Press Release: IMF Executive Board Concludes 2015 Article IV Consultation with Djibouti
IMF News, December 28, 2015
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- Press Release: IMF Executive Board Concludes 2015 Article IV Consultation with Djibouti
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Bibliographic details
- Published: December 28, 2015
Overview and context
- Press Release No. 15/587; December 28, 2015.
- On December 4, 2015, the Executive Board concluded the Article IV consultation discussions with Djibouti and considered and endorsed the staff appraisal without a meeting.
- Djibouti strategy: developing infrastructure and port facilities to foster rapid growth and reduce poverty; growth driven by large investment projects but widespread poverty and unemployment persist; high external debt limits scope for additional borrowing.
Growth, inflation, and investment projections
- Aggregate investment reached 44 percent of GDP in 2014 and is expected to peak at 57 percent in 2015–16.
- GDP growth:
- 2014: 6 percent
- 2015–16: about 6.5 percent
- 2017–19: 7 percent
- Inflation:
- Projected at 3 percent in 2015
- About 3.5 percent in 2016–18
- Infrastructure spending impact: expected to increase demand for housing and services and contribute to inflationary pressure.
Fiscal and external balance pressures
- Fiscal deficit (commitment basis, incl. grants):
- 2014: 12.2 percent of GDP
- 2015: projected 16.5 percent of GDP
- 2016: projected 11.4 percent of GDP (decline in tandem with investment profile)
- Total public and publicly guaranteed (PPG) debt:
- 2014: 60.5 percent of GDP (reflecting high non-concessional borrowing)
- Projected to peak at 80 percent in 2017
- Current account deficit:
- 2014: 25.6 percent of GDP
- 2015: projected 31 percent of GDP (due to large capital goods imports)
- 2017–19: projected 14 percent of GDP after completion of large investment projects
- Financing of deficit: loans and foreign direct investment (FDI)
- Central bank gross foreign assets: projected to remain strong, permitting full currency board coverage over 2015–20.
Financial sector and monetary conditions
- Commercial banks’ non-performing loans: ratio of non-performing loans to total loans rose to more than 22 percent in June 2015.
- Concerns: deterioration in loan portfolio and decline in return on equity.
- Financial inclusion: access to financial services remains low despite increase in number of banks.
- Planned measures: establishment of a credit guarantee fund and development of microfinance to promote financial inclusion.
- Anti-money laundering/combating financing of terrorism: need to reinforce instruments.
Executive Board assessment and staff recommendations
- Strengthen public capacity to manage the investment program, including evaluation and monitoring of investment projects.
- Prioritize proposed projects based on absorptive capacity and resource constraints; conduct cost-benefit analyses before undertaking projects.
- Expedite reform of public enterprises that will manage large investment projects to improve efficiency, financial standing, commercial viability, and reduce contingent liabilities.
- Caution on non-concessional financing:
- Urged to be cautious with additional borrowing and limit non-concessional borrowing.
- Enhance debt management capacity, including monitoring contingent liabilities.
- Improve coordination among government units responsible for contracting, monitoring, and servicing debt.
- Tax reform:
- Commended June 2015 tax conference with broad stakeholder participation.
- Underscored need to design and implement comprehensive tax reform based on conference recommendations.
- Implement a simple and transparent tax regime that reduces tax exemptions and levels the playing field for all investors.
- Banking sector:
- Strengthen banking supervision; adopt measures to address banks in difficulty.
- Expedite credit guarantee fund and microfinance development.
- Competitiveness and structural measures:
- Currency board arrangement has served Djibouti well.
- Improve competitiveness by reducing cost of utilities and developing human capital.
- Prioritize projects that foster inclusive growth through job-creation and poverty reduction.
- Enhance measures to protect the poor.
- Diversify into labor-intensive sectors such as fishing and tourism for employment and inclusive growth.
Key economic and financial indicators (selected, exact values preserved)
- Quota: SDR 15.9 million
- Population: 0.939298 million; 2014
- Per capita nominal GDP: $1,383; 2010
- Poverty rate: 79 percent; 2012
- Unemployment rate: 48.4 percent; 2012
- Main export: Port-related services
Selected time-series (est./proj. where provided)
- Real GDP (annual change in percent): 2013: 5.0; 2014: 6.0; 2015: 6.5; 2016: 7.0
- Consumer prices (annual average): 2013: 2.4; 2014: 2.9; 2015: 2.7; 2016: 3.5; 2017: 3.0
- Total fixed capital investment (percent of GDP): 2013: 40.5; 2014: 44.1; 2015: 60.1; 2016: 53.6; 2017: 33.4; 2018: 30.9; 2019: 27.0; 2020: 26.6
- Private: 2013: 26.9; 2014: 24.0; 2015: 30.0; 2016: 28.7; 2017: 20.2; 2018: 19.3; 2019: 17.8
- Public1/: 2013: 13.7; 2014: 30.1; 2015: 24.9; 2016: 13.2; 2017: 11.6; 2018: 9.2; 2019: 8.8
- Gross national savings (percent of GDP): 2013: 17.3; 2014: 18.5; 2015: 29.1; 2016: 27.8; 2017: 18.6; 2018: 16.4; 2019: 14.4; 2020: 13.6
- Savings/investment balance (percent of GDP): 2013: -23.3; 2014: -25.6; 2015: -31.0; 2016: -25.8; 2017: -14.8; 2018: -14.5; 2019: -12.6; 2020: -13.1
- Total revenue and grants (percent of GDP): 2013: 31.8; 2014: 37.1; 2015: 36.2; 2016: 33.9; 2017: 29.4; 2018: 28.3; 2019: 27.2
- Tax revenue (percent of GDP): 2013: 19.8; 2014: 18.7; 2015: 18.1; 2016: 17.6
- Expenditure and net lending (percent of GDP): 2013: 37.7; 2014: 43.1; 2015: 47.6; 2016: 35.1; 2017: 32.3; 2018: 29.0; 2019: 27.3
- Current expenditure (percent of GDP): 2013: 22.9; 2014: 23.5; 2015: 22.8; 2016: 21.9; 2017: 20.8
- Overall balance (commitment basis, incl. grants, percent of GDP): 2013: -5.9; 2014: -12.2; 2015: -16.5; 2016: -11.4; 2017: -1.2; 2018: -3.0; 2019: -0.7; 2020: -0.1
- Overall balance (cash basis, incl grants, percent of GDP): 2013: -6.9; 2014: -12.7; 2015: -17.0; 2016: -11.9; 2017: -1.6; 2018: -3.4; 2019: -1.1
- Overall balance (excluding grants, percent of GDP): 2013: -10.3; 2014: -16.8; 2015: -24.2; 2016: -19.7; 2017: -8.6; 2018: -7.2; 2019: -4.8; 2020: -3.9
- Claims on the private sector (change): 2013: 15.6; 2014: 8.6; 2015: 12.0; 2016: 14.0; 2017: 16.0; 2018: 18.0
- Broad money (percent change): 2013: 6.9; 2014: 9.4; 2015: 10.2; 2016: 10.7; 2017: 10.4
- Exports of goods and services (in millions of U.S. dollars): 2013: 485; 2014: 511; 2015: 601; 2016: 642; 2017: 684; 2018: 741; 2019: 800; 2020: 870
- Imports of goods and services (in millions of U.S. dollars): 2013: -913; 2014: -1022; 2015: -1318; 2016: -1325; 2017: -1173; 2018: -1203; 2019: -1249; 2020: -1339
- Balance of goods and services (in millions of U.S. dollars): 2013: -428; 2014: -511; 2015: -718; 2016: -683; 2017: -489; 2018: -462; 2019: -449; 2020: -468
- FDI (in percent of GDP): 2013: 19.7; 2014: 9.1; 2015: 8.5; 2016: 9.7; 2017: 9.8; 2018: 10.8
- Stock of external public and publicly guaranteed debt (in millions of U.S. dollars): 2013: 704; 2014: 833; 2015: 1142; 2016: 1506; 2017: 1689; 2018: 1838; 2019: 1901; 2020: 1937
- Stock of external public and publicly guaranteed debt (in percent of GDP): 2013: 48.4; 2014: 52.5; 2015: 65.7; 2016: 78.7; 2017: 79.6; 2018: 78.3; 2019: 73.5; 2020: 68.6
- Gross official reserves (in millions of U.S. dollars): 2013: 411; 2014: 381; 2015: 350; 2016: 399; 2017: 476; 2018: 495; 2019: 479; 2020: 460
- In months of next year's imports of goods and services: 2013: 4.8; 2014: 3.2; 2015: 4.7; 2016: 4.3; 2017: 3.7
- Gross foreign assets of commercial banks (in millions of U.S. dollars): 2013: 835; 2014: 903; 2015: 958; 2016: 1015; 2017: 1076; 2018: 1140; 2019: 1209; 2020: 1281
- In months of imports of goods and services: 2013: 8.2; 2014: 8.7; 2015: 11.0
- Nominal GDP (in millions of Djibouti francs): 2013: 258,658; 2014: 282,228; 2015: 308,688; 2016: 340,260; 2017: 376,820; 2018: 417,310; 2019: 459,917; 2020: 502,137
- Currency board cover (in percent): 2013: 107; 2014: 110; 2015: 109
- Private credit to GDP (in percent): 2013: 32.4; 2014: 32.9; 2015: 34.1; 2016: 34.9; 2017: 36.3; 2018: 38.4; 2019: 40.8; 2020: 42.8
- Exchange rate (DF/US$) end-of-period: 2013: 177.7
- Real effective exchange rate (yearly average, 2005=100): 2013: 95.8; 2014: 96.4; 2015: 102.3
- Change in percent (depreciation -): 2013: 0.3; 2014: 0.5; 2015: 6.2
- Population (million): 2013: 0.913714; 2014: 0.939298; 2015: 0.965598; 2016: 0.992635; 2017: 1.02043; 2018: 1.04900; 2019: 1.07837; 2020: 1.10857
Source: Press Release No. 15/587, IMF Communications Department, December 28, 2015.