Press Release No. 12/83

Press Release No. 12/83
March 14, 2012

An International Monetary Fund (IMF) mission visited Abidjan during February 29–March 14, 2012 to conduct discussions on the first review of a program supported by the Extended Credit Facility (ECF), which was approved by the IMF Executive Board on November 4, 2011¹ (see Press Release No. 11/399) in the amount of SDR 390.24 million (about US$616 million). The mission met with H.E. Dr. Alassane Dramane Ouattara, President of Côte d’Ivoire; Mr. Charles Koffi Diby, Minister of Economy and Finance; and other members of the government. The mission also met with members of the business and donor communities. Discussions focused on recent economic developments and growth prospects, policy implementation under the ECF, structural reforms, and progress towards the HIPC completion point.

At the conclusion of the mission, Ms. Doris Ross, Assistant Director in the IMF’s African Department, issued the following statement:

“The Côte d’Ivoire authorities and the IMF team made excellent progress in discussions for the first review of the ECF-supported program and have reached agreement ad referendum subject to approval by IMF management and the Executive Board, the government’s policies for 2012 could be supported with SDR 65 million (about US$100 million) under the IMF’s Extended Credit Facility (ECF) in May. In addition, the mission held staff-level discussions on the work that needs to be undertaken ahead of the completion point under the Heavily Indebted Poor Countries (HIPC) Initiative. The authorities have made substantial progress in fulfilling the completion point triggers. Completion of these efforts would lay the basis for reaching the HIPC completion point—and the associated major debt reduction—by
end-June 2012.

“Economic performance in 2011 was better than expected. After contracting sharply during the post-election crisis, the economy rebounded faster than expected, and finished the year 4.7 percent lower than in 2010. Twelve-month inflation, which peaked during the crisis at 9.1 percent, finished the year at 1.9 percent. Budget execution was also better than expected. Fiscal revenue rebounded strongly in the second half of the year helped by both the rapid recovery of economic activity and improved collection efforts. Expenditure stayed within budget targets and appropriations for investment and pro-poor spending were fully used. All of the quantitative performance criteria for end-December under the ECF arrangement were observed.

“Good progress has also been made in the implementation of structural reforms, many of which are needed to strengthen public financial management and to improve the business climate. The mission welcomes the completion of the civil service census, the approval of reform to the private sector pension system, the institution of commercial courts, the adoption of the law on enforcement of arbitral decisions, and the creation of business support centers. The reform of the coffee-cocoa sector, the success of which is essential to a large part of the population, is a broad and complex undertaking. The mission welcomes the progress the government has made to date in implementing its reform program, developed in close consultation with its partners in the sector.

“There have been some delays in implementing other planned reforms. Further progress is needed in resolving problems at some state-owned enterprises, including publicly-owned commercial banks, and ensuring that the electricity sector becomes financially viable in the medium term, improves maintenance and expands capacity, as well as making the new National Debt Management Committee operational.

“The prospects for 2012 are positive. Economic growth is expected to be around 8 percent, while inflation should remain low, although the uncertain global environment poses some risks to this outlook. The solid performance of budget revenue has provided some room to finance additional budget outlays, most notably to support state enterprises in sectors with strong job creation potential. The 2012 program maintains the large increase in public investment from 2011, especially in transport infrastructure.

“The government’s reform program is set to continue over the course of 2012, with key priorities being the implementation of the cocoa sector strategy, electricity sector reforms, and efforts to improve the business climate. The government still needs to refine its plans in a number of areas. These include strategies for the development of the financial sector; the partial divestiture of the state enterprise portfolio; more flexibility in fuel pricing; controlling the public wage bill and government pension reform; and debt management.”

“The IMF team thanks the authorities for their hospitality and for the constructive discussions. The mission congratulates the government of Prime Minister Ahoussou on its nomination, and wishes it success in tackling the important challenges facing Côte d’Ivoire.”

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¹ The ECF is the IMF’s main tool for medium-term financial support to low-income countries. Financing under the ECF currently carries a zero percent interest rate, with a grace period of 5½ years, and a maturity of 10 years.