Middle East and Central Asia > Djibouti

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Dinar Prihardini and Ms. Aleksandra Zdzienicka
Small Developing States (SDS) face substantial challenges in achieving sustainable development. Many of these challenges relate to the small size and limited diversification of their economies. SDS are also among the most vulnerable countries to the impact of climate change and natural disasters. Meeting SDS sustainable development goals goes hand-in-hand with building their climate resilience. But the additional costs to meet development and resilience objectives are substantial and difficult to finance. This work adapts the IMF SDG Costing methodology to capture the unique characteristics and challenges of climate-vulnerable SDS. It also zooms into financing options, estimating domestic tax potential and discussing the possibility of accessing ‘climate funds.’
International Monetary Fund. Statistics Dept.
An external sector statistics (ESS) mission visited Djibouti from January 26–30, 2020. This was the fourth mission under the JSA/AFR project to improve ESS in 17 Francophone African countries. The mission found that significant data on direct investment (DI) have not been incorporated in either the balance of payments or international investment position (IIP) statistics since 2017.
International Monetary Fund. Middle East and Central Asia Dept.
This paper highlights Djibouti’s Requests for Disbursement Under the Rapid Credit Facility and Debt Relief Under the Catastrophe Containment and Relief Trust. The coronavirus disease 2019 pandemic is having a severe impact on Djibouti, creating urgent balance of payments and fiscal financing needs. The authorities acted swiftly to contain and mitigate the spread and impact of the virus. Their prevention and containment measures and decisions to scale-up health and other emergency spending to protect households and firms hit by the crisis will help limit economic and social consequences. IMF support is expected to provide additional resources for the essential health and other emergency spending, including social safety nets. It will also help catalyze additional donor support. Once the crisis abates, temporary measures should be unwound, with policies refocusing on promoting a strong and inclusive recovery and preserving medium-term debt sustainability. It will be critical to address and prevent the recurrence of external arrears, ramp up operations of key projects, and reduce public sector borrowing.
International Monetary Fund. Middle East and Central Asia Dept.
This 2019 Article IV Consultation with Djibouti discusses that large-scale infrastructure investments and a rapid expansion of trade and logistics activities have fueled strong growth in recent years. The government has in recent years implemented large-scale investments to develop transport and logistics infrastructures. Combined with business climate reforms, this development strategy has fueled strong growth and positioned Djibouti well to become a regional trade and logistics hub. The IMF staff’s baseline projections assume a significant reduction in debt financed public investment. Growth is nonetheless projected to remain strong, driven by the rapid expansion in Ethiopia’s trade and a pickup in private investment. Fostering higher and inclusive growth and bolstering the external position require addressing impediments to private sector investment and improving external competitiveness. Critical reforms include further enhancing the business environment, promoting competition, and improving the governance and efficiency of public enterprises to lower factor costs, particularly in the telecommunications and electricity sectors.
International Monetary Fund. Statistics Dept.
This Technical Assistance Report on Djibouti provides details of IMF mission to aid on the financial soundness indicators (FSI). The mission achieved the said objectives and assisted the Banking Supervision Unit (BSU) officials in the preparation of the FSI production files and the development of the metadata files. The mission held constructive discussions with the Central Bank of Djibouti staff on various other aspects of the production of statistics aimed at improving the quality of the data produced. These discussions led to the preparation of an action plan identifying the main improvements to be pursued or undertaken, with the following priority recommendations. The report also highlights that the microfinance sector is growing in Djibouti; however, access to financing remains very limited. A review of the Call Report forms revealed a number of inconsistencies. The report recommends that the BSU staff participate regularly in the FSI courses organized by the IMF.
International Monetary Fund. Statistics Dept.
In response to a request of the Central Bank of Djibouti (CBD), a mission from the International Monetary Fund’s (IMF’s) Statistics Department (STA) visited Djibouti during March 4-11, 2018, to provide technical assistance (TA) on the financial soundness indicators (FSIs). The main objectives of the mission were to: (1) ensure that the source data were adequate for the compilation of the FSIs; (2) assist the CBD in the compilation of the FSIs on the basis of the international standards set out in the IMF’s Financial Soundness Indicators Compilation Guide (FSI Guide); (3) guide the staff of the CBD in the preparation of the FSI metadata in line with the IMF metadata forms; and (4) agree with the Banking Supervision Unit (BSU) on an action plan for the production of the FSIs and their regular reporting to STA.
Mr. Alexei P Kireyev
This paper reviews the significant macro-fiscal challenges posed by climate change in Djibouti and the costs of mitigation and adaptation policies. The paper concludes that Djibouti is susceptible to climate change and related costs are potentially large. Investing now in adaptation and mitigation has large benefits in terms of reducing the related costs in the future. Reforms to generate the fiscal space are therefore needed and investment for mitigation and adaptation to climate change should be built into the long-term fiscal projections. Finally, concerted international efforts and stepping up regional cooperation could help moderate climate-related macro-fiscal risks.
International Monetary Fund. Middle East and Central Asia Dept.
This paper presents country experiences with reforms to strengthen regulatory oversight of the Islamic banking sector. Based on the selected country experiences, a number of important lessons and policy options can be drawn that have implications for the stable and sound development of Islamic banking. An enabling regulatory and institutional framework and a level playing field for conventional and Islamic banks is critical for the sound and stable growth of the Islamic banking industry. The country experiences also underscore the importance of providing an enabling framework while letting market forces determine the size of the industry.
Mr. Alexei P Kireyev and Jingyang Chen
The paper suggests an operationally usable framework for the evaluation of growth inclusiveness—the inclusive growth framework (IGF). Based on the data on growth, poverty, and inequality, the framework allows for the quantitative assessment of growth inclusiveness. The assessment relies on the decomposition of the change in poverty into growth, distribution, and decile effects, which can be calculated using the Distributive Analysis Stata Package (DASP). Availability of at least two household surveys is the main precondition for the use of the IGF. The application of the IGF is illustrated with two country cases of Senegal and Djibouti.
Mr. Alexei P Kireyev
The paper examines the poverty-reducing and distributional characteristics of Djibouti’s economic growth, and discusses policies that might help make growth more inclusive. It covers the period between 2002 and 2013, for which comparable household surveys are available. The main findings are that while in the past decade the overall level of poverty in Djibouti declined, there have been no clear signs of improvements in either equality or growth inclusiveness. Growth has not been inclusive and benefitted mainly those in the upper part of the income distribution. These conclusions should be treated as indicative. Progress in poverty reduction and inclusiveness would require not only sustained high growth but also the creation of opportunities in sectors with high earning potential for the poor. Better targeted social policies and more attention to the regional distribution of spending would also help reduce poverty and improve inclusiveness.