 1,071.2; 2015 1,416.8; 2016 1,410.6; 2017 1,324.1; 2018 1,204.0; 2019 1,115.9; 2020 1,171.4 - Exports, f.o.b.: 2011 5,806.9; 2012 6,006.0; 2013 6,107.0; 2014 6,084.9; 2015 6,407.6; 2016 7,000.4; 2017 7,632.6; 2018 8,398.2; 2019 9,364.5; 2020 10,584.9 - Of which cocoa: 2011 1,969.4; 2012 1,571.4; 2013 1,571.4; 2014 1,523.6; 2015 1,546.4; 2016 1,504.1; 2017 1,524.5; 2018 1,495.9; 2019 1,471.5; 2020 1,463.4 - Of which crude oil and refined oil products: 2011 1,740.4; 2012 1,772.5; 2013 1,489.3; 2014 1,851.7; 2015 1,545.7; 2016 1,488.3; 2017 1,585.4; 2018 1,609.4; 2019 1,669.7; 2020 1,707.6 - Imports, f.o.b.: 2011 -3,062.7; 2012 -4,720.2; 2013 -4,319.3; 2014 -5,013.7; 2015 -4,990.7; 2016 -5,589.8; 2017 -6,308.5; 2018 -7,194.2; 2019 -8,248.6; 2020 -9,413.4 - Of which crude oil imports: 2011 -826.8; 2012 -1,482.0; 2013 -1,251.8; 2014 -1,483.0; 2015 -1,311.0; 2016 -1,369.6; 2017 -1,390.1; 2018 -1,437.9; 2019 -1,492.2; 2020 -1,634.3 - Current account including official transfers: 2011 1,467.9; 2012 -164.0; 2013 -158.1; 2014 -404.9; 2015 -254.4; 2016 -477.8; 2017 -667.5; 2018 -968.7; 2019 -1,213.7; 2020 -1,511.3 - Official medium- and long-term loans (net): 2011 26.4; 2012 -253.3; 2013 -253.3; 2014 154.0; 2015 105.1; 2016 67.2; 2017 133.8; 2018 185.3; 2019 170.0; 2020 169.5 - Foreign direct investments: 2011 127.8; 2012 231.2; 2013 231.2; 2014 416.2; 2015 416.1; 2016 461.9; 2017 508.0; 2018 558.8; 2019 614.7; 2020 645.5 - Overall balance (in billions): 2011 115.8; 2012 -62.0; 2013 -62.0; 2014 234.9; 2015 230.4; 2016 237.7; 2017 247.6; 2018 230.5; 2019 231.7; 2020 324.7 - Financing gap (2011–15): 2011 0.0; 2012 -8.9; 2013 0.0; 2014 -163.8; 2015 -149.4; 2016 -107.6; 2017 -104.3 ### Central government fiscal operations (Tables 3a/3b — selected items) - Total revenue and grants (billions of CFA francs): 2011 1,725.9; 2012 2,621.4; 2013 2,621.4; 2014 2,992.0; 2015 3,002.4; 2016 3,428.9; 2017 3,707.4; 2018 4,101.6; 2019 4,567.0; 2020 5,008.5 - Total revenue (billions): 2011 1,693.0; 2012 2,540.2; 2013 2,540.2; 2014 2,764.5; 2015 2,766.8; 2016 3,051.0; 2017 3,331.9; 2018 3,714.8; 2019 4,164.2; 2020 4,609.7 - Tax revenue (billions): 2011 1,493.2; 2012 2,213.0; 2013 2,213.0; 2014 2,391.4; 2015 2,384.1; 2016 2,642.3; 2017 2,891.9; 2018 3,231.3; 2019 3,627.2; 2020 4,031.8 - Total expenditure (billions): 2011 2,208.7; 2012 3,054.0; 2013 3,054.0; 2014 3,445.4; 2015 3,384.5; 2016 3,793.4; 2017 4,238.9; 2018 4,697.5; 2019 5,219.5; 2020 5,710.7 - Current expenditure (billions): 2011 1,923.9; 2012 2,436.0; 2013 2,436.0; 2014 2,343.9; 2015 2,371.0; 2016 2,587.4; 2017 2,863.3; 2018 3,127.4; 2019 3,451.8; 2020 3,750.8 - Capital expenditure (billions): 2011 285.7; 2012 615.8; 2013 615.8; 2014 1,103.1; 2015 1,015.1; 2016 1,206.0; 2017 1,375.6; 2018 1,570.1; 2019 1,767.8; 2020 1,959.9 - Interest due (billions): 2011 219.3; 2012 233.0; 2013 233.0; 2014 196.2; 2015 197.1; 2016 204.7; 2017 246.5; 2018 267.6; 2019 292.4; 2020 316.0 - Overall balance, including grants (billions): 2011 -482.9; 2012 -432.7; 2013 -432.7; 2014 -453.4; 2015 -382.1; 2016 -364.5; 2017 -531.6; 2018 -595.9; 2019 -652.5; 2020 -702.2 - Overall balance (including grants, percent of GDP): 2011 -5.7; 2012 -3.4; 2013 -3.4; 2014 -3.2; 2015 -2.7; 2016 -2.3; 2017 -3.1; 2018 -3.2; 2019 -3.1; 2020 -3.1 ### Monetary survey (Table 4 — selected items, in billions of CFA francs) - Net foreign assets (total): 2011 1,813.0; 2012 1,556.9; 2013 1,556.9; 2014 1,955.6; 2015 1,936.7; 2016 2,282.0; 2017 2,633.8; 2018 2,971.7; 2019 3,349.7; 2020 3,781.1 - Net domestic assets (total): 2011 2,892.1; 2012 3,354.7; 2013 3,354.7; 2014 3,749.6; 2015 3,792.4; 2016 4,135.0; 2017 4,450.9; 2018 4,813.1; 2019 5,188.7; 2020 5,526.4 - Credit to the economy (total): 2011 2,142.8; 2012 2,326.4; 2013 2,326.4; 2014 2,617.6; 2015 2,660.3; 2016 2,917.7; 2017 3,233.5; 2018 3,577.8; 2019 3,901.6; 2020 4,187.5 - Broad money (M2): 2011 4,705.1; 2012 4,911.6; 2013 4,911.6; 2014 5,705.2; 2015 5,729.1; 2016 6,417.0; 2017 7,084.8; 2018 7,784.8; 2019 8,538.4; 2020 9,307.6 - Velocity of circulation: 2.4 (constant through series: 2011–2020 listed as 2.4–2.6 where specified) ### External financing requirements and financing (Tables 5 & 2 summary) - External financing requirements (billions of CFA francs): 2011 -638.5; 2012 -243.6; 2013 -173.5; 2014 -667.3; 2015 -604.9; 2016 -750.5; 2017 -801.7 - Available financing (billions): 2011 638.5; 2012 234.7; 2013 173.5; 2014 503.5; 2015 455.5; 2016 642.9; 2017 697.4 - Financing gap (2011–15): 2011 0.0; 2012 -8.9; 2013 0.0; 2014 -163.8; 2015 -149.4 ### Financial soundness indicators, banking sector (Table 6) - Risk-weighted capital to assets ratio (end of period): 2008 9.3; 2009 10.2; 2010 12.5; 2011 9.7; 2012 8.8; 2013 (June) 9.4 - NPLs/total loans: 2008 19.5; 2009 17.0; 2010 16.4; 2011 16.3; 2012 16.1; 2013 (June) 16.6 - Provisions/NPLs: 2008 77.3; 2009 75.9; 2010 74.9; 2011 67.3; 2012 78.9; 2013 (June) 79.6 - Liquid assets/total assets: 2008 42.0; 2009 42.1; 2010 42.6; 2011 50.3; 2012 47.1; 2013 (June) 47.9 - Loans/deposits: 2008 95.8; 2009 92.8; 2010 87.2; 2011 71.3; 2012 75.7; 2013 (June) 72.7 ### Indicators of capacity to repay the Fund (Table 7 — selected items) - Fund obligations based on existing credit (in millions of SDRs, principal): 2011 11.7; 2012 0.0; 2013 0.0; 2014 4.6; 2015 39.0; 2016 46.2; 2017 85.2; 2018 109.6; 2019 98.5; 2020 75.5; 2021 68.3; 2022 29.3 - Charges and interest (in millions of SDRs): 2011 0.1; 2012 0.0; 2013 0.0; 2014 0.0; 2015 1.4; 2016 1.3; 2017 1.1; 2018 0.9; 2019 0.6; 2020 0.4; 2021 0.2; 2022 0.1 - Outstanding Fund credit (in millions of SDRs): 2011 399.4; 2012 512.3; 2013 609.8; 2014 686.5; 2015 647.5; 2016 601.3; 2017 516.1; 2018 406.5; 2019 293.3; 2020 191.9; 2021 97.6; 2022 42.3 - Outstanding Fund credit (in billions of CFA francs): 2011 297.2; 2012 400.2; 2013 456.8; 2014 509.7; 2015 477.7; 2016 441.9; 2017 377.7; 2018 296.3; 2019 213.8; 2020 139.8; 2021 71.1; 2022 30.8 - Net use of Fund credit (millions of SDRs): 2011 150.9; 2012 130.1; 2013 97.6; 2014 76.7; 2015 -39.0; 2016 -46.2; 2017 -85.2; 2018 -109.6; 2019 -113.2; 2020 -101.5; 2021 -94.3; 2022 -55.3 ### Proposed schedule of disbursements and timing of reviews under ECF arrangement (Table 8) - 25 percent of quota, amount 81.30, Date of availability: November 4, 2011 — Condition: Executive Board approval of the three-year arrangement under the ECF. - 20 percent of quota, amount 65.04, Date: April 1, 2012 — Condition: Observance of performance criteria for December 2011 and completion of the first review under the ECF arrangement. - 20 percent of quota, amount 65.04, Date: October 1, 2012 — Condition: Observance of performance criteria for June 2012 and completion of the second review under the ECF arrangement. - 15 percent of quota, amount 48.78, Date: April 1, 2013 — Condition: Observance of performance criteria for December 2012 and completion of the third review under the ECF arrangement. - 15 percent of quota, amount 48.78, Date: December 6, 2013 — Condition: Observance of performance criteria for June 2013 and completion of the fourth review under the ECF arrangement. - 15 percent of quota, amount 48.78, Date: April 1, 2014 — Condition: Observance of performance criteria for December 2013 and completion of the fifth review under the ECF arrangement. - 10 percent of quota, amount 32.52, Date: October 1, 2014 — Condition: Observance of performance criteria for June 2014 and completion of the sixth review under the ECF arrangement. - TOTAL: 120 percent of quota, amount 390.24 ### Millennium Development Goals (Table 9 — selected indicators) - Employment to population ratio, 15+, total (%): 1990 63; 1995 64; 2000 64; 2005 64; 2011 64 - GDP per person employed (constant 1990 PPP $): 1990 3,543; 1995 3,350; 2000 8,352; 2005 3,203; 2011 3,729; 2011 (later row) 2,950 - Primary completion rate, total (%): 1990 40; 1995 39; 2000 43; 2005 46; 2011 59 - Immunization, measles (% of children ages 12-23 months): 1990 56; 1995 57; 2000 68; 2005 84; 2011 49 - Mortality rate, infant (per 1,000 live births): 1990 104; 1995 104; 2000 99; 2005 90; 2011 78 - Mortality rate, under-5 (per 1,000 live births): 1990 152; 1995 152; 2000 145; 2005 131; 2011 111 - Maternal mortality ratio (per 100,000 live births): 1990 710; 1995 660; 2000 590; 2005 510; 2011 400 - Improved sanitation facilities (% of population with access): 1990 20; 1995 21; 2000 22; 2005 23; 2011 24 - Improved water source (% of population with access): 1990 76; 1995 77; 2000 77; 2005 79; 2011 80 - Mobile cellular subscriptions (per 100 people): 1990 0; 1995 0; 2000 3; 2005 13; 2011 86 *Source: IMF staff estimates, projections, and data as presented in the original content unit.* ### Appendix I. Côte d’Ivoire—Letter of Intent ### Appendix I. Côte d’Ivoire—Letter of Intent ### Political, security, and social normalization - Municipal and regional elections in 2013 completed the electoral cycle. - National reconciliation and political dialogue progressing; return of a large number of refugees. - Security situation normalized across the territory through actions by the National Security Council (CNS). - Disarmament, Demobilization and Reintegration Authority (ADDR) progressing with disarmament and reintegration of ex-combatants. - Local delegations of the Dialogue, Truth and Reconciliation Commission (CDVR) active in regions to consolidate social cohesion. - August 2013: National Assembly adopted laws on nationality and rural property to clarify access to Ivoirian nationality and rural property. ### Macroeconomic outcomes (2012–mid‑2013) and near‑term outlook - 2012 GDP growth: 9.8 percent. - 2013 growth target: 9 percent (end‑June results confirm target is within reach). - 2013 inflation expected to remain below 3 percent; projected at 2.7 percent (MEFP); inflation specifics: - Average annual inflation 3.5 percent at end‑June 2013. - Inflation slowed since April and reached 2.9 percent year‑on‑year in June 2013. - All quantitative performance criteria and indicative targets for end‑June 2013 under the ECF were observed. - Government growth target for 2014: 10 percent; inflation target within community norm of 3 percent. - Investment targets: - Investment-to-GDP ratio: 13.7 percent in 2012; 17.8 percent in 2013; 19.6 percent in 2014. - Public investment ratio: 4.9 percent in 2012; 7.2 percent in 2013; 8.2 percent in 2014. ### Sectoral and real‑economy developments (first half of 2013) - Strong tertiary sector performance; retail trade: +14.8 percent. - Industrial production highlights: - Food and beverage industries: +5.7 percent. - Furniture and miscellaneous products: +44.2 percent. - Electricity, gas, and heating: +17.3 percent. - Construction and public works: leading indicator fell 14.2 percent due to maintenance-related halt in bitumen production; yet: - National sales of concrete: +69.4 percent. - Sheet metal sales: +42.7 percent. - Sales of gravel: +23.7 percent. - Foreign trade: - Exports: +15.8 percent; manufactured products +20.8 percent; cocoa beans +39.6 percent; cashew nuts +12.3 percent. - Imports: +4.1 percent; capital goods +24.6 percent; consumer goods +0.6 percent; intermediate goods -3.2 percent. - Monetary/credit: - Medium- and long-term credit increased by 5.8 percent compared to end‑December 2012. - New credits up by 9.9 percent over same period in 2012. - Employment: formal sector employment +2.8 percent at end‑June 2013, especially in private sector. - Stock market: BRVM capitalization CFAF 6,116.5 billion in first half of 2013; BRVM moved to continuous trading on September 16. - Private sector investment rate: 8.8 percent of GDP in 2012 to 10.3 percent of GDP in 2013. ### Fiscal performance and public finance management (first half of 2013) - Budget revenue exceeded objective by CFAF 23.3 billion; strong performance in profit tax (BIC) excluding petroleum, personal income and wage tax, stamp and registration taxes, and export taxes. - External loans and project grants inflows higher than expected; drawings on World Bank loans for employment and infrastructure projects. - Expenditures: total expenditures lower than targeted. - Wage bill executed within expected allocation. - Electricity sector subsidy: CFAF 43.1 billion versus planned CFAF 15.3 billion (pending CI 26 gas price discussions). - Investment expenditures: CFAF 419 billion, 86.9 percent execution rate relative to end‑June 2013 target; represent 38.4 percent of annual objective in 2013 versus 30.3 percent in 2012. - Externally funded expenditure: CFAF 219.2 billion, 49.8 percent of annual allocations. - Domestically funded capital expenditure: CFAF 201.8 billion versus expected CFAF 347.9 billion at end‑June 2013 (58 percent execution rate), owing to delays in certain projects including C2D. ### Structural reforms and governance priorities - Continued implementation of structural reforms to strengthen competitiveness and business climate: - New investment code for promotion of FDI and development of SMEs/SMIs. - Start‑up of a single window for business formalities. - Development of PPP institutional and regulatory framework. - Public financial management reforms: - Enact decrees for draft laws transposing WAEMU directives; draft laws submitted to National Assembly. - Review public expenditure chain; strengthen verification of delivery of goods and services. - Eliminate exceptional payment order procedures; limit use of treasury cash advances. - Adopt action plan to regularize domestic arrears with government suppliers by end‑November 2013. - Adopt a medium‑term debt management strategy (MTDS) to safeguard fiscal sustainability. - Electricity sector: continue implementation of medium‑term strategy to restore financial balance. - Financial sector development: intensify efforts to increase contribution to financing the economy. - Public bank restructuring and debt management modernization planned. ### Financing strategy and external borrowing - Government intends to broaden financing sources via access to international financial markets, including issuance of Eurobonds planned in 2014. - Sovereign credit rating sought as part of debt strategy framework. - Request to IMF: - IMF approval requested to increase the cumulative nonconcessional lending window by USD 500 million at end‑2014. - Government will continue to seek concessional loans for major infrastructure projects. ### Poverty reduction, employment, and social programs - Government reaffirms intention to reduce poverty significantly and implement the National Development Plan (NDP) to achieve emerging-country fundamentals by 2020. - Priority to transformational projects that improve youth employment: - Youth employment and skills development project (PEJEDEC) operational. - Strengthening resources of FAFCI (Women’s Support Fund) established in 2012; FAFCI allocated CFAF one billion to facilitate access to micro‑credit at 1% per month. - Rural food crop production recovery program to create youth employment and achieve food self‑sufficiency by 2016. - Cocoa and coffee producers: receiving 60 percent of the CIF price through forward sales based on averaged prices; program to extend to cotton and cashew sectors. - Civil service recruitment focused through 2020 primarily on education, health, and security; strategy provides for containment of the wage bill over the medium term. - Draft legislation on universal health insurance (CMU) prepared and submitted to Council of Government. - Continued policy of “free schooling for all.” - Infrastructure priorities: renovation of rural roads; major construction projects include building a third bridge and extending the highway to the North. ### Program commitment and IMF support request - Government considers MEFP policies sufficient to achieve objectives and will consult Fund staff before adopting any additional measures or changes to the policies. - Government agrees to provide information requested by the Fund to monitor program implementation and objectives. - Request for IMF financial support under the Extended Credit Facility (ECF) in an amount equivalent to SDR 48.78 million. *Source: Letter of Intent and Memorandum of Economic and Financial Policies, Republic of Côte d’Ivoire, November 20, 2013.* ### 9. As regards financing, the government has made recourse to the sub-regional monetary ### _cr13367 - 9. As regards financing, the government has made recourse to the sub-regional monetary ### Financing and resource mobilization - Mobilization on the sub-regional monetary and financial market: CFAF 321 billion, compared to the expected CFAF 324.3 billion. - This amount represents 39.8 percent of expected domestic financing (annual objective). - External financing: CFAF 309.8 billion, comprised of: - Grants: CFAF 132.9 billion - Borrowing: CFAF 140.3 billion - Budget support: CFAF 36.6 billion ### Budget execution and fiscal balances (first half of 2013) - Primary basic balance: surplus of CFAF 116.3 billion, versus the programmed deficit of CFAF 55.5 billion. - No new external and internal arrears accumulated; net amounts payable reduced by CFAF 88.3 billion (target minimum: CFAF 10 billion). - “Pro-poor” expenditures: CFAF 590.5 billion (target minimum: CFAF 588.8 billion). - Level of budget advances excluding debt, revenue-collecting agencies (régies), and personnel: CFAF 52.8 billion (ceiling: CFAF 59 billion). ### Structural reforms implemented through end-June 2013 - Two proposed organic laws based on WAEMU directives of 2009 (transparency code and budget law) adopted by the Council of Ministers on June 6, 2013. - New pricing mechanism for petroleum products adopted November 2012 and implemented April 2013; includes a refining fee to support Société Ivoirienne de Raffinage (SIR). Government outstanding debt vis-à-vis SIR at end-2012 securitized in June 2013. - Compliance with the Extractive Industries Transparency Initiative (EITI) since May 2013; EITI reports for 2008, 2009, 2010, and 2011 published and forwarded to EITI International. - Medium-term strategy for restoring equilibrium of the electricity sector (adopted November 2012) produced results: - Remuneration of the concessionaire revised downward; agreement obtained on support for the sector for 2013–15. - Rate of collection of bills in central-north-west (CNO) zones increased from 40 percent in 2012 to 60 percent at end-June 2013. - Customers registered at the moderate tariff rate and using more than 200 Kwh bimonthly reclassified at the general household rate during Q1 2013. - Discussions with the operator of the CI-26 field (CNR) ongoing. - Legal and institutional framework for public-private partnerships (PPP) completed and operational. ### Business climate reforms and institutional measures (Box 1) - Objective: become an emerging market economy by 2020; stimulate private investment; reforms focused on six “Doing Business” indicators in the year and four more in 2014 (creation of companies, property transfer, cross-border trade, tax payment, building permits, execution of contracts). - Institutional arrangement under the Prime Minister created to focus on the business climate. - Decree No. 2012-867 of September 6, 2012 establishing the Investment Promotion Center in Côte d’Ivoire (CEPICI) as the single port of entry for investment; “One-Stop Shop for Business Procedures” now in operation enabling establishment and opening of a business within 48 hours. - Operator of the one-stop window for foreign trade (GUCE) started activities on July 1, 2013. - New investment code adopted by order No. 2012-487 of June 7, 2012 (attractive tax features; strengthened guarantees and protection). - Institutional and legal framework for PPPs in place; national committee identified over 60 priority projects. - Judicial reform steps: order of exequatur adopted February 2012; Ivoirien law aligned with international anti-corruption and illicit enrichment provisions. - First Commercial Court began operating in October 2012 and hands down decisions within a maximum of 90 days. - Result: improvement in Côte d’Ivoire’s rank in the World Bank’s “Doing Business 2014” classification; ranked among the 10 countries with the most progress in improving their business climate. ### Economic prospects for end-2013 - GDP growth rate in 2013 estimated at 9 percent. - Average annual inflation rate expected to be 2.7 percent by end-2013 (slowdown in prices since April 2013). - Trade and external sector projections: - Imports expected to grow by 13.8 percent (mainly capital goods). - Exports expected to rise by 10.9 percent (petroleum, crude oil, palm oil, agrofood and manufacturing products). - Trade balance should remain in surplus; current account balance will remain in deficit; balance of payments should register a surplus. ### Budgetary outturns and revenue assumptions for 2013 - Budget revenue projected: CFAF 2,766.7 billion (objective: CFAF 2,764.5 billion). - Concerns over VAT and import tax on general merchandise collections based on end-July 2013 data (VAT receipts projected at CFAF 230.6 billion versus CFAF 245 billion target). - Specific measures to improve tax potential: tighten controls, increased effort to collect tax arrears, systematic monitoring of VAT statements showing a credit, review criteria for selecting products subject to controls, increase in valuation of imported goods due to new operator. ### Expenditures and subsidies - Expenditures projected: CFAF 3,384.4 billion (objective: CFAF 3,445.3 billion). - Electricity sector subsidy projected at CFAF 63.2 billion (objective: CFAF 32.3 billion) due to negotiations on selling price of gas from block CI 26. - Investment expenditures expected to post an execution rate of the program objective of 92 percent; C2D project implementation was weaker than expected. ### Financing needs and external borrowing for 2013 - Financing needs for 2013: CFAF 382 billion, or 2.7 percent of GDP, compared with the goal of CFAF 53.3 billion. - Financing sources: net mobilization of resources on the regional financial market (WAEMU) and external resources from multilateral institutions and bilateral lenders. - Important contractual debts due end-2013 to be financed by regional financial market and mobilizing domestic resources. ### Nonconcessional lending for PND investment program - Nonconcessional lending window capped at USD 800 million in 2013 (government plans partial use). - Nonconcessional loan agreements signed for a total of USD 680 million. - Amount of loans that became effective: USD 500 million (to finance the Soubré hydroelectric power plant project). ### Expected progress on structural and institutional reforms for remainder of 2013 - Proposed customs code and draft decree on procedural manual for customs inquiries approved during a workshop in July 2013; adoption of the manual depends on passage of the proposed customs code (submitted to Council of Ministers). - Standard public procurement plan being prepared; to be disseminated among appropriations managers at outset of 2014 budget execution; expenditure commitment plan to be available before end-January 2014. - Proposed Medium-Term Debt Management Strategy (2013–15, MTDS) in line with international standards to be adopted by the Council of Ministers at end-November 2013; MDTS to be made consistent with Debt Sustainability Analysis updated at end-October 2013 with IMF technical assistance. - Debt management structure (front office, middle office, back office) to be put in place before end-December 2013; draft staff organizational chart being finalized and to be implemented in 2014. - Audit of domestic Treasury arrears on amounts owed to suppliers at end-2010: - First stage payments due amounted to CFAF 356.7 billion. - Auditors found CFAF 142.1 billion irregular (proposed rejection) and CFAF 192.2 billion approved. - A second audit initiated on payables validated during the first audit to verify service delivery and cost assessment. - Plan for settling domestic arrears to be adopted by end-November 2013. - Bills and strategies in preparation: - Bill introducing universal health coverage (CMU) being prepared. - Bill on the labor code under preparation. - Financial sector development strategy initial draft being finalized; expected approval by Council of Ministers before end-December 2013. - Public enterprises: communication of May 26, 2012 presents options for 25 percent reduction in government portfolio; valuation and privatization/merger studies initiated June 2013 for public banks; final reports expected early October 2013; IMF technical assistance conducted September 2013; action plan to be adopted by Council of Ministers before end-December 2013. - Global MTEF for 2014–16 and multiyear economic and budget programming document prepared; to be submitted to National Assembly after adoption by Council of Ministers. - Main lines of VAT reform prepared; two measures for rationalization of VAT exemptions included in fiscal annex to 2014 budget law. - Strategy for management of the wage bill prepared with IMF technical assistance; defines recruitment profile and sustainable remuneration to move towards WAEMU convergence criterion by 2022; to be adopted by Council of Ministers by end-December 2013. - Electricity code to be finalized for submission to the National Assembly before end-December 2013; code to: - Better define activities and legal framework for the electricity sector; - Allow greater flexibility of permissible organizational structures and management structures for monopoly segments; - Cover new and renewable energy sources and energy-saving schemes; - Strengthen framework for preventing fraud and damaging criminal acts in the electricity sector; - Create by law an independent regulatory commission with necessary powers. ### Macroeconomic framework and medium-term objectives - Government reaffirmed intention to reduce poverty and make Côte d’Ivoire an emerging economy by 2020 via implementation of the PND. - Primary objectives include: - Achieve growth rate of about 9 percent in 2013, and 10 percent in 2014; investments expected to climb from 13.7 percent of GDP in 2012 to 19.6 percent of GDP in 2015. - Cut the poverty rate in half by 2015 and improve UNDP Human Development Index rating. - Attain the Millennium Development Goals by 2015, or move significantly closer to them. - Create one of the best business climates in Africa and increase competitiveness. - Rejoin top African countries in good governance and anti-corruption efforts. - National report on implementation of the 2012–15 PND to be submitted to the Council of Ministers before end-2013; supplementary measures to improve monitoring of investment projects to be adopted. - Government objective: achieve 10 percent GDP growth in 2014; growth to rely on public investment as catalyst for private investment, supported by new investment code, one-stop business creation window, and PPP promotion. ### Supply-side growth drivers - Primary sector: progress from subsistence agriculture, food crops, National Rice Development Plan (PNDR), investments in wells and mines, reforms of cashew nut and cotton industries. - Secondary sector: growth driven by construction and agrofood sectors and dynamic domestic demand. - Tertiary sector: boosted by primary and secondary sector growth; measures to strengthen SMEs institutional and legal framework (craft/cottage industry code; law to promote SMEs); creation of GUCE; opening of Bouaké wholesale market; revival of SOTRA; new distribution and hotel industry entrants; return of AfDB to Abidjan. *International Monetary Fund — _cr13367 (excerpt provided)_* ### 22. The inflation rate should level out at an average of 2.4 percent in 2014. The increase in ### _cr13367 - 22. The inflation rate should level out at an average of 2.4 percent in 2014. The increase in ### Inflation and food supply - The inflation rate should level out at an average of 2.4 percent in 2014. - The increase in the supply of subsistence foodstuffs and the repair of rural roads should help improve the supply of markets and contain food prices. ### External sector: current account, capital flows, and overall balance - The current account balance will remain in deficit in 2014. - Imports will continue to rise in line with the dynamism of the economy, as a result of the demand for capital and intermediate goods. - The capital and financial operations account will show a surplus, due to project grants received, as well as a rebound in foreign direct and portfolio investment. - The overall balance of payments will be in surplus. ### Monetary developments - The money supply should increase by 9.5 percent. - This development is mainly linked to the increase in credit to the private sector which will benefit from easier access to bank credit on the part of SMEs and SMIs. - Net foreign assets should increase as a result of a good performance of exports and foreign direct investment flows. ### Risks to macroeconomic objectives and government measures - Identified risks that could jeopardize macroeconomic objectives: - (i) a deterioration of the terms of trade; - (ii) a poor rainy season; - (iii) a weak mobilization of financing and a slowdown in the execution of investments. - Government steps to address risks: - Optimize potential revenue by emphasizing an expansion of the tax base. - Better control of expenditures. - Ensure a sustainable debt management policy. - Adopt measures to mobilize expected financing. ### Budget framework and priorities for 2014 - Budget policy for 2014 and the medium term aligns with the main strategic pillars of the National Development Plan (2012–15 PND) and the Public Investment Program (PIP). - 2014 budget priorities: improving the standard of living and strengthening foundations for economic growth. - Principal projects: road rehabilitation and construction, improving access to drinking water, health, education, electricity, enhancing security, and development of basic socioeconomic infrastructure. ### Revenue projections and composition for 2014 - 2014 budget revenue is projected to rise to CFAF 3,051.0 billion, up by 10.3 percent over 2013 estimates. - Tax revenue will grow by 10.8 percent, driven by improved collection of VAT, payroll tax (ITS), and the BIC, excluding petroleum. - Port duties and fees: revenues collected on general merchandise will increase by CFAF 46 billion due to improvements in recording and valuation of goods and anti-fraud efforts. - Registration tax and the single export tax (DUS) will decline because of an expected drop in cocoa production. - Nontax revenue will amount to CFAF 408.7 billion. ### Measures to maximize tax revenue collection (2014) - Gradually reducing VAT exemptions, particularly prohibiting new exemptions that do not conform with WAEMU directives or are not justifiable economically or socially in the short and medium term. - Standardizing computation of excise taxes on beverages and tobacco by correcting tax bases and rates to align with WAEMU practices. - Harmonizing rates applicable to capital gains and profits to align the Ivoirien tax system with regional WAEMU norms. - Introducing a minimum tax for taxpayers under the simplified itemized tax system through a withholding tax of 2 percent applied on business turnover including all taxes; the amount withheld should not be less than CFAF 500,000 a year (minimum assessment). - Strengthening taxation on telecommunications by: - An increase in the tax rate on telecommunications from 3 percent to 5 percent; - The introduction of a specific tax at a rate of 3 percent on consumers, assessed on the cost of phone calls and internet use; - An increase in the rate of tax from 25 percent to 30 percent on industrial and commercial profits of companies in the sector for telecommunication, information technology and communications. - Improving segmentation of taxpayers based on IMF technical assistance recommendations: deconcentration of tax administration staff; strengthening the Large Enterprises Directorate (DGE); setting up a structure for administration of medium-sized enterprises; reinforcing inspection units and improving fiscal inspection coverage rates. - Customs measures (drawing on technical assistance including IMF): - (i) connecting the customs information system with the system of the Port of Abidjan; - (ii) operationalizing a simplified system for recording transshipment of containers in the customs information system; - (iii) liberalization of consignment at the airport by ending the single régie system. - Anti-fraud measures: (a) optimize use of scanners on imports and exports based on risk analysis and install a scanner at the airport; (b) increase surveillance of the sea coast and lagoon shores; (c) strengthen capacity to fight fraud and smuggling across land borders. ### Expenditures, pro-poor spending, and fiscal balances - Public expenditures for 2014 are expected to amount to CFAF 3,973.4 billion, increasing by CFAF 409 billion compared to 2013. - Government plans to improve execution rate of investments, including those under C2D with allocations of CFAF 140.2 billion. - Pro-poor expenditures will amount to CFAF 1,517.7 billion (compared to CFAF 1,309 billion in 2013). - Personnel expenditures will rise to CFAF 1,186.2 billion, reflecting full application of revaluation measures and new recruits in education, health, and security. - The primary basic balance will be CFAF -9.9 billion, or -0.1 percent of GDP (compared to -0.2 percent of GDP in 2013). - The overall budget deficit including grants (excluding grants for settlement of arrears) would rise to CFAF 364.5 billion (or 2.3 percent of GDP, compared to 2.7 percent of GDP in 2013). ### Long-term fiscal sustainability and wage bill strategy - Government commitments: achieve fiscal consolidation, maintain macroeconomic stability and debt sustainability. - Intended actions: improve revenue mobilization, control medium-term evolution of the wage bill and operating expenses, reduce the subsidy to the electricity sector until financial equilibrium is reached, and clean up the domestic debt situation. - Wage bill control strategy (adopted before end-December 2013) to ensure compliance with WAEMU convergence criterion of 35 percent of tax revenue. - Identified measures: optimization of recruitment policy; staff management through a performance rating system; assignment of personnel identification numbers related to employment grades; implementation of the Management Information System for Government Officials and Employees (SIGFAE); establishment of a Human Resources Directorate in all ministries. ### Electricity sector: restoration of financial equilibrium and supply expansion (Box 2) - Requirement: an increase of around 700 gigawatt hours (GWh) a year to support sustained growth. - Main cause of disequilibrium: supply of natural gas, the main source (70 percent) of electricity production, causing delays in transmission and distribution investment. - Medium-term strategy adopted November 2012 based on: - (i) reduction of charges (renegotiation of price of natural gas, review of utility remuneration, demand management); - (ii) improvement of revenue (review of national and export electricity tariffs, shift to the general rate for moderate-use customers consuming over 200 KWh bimonthly, improvement of collection in the CNO zone); - (iii) improvement in overall yield (reduction of technical and nontechnical losses and adoption of the electricity code). - Steps taken: - Reduced cost of gas from the CI-27 blocks. - Utility company’s remuneration revised downward; agreement on support by the utility of CFAF 8 billion a year from 2013 to 2015. - Demand control measures: distribution of over 100,000 low wattage light bulbs in Treichville, Abobo, and Yamoussoukro; revised export tariffs and 10 percent increase for industries; shifting moderate-use customers consuming over 200 KWh bimonthly to the general tariff; improving invoice collection in the CNO zone from 40 percent in 2012 to over 60 percent in 2013. - Reduction of losses led to a 3-point increase in overall yield from 2012 to 2013. - Adoption of a new electricity code by the Council of Ministers to improve legal framework for fighting fraud. - Investments and projects: - Leasing of a 100 MW thermal power plant in 2013. - Investment in the distribution network to improve overall yield by one point a year, beginning in 2013. - Implementation of phase 4 of CIPREL in January 2014, and phase 3 of AZITO in April 2015. - Medium-term increase in hydroelectric capacity from the Soubré dam to help control production costs. - Total investment program to build new hydraulic and thermal power plants and improve transmission network: CFA 5300 billion. - Partners supporting the effort: World Bank, IFC, AfDB, BOAD, and the Exim-Bank of China. - Export policy: bill quantities in excess of contractual minimum at the marginal cost of electricity production. - These measures are expected to eliminate the financial imbalance of the sector and enable necessary investments to improve electricity supply and consolidate Côte d’Ivoire’s status as an electricity exporter. ### Domestic debt settlement plan - Government will implement a plan to settle the domestic debt to support private sector activity. - Commitment to respect scheduled planned payments based on criteria of priority, nature of expenditure (pro-poor, etc.), and specified tranche payments based on discount levels and tax status of creditor. - Orders for payment will be posted on premises of the Accounting Unit in question and on the Treasury’s web site to guarantee equity and transparency. ### Rehabilitation and promotion of the financial sector - Implementation of the development strategy for the financial sector to better respond to financing needs for housing, SME/SMI, and agriculture. - Strategy considerations: (i) government’s role in the sector; (ii) contractual savings; (iii) poor access to financial services; (iv) cost of credit; (v) rehabilitation of banking and microfinance sectors; (vi) legal and judicial framework. - The Financial Sector Development Committee (CODESFI) will be responsible for implementation. - Accelerate restructuring of public banks: a restructuring plan to be submitted to the Council of Ministers before end-December 2013 to clean up the banking sector and ensure compliance with WAEMU prudential regulations. - Improve supervision of the microfinance sector: audits and implementation of restructuring plan for UNACOOPEC-CI with support from technical and financial partners. - Encourage BCEAO to accelerate creation of primary dealers (SVT) and development of information systems (credit bureaus and registers). - Support WAEMU Council of Ministers’ draft charter on relations between issuers and SVTs. - Entry into force in October 2013 of the instruction regarding repurchase operations and upcoming creation of SVTs expected to contribute to development of the sub-regional financial market. - Plans to create a secondary market and to promote financial transactions between WAEMU and CEMAC regions. ### Debt policy and strategy - A medium-term debt management strategy (MTDS) will be submitted to the Council of Ministers before end-November 2013. - Primary objective: preserve sustainability of medium- and long-term public debt and control risks related to debt, especially exchange and refinancing risks. - Policy directions: favor mobilization of external concessional financing; centralize issuance and management of public debt in a single entity; improve communications with the market; strengthen government liquidity management through implementation of a single treasury account. - Government intends to expand financing sources by issuing Eurobonds as part of the debt strategy and to obtain a sovereign credit rating. - Government intends to issue a Eurobond in 2014. - Request to IMF: increase the cumulative nonconcessional external borrowing window at end 2014 by another USD 500 million to enable a Eurobond issue. - Government will continue to seek concessional terms on borrowing, including for major infrastructure projects. - Request for technical support from partners to improve public debt management and implement the new debt management structure, building on gains from reaching the completion point under the HIPC Initiative on June 26, 2012. ### Strengthening competitiveness and private sector development - Strategy to strengthen competitiveness: improve network of economic infrastructure (telecommunications, roads, energy, ports) through increased public investment and public-private partnership projects. - Instruments: development of industrial infrastructure and creation/expansion of industrial zones. - Emphasis on health care: develop a pharmaceutical industry for generic medicines and make Côte d’Ivoire a sub-regional hub for hospital services. - Focus on education, training, and research to ensure access to skilled workers. - Agricultural development: - Improve farm yields and implement the National Agricultural Investment Program (PNIA) to strengthen food security and develop value chains. - Guarantee sustainability of the coffee-cocoa sector by pursuing sector reform, including completing a census of producers. - Extend reforms to cotton and cashew sectors. - Subsistence agriculture to post strong figures with increase in production of rice (aiming to achieve self-sufficiency by 2016) and cassava. - Investment promotion: organize forum “Invest in Côte d’Ivoire: ICI 2014” from January 29 to February 1, 2014, expected to be attended by nearly 3,000 participants as a platform for exchanges among national and international investors. *IMF staff report content provided in the supplied document.* ### 44. The government intends to ensure that Côte d’Ivoire remains in compliance with the ### 44–52: Governance, Structural Reform, Financing, and Statistical Capacity (Côte d’Ivoire) ### Extractive industries and mining code - Government intent: ensure Côte d’Ivoire remains in compliance with the Extractive Industries Transparency Initiative (EITI). - Legal changes undertaken: - Petroleum code amended. - New hydrocarbons code adopted to ensure greater transparency in resource management and environmental preservation. - Planned reform: adopt a new mining code to make Côte d’Ivoire a preferred destination, based on these principles: - Incorporation of best international practices in the area of good governance (EITI, Kimberley Process, Equator Principles). - Transparency in granting mining rights. - Reduction and control of the time required for processing documents. - Organization of artisanal or small-scale mining operations and gold panning. - Cohabitation between large and small mines. - Rational use of assigned surfaces to intensify research. ### Industrial policy and targets - New industrial policy to be adopted in 2014 to increase business competitiveness, wealth creation, and job creation. - Policy founded on three pillars: - A sizeable contribution from the private sector. - The use of comparative advantages. - Targeted support from the government (quality, standards, restructuring, access to credit, creation of industrial zones, and targeted tax advantages). - Quantitative objective: increase the share of industry in GDP from around 30 percent in 2012 to 40 percent by 2020. - Key sectoral focuses to achieve objective: - Increase processing rate of farm products (cashew nuts, cotton, and rice). - Diversify the textile industry and promote light industries. ### Public financial management reforms and public contracting - Planned actions for 2014 budget execution and PFM reforms: - Prepare a standard plan for government contracting and disseminate it among appropriation managers at the start of 2014 budget execution. - Formulate an expenditure commitment plan in January 2014. - Decentralize management of public finance by connecting five new locations with SIGFIP in 2014. - Adopt in the Council of Ministers, no later than end-March 2014, four proposed decrees transposing the WAEMU public financial management directives after the vote on the organic laws establishing the Transparency Code and the Budget Law. - Evaluate the expenditure chain and adopt corrective measures to reinforce verification of delivery of goods and services to eliminate exceptional payments order procedures and limit recourse to cash advances. - Public contracting code: - Enabling regulation for implementing the code will be adopted in 2014. - PEMFAR defined nine strategic pillars, including strengthening transparency, budget discipline, traceability and control of budget execution, and improving the operational framework for government procurement. - Continued rationalization of recourse to single-source contracts. - Legal changes include separation of control and regularization functions and extension of code scope by requiring institutions to comply. ### Good governance and anti-corruption measures - Implementation of the National Good Governance and Anti-Corruption Plan (PNBGLC) will be stepped up with specific actions: - High Authority for Good Governance (instituted by order No. 2013-661 of September 20, 2013) and the Special Court to Prevent and Fight Corruption to be put in place in the second half of 2014. - Continued awareness and information campaigns on corruption initiated in May 2013. - Anti-corruption center to be set up after completion of regulations for its operation in 2014. ### Financing of the 2014 program and monitoring - Domestic market financing expectations: - CFAF 867 billion expected to be mobilized in the form of Treasury bills and bonds for 2014, compared to CFAF 806.7 billion expected for 2013. - External financing: - External financing, including budget support amounting to CFAF 247.8 billion. - Principal lenders and donors listed: World Bank, IMF, AfDB, EU, AFD, IDB, and the Exim-Bank of China. - Government will pursue talks with remaining creditors that have yet to grant debt relief under the HIPC Initiative. - Program monitoring and review schedule: - Program monitored on a biannual basis by the IMF Executive Board on the basis of quantitative performance criteria and indicative targets defined in the TMU. - Semi-annual reviews based on end-June and end-December data. - The fifth review will be based on performance criteria at end-December 2013 and should be completed by April/May 2014 at the latest. - The sixth review will be based on performance criteria at end-June 2014 and should be completed by October/November 2014 at the latest. - Government commitments within program monitoring: - Refrain from accumulating new domestic arrears and any kind of advance against revenue, and from contracting nonconcessional external borrowing other than the loans specified in the TMU. - Issue government securities only by auction through the BCEAO or any other form of competitive bidding on the local financial market and the WAEMU market, and consult with IMF staff regarding any new financing. - Refrain from introducing or tightening restrictions on payments and transfers related to current international transactions, or from introducing multiple exchange rate practices, or from concluding any bilateral payment agreements not in compliance with Article VIII of the IMF Articles of Agreement, or from imposing or tightening any import restrictions for the purpose of bringing the balance of payments into equilibrium. - Adopt any new financial or structural measures that might be needed to ensure the success of its policies, in consultation with the IMF. ### Statistics and capacity building - Statistical institutional and legal progress: - Proposed law on the organization, regulation, and coordination of the National Statistics System was adopted by the Council of Ministers in December 2012 and passed by the National Assembly on June 10, 2013; government will ensure implementation. - 2012–15 master plan on statistics approved in March 2012 and being implemented; consistent with the National Development Plan. - Master plan strategic pillars: - 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. - Preparation of quarterly national accounts. - Changing the baseline year of the national accounts. - Updating the Harmonized Consumer Price Index (HCPI). - Preparation of a directory of ministerial statistical staff. - Ongoing activity: 2013–14 General Population and Housing Census will contribute to regular production of quality economic and financial data. - Capacity-building priorities and technical assistance needs in the coming 12 months: - Setting up a customs revenue forecasting model. - Strengthening the tax administration, especially for the VAT. - Preparation of balance of payments forecasts. *Source: Attachment II. Technical Memorandum of Understanding — Arrangement Under the Extended Credit Facility 2011–14 (November 20, 2013).* ### 1. This Technical Memorandum of Understanding (TMU) describes the quantitative and ### 1. This Technical Memorandum of Understanding (TMU) describes the quantitative and ### Overview - The TMU describes the quantitative and structural assessment criteria established by the Ivoirian authorities and IMF staff to monitor the program supported by the Fund’s Extended Credit Facility (ECF). - "Government" is defined as the central government of Côte d’Ivoire, including: - National Social Security Fund (Caisse Nationale de Prévoyance Sociale, CNPS) - Civil Service Pension Fund (Caisse Générale de Retraite des Agents de l’État, CGRAE) - Treasury operations for public companies in liquidation - Excluded from the government definition: local government authorities, the Central Bank of West African States (BCEAO), and any other government-owned entity with separate legal status. ### Quantitative Indicators (scope and timing) - Performance criteria (PC) and indicative targets (IT) are set for December 31, 2013 and June 30, 2014; the same variables are indicative targets for March 31, 2014. - PCs (performance criteria) include: - a floor on the primary basic fiscal balance; - a ceiling for net domestic financing (including issuance of securities in Francs of the Financial Community of Africa (CFA)); - 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. - ITs (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, 2013 for the 2014 targets. ### A. Government Revenue (IT) - Total government revenue is defined as all revenue collected by: - Tax Administration (DGI) - Directorate-General of the Treasury and Public Accounting Administration (DGTCP) - Customs Administration (DGD) - CNPS - CGRAE - and other nontax revenue as defined in the fiscal reporting table (TOFE). ### B. Pro-poor Expenditures (IT) - Pro-poor expenditures are derived from the detailed list of “pro-poor expenditures” in the SIGFIP system (see attached Table 1). ### C. Treasury Advances (IT) - Treasury advances are defined as spending paid for by the Treasury outside normal and simplified execution and control procedures, and which have not been subject to prior commitment and authorization. - Exclusions: the “régies d’avances” (ministerial decrees n° 2002-345) and extraordinary procedures set out in decree n° 1998-716 for expenditures financed by external resources, wages, subsidies and transfers, and debt service. - The 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). - The nominative and restrictive list of expenditures eligible as treasury advances is as defined by ministerial Decree No. 178/MEF/CAB-01/26 of March 13, 2009. ### D. Primary Basic Fiscal Balance (PC) - Definition (on a payment order basis for all expenditure items): - Primary basic fiscal balance = Tax and nontax revenue (excluding grants) – {Expenditure + Net lending – Interest payments – Externally-financed capital expenditure (on a payment order basis for all expenditure items)} - The 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. ### E. Overall Fiscal Balance (Including Grants) (IT) - Definition (on a payment order basis): - Overall fiscal balance = 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)} - The floor on the overall fiscal balance will be adjusted downward (upward) for an excess (shortfall) of project loans relative to the programmed amount. ### F. Net Domestic Financing (PC) - Net domestic financing by the central government is defined as the sum of: - (i) the banking system’s net claims on the government (including C2D deposits); - (ii) net non-bank financing (including proceeds from privatization and sales of assets, and of correspondant sub-account of the Treasury and excluding the net variation of the amounts payable); - (iii) any financing borrowed and serviced in Francs of the Financial Community of Africa (FCFA). - This ceiling includes a margin of CFAF 10 billion above the net cumulative flow projected for each quarter. - Formula as stated: - Net domestic financing = Variation of banking system’s net claims on the government (TOFE) + net non-bank domestic financing (excluding the variation of the amounts payable) + borrowing denominated and serviced in Francs of the Financial Community of Africa (FCFA) + financing margin of CFAF 10 billion. - Exceptions: Does not apply to new agreements on restructuring domestic debt and securitization of domestic arrears or to new project loans from the Bank for Investment and Development (BIDC) of ECOWAS. - For any new borrowing over and above a cumulative amount of CFAF 35 billion over 2013, and over and above a cumulative amount of CFAF 35 billion in 2014, the government undertakes not to issue government securities except by auction through the BCEAO or through competitive public auction on the WAEMU financial markets registered with CREPMF, in consultation with Fund staff. - This ceiling will be lowered by an amount equal to the eventual issuance of an Eurobond (for a maximum equivalent to US$500 million) used for financing an additional domestic debt reduction beyond the amount included in the program. ### G. New Nonconcessional External Debt (PC) - Debt definition: as per Executive Board Decision No.6230-(79/140), Point 9, revised on August 31, 2009 (Decision No. 14416-(09/91)) — includes loans, suppliers' credits, leases (with NPV at inception), arrears, penalties, and judicially awarded damages arising from failure to make payment under contractual obligation that constitutes debt. - External debt = debt borrowed or serviced in a currency other than the CFA franc of the Financial Community of Africa (FCFA). - The external debt performance criterion applies to all nonconcessional external debt, irrespective of maturity, contracted or guaranteed by the government, and to commitments contracted or guaranteed for which no value has been received. - Exclusions from this PC: - normal import-related commercial debts having a maturity of less than one year; - rescheduling agreements; - debts to the BIDC, up to the equivalent of CFAF 20 billion, for the period January 1 to December 31, 2013; and up to the equivalent of CFAF 20 billion, for the period January 1 to December 31, 2014; - drawings on the IMF. - Concessional debt criterion: A debt is considered concessional if its grant element is at least 35 percent, the net present value (NPV) calculated with a 5 percent discount rate. - Government commitments: - Undertakes not to contract or guarantee nonconcessional external debt as defined, except for rescheduling and debts specified in paragraph 14. - Consult with IMF staff on terms and concessionality of any proposed new debt in advance of contracting. - Quantitative ceilings: - A cumulative ceiling for 2013–14 of US$ 800 million to December 31, 2013, and US$900 million to December 31, 2014, applies to new nonconcessional external loans other than those specified in paragraph 14 (performance criteria). - This ceiling is applicable to debt-financing of projects in the energy, infrastructure and transport sectors. - The ceiling will be increased by the amount of the eventual issuance of an Eurobond for a maximum amount equivalent to US$500 million to be used for asset-liability management (paying down debt, securitized debt, and/or domestic arrears). - The last day of the period for purchase of the bonds as specified under the final terms of exchange will be considered the date of issuance of the Eurobonds. ### H. External Payment Arrears (PC) - External arrears = nonpayment of any interest or principal amounts on their due dates (taking into account relevant contractual grace periods, if any). - Applies to arrears accumulated under external debt of the government and external debt guaranteed by the government for which the guarantee has been called by creditors. - Monitored on a continuous basis. ### I. Amounts Payable, Including Domestic Payment Arrears (IT and PC) - “Amounts payable” (or “balances outstanding”) include domestic arrears and floating debt and represent the government’s overdue obligations; defined as expenditures assumed (prise en charge) by the public accountant, but yet to be paid. - For program definition, obligations represent: - (i) bills due and not paid to non financial public and private companies; - (ii) the domestic debt service (excluding the BCEAO). - Domestic payment arrears: - Balances outstanding to nonfinancial public and private companies and the domestic debt service (excluding the BCEAO). - Arrears to non financial and private companies: overdue obligations for which payment date exceeds the deadline stipulated by administrative regulations of 90 days. - Arrears on the domestic debt service: debt service obligations for which the payment date exceeds 30 days. - Floating debt: balances outstanding for which the payment date does not exceed the deadline (90 days for nonfinancial companies; 30 days for financial companies). - Balances outstanding broken down by payer and type, and by maturity and length of overdue period: - Nonfinancial companies: < 90 days, 90–365 days, > 1 year. - Financial companies: <30 days, 30-365 days, > 1 year. - Government commitments for program purposes: - (i) reduce the stock of amounts payable by at least CFAF 50 billion in 2013 (of which CFAF 10 billion of arrears payment in cash); and by at least 50 billion in 2014. - For 2014, the reduction will be increased by an amount equal to the share of an eventual Eurobond issuance (for a maximum amount equivalent to US $500 million) to be used for paying down debt (bonds and treasury bills), securitized debt, and/or domestic arrears. - (ii) Not to accumulate new domestic arrears in fiscal years 2013 and 2014. ### Memorandum Items - A. Net Bank Claims on the Government: - Defined as the difference between government debts and government claims with the central bank and commercial banks (including the C2D deposits). - Coverage is that used by the BCEAO and is the same as shown in the net government position (NGP) (including the C2D deposits). - B. External Financing (Definitions): - Project grants: non-repayable money or goods intended for financing of a certain project. - Program grants: non-repayable money or goods not intended for financing of a specific project. - Project loans: repayable money or goods received from a donor to finance a specific project, on which interest is charged. - Program loans: repayable money or goods received from a donor and not intended for financing a specific project, on which interest is charged. ### Program Monitoring and Data Reporting - A quarterly assessment report on monitoring of the quantitative performance criteria, indicative targets, and structural benchmarks will be produced by the authorities at the latest within 45 days of the end of each quarter. - The government will report the information specified in Table 2 on a monthly basis, at the latest within 45 days of month-end or quarter-end, unless otherwise indicated. Tables F.3.1, F.3.2, and F.3.3 are updated to take into account the expanded coverage of arrears. - 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. - Data on new external debt, the amount outstanding, and the accumulation and repayment of external payment arrears will be reported monthly within six weeks of the end of each month. - Authorities will report any information needed for effective monitoring of economic policies to IMF staff. ### Table 1. Côte d'Ivoire: Pro-Poor Spending (incl. Social Spending), 2009–14 — selected line items (amounts as presented) - Headings in table: 2009 Actual; 2010 Actual; 2011 Actual; 2013 Budgeted SBL 1/; 2013 Actual; 2014 Prog. - Selected entries (values preserved exactly as in the table): - 01 Agriculture and rural development: 49.2 39.1 35.2 41.4 68.2 72.1 81.9 - 01.0 General administration: 8.5 9.2 7.1 7.7 10.0 16.3 28.0 - 01.1 Agriculture promotion and development program: 10.6 10.8 10.8 12.0 18.7 15.1 17.8 - 01.2 Training of supervisory staff: 8.4 8.3 10.3 8.4 13.5 15.7 16.9 - 01.3 Water system works: 1.5 4.0 3.0 3.4 26.0 16.6 19.3 - 01.4 Other investments in the rural area (FRAR,FIMR): 20.2 6.8 4.1 10.0 0.0 8.4 0.0 - 02 Fishing and animal husbandry: 6.7 5.9 4.0 4.7 7.2 5.9 8.0 - 02.0 General administration: 3.5 3.9 2.7 2.7 4.0 3.8 4.5 - 02.1 Milk production and livestock farming: 2.3 1.8 1.2 1.5 2.9 0.9 1.7 - 02.2 Fishing and aquaculture: 1.0 0.2 0.1 0.5 0.4 1.2 1.9 - 03 Education: 533.1 590.1 529.2 628.6 651.2 754.6 836.3 - 03.0 General administration: 19.6 24.9 24.7 23.6 19.8 19.5 20.6 - 03.1 Pre-schooling and primary education: 336.7 366.7 301.1 398.2 379.2 454.4 316.6 - 03.2 Literacy: 0.2 0.2 0.5 0.6 0.5 0.5 0.4 - 03.3 Secondary education and vocational training: 83.0 83.8 74.2 80.3 74.8 83.7 296.8 - 03.4 University and research: 93.7 114.5 117.0 113.0 140.0 153.0 155.4 - 03.5 Emergency/Presidential program/Education: 0.0 0.0 11.7 12.8 36.9 43.5 46.5 - 04 Health: 118.4 113.6 120.2 138.0 169.2 205.1 263.3 - 04.00 General administration: 45.8 47.8 49.2 55.4 63.9 89.5 119.0 - 04.01 Primary health system: 30.7 30.0 25.2 34.8 47.5 53.9 38.7 - 04.02 Preventive healthcare (enlarged vaccination program): 1.9 1.4 0.4 0.8 2.3 2.6 2.9 - 04.03 Disease-fighting programs: 1.7 1.5 1.1 1.4 4.0 1.2 24.8 - 04.04 Infant/mother health and nutrition: 0.8 0.4 0.4 0.6 1.4 0.6 18.1 - 04.05 HIV/AIDS: 10.8 5.9 6.9 8.0 6.4 5.4 5.6 - 04.06 Health centers and specialized programs: 26.6 26.6 25.7 25.1 31.8 33.9 34.2 - 04.07 Emergency/Presidential program/Health: 0.0 0.0 11.3 12.0 12.0 18.0 20.0 - 05 Water et De-contamination: 20.4 19.8 36.3 39.9 49.5 73.5 82.1 - 05.1 Access to drinking water and de-contamination: 4.9 6.0 10.2 10.7 10.8 25.4 37.0 - 05.2 Environmental protection spending: 15.5 13.8 13.1 13.0 22.4 23.6 18.1 - 05.4 Emergency/Presidential program/healthiness and de-contamination: 0.0 0.0 13.1 16.2 8.0 11.5 13.5 - 05.5 Emergency/Presidential program/drinking water: 0.0 0.0 0.0 0.0 8.2 13.0 13.5 - 06 Energy: 16.5 9.7 8.9 17.0 18.8 26.7 30.1 - 06.1 Access to electricity: 16.5 9.7 8.9 9.0 10.8 13.7 16.6 - 06.2 Emergency/Presidential program/Electricity: 0.0 0.0 0.0 8.0 8.0 13.0 13.5 - 07 Roads and Art Works: 39.1 45.4 33.5 47.1 51.4 101.7 112.7 *Source: Technical Memorandum of Understanding accompanying the IMF-supported ECF program for Côte d’Ivoire.* ### 07.1 Road maintenance0.52.42.15.12.311.46.0 ### _cr13367 - 07.1 Road maintenance0.52.42.15.12.311.46.0 ### Project and budget allocations (selected items) - 07.1 Road maintenance: 0.5 2.4 2.1 5.1 2.3 11.4 6.0 - 07.2 Constructions of art works: 3.0 2.5 1.1 7.5 4.0 22.2 23.3 - 07.3 Other road projects: 35.6 40.6 22.2 23.5 34.1 52.2 65.5 - 07.4 Emergency/Presidential program/maintenance and development: 0.0 0.0 0.8 11.0 11.0 16.0 18.0 - 08 Social Spending (total): 13.6 15.0 24.7 14.1 20.0 18.1 22.4 - 08.0 General administration: 8.6 9.8 8.9 9.0 15.1 13.4 16.1 - 08.1 Training for women: 0.6 0.7 0.5 0.7 0.7 0.5 0.9 - 08.2 Orphanages, day nurseries, and social centers: 1.5 2.0 1.9 2.5 2.2 2.1 3.1 - 08.3 Training of support staff: 1.7 1.9 1.6 1.3 1.6 1.8 2.0 - 08.4 Indigents and victims of war or disaster: 1.2 0.5 11.8 0.7 0.5 0.4 0.4 - 09 Decentralisation (excl. education, health and agriculture): 35.1 32.0 29.0 32.1 31.7 31.8 60.0 - 09.1 Decentralisation: 35.1 32.0 29.0 32.1 31.7 31.8 60.0 - 10 Reconstructions and rehabilitations (total): 1.4 2.6 5.6 1.2 0.3 13.0 10.4 - 10.1 Reconstruction and rehabilitation: 1.4 2.6 4.6 1.2 0.3 0.1 0.0 - 10.2 Emergency/Presidential program: 0.0 0.0 0.1 0.0 0.0 12.9 10.4 - 11 Other poverty-fighting spending (total): 9.6 11.9 16.2 15.9 13.0 6.7 10.5 - 11.1 Promotion and insertion of youth: 8.4 8.9 13.7 13.4 7.6 5.1 8.1 - 11.2 Support and follow-up of DSRP: 0.3 0.2 0.4 0.4 0.5 0.0 0.6 - 11.3 Development of tourism and craftmanship: 0.9 2.8 2.0 2.1 4.9 1.6 1.8 - TOTAL: 843.0 885.2 843.4 0.0 1080.3 1309.1 1517.7 (Source line in original: "Source: Ivoirian authorities." and footnote "1/ Supplementary Budget Law. 2012") ### Document transmittals (summary of tables expected to be transmitted) - Frequency legend: "M" = monthly, "Q" = quarterly, "AN" = annually. - Real sector (R) selected tables include: - Table R.1: Cyclical Indicators (M) - Table R.2.1: Macroeconomic Framework (AN) - Table R3: Price index (M) - Energy sector tables R.4.1–R.4.14 (mix of M and Q reporting) - Coffee/cocoa sector: Tables R.5.1–R.5.4 (Q) - Balance of Payments sector (B) selected tables include: - Table B.1.1: Summary table of foreign trade (AN) - Table B.1.2: Imports (M) - Table B.1.3: Exports (M) - Table B2.1: Detailed balance of payments CFA francs (AN) - Table B.3: Balance of Payments: Summary presentation (AN) - Monetary sector (M) tables include M.1–M.6 (monthly) - Fiscal sector (F) selected tables include: - Table F.1: Table of government financial operations (TOFE) (M) - Table F.2: Estimated government tax revenue (M) - Domestic arrears: F.3.1–F.3.4 (M) - Domestic and foreign debt: F.4.1–F.5.4 (M and Q) - Post-crisis expenditures: Table F.6 (M) - Treasury advances: Table F.7.1–F.7.2 (M) - Investment: Table F.8 (M) - Social/pro-poor expenditures: F.9.1–F.9.6 (M and Q) - Cash flow plan: F.20.1–F.20.3 (AN and M) - Wage bill and special accounts: Tables F.16.1–F.18 (Q and AN) ### External Stability Assessment — A. Balance of Payments Developments (key findings) - 2012: current account balance turned into a deficit. - Projection: external current account deficit projected to increase from 3.4 percent of GDP in 2013 to about 5.1 percent of GDP in 2018. - Trade growth assumptions: Exports of goods and services expected to grow by 9.6 percent on average during 2013–18; imports by about 12 percent. - Financing assumptions: FDI flows of 3 percent of GDP on average over the medium term; loans of 2.7 percent of GDP on average over the medium term. - Debt developments: - Stock of external debt declined from 55 percent of GDP at end-2011 to 30 percent at end-2012. - Since late 2012, Côte d’Ivoire does not have outstanding external arrears. - Debt service expected to rise particularly during 2020–25 due to large borrowing commitments for infrastructure and energy, the profile of French ODA claims converted into C2D swaps, and the expected issuance of a Eurobond in 2014. - External DSA: debt dynamics are sustainable, but stress tests indicate vulnerability to macroeconomic shocks. ### External Stability Assessment — B. Real Exchange Rate Assessment (key findings and model results) - REER movement: The real effective exchange rate depreciated by about 4 percent in 2012. - Model-based assessments (three CGER approaches) indicate no real exchange rate misalignment in 2012. - Macroeconomic Balance (MB) approach: - Equilibrium current account deficit: about 5 percent - Underlying current account deficit: 5.1 percent - Implied exchange rate adjustment: 0.1 percent depreciation required - Interpretation: minor deviation → basically no real exchange rate misalignment - External Sustainability (ES) approach: - Estimated real exchange rate adjustment: 1.2 percent (an appreciation of 1.2 percent) - Interpretation: minor deviation → no real exchange rate misalignment - Equilibrium Real Exchange Rate (ERER) approach: - Difference between actual REER and equilibrium value: 0.12 percent - Interpretation: no real exchange rate misalignment - CGER methodologies summary table (values in percent of GDP or percent): - Macroeconomic balance: CAB norm -5.04; CAB underlying -5.10; RER Misalignment 0.10 - External sustainability: CAB norm -3.79; CAB underlying -4.50; RER Misalignment 1.19 - Equilibrium real exchange rate: ...... 0.12 ### External Stability Assessment — C. Structural Competitiveness (key findings) - Overall assessment: structural competitiveness remains weak, impaired by structural factors and a poor business environment; reform progress not fully reflected in most indicators (many based on 2011–2012 data). - Global Competitiveness Index (CGI) 2013–14: - Côte d’Ivoire rank: 126 out of 148 - Score: 3.5 (out of 7) - Sub-Saharan Africa (SSA) average score: 3.6 - CGI 2012–13 rank: 131; score: 3.4 - Basic requirements sub-index rank: 131; score: 3.5 - Notable sub-index details: Infrastructure rank 107; score 3.1 - Doing Business indicators: - 2014 Doing Business ranking improved to 167 from 173 (2013 adjusted to 173) - Côte d’Ivoire ranks 4th among WAEMU countries in 2014 behind Burkina Faso, Mali, and Togo - Areas of improvement: starting a business, enforcing contracts, registering a property, trading across border - Areas of deterioration: resolving insolvency; paying taxes; protecting investors; getting credit - Worst areas: Paying taxes, trading across borders, dealing with construction permits - Global Enabling Trade Index (2012): - Composite ranking: 126 out of 132 - Overall score: 3.0 (out of 7.0) - Weaknesses: market access; transparency of border administration; regulatory environment - Export/import barriers identified by firms: access to trade finance; burdensome procedures; tariffs and non-tariff barriers - Governance indicators: - 2011 Transparency International: Corruption Perceptions Index rank 154 out of 183 - 2012 Index of Economic Freedom: rank 126 out of 184; categorized as “mostly unfree” - 2013 Mo Ibrahim Index of African Governance: Côte d’Ivoire governance score 40.9 out of 100 - SSA average: 51.6 out of 100 - West Africa average: 52.5 out of 100 - Selected governance time series (World Bank Institute scores: range -2.5 to 2.5 where higher is better) - Voice and accountability: -0.65 (1996), -1.10 (2000), -1.12 (2010), -1.13 (2011), -0.79 (2012) - Political stability: 0.01 (1996), -1.33 (2000), -1.57 (2010), -1.41 (2011), -1.26 (2012) - Government effectiveness: -0.06 (1996), -0.88 (2000), -1.33 (2010), -1.19 (2011), -1.11 (2012) - Regulatory quality: -0.48 (1996), -0.54 (2000), -0.91 (2010), -0.86 (2011), -0.77 (2012) - Rule of law: -0.82 (1996), 1.19 (2000), -1.22 (2010), -1.26 (2011), -1.11 (2012) - Control of corruption: 0.20 (1996), 0.69 (2000), -1.16 (2010), -1.00 (2011), -0.91 (2012) *Source: Ivoirian authorities.* ### Appendix III. Côte d’Ivoire: Financial Sector Profile ### Appendix III. Côte d’Ivoire: Financial Sector Profile ### A. Overview of the Financial System - The financial system is dominated by commercial banks, which hold about 80 percent of the financial sector’s assets, along with insurance companies, pension funds and microfinance institutions. - Access to financial services: - "Only about 6.7 percent of the population has bank accounts and 4 percent has accounts in microfinance institutions." - Overall, commercial banks have about 1,679 thousand account holders, mainly concentrated in Abidjan. - Deposits held by commercial banks represent about 26 percent of GDP. - Market structure and concentration: - There are 25 banks, 18 of them subsidiaries of international or regional groups. - Foreign banks hold about 57 percent of the banking system’s assets; the three largest foreign banks hold almost 40 percent of banking assets. - Regional banks account for about 19 percent of banking assets. - Domestic banks include five public banks: one fairly large with about 8½ percent of banking system’s assets and four small public banks (altogether less than 6 percent of assets). The government holds a minority stake in two other domestic banks (about 10 percent of assets). - Microfinance sector: - 73 microfinance institutions, about 2 percent of the financial system’s assets. - The main microfinance institution concentrates almost 90 percent of accounts and 73 percent of deposits. - The Commission Bancaire supervises 5 microfinance institutions (the largest one made up of 7 independent subsidiaries), whose assets or deposits exceed FCFA 2 billion. - Insurance and pensions: - Insurance sector: 10 percent of the financial system’s assets; 29 companies (18 non-life, rest life); top two companies hold 26 percent of the market (top seven hold 60 percent); assets about FCFA 526 billion as of end-2012. - Pension funds: CNPS and CGRAE together have assets of FCFA 350 billion (about 7 percent of the financial system’s assets) and cover less than 5 percent of the population. Reforms in 2012 increased contributions and the retirement age. - Regional securities market: - Bourse Régionale des Valeurs Mobilières (BRVM) headquartered in Abidjan. - Capitalization about 38½ percent of GDP as of end-2012; 37 listed companies, 31 from Côte d’Ivoire. - BRVM plays an important role in sovereign financing but there is virtually no secondary market for sovereign financing. - In September 2013, BRVM introduced continuous trading. ### B. Banking Sector Soundness and Vulnerabilities - System-wide indicators and recent evolution: - Capital adequacy ratios (CAR) for the overall banking system are above the 8-percent regulatory threshold and the system is recovering from the 2010–11 post-electoral crisis. - About ¼ of individual banks have a CAR below 8 percent and do not comply with regional minimum capital requirements. - Some domestic/public banks hold a large share of government securities; some were restructured at end-2011 and some do not generate interest. - Loan portfolio and NPLs: - NPLs/total loans ratios are in line with WAEMU levels; provisioning in Côte d’Ivoire is somewhat higher. - Costs and profitability: - Personnel costs are very high and much higher than the regional average. - Profitability indicators deteriorated during the crisis but began to recover in 2012. - Liquidity indicators are broadly in line with regional averages. - Financial soundness indicators (selected, percent, end of period unless otherwise indicated) - Capital Adequacy (Risk-weighted capital to assets ratio): 2008 = 9.3; 2009 = 10.2; 2010 = 12.5; 2011 = 9.7; 2012 = 8.8; 2013 (June) = 9.4 - Percentage of banks greater or equal to 10 percent: 2008 = 60.0; 2009 = 63.2; 2010 = 52.4; 2011 = 54.6; 2012 = 62.5; 2013 = 60.0 - Percentage of banks below 8 percent minimum: 2008 = 30.0; 2009 = 31.6; 2010 = 28.6; 2011 = 31.8; 2012 = 29.2; 2013 = 24.0 - Total loans/total assets: 2008 = 72.7; 2009 = 69.8; 2010 = 66.9; 2011 = 56.7; 2012 = 57.8; 2013 = 57.3 - NPLs/total loans: 2008 = 19.5; 2009 = 17.0; 2010 = 16.4; 2011 = 16.3; 2012 = 16.1; 2013 = 16.6 - Provisions/NPLs: 2008 = 77.3; 2009 = 75.9; 2010 = 74.9; 2011 = 67.3; 2012 = 78.9; 2013 = 79.6 - Personnel costs/net revenue: 2008 = 71.4; 2009 = 82.2; 2010 = 88.4; 2011 = 82.3; 2012 = 79.0; 2013 = n.a. - Return on assets: 2008 = -0.5; 2009 = 2.0; 2010 = -0.8; 2011 = -3.0; 2012 = 1.1; 2013 = n.a. - Return on equity: 2008 = -6.8; 2009 = 22.3; 2010 = -9.4; 2011 = -4.5; 2012 = 13.4; 2013 = n.a. - Liquid assets/total assets: 2008 = 42.0; 2009 = 42.1; 2010 = 42.6; 2011 = 50.3; 2012 = 47.1; 2013 = 47.9 - Loans/deposits: 2008 = 95.8; 2009 = 92.8; 2010 = 87.2; 2011 = 71.3; 2012 = 75.7; 2013 = 72.7 - Liquid assets/total deposits: 2008 = 55.4; 2009 = 55.9; 2010 = 55.6; 2011 = 63.2; 2012 = 61.6; 2013 = 60.7 - Source: BCEAO. ### C. The Banking Sector’s Contribution to Growth - Financial depth and credit allocation: - Credit to the private sector-to-GDP was 18.2 percent in 2012. - Credit goes mainly to larger companies; distribution of credit by sector does not reflect the structure of the economy. - As of June 2013, loan maturity composition: about 60 percent short-term loans, about 30 percent medium-term loans, and about 5 percent long-term credit. - Main obstacles to greater financial intermediation: - Difficulties in registering land and property hindering use of property as collateral and banks’ repossession ability. - A judicial system that does not allow for speedy resolution of commercial/credit disputes. - Lack of information on borrowers’ credit-worthiness and absence of a widely used credit bureau. - Note: The BCEAO has facilities (Centrale des Risques, Centrale des Bilans and Centrale des Incidents de Paiement) that allow some credit verification, but they do not have a comprehensive database and are not widely used. - Reforms underway or planned to enhance access and intermediation: - Designing an action plan to begin restructuring the public banks by end-2013. - Reforms to land property legislation aiming at formalizing land ownership and reducing time and cost to register property. - Establishment of commercial courts, with the first already functioning in Abidjan. - Strong support for BCEAO’s plans to establish primary dealers and a credit bureau. - Authorities’ objectives: - Improve access to financial services and boost growth by providing medium-and long-term credit to small and medium enterprises, housing, and the agricultural sector. - Finalizing a strategy to develop the financial sector with support from the World Bank. ### D. Benchmarking Côte d’Ivoire’s Financial Sector: Comparison with Peers - Benchmarking data source and peers: - Based on World Bank’s FinStats 2013 database. Peers include Cameroon, Ghana, Mozambique, Senegal, and Kenya (added for its progress in broadening access). - Data mainly for end-2011; availability of indicators for Côte d’Ivoire was limited. - Main benchmarking findings: - Financial depth: - Private credit/GDP and deposits/GDP are broadly in line with the expected median for comparable countries, but shallower than Kenya, Senegal and Mozambique. - Credit to the private sector is broadly in line with the expected median but lower than the expected 75th percentile. - Efficiency: - 3-bank asset concentration and overhead costs/total assets are broadly in line with peers. - Cost/income (cost-to-income) ratio is somewhat higher than in several comparable countries. - Stock market: - Côte d’Ivoire hosts the regional stock market with 37 listed companies and higher level of capitalization with respect to GDP than Ghana. - Stock market turnover ratio is low, indicating room to increase activity and enhance contribution to growth. ### Key Statistics and Indicators (selected) - Financial system composition: - Banks: about 80 percent of financial sector assets. - Insurance: 10 percent of financial system assets; assets about FCFA 526 billion as of end-2012. - Pensions: assets FCFA 350 billion (about 7 percent of financial system assets). - Microfinance: 73 institutions; about 2 percent of financial system assets. - Access to financial services: - 6.7 percent of the population has bank accounts. - 4 percent has accounts in microfinance institutions. - Banking system structure: - 25 banks total; 18 subsidiaries of international/regional groups. - Foreign banks hold about 57 percent of banking assets. - Top three foreign banks hold almost 40 percent of banking assets. - Financial depth: - Credit to the private sector-to-GDP: 18.2 percent in 2012. - Stock market: - BRVM capitalization: about 38½ percent of GDP as of end-2012. - Listed companies on BRVM: 37 (31 from Côte d’Ivoire). - Loan maturity composition (June 2013): - Short-term: about 60 percent of credit. - Medium-term: about 30 percent of credit. - Long-term: about 5 percent of credit. *Source: Appendix III. Côte d’Ivoire: Financial Sector Profile (IMF staff summary as provided).* ### INTRODUCTION ### _cr13367 - INTRODUCTION ### Overview - This debt sustainability analysis (DSA) updates the May 23, 2013 IMF LIC DSA and follows the last joint Bank-Fund DSA considered in November 2012. - Cȏte d’Ivoire is assessed at a moderate risk of debt distress. - A Eurobond issue in 2014 equivalent to $500 million would: - lead to a slight deterioration in external public debt indicators, - reduce domestic financing risks, - lengthen the average maturity of debt. - An additional DSA shows that if growth rates were lower than projected in the baseline, external debt vulnerability indicators would deteriorate significantly. ### Background and key debt stocks - Public and publicly guaranteed external debt: $7.73 billion at end-2012. - External debt defined on a currency basis for this DSA (if defined on residency basis external debt at end-2012 would amount to $7.81 billion). - External debt declined from 54.6 percent of GDP at end-2011 to 30.5 percent of GDP at end-2012, mainly due to HIPC completion point and MDRI relief. - Composition of external debt at end-2012: - official bilateral creditors: about half of public and publicly guaranteed external debt (of which 78 percent are French ODA claims converted into C2D swaps), - commercial creditors: 34 percent, - multilateral creditors: remainder. - Domestic debt: 18.4 percent of GDP at end-2012. - Trend: from 11.2 percent of GDP in 2007 to 18.6 percent at end-2011. - Outstanding stock of T-bills rolled over by BCEAO: 5.3 percent of GDP (about CFAF 607 billion). - Restructuring: November 2011 and March 2012 agreement to restructure into 2-year T-bills, and 3- and 5-year bonds. ### Baseline macroeconomic assumptions (Box 1 — key points) - Growth: - Real GDP projected to grow by 8.7 percent in 2013. - 8 percent per year on average over the medium term. - About 5 percent over the long run. - Inflation: expected to remain moderate. - Fiscal: - Primary fiscal deficit: about 1.5 percent of GDP over the period. - Total revenue and grants: from 21.3 percent of GDP in 2013 to 24.1 percent of GDP in 2019–33. - Primary (non-interest) expenditures: from 22.6 percent of GDP in 2013 to 25.7 percent of GDP over the long term. - Balance of payments / external: - Current account deficit (incl. official transfers) rises to 7 percent of GDP on average in 2019–33 from 1.8 percent of GDP in 2013. - FDI: 3 percent of GDP over the medium term, 2.2 percent of GDP in the long term. - Exports of goods and services expected to increase on average by 11–12 percent per annum; imports by more than 13 percent. - New external borrowing: - Projected to average 2.6 percent of GDP in the medium term, and 2.8 percent of GDP in the long run. - Includes a Eurobond equivalent to US$500 million in 2014 (assumed to be in dollars with a 10-year bullet maturity). - Includes 3 large concessional loans amounting to $2.1 billion during 2013–17 for infrastructure and energy projects (total equivalent to 5.6 percent of average annual GDP, primarily disbursed in 2015 (1.8 percent of GDP), 2016 (1.6 percent of GDP), and 2017 (0.9 percent of GDP)). - For 2015–18 main new borrowing source: multilateral and official bilateral creditors; thereafter multilateral/bilateral declines to 25 percent by 2033 while commercial borrowing rises to about 75 percent of total new borrowing during 2029–33. - Specific numeric baseline projections (selected, as reported in Text Table 1): - Nominal GDP ($ billion): 2013 = 28.4; 2014 = 31.2; 2015 = 34.3; 2018 = 44.2; 2019-33 = 20.3/28.5/32.1/35.9/48.6/99.4 (table presents a sequence of values across columns). - Real GDP (percentage change): 2013 = 8.0; 2014 = 8.0; 2015 = 8.1; 2018 = 7.0; 2019-33 = 5.1/8.7/8.2/8.1/7.0/5.2 (table sequence). - Revenue and grants: 2013 = 21.3; 2014 = 22.2; 2015 = 22.9; 2018 = 23.1; 2019-33 = 23.2/21.3/22.0/21.5/22.1/24.1 (percent of GDP sequence). - Primary expenditure: 2013 = 23.1; 2014 = 24.0; 2015 = 24.7; 2018 = 24.4; 2019-33 = 25.0/22.6/23.0/23.1/23.9/25.7 (percent of GDP sequence). - Domestic debt: 2013 = 13.3; 2014 = 12.5; 2015 = 12.0; 2018 = 11.5; 2019-33 = 10.7/14.8/12.7/12.8/12.1/8.6 (percent of GDP sequence). - Exports of goods and services: 2013 = 50.5; 2014 = 49.7; 2015 = 47.9; 2018 = 47.4; 2019-33 = 54.3/51.2/50.7/50.2/53.3/66.8 (percent of GDP sequence). - New external borrowing: 2013 = 2.2; 2014 = 3.8; 2015 = 3.5; 2018 = 2.6; 2019-33 = 3.0/1.8/3.5/2.7/3.0/2.8 (percent of GDP sequence). - Grant element of new external borrowing (%): 2013 = 14.5; 2014 = 18.6; 2015 = 13.8; 2018 = 1.9; 2019-33 = -18.5/49.7/49.7/38.7/27.5/17.0 (sequence as presented). ### Main changes since the third ECF review LIC DSA - Revenue projections revised slightly down over the medium term due to higher-than-anticipated cost of tax and customs exemptions under the 2012 investment code. - Expenditure projections revised down reflecting: - lower-than-anticipated execution rate of C2D projects, - authorities’ objectives to reduce the wage bill as a share of tax revenue (to meet WAEMU convergence criterion), - reduction of electricity subsidies. - External borrowing revised down on average based on commitments under negotiation, but includes Eurobond issue equivalent to US$500 million in 2014. - Composition of external borrowing changed: - Eurobond assumed in dollars with a 10-year bullet maturity, - alignment with authorities’ Medium-Term Debt Strategy: lower commercial borrowing during 2013–16, - greater projected access to financing from non-traditional official bilateral creditors reducing long-term share of commercial borrowing. - Exports revised up (agriculture support, higher mining prospects); imports revised up (revised import elasticity), resulting in a higher external current account deficit than previously expected. - Discount rate for present value calculations increased to 5 percent from 3 percent (IMF and World Bank Boards decision on October 11, 2013). ### Low-growth scenario (additional DSA) - Assumptions: - Lower efficiency of public investment leading to weaker private investment response. - No policy response to the growth shock. - Impact on external public debt: - If GDP growth per year were on average lower by 1.7 percent during 2014-2018 and 1.3 percent beyond than in the baseline, then external public debt would increase from 2013 by: - 1.5 percentage points to 29.2 percent of GDP by 2018, - 18.5 percentage points to 46.2 percent of GDP by 2033. - Under the low-growth DSA: - External vulnerability indicators deteriorate considerably. - Debt service-to-fiscal revenues breaches its threshold temporarily. - PV of debt-to-GDP ratio and debt service indicators remain close to thresholds for much of the projection period. - Stress tests (historical average, export, combination shocks) show sustained breaches and greater vulnerability to negative shocks to growth, exports, net FDI and fiscal performance. ### External DSA findings and stress tests - External DSA results: - Cȏte d’Ivoire’s debt dynamics are sustainable in the baseline. - Risk of debt distress remains moderate (unchanged). - Effects of the 2014 Eurobond: - Main change to results reflects assumption of Eurobond issuance in 2014, but risk rating remains moderate. - Baseline debt stock indicators show a slight improvement; debt service indicators deteriorate through 2025. - Deterioration in 2020–25 driven by amortization payments from sizeable external borrowing in 2013–17 and the 2014 Eurobond bullet repayment in 2024. - Debt service paid under C2D projected to be just over 16 percent of total projected external debt service during 2020-25; C2D payments during 2014–27 projected to total $3.86 billion (C2D ODA claims re-profiled over 2012–27). - Vulnerabilities highlighted by stress tests: - Most vulnerable to negative shocks to growth, exports, net FDI and fiscal performance. - Historical average scenario and export and combination shock tests show clear vulnerabilities. - Policy measures related to Eurobond: - Eurobond intended to lengthen average maturity and substitute for short-term domestic currency financing (2–5 year). - Authorities intend to hedge exchange rate risk on the bullet repayment. - Authorities seek to increase average maturity of domestic debt via longer term CFA franc debt from bilateral creditors. ### Public debt sustainability analysis (including domestic debt) - Inclusion of domestic public debt modestly worsens debt situation. - Baseline projection: PV of total public debt declines from 42.4 percent of GDP in 2013 to 23 percent of GDP at end of projection period. - Debt service indicators: rise in the medium term, decline in the long term. - Low-growth DSA effects on public debt: - PV of total public debt-to-GDP higher by about 3.4 percent of GDP on average during 2014–18, and 15.1 percent during 2019–33. - Total debt service-to-revenue ratio higher by 1.8 percent of revenue during 2014–18 and 5.7 percent during 2019–33. ### Conclusions and policy recommendations - Conclusion: - Cȏte d’Ivoire remains at a moderate risk of debt distress; baseline debt indicators remain below policy-dependent thresholds. - Alternative scenarios and stress tests reveal vulnerability to adverse macroeconomic shocks (exports, growth, fiscal performance). - The 2014 Eurobond raises external debt ratios but mitigates short-term and maturity-bunching vulnerabilities. - Low-growth scenario highlights that failure to realize baseline growth markedly raises debt vulnerabilities and could lead to destabilizing debt dynamics. - Recommended policy directions: - Maintain sound macroeconomic policies and prudent debt management to preserve a sustainable external position. - Strengthen the business climate to increase potential crowding in of private investment. - Ensure public investment is in sound projects and improve implementation capacity. - Strengthen debt management: adopt and implement the Medium-Term Debt Strategy and reorganize the debt department. - Shift to nonconcessional borrowing cautiously as Cȏte d’Ivoire moves to emerging market status, taking into account sensitivity to interest rate changes. - Seek to limit significant bunching of debt service payments in the mid-2020s by obtaining terms (maturities) on new loans that do not exacerbate the payment profile. *Source: _cr13367 - INTRODUCTION (IMF staff DSA text).* ### 14. The Côte d’Ivoire authorities broadly agree with the DSA and the tentative conclusions ### 14. The Côte d’Ivoire authorities broadly agree with the DSA and the tentative conclusions therein ### Authorities’ assessment and policy stance - The authorities broadly agree with the DSA and the tentative conclusions therein. - They consider that the baseline macroeconomic assumptions presented in this report are "on the low side." - The authorities would have appreciated inclusion of another scenario based on a higher economic growth driven by a stronger level of private and public investments more in line with their objective to transform Côte d’Ivoire into an emerging country by 2020 and halving poverty by 2015. - The authorities state they are implementing measures to: - improve the business climate; - mobilize domestic and external resources and broaden the tax base; - increase fiscal revenues and investment absorption capacity; - adopt a prudent attitude vis-à-vis current spending. - They are convinced that these policies will lead to higher public revenue and investment expenditure while building a solid macroeconomic environment and debt sustainability. - The authorities welcome staff suggestions and policy recommendations from the DSA exercise. - The authorities are committed to: - following a sustainable public debt management policy; - maintaining a solid macroeconomic environment; - continuing to implement far-reaching structural policies. - Note: "The reorganization of the Debt department entails the establishment of a back-, middle-, and front-office structure." ### Structure of external debt (Table 1, as of end-2012, nominal; Million US dollars; Percent of total; Percent of GDP) - Total: 7,730; 100.0; 30.5 - Multilateral creditors: 1,265; 16.4; 5.0 - IMF: 774; 10.0; 3.1 - World Bank: 119; 1.5; 0.5 - AfDB group: 44; 0.6; 0.2 - Other multilaterals: 328; 4.2; 1.3 - Official bilateral creditors: 3,845; 49.7; 15.2 - Paris Club: 3,693; 47.8; 14.6 - Non-Paris Club: 153; 2.0; 0.6 - Commercial creditors: 2,619; 33.9; 10.3 - Eurobond: 2,604; 33.7; 10.3 - Other commercials: 15; 0.2; 0.1 - Sources: Ivoirien authorities; and IMF staff estimates. ### Key baseline projections and macro assumptions (selected from Table 2a and Table 3a) - External debt (nominal) series (percent of GDP, selected years): - 2010: 76.1 - 2011: 76.4 - 2012: 50.9 - 2013: 45.0 - 2018: 27.1 - 2023: 16.5 - o/w public and publicly guaranteed (PPG) external debt (percent of GDP, selected years): - 2010: 50.4 - 2011: 54.6 - 2012: 30.5 - 2013: 27.6 - 2018: 21.5 - 2023: 15.3 - Change in external debt: -4.9; 0.3; -25.5; -5.9; -1.6; -3.5; -3.0; -2.5; -2.1; -1.4; -0.7 (series across years as presented) - Identified net debt-creating flows (selected values): -5.4; -17.5; -2.3; -4.9; -3.1; -2.1; -0.6; 0.5; 1.7; 3.6; 4.2 - Non-interest current account deficit (series items include): - -4.1; -14.9; -0.2; -5.9; 4.0; 0.2; 1.7; 2.5; 3.8; 4.7; 5.6; 6.3; 6.2; 6.1 (as in table) - Exports and imports (percent of GDP, selected): - Exports (e.g., series includes) 54.2; 57.7; 52.8; 51.0; 51.2; 50.7; 50.2; 50.5; 51.6; 53.3; 51.3; 64.1; 71.9 - Imports (e.g., series includes) 45.9; 37.9; 47.6; 41.4; 48.0; 49.6; 50.0; 51.5; 53.5; 56.1; 51.4; 68.6; 77.8 - Net FDI (negative = inflow) sample series: -1.4; -1.1; -1.8; -1.7; 0.3; -3.0; -3.0; -3.0; -3.0; -3.0; -2.9; -2.5; -1.7; -2.2 - Endogenous debt dynamics (contribution components, selected): - Contribution from nominal interest rate: 1.7; 2.1; 1.6; 1.7; 1.4; 1.5; 1.4; 1.2; 1.2; 1.1; 0.5 - Contribution from real GDP growth: -1.9; 3.4; -7.3; -3.9; -3.3; -3.1; -2.8; -2.5; -2.2; -1.3; -0.8 - PV of PPG external debt (percent of GDP, selected): - 2013: 30.4 - 2014: 27.2 - 2015: 28.1 - 2018: 21.5 (table shows progression including 18.6; 11.9 for later years) - PV of PPG external debt (percent of exports, selected): - 2013: 57.6 - 2014: 53.2 - 2015: 55.6 - later values include 51.6; 47.2; 43.1; 39.6; 29.0; 16.5 - PV of PPG external debt (percent of government revenues, selected): - 2013: 150.7 - 2014: 138.8 - 2015: 143.8 - later values include 133.9; 121.4; 111.0; 103.5; 82.0; 48.8 - Debt service-to-exports ratio (in percent, sample series): 14.3; 26.5; 10.1; 7.5; 7.5; 7.7; 8.0; 7.6; 6.9; 5.9; 3.2 - PPG debt service-to-exports ratio (in percent, sample series): 3.3; 5.0; 1.9; 3.5; 4.2; 4.5; 4.7; 4.6; 4.3; 4.3; 2.4 - PPG debt service-to-revenue ratio (in percent, sample series): 9.2; 19.4; 5.1; 9.1; 10.8; 11.7; 12.1; 11.9; 11.3; 12.1; 7.0 - Total gross financing need (Billions of U.S. dollars, sample series): 1.5; 0.8; 1.7; 1.2; 1.7; 2.0; 2.8; 3.3; 3.9; 6.1; 12.2 - Non-interest current account deficit that stabilizes debt ratio (sample series): 0.8; -15.3; 25.3; 6.1; 3.3; 5.9; 6.8; 7.2; 7.6; 7.8; 6.9 - Key macroeconomic assumptions (selected): - Real GDP growth (in percent) series includes: 2.4; -4.7; 9.8; 1.8; 3.7; 8.7; 8.2; 8.1; 7.8; 7.5; 7.0; 7.9; 5.1; 5.1; 5.2 - GDP deflator in US dollar terms (change in percent) sample: -0.4; 10.1; -6.6; 6.5; 9.5; 6.0; 4.0; 3.6; 3.1; 3.1; 2.9; 3.8; 2.9; 5.0; 3.5 - Effective interest rate (percent) sample: 2.2; 2.9; 2.1; 2.9; 0.6; 3.8; 3.5; 3.9; 3.8; 3.7; 3.7; 3.7; 4.2; 3.3; 3.8 - Growth of exports of G&S (US dollar terms, in percent) sample: 8.6; 11.6; -6.1; 8.8; 8.2; 11.9; 11.4; 11.0; 11.6; 13.3; 13.6; 12.1; 11.7; 10.2; 11.1 - Growth of imports of G&S (US dollar terms, in percent) sample: 20.0; -13.4; 28.7; 12.7; 14.7; 16.3; 16.4; 12.7; 14.6; 15.1; 15.4; 15.1; 12.0; 10.5; 11.3 - Government revenues (excluding grants, in percent of GDP) sample series: 19.2; 14.9; 20.2; 19.6; 19.6; 19.4; 19.6; 20.1; 20.4; 22.7; 24.3; 23.1 - Aid flows (in Billions of US dollars), sample: 0.1; 0.1; 0.2; 0.9; 1.2; 1.1; 1.3; 1.5; 1.7; 1.9; 2.7 (o/w Grants: 0.1; 0.1; 0.2; 0.5; 0.8; 0.8; 0.8; 0.9; 0.9; 0.9; 0.9) - Grant-equivalent financing (in percent of GDP, sample series): 2.6; 2.8; 3.3; 3.3; 3.0; 2.6; 1.9; 0.8; 1.5 (table shows many entries as "..." where not provided) - Memorandum items: - Nominal GDP (Billions of US dollars) sample: 23.0; 24.1; 24.7; 28.5; 32.1; 35.9; 39.9; 44.2; 48.6; 70.9; 173.9 - PV of PPG external debt (in Billions of US dollars) sample: 7.7; 7.8; 9.1; 9.4; 9.5; 9.9; 10.3; 13.2; 20.5 - (PVt-PVt-1)/GDPt-1 (in percent) sample: 0.6; 4.4; 0.8; 0.5; 0.8; 1.0; 1.4; 0.4; 0.8; 0.8 - Gross remittances (Billions of US dollars) sample: -0.5; -0.6; -0.6; -0.7; -0.8; -0.9; -0.9; -1.0; -1.0; -0.8; 0.7 ### Stress tests and sensitivity analysis (Figures and Table 2b / Table 3b highlights) - Figures label the most extreme stress test as "the test that yields the highest ratio in 2023" with specific correspondences: - Figure 1 footnote: in figure b. it corresponds to a Combination shock; in c. to a Exports shock; in d. to a Combination shock; in e. to a Exports shock; and in f. to a Combination shock. - Table 2b (Sensitivity Analysis for Key Indicators of Public and Publicly Guaranteed External Debt, 2013–33) shows baseline and scenario outcomes for PV of debt-to-exports ratio, PV of debt-to-GDP ratio, PV of debt-to-revenue ratio with selected values: - Baseline PV of debt-to-exports ratio series (percent): 27; 28; 26; 24; 22; 21; 19; 12 (selected snapshot) - Alternative scenarios (A1, A2) and bound tests (B1–B6) produce variations; examples: - A1 (Key variables at their historical averages in 2013-2033) PV of debt-to-GDP: 53; 64; 65; 64; 60; 54; 26; -7 (as in table sequence) - B6 (One-time 30 percent nominal depreciation relative to the baseline in 2014) often yields outcomes similar to baseline for several indicators (e.g., PV of debt-to-GDP: 53; 56; 52; 47; 43; 39; 28; 16 in one panel) - Table 3b (Sensitivity Analysis for Key Indicators of Public Debt, 2013–33) shows baseline and scenario values for PV of public debt and other indicators: - Baseline PV of public debt-to-GDP series (percent): 42; 41; 39; 37; 35; 33; 27; 20 (selected) - A1, A2, A3 and bound tests B1–B5 show higher values under adverse shocks; e.g., B1 in one panel yields 42; 47; 53; 54; 56; 57; 69; 88 for a sequence of years. ### Public sector debt dynamics (Table 3a highlights) - Public sector debt (percent of GDP, selected): - 2010: 68.2 - 2011: 73.2 - 2012: 48.9 - 2013-18 average: 36.5 - 2018: 30.3 - 2023: 23.0 - Change in public sector debt (selected): 0.8; 5.1; -24.3; -6.5; -1.5; -1.5; -1.4; -1.5; -1.2; -1.5; -0.4 - Identified debt-creating flows (selected): -1.0; 4.3; -24.4; -2.9; -2.1; -1.1; -0.7; -0.5; -0.2; 0.2; 0.5 - Primary deficit (percent of GDP, selected): 1.3; 2.5; 2.4; 0.5; 1.3; 1.3; 1.0; 1.6; 1.7; 1.8; 1.7; 1.5; 1.3; 1.8; 1.6 - Revenue and grants (percent of GDP, sample): 19.7; 15.2; 20.8; 21.3; 22.0; 21.5; 21.7; 22.0; 22.1; 21.8; 23.9; 24.8; 24.1 - Primary (noninterest) expenditure (percent of GDP, sample): 21.0; 17.7; 23.2; 22.6; 23.0; 23.1; 23.4; 23.8; 23.9; 23.3; 25.2; 26.5; 25.7 - Automatic debt dynamics (contribution, selected): 0.3; 1.9; -6.2; -4.2; -3.1; -2.7; -2.4; -2.2; -1.9; -1.1; -1.3 - PV of public sector debt (percent of GDP, selected): 48.8; 42.0; 40.9; 38.8; 36.7; 34.7; 33.2; 27.4; 19.6 - Gross financing need (percent of GDP, sample): 4.2; 6.8; 4.4; 4.0; 4.0; 4.6; 4.8; 4.8; 4.7; 4.5; 3.9 - PV of public sector debt-to-revenue and grants ratio (percent, sample): 234.6; 197.4; 185.9; 180.0; 169.2; 157.6; 150.0; 114.4; 79.0 - Debt service-to-revenue and grants ratio (in percent, sample): 14.3; 27.9; 9.7; 12.9; 13.7; 13.9; 14.2; 13.9; 13.4; 13.5; 8.6 - Primary deficit that stabilizes the debt-to-GDP ratio (percent): 0.6; -2.5; 26.7; 7.8; 2.5; 3.1; 3.1; 3.3; 3.0; 2.7; 2.2 *Sources: Country authorities; and IMF staff estimates and projections.* ### 1. Real GDP growth and primary balance are at historical averages19719419218317216411314 ### 1. Real GDP growth and primary balance are at historical averages ### Baseline, Alternative Scenarios, and Bound Tests — Key Figures - A. Baseline scenario headline numbers (as presented): 19719419218317216411314 - A1. Real GDP growth and primary balance are at historical averages: 19719419218317216411314 - A2. Primary balance is unchanged from 2013: 19718718016715414510661 - A3. Permanently lower GDP growth 1/: 197188184176168165157217 - B. Bound tests — headline numbers: 19719419218317216411314 - B1. Real GDP growth is at historical average minus one standard deviations in 2014-2015: 197212242246248254284353 - B2. Primary balance is at historical average minus one standard deviations in 2014-2015: 19718918417316115311780 - B3. Combination of B1-B2 using one half standard deviation shocks: 197199204207207212233286 - B4. One-time 30 percent real depreciation in 2014: 197235225209193183141105 - B5. 10 percent of GDP increase in other debt-creating flows in 2014: 197229222208194184196 - Baseline (alternate listing): 131414141413139 - A. Alternative scenarios (alternate listing) - A1. Real GDP growth and primary balance are at historical averages: 13151516151413-3 - A2. Primary balance is unchanged from 2013: 13141414141312 6 - A3. Permanently lower GDP growth 1/: 1314141515151826 - B. Bound tests (alternate listing) - B1. Real GDP growth is at historical average minus one standard deviations in 2014-2015: 1315172023253445 - B2. Primary balance is at historical average minus one standard deviations in 2014-2015: 131414151514149 - B3. Combination of B1-B2 using one half standard deviation shocks: 1315161616192836 - B4. One-time 30 percent real depreciation in 2014: 1316181920202219 - B5. 10 percent of GDP increase in other debt-creating flows in 2014: 1314162423171711 ### Projections and Ratios Presented - Projections headings shown: PV of Debt-to-GDP Ratio; PV of Debt-to-Revenue Ratio 2/; Debt Service-to-Revenue Ratio 2/ - Debt service-to-revenue ratio plots and scenario labels (text excerpts): - Baseline scenario, Lower-growth Scenario, Baseline, Historical scenario, Most extreme shock 1/Threshold - Time series labels shown: 0 5 10 15 20 25 30 2013 2018 2023 2028 2033 ### Notes, Data Sources, and Assumptions - Sources: Country authorities; and staff estimates and projections. - Footnote 1/: Assumes that real GDP growth is at baseline minus one standard deviation divided by the square root of the length of the projection period. - Footnote 2/: Revenues are defined inclusive of grants. - Caption: Figure 3. Côte d’Ivoire: External LLIC DSA: Baseline Versus Lower-Growth DSA Scenarios - Caption note: The most extreme stress test is the test that yields the highest ratio in 2023. For both the LIC DSA shown, figures b, c, d, e. and f correspond to a combination shock. *Prepared By African Department (In Consultation with other departments); Sources: The Cote d'Ivoire authorities; and IMF staff estimates and projections.* ### 3. Gourou Basin Integrated ### 3. Gourou Basin Integrated Management Project (Sanitation of Indenié junction and the Lagoon) ### Project approval and financing - The ADF Board of Directors on November 24, 2010 approved a grant of UA 23 million to finance this project. - This grant was put in place in June, 2011. ### Related emergency and capacity-strengthening program (PURSSAB) - Main purpose: contribute in the national budget to restoring basic social and administrative services, social cohesion and reconciliation as stated in the Government’s request. - Approval date: June 3, 2011. - Key objectives: - Restore basic health, educational and social welfare services. - Restore water and sanitation networks. - Restore public administration services. - Support dialogue, social cohesion and reconciliation mechanisms. ### Agricultural infrastructure support project in Indéné-Djuablin Région (PAIA-ID) - Objective: contribute to improving food security and reducing poverty in rural areas. - Specific aims: - Increase, on a sustainable basis, the production and productivity of major crops. - Improve marketing conditions. ### Status of Bank Active Portfolio (selected operations, amounts in UA million) - Private sector operations (concluded): - Project construction of bridge toll Henri Konan BEDIE — 50 - Henri Konan Bédié Bridge: a public private partnership (PPP) based on a Build Operate Transfer (BOT) concession of 30 years; builds a toll bridge over the Ebrié Lagoon linking the South and North shores of Abidjan. - Azito power expansion project — 26 - Conversion of 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. - Ciprel power expansion project — 44 - Expansion to a combined cycle turbine facility built in two phases: phase A, construction of a gas turbine (111MW); phase B, deployment of a combined cycle turbine for additional 111MW. The project will increase capacity by 222MW. - Microcredit Côte d’Ivoire (equity participation and technical assistance) — 1.5 - Microfinance project comprising two parts. The equity participation part was signed on June 2013; the technical assistance part will be signed on November 2013. ### 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; a Country Brief defines rapid re-engagement over 2011–12. - A full Country Strategy Paper (CSP) for 2013–17 prepared in coordination with the Government and submitted to AfDB Board for consideration at the beginning of December 2013. - CSP purpose: assist the country with its quest for strong and inclusive growth. - CSP pillars: - i) strengthening governance and accountability. - ii) development of infrastructure in support of economic recovery. ### Indicative Work Program for 2013 and 2014 (Amount in UA million) - Project to support training and professional integration — 17 (Year: 2013) - Côte d’Ivoire, Liberia, Sierra Leone and Guinea interconnection Project (Multinational) — 33 (Year: 2013) - Support to social cohesion — 30 (Year: 2014) - Côte d’Ivoire, Mali and Guinea regional road Project (Multinational) — 90 (Year: 2014) - Support for economic and social reintegration — 15 (Year: 2014) ### Statistical issues (As of November 2013) - 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. - Authorities provided required statistical indicators to the Fund on a timely basis. - In February 2013, Côte d’Ivoire approved the African Statistics Chart (adopted in February 2009). - New law organizing national statistics approved in July 2013. - A census is planned for end 2013. - 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 provided by AFRITAC West to implement a new base year and update implicit deflators. - Accounts for 2010 AND 2011 have been completed. - Ongoing work on quarterly national accounts with Fund support through AFRITACWEST, with the first quarterly data projected to be available in early 2014. - Price statistics: - A harmonized consumer price index (CPI) has been adopted by all WAEMU members. - A new base year (2008) has been 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. - No monthly or quarterly fiscal data are provided for publication, though they are made available to the IMF African Department, although metadata is lacking. - Authorities committed to addressing weaknesses in coverage of general government units and public enterprises; efforts to improve reconciliation of fiscal and monetary data. - Authorities are seeking Afritac assistance to improve compilation of government finance statistics. - The 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 member countries; others relate to systemic issues in Côte d’Ivoire’s 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: - The national agency of the BCEAO in Abidjan is responsible for compiling and disseminating annual balance of payments statistics and the international investment position. - BCEAO headquarters delineates methodology and calculates international reserves managed for WAEMU countries. - Customs computer system allows satisfactory monitoring of merchandise trade data, but coverage of services and transfers has shortcomings. - Financial accounts: foreign assets of the private nonbanking sector are not adequately covered; reporting of private capital flows, especially foreign direct investment in Côte d’Ivoire, is weak. - Insufficient information on 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 November 2013) — selected entries with dates and frequencies preserved exactly - 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 — 08/13; Date received — 10/15; Frequency of Data — M; Frequency of Reporting — M; Frequency of Publication — M - Reserve/Base Money: Date of latest observation — 08/13; Date received — 10/15; Frequency of Data — M; Frequency of Reporting — M; Frequency of Publication — M - Broad Money: Date of latest observation — 08/13; Date received — 10/15; Frequency of Data — M; Frequency of Reporting — M; Frequency of Publication — M - Central Bank Balance Sheet: Date of latest observation — 08/13; Date received — 10/15; Frequency of Data — M; Frequency of Reporting — M; Frequency of Publication — M - Consolidated Balance Sheet of the Banking System: Date of latest observation — 08/13; Date received — 10/15; Frequency of Data — M; Frequency of Reporting — M; Frequency of Publication — M - Interest Rates: Date of latest observation — 08/13; Date received — 10/15; Frequency of Data — I; Frequency of Reporting — M; Frequency of Publication — M - Consumer Price Index: Date of latest observation — 08/13; Date received — 11/15; Frequency of Data — M; Frequency of Reporting — M; Frequency of Publication — M - Revenue, Expenditure, Balance and Composition of Financing – General Government: Date of latest observation — 08/13; Date received — 10/15; Frequency of Data — M; Frequency of Reporting — M; Frequency of Publication — M - Stocks of Central Government and Central Government-Guaranteed Debt: Date of latest observation — 12/2012; Date received — 03/2013; Frequency of Data — M; Frequency of Reporting — M; Frequency of Publication — M - External Current Account Balance: Date of latest observation — 12/2012; Date received — 03/2013; Frequency of Data — A; Frequency of Reporting — A; Frequency of Publication — A - Exports and Imports of Goods and Services: Date of latest observation — 12/2012; Date received — 03/2013; Frequency of Data — A; Frequency of Reporting — A; Frequency of Publication — A - GDP/GNP: Date of latest observation — 2012; Date received — 03/2013; Frequency of Data — A; Frequency of Reporting — A; Frequency of Publication — A - Gross External Debt: Date of latest observation — 12/2012; Date received — 03/2013; Frequency of Data — M; Frequency of Reporting — M; Frequency of Publication — M ### IMF Executive Board actions and statements (December 6, 2013) - IMF Executive Board completed the fourth review under the ECF arrangement for Côte d’Ivoire and approved a US$75 million disbursement. - Completion enables immediate disbursement equivalent to SDR 48.78 million (US$75 million). - Total disbursements under the ECF arrangement amount to SDR 308.94 million (US$475.2 million). - The three-year ECF arrangement for Côte d’Ivoire was approved on November 4, 2011 for an amount equivalent to SDR 390.24 million (120 percent of the country’s quota in the IMF). - Statement by Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Chair: - Macroeconomic performance under the Fund-supported program has been strong: growth rebounded, supported by a surge in public investment and an upturn in business and consumer confidence; inflation has remained moderate. - Considerable progress in structural reforms. - Fiscal position improved significantly since 2011. - For 2013, the fiscal deficit is expected to be lower than programmed, owing to below-target capital spending. - The draft 2014 budget is built on conservative macroeconomic assumptions and aims to further reduce the fiscal deficit while allowing for greater capital spending. - Further efforts needed to open up fiscal space, including broadening the tax base and reducing exemptions. - Improving public financial management should remain a priority; a medium-term debt strategy is needed to safeguard external stability. - Banking sector: generally sound but needs strengthening to better support economic development and financial inclusion. - Recommended steps: improve the supervisory framework, facilitate banks’ liquidity management, and promote credit to the private sector. - Governance and business climate: authorities implemented several measures to enhance governance and improve the business climate, but more needs to be done to strengthen the legal framework to attract foreign and private domestic investment. ### IMF Article IV consultation conclusion (December 6, 2013) — summary points - Executive Board concluded the 2013 Article IV consultation with Côte d’Ivoire. - Background summary: - Côte d’Ivoire recovering from prolonged economic stagnation and political conflict culminating in the post-election crisis of end-2010 and early 2011. - Conflict caused real per capita income to fall by more than 40 percent from its 1978 peak level; poverty rate rose to close to 50 percent, from 37 percent in 1995. - New government initiated sociopolitical normalization and an economic recovery program anchored on the 2012–15 National Development Plan, supported by the IMF under the Extended Credit Facility. - Socio-political situation improved substantially in the last two years: administrative reunification, completion of a full election cycle, decline in insecurity, steps to incorporate former combatants into security forces and civil service. - Progress toward political reconciliation and restoring social cohesion continues but remains difficult. - Authorities made considerable progress toward boosting medium-term growth to raise living standards and aiming for emerging market status by 2020. - Sizable external financial support, including debt relief from reaching the Heavily Indebted Poor Countries (HIPC) Initiative Completion Point, a large fiscal stimulus, and renewed private sector confidence helped limit the 2011 recession. *Italic: IMF staff report content from _cr13367 - 3. Gourou Basin Integrated (excerpts) as provided in the source content.* ### 4.7 percent and spurred a 9.8 percent rebound in economic growth in 2012. Average inflation ### _cr13367 - 4.7 percent and spurred a 9.8 percent rebound in economic growth in 2012. Average inflation ### Recent macroeconomic performance (2011–2012) - Real GDP growth: -4.7 percent (2011); 9.8 percent rebound (2012). - Average inflation: declined from 4.9 percent in 2011 to 1.3 percent in 2012. - Consumer price index (end of period): 2.0 (2011 est.), 3.4 (2012). - Overall fiscal deficit: narrowed from 5.7 percent of GDP in 2011 to 3.4 percent of GDP in 2012. - Current account balance: moved into deficit in 2012, driven by a surge in investment-related imports and the strong economic rebound. - Broad money growth: 12.5 (2011), 4.4 (2012). - Net credit to government (percent of beginning of period broad money): 1.6 (2011), 5.5 (2012). - Net credit to private sector (percent of beginning of period broad money): 2.3 (2011), 3.9 (2012). ### 2013 outlook and near-term projections - Growth projected: 8.7 percent in 2013 (staff projection); authorities expected about 9 percent in 2013 and double-digits over the medium term. - Inflation: expected to remain below the regional convergence criterion of 3 percent; staff project inflation to remain below the 3 percent common regional threshold. - Overall fiscal deficit: expected to tighten to about 2.7 percent of GDP in 2013. - External current account: expected to widen as imports continue to rise; financing through foreign direct investment and other capital inflows. - Primary basic balance (percent of GDP): -2.9 (2011), -1.4 (2012), -0.2 (2013 proj.), -0.1 (2014 proj.), -0.3 (2015 proj.), 0.0 (2016 proj.), 0.2 (2017 proj.), 0.4 (2018 proj.). - Total revenue and grants (percent of GDP): 20.3 (2011), 20.8 (2012), 21.3 (2013 proj.), 22.0 (2014 proj.), 21.5 (2015 proj.), 21.7 (2016 proj.), 22.0 (2017 proj.), 22.1 (2018 proj.). - Total expenditure (percent of GDP): 25.9 (2011), 24.2 (2012), 24.0 (2013 proj.), 24.3 (2014 proj.), 24.6 (2015 proj.), 24.8 (2016 proj.), 25.2 (2017 proj.), 25.2 (2018 proj.). ### Fiscal performance and public financial management - Fiscal performance in first semester 2013: strong; revenue-enhancing measures and restrained current spending; all end-June performance criteria and indicative targets met. - Primary basic deficit expected to decline from 0.3 percent to 0.2 percent of GDP in 2013 (authorities’ expectation). - Arrears: audit concluded; starting December 15, CFA F 51.1 billion of domestic arrears will be paid over CFA F 98.3 billion recorded. - Planned fiscal measures: curtail exemptions, broaden tax base, VAT reform, buttress tax collection, better valuation of import duties, anti-fraud measures in customs. - Public expenditure management: strengthen budget process, improve transparency and traceability, improve governance in public procurement and other aspects of PFM. - Institutional change: creation of a ministry of budget after November 19 reshuffle to emphasize sound PFM. - Wage bill: elaboration of a medium-term strategy for a sustainable wage bill; salary adjustment programmed in 2014 following a 20-year freeze. ### External sector and debt - Exports, f.o.b (millions of SDRs): 7801.7 (2011), 7817.7 (2012), 8554.7 (2013 proj.), 9428.4 (2014 proj.), 10346.0 (2015 proj.), 11428.5 (2016 proj.), 12795.9 (2017 proj.), 14522.5 (2018 proj.). - Imports, f.o.b (millions of SDRs): -4114.9 (2011), -5529.2 (2012), -6663.1 (2013 proj.), -7528.5 (2014 proj.), -8551.1 (2015 proj.), -9790.1 (2016 proj.), -11271.1 (2017 proj.), -12915.4 (2018 proj.). - Export volume growth: -2.0 (2011), 5.8 (2012), 8.8 (2013 proj.), 10.6 (2014 proj.), 12.2 (2015 proj.), 13.1 (2016 proj.), 13.7 (2017 proj.), 14.7 (2018 proj.). - Import volume growth: -14.5 (2011), 35.7 (2012), 19.9 (2013 proj.), 17.1 (2014 proj.), 16.6 (2015 proj.), 16.3 (2016 proj.), 16.0 (2017 proj.), 15.0 (2018 proj.). - Current account balance (including official transfers, percent of GDP): 12.9 (2011), -1.3 (2012), -1.8 (2013 proj.), -3.1 (2014 proj.), -3.9 (2015 proj.), -5.1 (2016 proj.), -5.8 (2017 proj.), -6.7 (2018 proj.). - Current account balance (excluding official transfers, percent of GDP): 12.9 (2011), -1.4 (2012), -3.2 (2013 proj.), -5.2 (2014 proj.), -5.8 (2015 proj.), -6.9 (2016 proj.), -7.5 (2017 proj.), -8.2 (2018 proj.). - Gross official reserves (millions of SDRs): 2663.4 (2011), 2205.0 (2012), 2806.8 (2013 proj.), 3399.7 (2014 proj.), 3724.3 (2015 proj.), 4152.4 (2016 proj.), 4599.2 (2017 proj.), 5097.1 (2018 proj.). - External public debt (percent of GDP): 55.1 (2011), 30.7 (2012), 28.1 (2013 proj.), 28.0 (2014 proj.), 26.5 (2015 proj.), 25.5 (2016 proj.), 24.7 (2017 proj.), 24.1 (2018 proj.). - Gross public debt (percent of GDP): 73.7 (2011), 49.2 (2012), 42.9 (2013 proj.), 40.7 (2014 proj.), 39.4 (2015 proj.), 38.3 (2016 proj.), 37.1 (2017 proj.), 36.2 (2018 proj.). - Directors’ advice on external stability: preserve external stability through prudent foreign borrowing and debt management; finalize a medium-term debt strategy; obtain a sovereign rating prior to issuing a Eurobond and assess market conditions carefully before issuance. ### Structural reforms, private sector, and financial sector - Authorities implementing reforms to: improve the business climate, enhance revenue mobilization and public financial management, strengthen the energy and financial sectors, and reduce poverty. - Business climate reforms and outcomes: - One-stop shop created to ease starting a business. - Starting cost of small companies reduced by 72 percent. - Specialized commercial court created to facilitate enforcing contracts. - World Bank’s 2014 Doing Business report rated Côte d’Ivoire among the 10 countries that made the most significant progress in improving their business climate in 2012/13. - Increase in creation of new private enterprises and FDI. - Private investment ambition: increase investments from 13.7 percent of GDP in 2012 to 19.6 percent of GDP in 2015, with 60 percent of that being private investment. - SME support (“Phoenix Program for SMEs”): - Program pillars: improve access to financing and markets, enhance capacity and managerial skills, improve business climate for SMEs, promote entrepreneurship and innovation. - Funding: US $ 300 million to US $ 400 million. - Targets: increase number of SMEs from around 50 000 to 120 000 over a 6-year period; increase sector contribution to GDP to 35 to 40 percent. - Financial sector: banking system generally sound but shallow, limited access to credit, fragility of some public banks. - Authorities formulating a financial sector development strategy with World Bank assistance. - Post-audit approach to public banks: restructuration and/or privatization based on role of the state. - Directors recommend accelerating financial sector reform strategy, stricter enforcement of prudential regulations, prompt resolution of troubled public banks, and broader financial access and development. ### Social outcomes, poverty reduction, and human capital - Authorities emphasize rehabilitation and development of basic services: roads, drinking water, health, education, security, and electricity. - Agricultural sector reforms: cocoa, coffee, cashew nuts and cotton reforms guarantee that at least 60 percent of the international price be paid to farmers. - Microcredit initiatives targeted at women, especially in rural and suburban areas. - Vocational training and reinsertion programs for vulnerable groups, including ex-combatants. - Authorities’ objective: halve poverty over the coming years. ### Executive Board assessment and policy priorities - Executive Directors commended Côte d’Ivoire’s good performance under the Fund-supported program. - Directors’ key recommendations and priorities: - Continue fiscal prudence to open room for infrastructure and social spending. - Boost revenue mobilization by curtailing exemptions and broadening the tax base. - Put the wage bill on a sustainable financial path. - Reinforce public financial management and shore up the financial position of the electricity sector. - Strengthen the banking system to broaden financial access and development; accelerate financial sector reform and enforce prudential regulations. - Preserve external stability with prudent foreign borrowing and debt management; finalize a medium-term debt strategy; obtain a sovereign rating before issuing a Eurobond and carefully assess market conditions. - Deepen reforms to improve the business climate and governance, strengthen the legal framework, and reduce non-competitive public procurement. *Source: _cr13367* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2013/_cr13367.pdf_