IMF Staff Concludes Visit to Djibouti

IMF News, December 12, 2024

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IMF team led by Ms. Esther Pérez Ruiz visited Djibouti from December 8 to 12, 2024.
Press Release No. 24/465.
End-of-Mission statement: views are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.
Media contacts: IMF Communications Department, PRESS OFFICER: Mayada Ghazala, Phone: +1 202 623-7100, Email: MEDIA@IMF.org.

Growth in FY24 is projected at a robust 6 ½ percent, driven by increased transshipments as shipping companies navigate Red Sea tensions.
Inflation remains moderate due to authorities stabilizing energy and food prices to mitigate rising import costs.
Fiscal deficit for FY24 is projected to stabilize at about 3 ½ percent of GDP, as reduced interest payments from a debt service moratorium with a major creditor, effective through 2028, offset weaker tax revenues and grants.
International reserves have been declining over the past two years, standing at over three months of imports as of September 2023.

Downside risks:
- Limited job creation, which could disproportionately affect the poor.
- Recurrence of droughts.
- Continued disruptions in the Red Sea affecting maritime activity.
Upside scenarios:
- Stronger-than-expected growth in Ethiopia.
- Swift resolution of Red Sea disruptions enhancing Djibouti’s overall outlook.

Immediate priority: strengthen economic resilience and the credibility of the policy framework amid an uncertain regional environment and constrained policy space.
Debt and external obligations:
- Expedite debt negotiations with key creditors.
- Leverage the debt service moratorium (effective through 2028) while addressing substantial outstanding external obligations.
Fiscal policy and revenue mobilization:
- Enhance revenue mobilization by shifting from customs duties to inland revenues.
- Leverage dividends from profitable state-owned enterprises to improve fiscal space.
Monetary and institutional measures:
- Support the Central Bank’s independence from the fiscal authority under the currency board to sustain reserves, exchange rate, and inflation stability.
Structural reforms and growth:
- Revise military base agreements where relevant.
- Advance reforms under enhanced monitoring by the MENAFATF to sustain a favorable investment climate.
- Promote cost-effective energy and develop job-rich sectors such as tourism to foster inclusive growth, in line with Djibouti Vision 2035.

Authorities remain committed to policies promoting macroeconomic stability, restoring debt sustainability, and advancing economic diversification to support job creation.
IMF mission expressed appreciation for Djiboutian authorities for cooperation and looks forward to continued close engagement.

Source: IMF Staff Concludes Visit to Djibouti — Press Release No. 24/465 (December 12, 2024).