IMF Executive Board Completes Second Review under the Extended Credit Facility, and Approves US$35.5 Million Disbursement for Togo

June 15, 2018

  • Completion of the review enables the disbursement of US$35.5 million.
  • Togo’s program aims to reinforce fiscal and financial stability and to promote inclusive growth.
  • Program implementation under the ECF arrangement has been good, against the backdrop of weakening economic activities due to the continuing socio-political tensions.

On June 15, 2018 the Executive Board of the International Monetary Fund (IMF) completed the second review of Togo’s economic performance under the program supported by an Extended Credit Facility (ECF) arrangement. Completion of the review enables the disbursement of SDR25.17 million (about US$35.5 million), bringing total disbursements under the arrangement to SDR75.51 million (about US$106.5 million). Program performance has been good. The Executive Board granted a modification of three performance criteria.

Togo’s three-year arrangement was approved on May 5, 2017 (see Press Release No. 17/151) for SDR176.16 million (120 percent of quota or about US$241.5 million at the time of approval of the arrangement) to support the country’s economic and financial reforms. The program aims to reduce the overall fiscal deficit substantially upfront to ensure long-term debt and external sustainability; refocus policies on sustainable and inclusive growth through targeted social spending and sustainably-financed infrastructure spending; and resolve the financial weaknesses in the two public banks.

Following the Executive Board’s discussion on Togo, Mr. Mitsuhiro Furusawa, Acting Chair and Deputy Managing Director, made the following statement:

“Togo’s performance under the ECF-supported program has been broadly satisfactory despite a difficult political and economic environment. The fiscal position improved significantly, driven mainly by expenditure reduction and public debt has declined. However, the medium-term outlook faces risks due to socio-political uncertainty and unfavorable global financial conditions. Strong commitment to the program and maintaining the reform momentum remains critical to preserving macroeconomic stability, improving social protection, safeguarding long-term debt sustainability, and boosting the country’s growth potential.

“It is important that fiscal policy continues to focus on reducing public debt and preserving fiscal sustainability. The authorities should pursue reforms to address the weak revenue collection, prevent new arrears, improve the cost-effectiveness of public investment projects, and contain public expenditure. The authorities are undertaking a review of expenditure to improve its efficiency and they have started implementing measures to improve public debt management. Ensuring debt reduction remains key for macroeconomic stability.

“It is important that the authorities continue to make progress toward adherence to the WAEMU convergence criteria so as to help maintain strong regional reserves. Restructuring of the two public banks, including adequate recapitalization, addressing non-performing loans, and strengthening governance, is an important step towards restoring financial stability.

“The finalization of the National Development Plan and Togo’s admission to the Compact with Africa are commendable. Swift and decisive implementation of the structural reforms outlined in these two policy documents, which are consistent with the ECF-supported program, would help Togo achieve stronger and more inclusive growth.”

Table 1. Togo: Selected Economic and Financial Indicators, 2015-23

2015

2016

2017

2018

2019

2020

2021

2022

2023

Est.

Proj.

(percentage change, unless otherwise indicated)

National income, prices, and exchange rates

Real GDP

5.7

5.1

4.4

4.7

5.0

5.3

5.4

5.4

5.4

Real GDP per capita

3.1

2.5

1.8

2.1

2.4

2.7

2.8

2.8

2.8

GDP deflator

3.5

1.8

0.4

1.9

2.3

3.0

3.0

3.0

3.0

Consumer price index (average)

1.8

0.9

-0.7

0.4

1.2

2.0

2.0

2.0

2.0

GDP (CFAF billions)

2,472

2,643

2,769

2,958

3,180

3,449

3,744

4,065

4,413

Exchange rate CFAF/US$ (annual average level)

591.2

592.8

580.9

…

…

…

…

…

…

Real effective exchange rate (appreciation = –)

7.1

-1.1

1.6

…

…

…

…

…

…

Terms of trade (deterioration = –)

6.9

-3.3

-0.7

-1.7

0.5

1.9

1.0

2.5

0.4

(percentage change of beginning-of-period broad money)

Monetary survey

Net foreign assets

-3.6

5.1

-2.0

0.0

0.0

0.0

0.0

0.0

0.0

Net credit to government

-2.1

-2.3

9.4

-13.9

2.3

0.0

0.0

0.0

0.0

Credit to nongovernment sector

13.2

10.1

-1.5

8.5

9.5

10.8

11.4

12.0

13.8

Broad money (M2)

20.6

12.6

8.3

6.8

7.5

8.5

10.1

8.6

12.4

Velocity (GDP/end-of-period M2)

1.9

1.8

1.8

1.8

1.8

1.8

1.8

1.8

1.7

(percent of GDP, unless otherwise indicated)

Investment and savings

Gross domestic investment

33.7

33.8

25.3

30.1

27.7

29.3

30.3

30.6

30.8

Government

12.9

13.9

6.3

10.1

6.7

6.8

6.9

7.2

7.4

Nongovernment

20.8

19.9

19.0

20.0

21.0

22.5

23.4

23.4

23.4

Gross national savings

22.7

24.4

17.3

22.2

20.9

23.7

25.3

25.7

25.8

Government

4.1

4.3

6.0

7.0

6.2

6.5

6.8

7.4

7.9

Nongovernment

18.6

20.1

11.2

15.2

14.7

17.3

18.5

18.3

17.9

Government budget

Total revenue and grants

21.8

21.6

21.5

24.5

23.8

23.8

24.0

24.3

24.5

Revenue

19.5

18.8

18.3

20.5

19.9

20.0

20.2

20.4

20.6

Total expenditure and net lending

30.7

31.2

21.8

29.0

24.3

24.2

24.1

24.1

24.0

Domestic primary balance1

-3.2

-4.5

0.8

1.0

2.9

2.9

2.9

2.8

2.8

Excluding bank recapitalization

-3.2

-4.5

0.8

2.4

2.9

2.9

2.9

2.8

2.8

Overall primary balance (commitment basis, incl. grants)

-6.5

-7.2

1.5

-2.1

2.0

2.0

2.0

2.0

2.0

Excluding bank recapitalization

-6.5

-7.2

1.5

-0.7

2.0

2.0

0.0

0.0

0.0

Overall balance (commitment basis, incl. grants)

-8.9

-9.6

-0.3

-4.5

-0.5

-0.3

0.0

0.2

0.5

Excluding bank recapitalization

-8.9

-9.6

-0.3

-3.1

-0.5

-0.3

0.0

0.0

0.0

Overall primary balance (cash basis, incl. grants)

-5.3

-7.2

-0.3

-4.3

0.9

2.0

2.0

2.0

2.0

Excluding bank recapitalization

-5.3

-7.2

-0.3

-2.9

0.9

2.0

2.0

2.0

2.0

Overall balance (cash basis, incl. grants)

-7.7

-9.6

-2.1

-6.7

-1.6

-0.3

0.0

0.2

0.5

Excluding bank recapitalization

-7.7

-9.6

-2.1

-5.3

-1.6

-0.3

0.0

0.2

0.5

External sector

Current account balance

-11.0

-9.3

-8.0

-7.9

-6.8

-5.6

-5.0

-4.9

-5.0

Exports (goods and services)

35.8

33.4

31.9

31.0

30.8

30.7

30.8

30.8

30.7

Imports (goods and services)

-57.8

-53.2

-50.0

-48.5

-46.7

-45.3

-44.6

-44.4

-44.4

External public debt2

21.7

20.2

19.9

22.7

24.3

23.8

23.4

23.0

22.4

External public debt service (percent of exports) 2

4.1

5.2

6.1

4.6

4.3

4.3

3.9

4.1

4.8

Domestic public debt3

50.6

61.4

55.9

51.6

44.8

39.9

35.0

30.3

25.9

Excluding bank recapitalization3

50.6

61.4

55.9

50.2

43.5

38.7

33.9

29.3

25.0

Total public debt4

72.2

81.6

75.7

74.3

69.2

63.7

58.4

53.3

48.3

Excluding bank recapitalization4

72.2

81.6

75.7

72.9

67.8

62.5

57.3

52.3

47.4

Total public debt (excluding SOEs)5

69.8

78.2

72.5

71.4

66.7

61.6

56.6

51.8

47.1

Excluding bank recapitalization (excluding SOEs) 5

69.8

78.2

72.5

70.0

65.4

60.4

55.5

50.8

46.2

Sources: Togolese authorities and IMF staff estimates and projections.

1 Revenue minus expenditure, excluding grants, interest, and foreign-financed expenditure.

2 Includes state-owned enterprise external debt.

3 Includes prefinancing debt, domestic arrears and state-owned enterprise domestic debt.

4 Includes prefinancing debt, domestic arrears and state-owned enterprise debt.

5 Includes prefinancing debt and domestic arrears.

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