Press Release No. 08/215

Press Release No. 08/215

A mission from the International Monetary Fund (IMF), led by Mr. Christian Mumssen, visited Lome during August 27-September 9, 2008 to conduct the first review of the government's economic and financial program supported by an arrangement under the Poverty Reduction and Growth Facility (PRGF), which is the IMF's concessional facility for low-income countries. The mission met with the Head of State, His Excellency Faure Gnassingbé, the House Speaker, Mr. Abass Bonfoh, the former Prime minister, Mr. Komlan Mally, the new Prime minister, Mr. Gilbert Houngbo, the Minister of Finance, Adji O.Ayassor, the National Director of BCEAO, Mr. Kokou Gozan, and other members of the cabinet and senior officials. The mission had constructive discussions with members of the donor community and civil society.

The following statement was issued in Lomé on September 15, 2008, by Mr. Koffi Yao, the IMF's Resident Representative for Togo:

"Performance under the PRGF-supported program has been good. All quantitative criteria were observed and good progress was made in implementing key structural measure. This was achieved although Togo has been severely affected by the recent soaring food and energy prices and flooding that destroyed roads and bridges, damaged food crops, and paralyzed trade and transports. These shocks have worsened the near-term macroeconomic outlook, with real GDP revised down to 0.8 percent in 2008 and inflation revised up to 9 percent. However, growth is expected to recover, to 3 percent in 2009, and inflation is projected to moderate.

"In discussing economic policies for the remainder of the year, the mission concurred with the authorities that these exogenous shocks are having significant adverse impact on the budget and the balance of payments. The government has sought to mitigate the social and economic impact of the shocks by providing moderate fertilizer and seed subsidies, fuel support to the electricity sector, clearing wage and pension arrears, introducing temporary wage supplements, increasing the minimum wage, and boosting spending for flood repairs. The mission supported these measures and commended the authorities for maintaining budgetary discipline, while eschewing price control and untargeted subsidies.

"For 2009, the mission and the authorities discussed the need to preserve macroeconomic stability and revive economic growth in the face of the very challenging economic environment. The mission was encouraged in this regard by the authorities' efforts to offset the projected shortfall in budgetary revenue caused by the external shocks, pursue resolutely revenue administration reforms and expenditure control, and reallocate spending to priority sectors (health, education, and infrastructure), while implementing its strategy to clear arrears to the private sector and reform state-owned banks and enterprises.

"The mission confirmed that the IMF will continue to help Togo address these challenges, and, including through a possible augmentation of financing, to be considered by the IMF Executive Board in the very near future. The mission would like to thank the authorities for their hospitality and the very close and constructive cooperation."