IMF Staff Completes Review Mission to Togo

IMF News, December 18, 2019

Source details

IMF team led by Mr. Ivohasina Fizara Razafimahefa visited Lomé during December 4-17, 2019 to discuss the sixth and final review of the program supported by IMF’s Extended Credit Facility (ECF).
The statement reports that, following finalization of discussions, the IMF Executive Board could consider the conclusion of the sixth ECF review.
The views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board.

Economic growth:
- 4.9 percent in 2018
- 5.3 percent in 2019 (estimated)
- 5.5 percent in 2020 (estimated)
Growth drivers and risks:
- Growth is driven primarily by domestic demand.
- Some export sectors are showing signs of weaknesses.
Financial indicators:
- Credit to the private sector expanded by 3.6 percent (year-on-year).
- Inflation stood at 0.4 percent (year-on-year) at end-September 2019.

Fiscal consolidation:
- Fiscal consolidation started in 2017 and remains sustained.
- Overall fiscal deficit estimated at 2.2 percent of GDP at end-September 2019.
Revenues and expenditures:
- Revenue collections were on target, with strong customs revenue collections compensating for weaknesses in domestic tax collections.
- Overall expenditure was less than projected.
Public debt:
- Total public debt amounted to 81 percent of GDP at end-2016.
- Projected to decline to 70 percent of GDP by end-2019.
Policy emphasis:
- It would be essential to persevere in fiscal consolidation to further reduce debt vulnerabilities.

Revenue administration measures implemented:
- Creation and harmonization of tax identification numbers.
- Tele-procedures to reduce compliance costs.
- Withholding and provisional deposits to secure revenue collections.
- Internal controls against corruption.
- Reduction of tax exemptions.
- Key measures underway to promote voluntary compliance.
Customs and public investment management:
- All customs clearance procedures will be progressively automated to reduce opportunities for revenue leakages and improve services to private sector agents.
- Evaluation and selection of public investment projects have become more rigorous; all new projects must go through a cost-benefit analysis before inclusion in the public investment program.
Budgeting:
- The shift to program-based budgeting is planned to start from 2021.
Expected impact:
- Continued implementation of these reforms will improve the efficiency of public expenditure.

Progress and actions:
- Reforms in the financial sector are progressing and discussions are underway.
- A prequalification notice for the privatization of the two public banks was announced in international financial news outlets; the prequalification process is underway.
Priorities and risks:
- It is essential to finalize the reforms in these two public banks to safeguard financial stability and minimize risks to the State budget.
- Non-performing loans in the banking sector remain high.
- Priority will be given to strengthening the legal and institutional frameworks for the recovery of such loans.

Improvements:
- The Togolese authorities have made highly commendable progress to improve the business environment; Togo is amongst the best reforming countries in the World under the latest Doing Business Indicators.
Institutional reforms:
- Authorities are engaged in institutional reforms to strengthen governance.

The mission held discussions with:
- Mr. Sani Yaya (Minister of Economy and Finance)
- Mr. Kossi Ténou (National Director of the Central Bank BCEAO)
- Other senior officials, as well as representatives of the private sector and development partners.
Next steps:
- Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.

Press Release No. 19/473, IMF Communications Department, December 18, 2019.