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Togo: Staff Report for the 2013 Article IV Consultation—Informational Annex

Author(s):
International Monetary Fund. African Dept.
Published Date:
February 2014
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Relations with the Fund

(as of August 31, 2013)

Membership Status: Joined August 1, 1962; Article VIII

General Resources Account:SDR Million% of Quota
Quota73.40100.00
Fund holdings of currency72.9999.32
Reserve Position0.530.72
SDR Department:SDR million% of Quota
Net cumulative allocation70.33100.00
Holdings59.2884.28
Outstanding Purchases and Loans:SDR million% of Quota
ECF Arrangements95.25129.77

Financial Arrangements:

TypeApproval

Date
Expiration

Date
Amount Approved

(SDR Million)
Amount Drawn

(SDR Million)
ECF1Apr 21, 2008Jul 26, 201195.4195.41
ECF1Sep 16, 1994Jun 29, 199865.1654.30
ECF1May 31, 1989May 19, 199346.0838.40

Formerly PRGF.

Formerly PRGF.

Projected Payments to the Fund2

(SDR million; based on existing use of resources and present holdings of SDRs)

Forthcoming
20132014201520162017
Principal1.178.0411.6017.3219.08
Charges/Interest0.000.010.210.17.013
Total1.178.0511.8117.5019.21

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

Implementation of HIPC Initiative:

I. Commitment of HIPC assistance FrameworkFramework
Decision point dataNov 2008
Assistance committed
By all creditors (US$ Million)1282.00
Of which: IMF assistance (US$ million)0.32
(SDR equivalent in millions)0.22
Completion point dateDec 2010
II. Disbursement of IMF assistance (SDR Million)0.22
Assistance disbursed to the member0.08
Interim assistance0.14
Completion point balance0.01
Additional disbursement of interest income2
0.22
Total disbursements

Assistance committed under the original framework is expressed in net present value (NPV) terms at the completion point, and assistance committed under the enhanced framework is expressed in NPV terms at the decision point. Hence these two amounts cannot be added.

Under the enhanced framework, an additional disbursement is made at the completion point corresponding to interest income earned on the amount committed at the decision point but not disbursed during the interim period.

Assistance committed under the original framework is expressed in net present value (NPV) terms at the completion point, and assistance committed under the enhanced framework is expressed in NPV terms at the decision point. Hence these two amounts cannot be added.

Under the enhanced framework, an additional disbursement is made at the completion point corresponding to interest income earned on the amount committed at the decision point but not disbursed during the interim period.

Exchange Arrangement

Togo is a member of the West African Economic and Monetary Union (WAEMU) and has no separate legal tender. The exchange system, common to all WAEMU countries, is free of restrictions on the making of payments and transfers for current international transactions. The union’s common currency, the CFA franc, is pegged to the euro at a rate of CFAF 655.957 = EUR 1, consistent with the official conversions rate of the French franc to the euro and the previous fixed rate of the CFA franc to the French franc of CFAF 100= F 1. On April 28, 2006, the rate of the CFA franc in terms of SDR was CFAF 769.68 = SDR 1.0. Effective January 1, 2007, the exchange arrangement of the WAEMU countries has been reclassified to the category of conventional pegged arrangement from the category of exchange arrangement with no separate legal tender. The new classification is based on the behavior of the common currency, whereas the previous classification was based on the lack of a separate legal tender. The new classification thus only reflects a definitional change, and is not based on a judgment that there has been a substantive change in the exchange regime or other policies of the currency union or its members.

Safeguards Assessments

The Central Bank of West African States (BCEAO) is a common central bank of the countries of the West African Economic and Monetary Union (WAMU). The 2013 assessment of the BCEAO is substanstially complete. The assessment found that the bank continues to have a strong control environment and has, with the implementation of the 2010 Institutional Reform of the WAMU, enhanced its governance framework. Specifically, an audit committee was established to oversee the audit and financial reporting processes, transparency has increased with more timely publication of the audited financial statements, and the BCEAO is committed to IFRS implementation by end-2014. The assessment also identified some limitations in the external audit process and recommended that steps be taken to ensure the adequacy of the mechanism through selection of a second experienced audit firm to conduct joint audits.

Joint World Bank-Imf Work Program, 2013–14

The IMF Togo team led by Mr. Mlachila (mission chief) held a discussion with the World Bank Togo team led by Mr. Hoogeveen (mission chief) on June 20th, 2013, to identify macro-critical structural reforms and coordinate the two teams’ work for the period August 2013-December 2016. Continuous collaboration is taking place, including coordination of timing of missions and conducting joint studies.

The teams agreed that Togo’s main macroeconomic challenges are to raise the level of economic growth and making it more inclusive. In this regard, there would be need to accelerate structural reforms, particularly resetting fiscal policy to ensure fiscal sustainability, enhance public financial management, and strengthen financial sector stability and promote financial development, including through privatization of government-owned banks. Reforms in other key areas such as energy, telecommunications, business environment and phosphates are needed to reduce bottlenecks and raise potential growth. At the same time, measures to render growth more inclusive, such as targeted transfers, should also be considered a priority. Areas of close collaboration between the Fund and the Bank include the financial sector, debt policy, and poverty analytics and policies. Details on division of labor in other areas are presented below.

TitleProductsProvisional Timing of missionsExpected Delivery Date
A. Mutual information on relevant work programs
World Bank work program in the next 12 months
Lending/ Grants:
Community Development ProjectOngoing
Education for AllOngoing
Emergency Infrastructure Rehabilitation & Energy ProjectOngoing
Financial Sector and Governance ProjectOngoing
Private Sector Development ProjectOngoing
Agriculture Sector ProjectOngoing
West Africa Productivity ProgramOngoing
Emergency Urban Rehabilitation Additional a FinancingOngoing
Integrated Disaster and Land Management ProjectOngoing
Infrastructure Additional FinancingOngoing
Community Development /Youth EmploymentOngoing
WARCIP Broadband connectivityOngoing
DPO VI—Economic Governance and Growth CreditNovember 2013
Maternal and Child Health operationApril 2014
DPO VII—Economic Governance and Growth CreditMay 2014
Economic and Sector Work:

FY 2014 Policy notes
May 2014
Public Expenditure ReviewJune 2014
Technical assistance/other analytical:
Use of Country SystemsDecember 2013
ICT Strategy DevelopmentJune 2015
Mineral SectorFebruary 2014
Post- basic EducationApril 2014
StatisticalNovember 2013
Strengthening the capacity of the accountancy professionDecember 2013
Others: Country Partnership StrategyJuly 2014
IMF work program in the next 12 monthsLending:
Finalization of discussion on potential new ECF arrangementFebruary 2014April 2014
First review under potential new ECF arrangementSeptember 2014November 2014
Technical assistance:
Public Financial Management (Accounting and Fiscal Reporting) (FAD)September 2013September 2014
Public Financial Management (Reform strategy and coordination) (FAD)September 2013March 2014
Liability Management (AFRITAC West)October 2013October 2013
Tax Administration (AFRITAC West)October 2013October 2013
Debt Sustainability Analysis National Workshop (AFRITAC West)October 2013October 2013
Cash Management (FAD)October 2013November 2013
Public Financial Management (AFRITAC West)October 2013April 2014
Organic Law Implementation Strategy (FAD)November 2013November 2013
Procurement plan (FAD)November 2013November 2013
Ministry of Finance Organization (FAD)November 2013November 2013
Customs Administration (AFRITAC West)November 2013December 2013
Diagnostic Revenue AdministrationDecember 2013December 2013
Accounting Closure (FAD)February 2014February 2014
B. Requests for work program inputs
Fund requests to BankTechnical support and collaboration on expenditure policy on social safety nets due to the significant fiscal impact of measures to mitigate the impact of increases in fuel prices on the poor.
Bank request to FundTechnical support and collaboration in the areas of public finance management and the banking sector.
C. Agreement on joint products and missions
Joint Bank-Fund products in the next 12 monthsJoint LIC Debt Sustainability AnalysisNovember 2013
Joint Staffs Advisory Note on PRSPJanuary 2014

Statistical Issues

1. Data provision is broadly adequate for surveillance, but weaknesses in the quality and timeliness of data hamper staff’s analysis. National accounts and balance of payments statistics are compiled based on very limited information, with only few surveys and scarce data on primary agriculture and private sector services. Moreover, government finance statistics are derived from a weak accounting and reporting system, and monetary data are reported by the BCEAO with a two-month lag.

2. The country has participated in the General Data Dissemination System (GDDS) since November 2001. Metadata on the national statistical system, including plans for improvement posted to the Fund’s Dissemination Standard Bulletin Board, were last updated in December 2004.

National accounts and consumer price index (CPI)

3. Like other West African Economic and Monetary Union (WAEMU) member states, Togo embarked in late 2002 on implementing the System of National Accounts 1993 (1993 SNA), using the ERETES software. The national accounts for the new base year (2000) were completed in 2005, but in 2006 due to a number of difficulties such as lack of staff, material and financial resources, the program was suspended and the NA for 2001 was not finalized. Only in March 2009 did the implementation process resume and the Direction Générale de la Statistique et de la Comptabilité Nationale (DGSCN) started working on the compilation of data for 2007 (the most recent year for which enough data was available). Since then, several AFRITAC West and AFRISTAT missions have assisted in the completion of data collection, in the preparation of source data, in ensuring consistency across primary data sources, and in preparing preliminary accounts. Estimates of production in the informal sector were also produced. The efforts related to end-2010 population census exercise, which required the full attention of staff in the DGSCN, have further delayed the completion of the 2007 National Accounts. Furthermore, a May 2011 AFRITAC West TA report pointed to serious anomalies in the provisional 2007 national accounts (concerning value added in the informal sector, low fixed capital formation, high consumption to GDP ratio, among others), which were corrected during the mission. Final National Accounts numbers for 2006 and 2007 have been validated by the Comité PIB. Despite the delays the authorities remain committed to achieving the objective of finalizing the national accounts referring to the years up to 2010 by 2014, reporting the previous target of June 2012.

4. The CPI basket was revised in 2010. The WAEMU commission, supported by AFRISTAT and the BCEAO, launched a revision of the harmonized CPI basket in the region in 2008. The reform included expanding CPI surveys, and updating the weights of various sub-components to reflect consumption habits. The DGSCN is constructing a consumer price index with national coverage. The collection of the first observations is planned for January 2014, and the index will be published after January 2015 when the first 12 month variation becomes available.

External sector statistics

5. Balance of payments statistics and international investment position data are compiled based on bank reports, a survey of enterprises, and customs data. Statistics are compiled following the principles of the 5th balance of payment manual, with a six-month delay and are revised twice a year. Export figures, net of transit trade, are appropriately reported since the latest STA technical assistance mission in balance of payments statistics in 2008. The Central bank continues its efforts for a better covering of informal trade notably with the subregional unit for the reconciliation of intra-WAMU trade.

Government accounts and public debt data

6. The Government finance statistics accounting system is undergoing improvements. The new WAEMU budget nomenclature now permits the economic and ministerial classification of expenditure, with functional classification under development. The monthly TOFE (Table of Central Government Financial Operations) is based on a mixture of administrative and accounting data and is sent to AFR with a two-month lag. The debt database weakened since the HIPC completion point at end 2010. Government recognition of old domestic arrears and their liabilities has further complicated the compilation of a reliable and consistent database. Only budgetary central government data are reported for publication in the Government Finances Statistics Yearbook (GFSY), government finance high frequency data are not reported for publication in the IFS. In the context of the 2013 Article IV consultation, with assistance from STA, the authorities established a bridge table allowing transposition of TOFE data, which is based on the 1986 Government Finance Statistics Manual (GFS86), to the 2001 Government Finance Statistics Manual (GFSM01), as well as a table on Government Financial Operations for 2009-16 based on GFSM01 principles (Appendix V).

Monetary statistics

7. Monthly data for Togo, along with data for other members of the West African Monetary Union are regularly disseminated by the Central Bank of the West African Monetary Union (BCEAO) with a lag of about two months. Data on lending and borrowing rates, charged by domestic banks, are now compiled and available monthly.

Togo: Table of Common Indicators Required for Surveillance(as of October 2013)
Economic VariableDate of latest observationDate receivedFrequency of Data2Frequency of Reporting2Frequency of publication2
Exchange RatesSeptember 2013October 2013MMPublished
International Reserve Assets and Reserve Liabilities of the Monetary AuthoritiesAugust 2013October 2013MMPublished
Reserve/Base MoneyAugust 2013October 2013MMPublished
Broad MoneyAugust 2013October 2013MMPublished
Central Bank Balance SheetAugust 2013October 2013MMPublished
Consolidated Balance Sheet of the Banking SystemAugust 2013October 2013MMPublished
Interest RatesAugust 2013September 2013MMPublished
Consumer Price IndexAugust 2013September 2013MMPublished
Revenue, Expenditure, Balance and Composition of Financing - General Governmentn.a.n.a.n.a.n.a.Not published
Revenue, Expenditure, Balance and Composition of Financing-Central GovernmentJuly 2013September 2013MMPublished
Stocks of Central Government and Central Government-Guaranteed DebtJune 2013August 2013MMNot published
External Current Account BalanceDecember 2012August 2013AOMNot published
Exports and Imports of Goods and ServicesDecember 2012August 2013MOMNot published
GDP/GNPDecember 2012August 2013AOMNot published
Gross External DebtDecember 2012August 2013AOMNot published
International Investment Position320112012AOMNot published

The general government consists of the central government (budgetary funds, extra-budgetary funds, semi-autonomous government agencies and institutions, and social security funds) and state and local governments.

Monthly (M), Quarterly (Q), Semi Annually (SA), Annually (A), on mission (OM).

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

The general government consists of the central government (budgetary funds, extra-budgetary funds, semi-autonomous government agencies and institutions, and social security funds) and state and local governments.

Monthly (M), Quarterly (Q), Semi Annually (SA), Annually (A), on mission (OM).

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

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