IMF Staff Concludes 2016 Article IV Consultation Visit to Togo

IMF News, November 3, 2016

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IMF staff team led by Ms. Cemile Sancak visited Lomé from October 20 to November 2 to conduct the 2016 Article IV Consultation.
The IMF Executive Board is expected to discuss the staff report on the 2016 Article IV Consultation in January 2017.
During the visit, the team held discussions with Sani Yaya, Minister of Finance and Development; Kossi Assimaidou, Minister of Planning; Kossi Ténou, BCEAO National Director, and other senior officials, and met with representatives of the private sector and development partners.
IMF team statement: productive discussions focused on policies and structural reforms to promote sustainable and inclusive growth and to maintain macroeconomic and financial stability.
IMF team welcomes the authorities’ firm commitment to take the necessary measures to reduce the public debt to a sustainable level and implement key structural reforms.

The economy expanded at 5.3 percent in 2015.
Inflation was 1.8 percent in 2015, explained by lower petroleum and transport prices.
Public debt, including the debt of public sector enterprises, increased from 48.6 percent of GDP in 2011 to 75.4 percent of GDP in 2015—above WAEMU’s total public debt limit of 70 percent of GDP, reflecting public infrastructure investments financed by both domestic and external borrowing.
The large debt service payments have increasingly put large pressures on the budget.

The economy is expected to grow at 5 percent in 2016.
Inflation is forecasted at 2.1 percent in 2016.
Economic growth is expected to increase gradually to 5.6 percent by 2021, with benefits from an improved transportation network and productivity gains in the agricultural sector.
With the improvement in the fiscal stance, public debt is expected to be reduced from 75.4 percent of GDP in 2015 to 56.4 percent of GDP by 2021.
Drivers and risks noted:
- Solid rise in agricultural production is a growth driver.
- Growth in 2016 weighed down by a slowdown in public infrastructure investments, a decline in growth in major trading partners, and the diversion of shipments to other ports in the region.
- The private sector is expected to play an increasing role as the engine of growth.

Fiscal and public investment policy
- Reduce domestically-financed capital investment.
- Partner with the private sector and technical and financial partners to continue to improve infrastructure.
- Refocus policies on sustainably-financed infrastructure spending and targeted social programs such as Programme d’Urgence de Développement Communautaire (PUDC) and Programme d’Appui aux Populations Vulnérables (PAPV).
- Government will identify development priorities in the Plan National de Développement (PND) for 2018-2022 and integrate these priorities into the budget.
Debt sustainability and public financial management
- Authorities should persist on their renewed commitment to debt sustainability to attain a sustainable debt level in the medium term.
- Accelerate implementation of key measures in public financial management, including debt management, and improve public investment management.
Revenue mobilization
- Leverage the Revenue Authority (Office Togolais des Recettes) to modernize revenue administration.
Financial sector and supervision
- Stricter enforcement of the current regulatory framework is needed.
- Banks not currently in full compliance with prudential ratios need to take immediate remediating actions.
- Improve financial stability of the microfinance sector by strengthening the supervisory body for microfinance institutions in the Ministry of Finance.

IMF team thanks the authorities for their warm hospitality, close cooperation and the frank atmosphere, which allowed for a fruitful exchange of views.
Views expressed in the statement are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on these preliminary findings, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.

IMF Press Release No. 16/485 — IMF Staff Concludes 2016 Article IV Consultation Visit to Togo