Public Information Notice: IMF Concludes Article IV Consultation with Côte d'Ivoire

July 16, 1999

Public Information Notices (PINs) form part of the IMF's efforts to promote transparency of the IMF's views and analysis of economic developments and policies. With the consent of the country (or countries) concerned, PINs are issued after Executive Board discussions of Article IV consultations with member countries, of its surveillance of developments at the regional level, of post-program monitoring, and of ex post assessments of member countries with longer-term program engagements. PINs are also issued after Executive Board discussions of general policy matters, unless otherwise decided by the Executive Board in a particular case.

On June 15, 1999, the Executive Board concluded the Article IV consultation with Côte d'Ivoire.1


Côte d'Ivoire implemented satisfactorily the adjustment and reform programs supported by the three-year arrangement under the Enhanced Structural Adjustment Facility (ESAF) that expired in June 1997. The recovery of the economy following the 1994 devaluation of the CFA franc, especially in the export sector, was sustained; rapid growth resumed; and inflation declined considerably to low-single-digit levels during that period. The implementation of prudent macroeconomic policies and progress in structural reforms reduced financial imbalances and alleviated structural rigidities.

In March 1998, the Executive Board of the IMF approved a new three-year ESAF arrangement in support of Côte d'Ivoire's continued adjustment efforts. At the same time, the Executive Boards of the IMF and the World Bank agreed that Côte d'Ivoire had qualified for assistance under the Initiative for Heavily Indebted Poor Countries (HIPC Initiative), with a completion point in March 2001, contingent upon an assessment by the IMF of the successful implementation of the program supported by a three-year ESAF arrangement.

Building upon the progress achieved under the previous ESAF arrangement, the program for the period 1998-2000 seeks to address the unfinished reform agenda in order to attain a high rate of sustainable growth, reduce poverty, and achieve financial viability. The program focuses on three key policy components: (a) the pursuit of a prudent fiscal policy; (b) the deepening of structural reforms to promote private sector development and investment; and (c) the pursuit of an ambitious social development agenda. Emphasis also has been put on addressing forcefully governance issues. Within this medium-term strategy, the 1998 program, supported by the first annual ESAF arrangement, projected a real GDP growth rate of 6 percent, a reduction of inflation from 5 percent in 1997 to 3 percent, and a narrowing of the external current account deficit by ½ of 1 percentage point to about 4 percent of GDP. The overall fiscal deficit was to be reduced from 2 percent of GDP in 1997 to 1.5 percent in 1998.

Performance under the 1998 program was mixed, and there were some difficulties in its implementation. On the encouraging side, although real GDP growth slowed to 5.4 percent in 1998, reflecting a drop in food production caused by adverse weather conditions, it remained well above the population growth rate. Inflation stabilized to a low level of 2 percent. The external current account improved further to 4.5 percent of GDP in 1998, although the improvement was less than initially expected, owing to a weakening of commodity prices. However, the fiscal situation remains very fragile, and cash-flow difficulties persist. Tax exemptions increased during the year-attributed in part to the increased execution of previously exempted projects-and control over spending is still weak. The overall fiscal deficit amounted to 1.8 percent of GDP in 1998, higher than the program.

Regarding structural measures, progress was made in several areas, but there were delays in implementing some of the envisaged reforms. The coffee sector was liberalized in October 1998, while preparations are being made to liberalize the cocoa sector in October 1999, at the beginning of the next season. Almost all domestic prices have been liberalized. The program of privatizations has progressed, although there have been some delays. The authorities have also taken steps to reform the financial system by restructuring the postal savings institution (SIPE) and moving ahead with the privatization of a state-owned bank (BIAO). In the context of the West African Economic and Monetary Union, C_te d'Ivoire reduced and simplified its external tariffs in 1998 and is expected to further reduce them in early 2000. The government has also announced its intention to liberalize the imports of petroleum products and privatize the local refinery (SIR) by end-December 1999.

A number of issues regarding governance have persisted, mainly in the areas of control over public spending, tax fraud, and nonperforming crop credits. The authorities have reaffirmed their determination to tackle decisively all the above issues.

Negotiations on the second annual ESAF-supported program would be initiated after implementation of the needed corrective measures and satisfactory performance through June 1999.

Executive Board Assessment

Directors noted that the overall performance under the 1998 program supported by the ESAF arrangement had been mixed. They commended the authorities for the satisfactory outcome on growth and inflation despite adverse exogenous factors, including the drought, and for the progress made in reducing the customs tariffs, liberalizing the coffee sector, and privatizing certain key enterprises. However, they noted that serious weaknesses remained in the fiscal area, important structural reforms had been delayed, and several governance issues had not been adequately resolved. Directors regretted that, after the midterm review of the 1998 program, policy slippages had persisted and the second annual ESAF-supported program could not be negotiated.

Directors urged the authorities to take corrective measures to put the program back on track. Most Directors stressed that the negotiations on the second annual ESAF-supported program should be initiated only after corrective measures were implemented, performance was satisfactory through June 1999, and the outstanding governance issues were adequately resolved. Directors therefore welcomed the authorities' continued commitment to the adjustment process and their intention to implement the necessary corrective measures.

In the fiscal area, Directors observed that, although the overall objectives for end-March 1999 appeared to have been met, the situation remained very fragile and cash-flow difficulties persisted. They stressed the importance of securing a durable improvement in revenue collection so as to help achieve the authorities' budgetary target in 1999. In this regard, they recommended a widening of the tax base through a reduction in tax exemptions and a strengthening of tax administration, in particular by stepping up efforts to combat tax fraud. They also emphasized the need to control spending effectively, avoid off-budget outlays, and significantly reduce the DENOs (spending committed for which payments orders have not been issued). Directors noted that the audit of domestic arrears had begun and urged that it be carried out exhaustively and in close cooperation with the private sector to ensure the resolution of any divergence between official data and private sector claims.

Directors pointed to the slow progress on the poverty reduction action plan and urged the authorities to accelerate its implementation. They also stressed the importance of improving the efficiency of spending in the social sectors and dealing urgently with any problem of mismanagement discovered in this area. A number of Directors reiterated the critical importance accorded by donors to steady progress in human resource development and poverty reduction, particularly in the context of their support for the HIPC Initiative.

Directors observed that the financial sector had been adversely affected over the last two years by nonperforming crop credits. They urged the authorities to speed up the ongoing reforms, including the privatization of the state-owned bank (BIAO), the restructuring of the postal savings and checking institution, and the strengthening and enforcement of prudential arrangements.

Directors noted the progress made in other structural reforms. They welcomed the dissolution of the former price stabilization fund for coffee and cocoa (CAISTAB) in preparation for the liberalization of the cocoa sector in October 1999, and urged that its external audit be exhaustive. Directors also noted that progress had been made in the privatization of the oil refinery and the BIAO, and urged that the pace of the remaining privatization be accelerated. They also stressed the importance of timely implementation of the next phase of the new common external tariff in the context of the West African Economic and Monetary Union. Moreover, the liberalization of imports of petroleum products in conjunction with the privatization of the oil refinery should be carried out without further delays.

On governance, Directors stressed that all the outstanding issues needed to be addressed. In particular, the nonperforming crop credit cases should be pursued expeditiously in the judicial system, and weaknesses noted at the treasury and the budget during a recent tax fraud trial should be corrected without delay. Any new cases that emerged should be dealt with swiftly and firmly.

Directors expressed concern about the reliability and availability of the statistical information, especially fiscal data and labor market indicators, and urged the authorities to strengthen the statistical system.

Directors welcomed the authorities' consent to the issuance of the Public Information Notice and encouraged them to continue to enhance the transparency of their economic and financial policies.

Côte d'Ivoire: Selected Economic and Financial Indicators, 1994-1998

1994 1995 1996 1997 1998

(Annual percentage changes, unless otherwise indicated)
National income
Real GDP per capita -1.9 3.2 3.1 2.3 1.7
GDP at constant prices 2.1 7.1 6.8 6.0 5.4
Consumer price index (end of period) 32.2 7.7 3.5 5.2 2.0
External sector (on the basis of CFA francs)
Exports, f.o.b., at current prices 123.3 19.7 14.9 8.6 1.5
Imports, f.o.b., at current prices 76.7 38.3 14.4 13.3 1.7
Terms of trade (deterioration -) 9.0 14.9 -12.3 -3.7 2.7
Real effective exchange rate -34.5 8.3 -1.0 2.2 3.4
(depreciation -)1
Central government operations
Total revenue and grants 64.5 29.9 11.8 7.8 4.9
Total expenditure 30.3 14.8 4.7 8.1 4.0
Money and credit
Net domestic assets2 -20.0 5.8 0.7 10.1 7.0
Money and quasi money (M2) 47.0 17.0 3.0 12.2 6.3
(In percent of GDP, unless otherwise indicated)
Central government operations
Total revenue and grants 20.6 22.8 23.2 22.9 22.2
Total expenditure 27.1 26.5 25.3 25.0 24.0
Overall deficit (-), payment order basis -6.5 -3.7 -2.1 -2.1 -1.8
Gross domestic investment 11.1 12.9 13.9 16.0 18.2
Central government 4.1 4.2 4.3 4.8 5.3
Nongovernment sector 7.0 8.7 9.6 11.2 12.9
Gross domestic savings 22.4 20.3 22.3 22.7 24.5
Central government 3.4 5.4 6.2 5.9 6.2
Nongovernment sector 18.9 14.9 16.1 16.8 18.3
Gross national savings 11.5 9.0 8.7 11.2 13.7
External sector
Current account balance (including official transfers)3 -1.0 -5.8 -4.8 -4.8 -4.5
Overall balance of payments (in millions of U.S. dollars) 500 -203 -316 -263 -139
External public debt (including IMF)4 183.9 157.9 163.0 140.3 98.0
Public external debt-service ratio (including IMF)5
In percent of exports of goods and nonfactor services 36.0 32.9 25.0 20.1 26.9
In percent of government revenue 77.3 62.3 52.1 42.2 43.6

Sources: Ivoirien authorities; and IMF staff estimates.

1 Based on end-of-period changes in relative consumer prices and the nominal effective exchange rate.
2 Changes in percent of broad money at beginning of period.
3 Excluding late interest on payments arrears to commercial banks.
4 Including short-term liabilities to the Central Bank of West African States (BCEAO) and all arrears to commercial banks, and reflecting the 1998 rescheduling with the Paris Club and the London Club agreement.
5 Public debt service due before debt relief.

1 Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. In this PIN, the main features of the Board's discussion are described.


Public Affairs    Media Relations
E-mail: E-mail:
Fax: 202-623-6278 Phone: 202-623-7100