Press Release: IMF Reaches Staff-Level Agreement with Côte d’Ivoire on a Program to be Supported with US$614 million Under the Extended Credit Facility, Concludes 2011 Article IV Staff Mission

IMF News, September 15, 2011

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Canonical URL: Press Release: IMF Reaches Staff-Level Agreement with Côte d’Ivoire on a Program to be Supported with US$614 million Under the Extended Credit Facility, Concludes 2011 Article IV Staff Mission

IMF staff team led by Ms. Doris Ross was in Abidjan since August 31 to discuss a three-year economic and financial program and the 2011 Article IV Consultation.
The mission met with: Prime Minister Guillaume Kigbafori Soro; State Minister for Justice Ahoussou Jeannot; State Minister for Employment and Social Affairs Gilbert Kone; State Minister for Planning and Development Albert Mabri Toikeuse; Minister of Economy and Finance Charles Koffi Diby; Minister of Industry Moussa Dosso; Minister of Economic Infrastructure Patrick Achi; Minister of Mines, Petroleum, and Energy Adama Toungara; Minister of Civil Service Konan Gnamien; Minister of Agriculture Mamadou Sangafowa Coulibaly; Minister of Commerce Dagobert Bazio; Minister-Delegate for Defense Paul Koffi Koffi; National Director of the Central Bank of West African States (BCEAO) Jean-Baptiste Aman; other senior officials; and representatives of civil society, the private sector, and the diplomatic community.
Staff-level agreement reached on an economic framework through 2014 expected to facilitate transition from crisis recovery to sustained growth.
The policies could be supported with SDR 390 million (about US$614 million) under the IMF’s Extended Credit Facility (ECF), subject to approval by IMF management and the Executive Board.
The Board could consider Côte d’Ivoire’s request for ECF support in early November.

The post-election crisis that began in December 2010 had a strong negative impact on the population and the economy.
IMF approved financial support of about US$130 million in July (see Press Release No. 11/272).
Recovery indicators:
- Industrial production in June reached 95 percent of its level a year earlier, compared with 50 percent in April.
- The current agricultural season is expected to be strong.
- As a result, gross domestic product (GDP) for 2011 is now projected to be 5.8 percent below 2010.
- Consumer prices, which rose sharply during the crisis, are on a downward trend.

2011: Government’s immediate policy priority has been to support the recovery, balancing tax relief with funding restoration of public services.
2012:
- Economy expected to move into an expansion phase, growing by 8-9 percent.
- External current account expected to swing into deficit for the first time in several years.
- Government revenue expected to recover, though not fully to pre-crisis levels.
- Post-crisis incorporation of ex-combatants and previously-unpaid teachers from the country’s North into the government payroll will further expand the already high wage bill.
- Government expects to accommodate this increase through tight controls of other current spending to create fiscal space to increase public investment to 5 percent of GDP (from 3 percent in 2010).
2013-14:
- Successful implementation of the government’s program should lead to economic growth of around 6 percent.
- Continued revenue growth permitting further increases in public investment to reach a targeted 7 percent of GDP in 2014.

Medium-term reform program foundation and policy measures include:
- Raise government revenues by expanding the tax base.
- Strengthen public financial management.
- Reach financial balance in the power sector.
- Reform the legal system, especially pertaining to commercial affairs, and improve the business environment.
- Establish the long-term viability of the public pension funds.
- Enhance the ability of the Ivoirien financial sector to intermediate savings.
Government strategy emphasizes rebuilding the economy after years of internal crisis, weak investment, low growth, and low employment, with a focus on fostering a dynamic private sector and increasing public investment, partnering with the private sector on infrastructure where possible.

Achieving program aims will require:
- Robust implementation of reforms.
- Continued improvement in the security environment, especially movement of goods and persons.
- Successful conduct of legislative elections, currently expected at the end of 2011.
To reach the Completion Point under the Heavily Indebted Poor Countries (HIPC) Initiative, authorities need to focus on key reforms, particularly in the coffee/cocoa sector.
The government secured external assistance at exceptional levels and forbearance by external creditors has allowed a substantial deficit to be financed with limited recourse to regional financial markets.

Press Release No. 11/333, September 15, 2011