## IMF Executive Board Concludes 2024 Article IV Consultation with Djibouti

_IMF News, June 4, 2024_

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## Bibliographic details
- Published: June 4, 2024

---

### Overview and recent developments
- The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Djibouti on March 22, 2024.
- After the negative shock of the pandemic and a weak recovery in 2021, the November 2022 peace agreement in Ethiopia bolstered the Djiboutian economy.
- Growth is expected to have reached about 7 percent in 2023, supported by the rebound in port activity and construction.
- Inflation is expected to have averaged around 1.8 percent in 2023 and projected to remain subdued.
- The economic outlook is cautiously optimistic for 2024 and the medium-term but subject to considerable uncertainty from regional risks, including potential trade disruptions.
- Stronger-than-expected trade from Ethiopia could support growth; fully addressing the debt burden could improve debt sustainability and create fiscal space.

### Executive Board assessment and priorities
- Directors agreed with the thrust of the staff appraisal and welcomed the 2023 recovery driven by expansion in port activities, train traffic, construction, and energy production.
- Directors noted considerable external risks, including:
  - Ethiopia's economic trajectory,
  - possible increases in regional migration and refugees,
  - potentially increased disruptions in the Red Sea.
- Directors emphasized the need for concerted efforts to:
  - address fiscal vulnerabilities,
  - enhance governance,
  - boost job creation,
  - implement structural reforms.
- It is expected the next Article IV consultation with Djibouti will be held on the standard 12-month consultation cycle.

### Fiscal policy, debt, and tax policy recommendations
- Directors highlighted the need for a comprehensive long-term strategy to address fiscal vulnerabilities.
- The debt service moratorium with China provides a window of opportunity for Djibouti to engage with creditors transparently on a strategy to fully address the unsustainable debt burden.
- Directors supported increasing the capacity of fiscal institutions to:
  - enhance tax collection,
  - improve policy coherence.
- Recommended fiscal measures include:
  - careful review and rationalization of tax incentives and VAT exemptions,
  - ensuring that revenues from military base leases reflect their real value,
  - better targeting fuel subsidies to free up resources for key social spending.

### State-Owned Enterprises (SOEs) and governance
- Directors welcomed authorities' efforts toward reforming State-Owned Enterprises.
- Emphasized the need for better financial oversight and governance of SOEs.
- Noted that the authorities’ upcoming review and restructuring of the administrative SOEs would be an important first step.
- Stressed the importance of building strong and broad-based support and providing adequate resources for successful implementation.

### Financial sector and monetary policy
- Directors encouraged improvements in banking regulation and oversight to strengthen the financial sector, especially given the ongoing MENAFATF evaluation.
- Agreed that the careful design and introduction of a reserve requirement by the Central Bank of Djibouti (CBD) would be a positive first step to further strengthen the central bank’s liquidity management toolkit.

### Structural reforms and resilience
- Directors urged the authorities to implement a robust set of structural reforms to:
  - enhance private sector job creation,
  - tackle informality,
  - improve education and training,
  - lower telecom and energy costs.
- Bolstering resilience to climate shocks and enhancing transparency of policy making, especially by improving data quality, were also emphasized.

### Key statistics (selected figures from Table 1)
- Real GDP growth:
  - 2020: 1.3
  - 2021: 4.5
  - 2022: 3.9
  - 2023 (Est.): 7.0
  - 2024 (Proj.): 6.5
  - 2025 (Proj.): 6.0
  - 2026 (Proj.): 5.5
- Consumer prices (annual average):
  - 2020: 1.8
  - 2021: 1.2
  - 2022: 5.2
  - 2023 (Est.): 2.0
  - 2024 (Proj.): 2.1
  - 2025 (Proj.): 2.2
- Fixed capital investment (percent of GDP):
  - 2020: 29.7
  - 2021: 30.4
  - 2022: 30.6
  - 2023 (Est.): 30.8
  - 2024 (Proj.): 31.1
  - 2025 (Proj.): 31.5
  - 2026 (Proj.): 32.0
- Gross national savings (percent of GDP):
  - 2020: 41.2
  - 2021: 23.1
  - 2022: 48.0
  - 2023 (Est.): 54.2
  - 2024 (Proj.): 35.9
  - 2025 (Proj.): 35.1
  - 2026 (Proj.): 34.4
- Revenues and grants (percent of GDP):
  - 2020: 22.9
  - 2021: 20.1
  - 2022: 18.6
  - 2023 (Est.): 17.5
  - 2024 (Proj.): 17.4
  - 2025 (Proj.): 17.3
- Tax revenues (percent of GDP):
  - 2020: 11.7
  - 2021: 11.6
  - 2022: 11.2
  - 2023 (Est.): 10.8
  - 2024 (Proj.): 11.8
  - 2025 (Proj.): 12.0
- Expenditure (percent of GDP):
  - 2020: 25.5
  - 2021: 23.2
  - 2022: 20.0
  - 2023 (Est.): 20.2
  - 2024 (Proj.): 20.5
  - 2025 (Proj.): 19.8
- Overall balance (commitment basis, percent of GDP):
  - 2020: -2.5
  - 2021: -3.1
  - 2022: -1.4
  - 2023 (Est.): -2.6
  - 2024 (Proj.): -3.0
  - 2025 (Proj.): -2.2
- Broad money (percent change):
  - 2020: -1.7
  - 2021: 3.2
  - 2022: 5.9
- Net foreign assets (percent change):
  - 2020: -7.7
  - 2021: 0.8
  - 2022: 2.6
  - 2023 (Est.): 2.7
- Credit to non-government (in percent of GDP):
  - 2020: 26.3
  - 2021: 28.6
  - 2022: 28.1
  - 2023 (Est.): 28.2
  - 2024 (Proj.): 28.4
  - 2025 (Proj.): 28.9
  - 2026 (Proj.): 29.3
- Current account balance (in millions):
  - 2020: 366
  - 2021: -224
  - 2022: 656
  - 2023 (Est.): 946
  - 2024 (Proj.): 223
  - 2025 (Proj.): 187
  - 2026 (Proj.): 148
  - 2027 (Proj.): 334
  - 2028 (Proj.): 344
  - 2029 (Proj.): 328
- External public and publicly guaranteed debt (in millions):
  - 2020: 2,356
  - 2021: 2,416
  - 2022: 2,453
  - 2023 (Est.): 2,527
  - 2024 (Proj.): 2,596
  - 2025 (Proj.): 2,636
  - 2026 (Proj.): 2,628
  - 2027 (Proj.): 2,621
  - 2028 (Proj.): 2,491
  - 2029 (Proj.): 2,332
- External public debt (percent of GDP):
  - 2020: 74.0
  - 2021: 71.4
  - 2022: 65.8
  - 2023 (Est.): 62.8
  - 2024 (Proj.): 59.5
  - 2025 (Proj.): 55.9
  - 2026 (Proj.): 51.5
  - 2027 (Proj.): 47.7
  - 2028 (Proj.): 42.0
  - 2029 (Proj.): 36.9
- Gross official reserves (in millions):
  - 2020: 677
  - 2021: 578
  - 2022: 581
  - 2023 (Est.): 573
  - 2024 (Proj.): 617
  - 2025 (Proj.): 664
  - 2026 (Proj.): 713
  - 2027 (Proj.): 769
  - 2028 (Proj.): 826
  - 2029 (Proj.): 890
- Nominal GDP (in millions of Djibouti francs):
  - 2020: 566,068
  - 2021: 601,732
  - 2022: 662,164
  - 2023 (Est.): 714,919
  - 2024 (Proj.): 775,565
  - 2025 (Proj.): 837,952
  - 2026 (Proj.): 906,961
  - 2027 (Proj.): 977,082
  - 2028 (Proj.): 1,053,140
  - 2029 (Proj.): 1,123,567
- Nominal GDP (in millions of US dollars):
  - 2020: 3,185
  - 2021: 3,386
  - 2022: 3,726
  - 2023 (Est.): 4,023
  - 2024 (Proj.): 4,364
  - 2025 (Proj.): 4,715
  - 2026 (Proj.): 5,103
  - 2027 (Proj.): 5,498
  - 2028 (Proj.): 5,926
  - 2029 (Proj.): 6,322
- Population (million):
  - 2020: 0.988
  - 2021: 1.002
  - 2022: 1.016
  - 2023 (Est.): 1.030
  - 2024 (Proj.): 1.043
  - 2025 (Proj.): 1.056
  - 2026 (Proj.): 1.069
  - 2027 (Proj.): 1.081
  - 2028 (Proj.): 1.093
  - 2029 (Proj.): 1.106

*Source: IMF staff estimates and projections; Djibouti authorities.*

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## References

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_Source: https://www.imf.org/en/news/articles/2024/06/04/pr24204-djibouti-imf-exec-board-concludes-2024-art-iv-consult_