Press Release No. 08/144

Press Release No. 08/144

An International Monetary Fund (IMF) mission led by Arend Kouwenaar, mission chief for Côte d'Ivoire, visited Abidjan from June 5-19 2008, to discuss with the Ivoirien authorities the implementation of their economic program for 2008 that is supported by a SDR 40.6 million (about US$66 million or FCFA 27 billion) arrangement approved in April 2008 under the IMF's Emergency Post Conflict Assistance (EPCA). The mission also initiated discussions on a new program for the period 2009-11 that could be supported by the IMF's Poverty Reduction and Growth Facility (PRGF). Staff from the World Bank and the African Development Bank participated in the discussions. The mission met with President Gbagbo, Prime Minster Soro, Minister of Finance Diby, and other senior officials. It also met with representatives of the private sector and the international community.

The mission issued the following statement in Abidjan today:

"The economy is continuing its recovery, helped by a favorable international environment for Côte d'Ivoire, including high world market prices for oil and cocoa. Real GDP growth is projected to double to 3 percent in 2008. Rising international food prices, however, have pushed up somewhat domestic inflation.

"Regarding the execution of the budget in the first months of 2008, expenditures were kept within the budget envelopes and revenues were on target. However, the mission expressed concern about emerging overruns on gas subsidies for the electricity sector and the risk of revenue shortfalls, in part due to delays in the contribution to the budget by the national petroleum company, as well as the risk of renewed accumulation of arrears to domestic suppliers.

"The mission welcomed the authorities' determination to take urgent remedial actions so as to safeguard the budgetary targets for 2008, including for social and crisis-exit program spending. It stressed the need to mobilize the windfall from higher oil prices and speed up the redeployment of tax administrations in the Center-North-West zone of the country. It also recommended that the authorities limit budgetary subsidies to the electricity sector and safeguard revenue from petroleum product taxation. This should also allow adequate resources to cushion the impact of the increase in food prices on the poorest segments of the population.

"The mission welcomed important progress in improving fiscal transparency and governance. Recent steps included the quarterly publication of budget execution statements, reports on quasi-fiscal cocoa levies and their use, and reports on financial flows in the energy sector. The mission also welcomed the Rural Investment Fund's (Fonds d'Investissement en Milieu Rural) use of cocoa levies for enhancing rural social and other basic infrastructure as well as Côte d'Ivoire's progress on implementing the Extractive Industries Transparency Initiative (EITI) procedures. However, the mission noted delays in initiating the independent audits of key public enterprises and in preparing a new institutional and regulatory framework for the coffee/cocoa sector.

"The mission stressed to the authorities that strong implementation of the economic program under EPCA in 2008 would be essential to underpin the economic recovery and ensure continued donor support for crisis-exit programs. It will also help lay the basis for a comprehensive economic program for 2009-11 that could be supported by the IMF's PRGF. The mission encouraged the authorities to complete expeditiously their Poverty Reduction and Strategy Paper, in broad consultation with the population. A solid implementation of the 2008 program could also pave the way to the decision point on debt relief under the HIPC Initiative at the time of approval of a PRGF arrangement. Discussions on such an arrangement are expected to continue in the coming months."