IMF Staff Concludes Visit to Djibouti

IMF News, June 15, 2023

Source details

An International Monetary Fund (IMF) team, led by Joyce Wong, visited Djibouti on June 11-15.
Press Release No. 23/215
End-of-Mission press releases convey preliminary findings after a visit to a country; the views expressed 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.
Statement date: June 15, 2023

Real GDP growth:
- 4.8 percent in 2021
- 3.7 percent in 2022 (authorities’ preliminary estimates)
Fiscal outturn:
- Fiscal deficit narrowed to 1.4 percent of GDP in 2022
- The fiscal outturn reflects in part some arrears accumulation, both domestic and external, pending the outcome of debt restructuring with their main external creditor.
Trade, transport, and prices:
- Port activity started to rebound in 2023 on the back of the peace agreement in Ethiopia; a continued recovery is expected in 2023.
- Inflation remains below regional trends, aided by exchange rate stability and unchanged domestic fuel prices.
Outlook caveat:
- A continued recovery is expected for 2023, but the outlook remains highly dependent on global and regional developments.

Ongoing external and domestic shocks affecting Djibouti:
- Consequences of the war in Ukraine
- The conflict in Ethiopia
- Tightening of global financial conditions
- Climate change
Debt and financing:
- Authorities are accelerating efforts on debt negotiations with their main creditor.
- Some arrears accumulation has affected the fiscal picture.

Fiscal policy and revenue:
- Improve revenue collection.
- Enhance expenditure efficiency.
- Overhaul fiscal policies to rebuild fiscal space.
- Review exonerations and military base leases to entrench a more equitable and sustainable revenue base.
Social protection and subsidies:
- Shift from broad-based subsidies to better targeted social transfers, as inflation abates, to direct scarce public resources to human capital development.
Governance and public financial management:
- Strengthen governance.
- Upcoming publication of the PEFA report will pave the way for future reforms.
- The upcoming MENAFATF evaluation and ongoing inter-agency preparatory work highlight the importance of governance.
State-owned enterprises (SOEs):
- Accelerate the implementation of the Code of Good Governance for SOEs.
- Further empower the Executive Secretariat of the State Portfolio to improve accountability and contain future risks from SOE borrowing.
Engagement:
- Mission and authorities agree on the need for an overhaul of fiscal policies and continued close engagement.

The mission team expressed deep appreciation to the Djiboutian authorities and other counterparts for their warm hospitality, excellent cooperation and candid discussions, and looks forward to continuing close engagement.

Press Release No. 23/215 — IMF Staff Concludes Visit to Djibouti, June 15, 2023