Press Release: IMF Approves ESAF Loan for Djibouti
IMF News, October 18, 1999
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- Published: October 18, 1999
Loan approval and terms
- IMF approved a three-year loan for Djibouti under the Enhanced Structural Adjustment Facility (ESAF) in an amount equivalent to SDR 19.082 million (about US$26.5 million) to support the government's three-year economic reform program beginning July 1999.
- The first annual loan will be disbursed in three installments.
- The first installment in an amount equivalent to SDR 2.726 million (about US$3.8 million) will be available shortly.
- Footnote on ESAF terms: ESAF loans carry an interest rate of 0.5% and are payable over 10 years with a 5 ½-year grace period.
Executive Board commentary (statement by Mr. Shigemitsu Sugisaki, Deputy Managing Director)
- Directors welcomed Djibouti's decision to pursue a comprehensive medium-term adjustment program under the ESAF arrangement to:
- accelerate growth,
- raise employment levels,
- reduce poverty, and
- strengthen the external position.
- Directors commended intentions to continue a tight fiscal policy stance while increasing outlays for social programs and infrastructure investment.
- Directors underscored the need to provide adequate expenditure allocations for health, education and social safety nets.
- Fiscal implementation requirements emphasized:
- steadfast implementation of the envisaged tax reform program,
- containment of non-priority expenditures—particularly through reductions in the wage bill and the implementation of the demobilization and civil service reform programs,
- acceleration of the settlement of arrears in a timely manner.
- Structural reform priorities urged:
- pressing ahead with the privatization program,
- freeing up markets—including in particular the labor market,
- reforms in tax, pension, and financial sector,
- legal reforms to support market functioning.
- Directors recognized:
- the ambitious reform agenda is a major challenge,
- timely financial assistance on concessional terms and substantial technical assistance from the international community would be essential for success.
Program summary — macroeconomic context and objectives
- Progress during 1996-98 under IMF-supported reform program:
- inflation declined, and in 1998 the price level was relatively stable.
- structural measures implemented: demobilization of military and security personnel, civil service downsizing, reduction in the government wage structure, and banking system reforms.
- Medium-term reform program aims:
- establish an environment conducive to private sector-led growth,
- enhance the country's social indicators,
- restructuring to accelerate economic growth and raise per capita income, increase employment, reinforce domestic financial stability, and strengthen the external position.
- Macroeconomic objectives for 1999-2002:
- real GDP growth of 3% on average,
- annual inflation limited to 2%,
- overall balance of payments deficit contained at 2.5% of GDP on average.
- Medium-term fiscal stance:
- pursue fiscal restraint to limit the budget deficit to 3% of GDP on average.
Structural reform measures
- Tax, revenue administration, and budget management reforms.
- Completion of the demobilization program; adoption of a retirement program; civil service reform to ensure further lowering of the wage bill.
- Reorientation of budget outlays toward priority purposes—particularly education and health sectors and social safety nets.
- Pension fund reform; banking sector reforms.
- Significant privatization program; deregulation; legal reforms—including labor and commercial codes and establishment of commercial courts.
Social issues and anti-poverty measures
- Poverty reduction strategy components:
- higher economic growth,
- increased outlays for education and health and the social safety net.
- Specific programs:
- employment-creation program to be implemented over 2000-03,
- re-insertion program to provide training for demobilized personnel,
- Social Fund Program to address rehabilitation of education and health infrastructure.
Country IMF membership and outstanding use
- Djibouti joined the IMF on December 29, 1978 and its quota is SDR 15.90 million (about US$22.08 million).
- Its outstanding use of IMF financing currently totals SDR 6.91 million (about US$9.60 million).
Selected economic and social indicators (1995–2002; values as presented)
- National income and prices (annual percentage changes)
- GDP at current prices: 0.7; 1.2; 1.6; 1.8; ...; 3.5; 4.4; 5.2; 6.3
- GDP at constant prices: -3.6; -1.5; 0.0; 1.7; 1.4; 2.3; 3.2; 4.3
- Consumer prices (annual average) 1/: 4.5; 2.6; 0.1; 2.0
- Government finance (In percent of GDP)
- Total revenue and grants: 31.1; 30.6; 31.0; 34.2; 13.8; 34.4; 36.2; 34.9; 34.5
- Revenue: 29.1; 28.8; 27.2; 25.4; 10.2; 25.2; 26.3; 26.8; 27.0
- Grants: 3.8; 8.9; 3.6; 9.2; 9.9; 8.1; 7.6
- Total expenditure: 39.2; 35.3; 33.4; 16.7; 34.8; 35.5; 35.0
- Current expenditure: 35.6; 26.7; 14.9; 30.2; 30.0; 28.9; 29.5
- Capital expenditure: 3.7; 3.9; 6.7; 4.6; 5.5
- Overall balance (payment order basis): -8.1; -3.9; -4.3; 0.9; -2.8; -0.4; 0.5; -0.5
- Change in arrears (decrease-): -0.7; 2.4; -0.8; -1.2; -4.5
- Overall balance (cash basis): -4.9; -4.6; -1.9; -1.6; -3.8; -3.3
- Government domestic arrears (stock) 2/: 23.1; 22.0; 23.9; 22.9; 23.8; 20.8; 13.6
- Government domestic debt 3/: 18.7; 19.0; 18.8; 17.6; 17.8; 17.2; 19.4; 20.7; 21.2
- Money and credit (Change in percent of broad money)
- Money and quasi-money: 3.3; -10.0; -1.4; 8.2; 0.2; 2.2; 5.4; 5.8; 6.4
- Net foreign assets: -10.3; -4.0; -2.6; -2.0; -0.9; 0.4; 0.8
- Net domestic assets: 6.9; 2.7; 10.7; 3.1; 5.0; 5.6
- Claims on the central government (net): -1.1; 0.6; 2.1
- Claims on nongovernment sector: 8.0; -0.3; 11.2; 6.1; 2.8
- Interest rates (in percent)
- Lending rates: 9.4-13.1; 9.5-13.3; 9.2-12.4; 13.0-14.0; …
- Deposit rates: 4.2-6.0; 2.1-4.0; 3.6-6.0; 3.6-4.0
- External Sector (In millions of U.S. dollars; unless otherwise indicated)
- Exports: 37.6; 39.6; 42.6; 59.1; 65.0; 70.2; 75.9; 82.4
- Locally produced goods: 13.7; 12.9; 13.9; 14.7; 16.0; 17.1; 18.5
- Re-exports: 24.0; 25.9; 29.7; 45.3; 50.3; 54.2; 58.8; 63.9
- Imports: 206.8; 200.7; 204.0; 238.8; 242.9; 254.4; 259.9; 272.8
- For domestic use: 178.7; 171.0; 174.7; 190.8; 193.4; 201.0; 202.0; 209.9
- For re-export: 28.1; 29.2; 48.0; 49.5; 53.4; 57.9; 62.8
- Services (net): 85.9; 82.3; 85.5; 85.6; 62.0; 62.7; 70.6; 83.1
- Income (net): 17.3; 15.7; 12.2; 11.7; 12.5; 12.4
- Of which: Interest obligations: -3.7; -5.0; -6.5; -6.3; -6.7; -7.0; -7.3
- Transfers (net): 49.0; 46.9; 52.2; 67.9; 70.8; 73.3; 65.4; 61.5
- Of which: Official transfers: 60.1; 57.0; 61.0; 72.2; 74.9; 77.1; 68.7; 64.5
- Current account: -17.0; -16.3; -11.5; -14.4; -32.9; -35.9; -35.5; -33.4
- Overall balance: -34.0; -12.0; -11.4; -15.0; -14.2; -14.0; -11.0
- Memorandum items:
- Currency board gross foreign assets (In millions of U.S. dollars): 71.4; 77.0; 67.8; 64.4; 71.5; 75.1; 78.8
- Monetary and LOLR cover (in percent): 115.6; 122.2; 113.1; 111.8; 113.7; 118.1; 116.9; 117.3; 116.5
- Commercial bank gross foreign assets (In months of imports for domestic use): 10.0; 8.6; 7.2; 7.1; 7.3
- Commercial bank gross foreign assets (In percent of GDP): -3.5; -2.3; -6.2; -6.1; -5.4; -6.9; -2.4; -2.2; -1.8
- Official debt 4/: 265.3; 284.3; 316.6; 337.0; 352.6; 368.1; 382.9; 398.3; 54.1; 57.3; 65.7; 66.4; 64.2
- Debt service ratio 5/:
- To current account receipts: 4.9; 5.3; 5.9; 5.7
- To exports of goods and services 6/: 7.5; 9.8; 10.1; 9.1; 8.5
- Social and demographic indicators
- Population: 660,000 (1996 estimate); rate of growth 3 percent
- Unemployment rate: 40 percent (51 percent for under 20 years of age)
- Life expectancy: 50 years (at birth)
- Infant mortality rate: 106 (per 1,000 live births)
- Medical access: 1 physician per 5,900 people (1991)
- Education: Pupil-teacher ratio: 47.2 (primary school); gross enrollment ratio: 14 percent (of secondary school age children)
Source: IMF Press Release No. 99/50, October 18, 1999; Annex: Program Summary and Selected Economic and Social Indicators.