The Executive Board of the International Monetary Fund (IMF) completed today the third review of Côte d’Ivoire’s economic performance under the program supported by an Extended Credit Facility arrangement (ECF). The Board’s decision, which was taken on a lapse of time basis,1 enables the immediate disbursement of an amount equivalent to SDR 48.78 million (about US$74.1 million), bringing total disbursements under the arrangement to an amount equivalent to SDR 260.16 million (about US$395.4 million).
The Executive Board approved the three-year ECF arrangement for Côte d’Ivoire on November 4, 2011 for an amount equivalent to SDR 390.24 million (120 percent of the country’s quota in the IMF, see Press Release No. 11/399).
Côte d’Ivoire’s economy recovered from the 2010–11 crisis-related recession more quickly than initially expected, recording a growth rate of 9.8 percent in 2012; average annual inflation declined to 1.3 percent over the year, while the fiscal position improved. The sharp rise in investment-related imports swung the current account into deficit, which was financed in part by higher foreign direct investment (FDI). Côte d’Ivoire no longer has any outstanding arrears to its external creditors.
The macroeconomic program is broadly on track; all but one performance criteria were met at end-December 2012. Progress on the structural reform agenda was uneven; important steps have been taken to reduce subsidies to the energy sector, improve incentives in the cocoa sector, and strengthen the business climate. However, there were delays in preparing the medium-term strategy to control the wage bill and in adopting reforms in some other sectors (in particular, the adoption of a new electricity code, a strategy to settle domestic arrears, and an action plan for restructuring public banks were delayed).
Côte d’Ivoire’s macroeconomic prospects for 2013 are positive, with robust growth being underpinned by a rise in public investment; inflation is expected to remain moderate at about 3 percent. The fiscal position will continue to improve, while higher FDI inflows are projected to finance a moderate widening of the external current account deficit.
The main challenge for Côte d’Ivoire over the medium term is to maintain the growth momentum. The National Development Plan for 2012–15, which replaces the previous Poverty Reduction Strategy Paper (2009–15), articulates a comprehensive agenda that takes into account the new challenges facing Côte d’Ivoire after a decade of socio-political crisis. Its focus on scaling up investment while preserving fiscal and debt sustainability is welcome. Increased participation of the private sector is critical to achieving the objective of higher and sustainable growth. Implementation of envisaged measures to further improve the business climate, regularize domestic arrears, and reform the financial sector will help foster expansion in the private sector.
In order to make the National Development Plan fully effective, the staffs of the Fund and the World Bank recommend that the Ivoirien authorities flesh out sectoral strategies more concretely, integrate them into a medium-term expenditure framework, and link them to targeted outcomes.
The Executive Board takes decisions under its lapse of time procedure when it is agreed by the Board that a proposal can be considered without convening formal discussions.