Washington, DC
:
The Executive Board of the International Monetary Fund (IMF) concluded the
Article IV consultation with Côte d’Ivoire and
endorsed the staff appraisal without a meeting on a lapse-of-time basis.
[1]
Supported by solid macroeconomic stability,
the Ivorian economy proved resilient to the COVID-19 pandemic thanks to
the authorities’ effective policy response.
COVID-related fatalities remain at low levels by international standards.
Vaccination efforts continue and about 70 percent of the target population
has already received a first dose.
The economy recovered strongly in 2021
, with growth estimated at 7 percent (from 2 percent in 2020), while annual
inflation rose to 4.2 percent due to external and supply shocks. The
overall fiscal deficit reached 5.1 percent of GDP, lower than anticipated,
mainly due to improvements in customs collection and tax administration
which offset higher security spending.
The deterioration in the external environment linked to the war in Ukraine
and regional security challenges are expected to weigh on the macroeconomic
outlook in 2022. IMF staff forecasts growth to slow down to 6 percent this
year due to subdued global demand, worsened terms of trade, and increased
uncertainty, while inflation is expected to increase further to about 5½
percent. The Ivorian authorities took several temporary measures to contain
the impact of the war in Ukraine, such as introducing price ceilings on
several food items.
However,
the near term is dominated by negative risks, stemming mainly from the
global repercussions of the war in Ukraine, tighter monetary policy in
advanced countries and the associated increase in borrowing cost, as well
as new COVID-19 variants’ outbreaks and continued instability in some
neighboring countries. The medium-term growth projections remain robust
with the country facing also upside risks, notably related to the discovery
of substantial oil and gas reserves. A resolute implementation of reforms
under the 2021-25 National Development Plan (NDP) would boost medium-term
growth.
Executive Board Assessment
[2]
A swift and well-designed policy response, underpinned by strong
macroeconomic policies over the past decade, helped contain the economic
cost of the COVID-19 pandemic. The war in Ukraine has nonetheless clouded
Côte d’Ivoire’s outlook. The recent measures to contain its impact on
inflation and the economy should remain temporary and become increasingly
targeted to the most vulnerable if the shock proves persistent. The
authorities need to find the right balance between accommodating urgent
spending pressures, which also include higher security spending, and
preserving fiscal space to cope with future shocks.
The current circumstances could warrant a slightly higher-than-budgeted
deficit this year. However, converging to the WAEMU target deficit of 3
percent of GDP in 2024 remains feasible. The debt sustainability analysis
continues to point to a moderate risk of debt distress, but with very
limited space to absorb future shocks amid worsening market conditions,
highlighting the authorities’ need to accelerate efforts to mobilize
domestic revenue.
Pursuing fiscal reforms remains critical for Côte d’Ivoire to make room to
finance priority spending and support inclusive growth. While the
better-than-anticipated 2021 fiscal outturn is in part due to ongoing
improvements in tax administration reforms and customs collection,
especially on account of digitalization, tax revenue remains well below the
WAEMU tax convergence target of 20 percent of GDP. Continuing ongoing
efforts to improve tax administration as well as to rationalize tax
exemptions are critical to finance government spending for investment,
social convergence, and services in underserved regions. Redesigning and
simplifying the personal income tax regime would also improve its
progressivity.
The new social program of the government can continue enhancing human
capital. While the country made significant progress in broadening access
to education over recent years, further efforts aimed at improving the
quality of basic education and professional training systems would help
easing skills mismatch in the labor market. Despite notable progress,
ensuring equitable access to health care remains a priority.
Sustaining efforts to improve the business climate, strengthen public
services, and tackle climate change challenges are key to boost inclusive
and sustainable growth. The authorities need to accelerate reforms to
tackle infrastructure bottlenecks, regulatory framework deficiencies,
enhance the protection of land tenure and property rights, and streamline
bureaucracy. A swift implementation of the 2021-25 NDP reforms would help,
and a strong involvement of the private sector is key to ensure efforts are
focused where they are needed the most, as well as to contain fiscal costs.
Further improvements in governance and the fight against corruption will
also contribute to attract private investment. The authorities are
committed to adopting sound climate adaptation and mitigation policies,
including on sustainable farming and forest preservation.
Deepening financial inclusion and access to finance remain crucial for
unlocking the private sector’s potential. Tackling deficiencies in
insolvency procedures, improving the credit infrastructure, and a prompt
restructuring of undercapitalized public banks, would improve the capacity
of the banking sector to support growth.
It is expected that the next Article IV consultation for Cote d'Ivoire be
held on the standard
12-month cycle.
[1]
Under Article IV of the IMF's Articles of Agreement, the IMF holds
bilateral discussions with members, usually every year. A staff
team visits the country, collects economic and financial
information, and discusses with officials the country's economic
developments and policies. On return to headquarters, the staff
prepares a report, which forms the basis for discussion by the
Executive Board.
[2]
The Executive Board takes decisions under its lapse-of-time
procedure when the Board agrees that a proposal can be considered
without convening formal discussions.
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Côte d'Ivoire: Selected Economic Indicators (2019-23)
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Population (2020): 27 million
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Gini Index (2015): 41.5
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Per capita GDP (2020): 2,279 USD
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Life Expectancy (years): 58
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Share of population below the poverty line (2015): 44.4%
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Literacy rate: 47.2%
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2019
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2020
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2021
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2022
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2023
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Est.
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Proj.
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Proj.
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Output
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Real GDP Growth (%)
|
6.2
|
2.0
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7.0
|
6.0
|
6.7
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Prices
|
|
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|
|
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Inflation (annual average, %)
|
0.8
|
2.4
|
4.2
|
5.5
|
2.3
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Central government finances
|
|
|
|
|
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Revenues (% GDP)
|
14.2
|
14.4
|
15.3
|
14.2
|
14.7
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Expenditure (% GDP)
|
17.3
|
20.5
|
20.9
|
20.0
|
19.2
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Fiscal balance (% GDP)
|
-2.3
|
-5.6
|
-5.1
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-5.3
|
-4.0
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Public debt (% GDP)
|
38.4
|
47.6
|
52.1
|
52.9
|
52.3
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Money and Credit
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Broad money (% change)
|
11.0
|
21.4
|
17.7
|
10.4
|
…
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Credit to private sector (% change)
|
6.1
|
9.2
|
12.6
|
4.5
|
…
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Balance of payments
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|
|
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Current account (% GDP)
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-2.3
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-3.2
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-3.8
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-4.8
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-4.6
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Net FDI Inflows (% GDP)
|
1.3
|
1.2
|
1.1
|
1.1
|
1.2
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WAEMU reserves (in months of imports)
|
5.6
|
5.5
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…
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…
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…
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External public debt (% GDP)
|
25.5
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30.5
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31.6
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31.4
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30.3
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Exchange rate
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REER (% change, depreciation –)
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-3.9
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5.1
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1.9
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…
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…
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Sources: Ivoirian authorities, World Bank, and IMF staff
estimates.
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