Recent Economic Developments

This paper reviews economic developments in Togo during 1991–96. From 1991 to 1993, real GDP experienced a cumulative decline of 22 percent. The tertiary sector was particularly hard hit, falling by 38 percent, as the political turmoil provoked an exodus of traditional regional services activity, previously based in Togo, to neighboring countries; thus commerce and tourism, and transport and communications value added fell by a cumulative 47.7 percent and 50.0 percent, respectively. The secondary sector contracted by some 35.0 percent over the period, as phosphate production declined in 1992 and 1993.


This paper reviews economic developments in Togo during 1991–96. From 1991 to 1993, real GDP experienced a cumulative decline of 22 percent. The tertiary sector was particularly hard hit, falling by 38 percent, as the political turmoil provoked an exodus of traditional regional services activity, previously based in Togo, to neighboring countries; thus commerce and tourism, and transport and communications value added fell by a cumulative 47.7 percent and 50.0 percent, respectively. The secondary sector contracted by some 35.0 percent over the period, as phosphate production declined in 1992 and 1993.


A. Introduction

Togo has a small, open economy that is heavily dependent on agriculture (cotton, coffee, cocoa, and food crops), mining (phosphate), and regional trade; its population was estimated at 4.0 million in 1995. Agricultural production is mainly provided by small-scale productive units; this sector accounted for about one-third of gross domestic product (GDP) and over one-half of domestic exports, while supporting approximately 80 percent of the population in 1995. The secondary sector contributed 23 percent of GDP, as manufacturing industries accounted for some 10 percent, and construction and energy combined about 8½ percent, while phosphate mining, which generated about one third of domestic export earnings, accounted for some 4½ percent of GDP. The tertiary sector was responsible for 45 percent of GDP, of which half, or about 22 percent of GDP, was in commerce and tourism. Lomé, the capital city, has a natural-deep water harbor that can handle some 2 million tons of merchandise a year. The country also is endowed with a relatively sophisticated banking system, and a dynamic trading/entrepreneurial class, key factors behind Togo’s well-developed services sector, which also serves neighboring countries.

Economic growth in Togo is affected to a large extent by the evolution of world commodity prices and economic developments in neighboring countries. After experiencing a rapid increase in real per capita income during most of the 1970s, when commodity prices were favorable and the government undertook a major program to expand public investment and the role of public enterprises, per capita GDP stagnated following the decline in commodity prices at the end of the 1970s; Togo’s economic and financial difficulties were exacerbated by an increase in the burden of its external debt-service obligations. In response, the authorities undertook a sustained adjustment effort during the 1980s that led to a significant improvement in Togo’s financial situation by the end of the decade, although economic growth, which averaged only 2½ percent over the 1986-90 period, remained relatively modest.

B. Overview of Developments, 1991-95

The progress of the previous decade was reversed beginning in 1991, signaling the advent of a three-year decline (Appendix I, Tables 1 and 2). Economic and financial conditions deteriorated as a result of the widespread disturbances caused by social and political unrest that had begun to emerge in 1990 when pressures to establish a multiparty political system began to build up. The increasing domestic tensions culminated in a general strike that brought the formal economy to a virtual standstill from November 1992 until the middle of 1993. From 1991 to 1993, real GDP experienced a cumulative decline of 22 percent. The tertiary sector was particularly hard hit, falling by 38 percent, as the political turmoil provoked an exodus of traditional regional services activity, previously based in Togo, to neighboring countries; thus commerce and tourism, and transport and communications value added fell by a cumulative 47.7 percent and 50.0 percent, respectively. The secondary sector contracted by some 35.0 percent over the period, as phosphate production declined in 1992 and 1993 owing to the combined impact of the loss of many export markets beginning in 1992 and the effects of the strike in 1993, while the manufacturing sector, which had been able to sustain relatively modest growth in 1991 and 1992, plunged by some 38.2 percent in 1993, also mainly reflecting the adverse impact of the social strife. In the agricultural sector meanwhile, poor weather depressed agricultural output by 1.1 percent in 1991; there was a limited (1.2 percent) recovery in 1992, which accelerated to 6.0 percent in 1993; the latter was the result of favorable weather and an increase in the area under cultivation brought about by a mass exodus of urban dwellers to rural areas to escape from the political and social unrest.

Togo’s economic difficulties were exacerbated by a terms of trade deterioration of some 20 percent between 1990 and 1994, mainly reflecting the decline in the prices of cotton, cocoa and phosphate. The problem was particularly severe in 1992 and 1993, when the export price index dropped by 9.3 percent and 9.7 percent, respectively.

With a view to reversing the sharp downturn in economic activity, and to counter the continuing adverse evolution in the terms of trade, Togo adopted in mid-1994 a strategy centered on the zone-wide correction of the parity of the CFA franc and the acceleration of structural reforms, with the aim of restoring economic growth and achieving financial viability over the medium term. The improvement in the political and security conditions, together with the impetus from the devaluation, contributed to a robust economic recovery. Real GDP grew by 15 percent in 1994 and 8 percent in 1995, driven principally by a strong expansion of mining, and commerce and transportation. After an initial surge following the devaluation, inflation was brought under control; the increase in the consumer price index (CPI), on an end-of-period basis, declined from 48.5 percent in 1994 to 6.4 percent in 1995.

C. Agricultural Production1

The primary sector is the second largest in Togo, contributing about 36 percent of GDP on average over the 1991-95 period. The agricultural sector is composed almost entirely of small-scale land holders who produce both cash and food crops, often on the same plot. Food crops (mostly cassava, sweet potatoes, corn, millet, and sorghum) and cash crops (mostly cotton, cocoa, and coffee) account respectively for about 62 percent and 10 percent of value added in the primary sector. Forestry, fishing, and livestock account for the remaining 28 percent of the sector (Appendix I, Table 1).

Although the cash crops’ contribution to GDP is relatively minor, this subsector plays a significant role in the economy, first, because cash crops account for more than 40 percent of domestic exports on average, and second, because the rural population depends on these crops to earn the income necessary for the purchase of both domestic consumer goods and the inputs needed in food crop production. The official agriculture trading agency (OPAT) had a monopoly on the internal and external marketing of the cotton, cocoa, and coffee until early 1996.

In order to ensure a strong supply response by the export crop sector to the 1994 devaluation, the government liberalized the internal and external marketing of cotton, cocoa and coffee, and allowed competition in the processing of cotton. In February 1995, the state-owned enterprise, SOTOCO (Société Togolaise de Coton), lost its monopoly on ginning when a private company, SICOT (Société Industrielle de Coton),2 was given the right to process cotton. SOTOCO started to export the cotton fiber it processes, in competition with SICOT3 in early 1996. In order to improve further the efficiency of the cotton subsector and increase rural income, the authorities have been exploring ways to encourage greater involvement of the private sector, including farmers’ organizations. To reinforce incentives to producers, they have decided to distribute 50 percent of SOTOCO’s after-tax profits to cotton farmers.


Since 1991, cotton has accounted for 60-70 percent of total cash crop production, and ginned cotton has represented about one-third of the value of domestic exports. Cotton is produced mostly in the central plateau and in the southern part of Togo by an estimated 185,000 small land holders, each cultivating on average about one-half hectare. The production costs for cotton compare favorably with world averages, although they are relatively high by regional standards. Producer prices, which are fixed by the government through SOTOCO and did not reflect trends in world market prices, were increased from CFAF 90 in 1992/93 to CFAF 145 in 1994/95 (Appendix I, Table 6), and this contributed to an expansion in output to a record level of 131,700 tons in 1994/95 (Appendix I, Table 7). The growth in production since the mid-1980s has been rather steady except for the 1993/94 crop year, when the harvest declined because of strike-related delays in payments to producers for the 1992/93 crop, which apparently weakened farmers’ confidence in the efficiency of the marketing system. Despite relatively difficult natural conditions, the yield in 1994/95, at 1.4 ton/ha, compared favorably with that of neighboring countries. However, the 1995/96 crop was much lower than initially expected. Despite a 4 percent increase in the area under cultivation and an increase in the producer price of 17 percent, production fell by 22 percent to 102,000 tons, and the yield fell to 1.1 ton/ha, while the output in neighboring countries continued to grow. Unfavorable rains certainly contributed to the decline in yield.4 Moreover, the poor weather reportedly caused many farmers to divert fertilizers away from cotton to other crops. The 1996/97 production started well; the area cultivated has increased by some 12 percent relative to 1995/96 and, with adequate rains, yields are expected to return to their normal level.

Coffee and cocoa

Officially recorded coffee and cocoa production has fluctuated widely since 1991/92, reflecting in part changes in the weather (Appendix I, Tables 6 and 7). Coffee and cocoa production was particularly low in 1992/93, a period during which the producer prices were at their lowest. Coffee production increased by 90 percent in 1993/94 when the producer price rose by 66 percent. In 1994/95, following the devaluation, the nominal producer price for coffee was raised by almost 180 percent, and production increased by another 20 percent. Cocoa production increased modestly in response to a 125 percent rise in producer prices in 1993/94, but picked up in 1994/95, as prices were raised by a further 10 percent, when it reached 6,400 tons, twice the level of 1992/93. The 1995/96 crops, particularly that of coffee, were adversely affected by unfavorable rainfalls.

Food crops, livestock, forestry, and fishing

Cassava, sweet potatoes, and corn together account for more than half of total value added in the food crops sector (Appendix I, Table 11). Food crop cultivation is usually integrated with that of cotton. This is done on a rotating basis for cassava, sweet potatoes, and cereals in the center and northern regions, and as intercropping with corn in the south. In 1991 and 1992, nominal value added in food crops accounted for about 20 percent of GDP (Appendix I, Table 2). In 1993, the nominal value added in the food crop sector increased by about 4 percent, but as total nominal GDP declined by 21 percent, the share of food crops in GDP soared to 31 percent. There was a large migration of civil servants and other urban dwellers to rural areas during the strike, which also contributed to the increase in production.

In 1994, the share of food crops fell to 18 percent of GDP, reflecting an 11.7 percent drop in nominal output and the very strong (50 percent) recovery of nominal GDP. The normalization of the political situation, and high prices for the main cash crops, encouraged farmers to shift production away from food crops, and constituted the major factors in the resulting changes in the relative shares of the various subsectors in the overall primary sector. In 1995, the share of food crops in GDP increased to 19 percent, reflecting some reallocation of land to food crops in a year when conditions for cash crops were particularly difficult. Food crops, which in constant prices accounted for about 20 percent of real GDP on average in 1991-92, surged to 31 percent in 1993, and then returned to an average of about 20½ percent of real GDP in 1994-95.

The contribution of the livestock, forestry, and fishing subsectors, which together accounted for some 9 percent of GDP in 1995, has been falling slightly since 1992 (Appendix I, Table 2). Estimates for livestock are made on the basis of the number of animals vaccinated each year; sheep and goats account for the largest share of the herds (Appendix I, Table 12).

D. Industrial Production


Political instability over the 1991-93 period, combined with the lingering effects of an overvalued exchange rate constrained output in the industrial sector, causing its share in GDP to fall from 25 percent in 1991 to 20 percent in 1993 (Appendix I, Table 14). The contribution from the manufacturing subsector shrank from 11 percent of GDP to less than 9 percent of GDP, while that of the construction subsector fell from 3 percent of GDP to less than 2 percent of GDP over the same period. In 1994, with public order restored and following the devaluation of the CFA franc, output in the sector grew by 26 percent, as many manufacturing firms started to operate again at near-normal capacity, and construction activities picked up strongly. Growth in 1995 remained strong, led by construction-related activities and mining.


Phosphate deposits were discovered in Togo in 1952. The ore formation that is currently being exploited is about 36 km long, 2.5 km wide, and 5 m thick. Togo’s phosphate production costs are reportedly among the lowest in the world as a result of the geological characteristics of the ore and the location close to the sea. The public enterprise that is responsible for the mining and export of phosphate is OTP (Office Togolais des Phosphates).5 Production, which had reached a peak of 3.4 million tons in 1989, was particularly hard hit by the turmoil of the 1991-93 period. By 1993, phosphate production dropped to 1.8 million tons (Appendix I, Table 14). In 1994 and 1995, production recovered strongly but, at 2.6 million tons, remained below the 1991 level. Export prices in CFA francs in 1994 and 1995 were, respectively, 75 percent and 50 percent higher than in 1993 as a result of the devaluation. Consequently, OTP, which had incurred losses in 1992 and 1993, was able to generate net profits of CFAF 3.8 billion in 1994, and CFAF 1.9 billion in 1995. In order to compensate for a weakening world demand for fertilizers and growing competition from South Africa, OTP is actively trying to penetrate new markets, in particular in the United States and Europe, while expanding exports to its traditional customers in Canada and the Philippines. Production prospects remain good in the near future; however, major capital investments will need to be made in order to keep extraction costs competitive over the medium term.


The manufacturing sector benefited from real growth rates of 24 percent and 10 percent in 1994 and 1995, respectively, and accounted for some 10 percent of GDP in 1995 (Appendix I, Tables 2 and 15). The expansion of output was particularly strong for construction-related activity. Cement, produced by the public enterprise, CIMTOGO, and metallic goods, produced by another state enterprise, SOTOTOLES, together accounted for some 13 percent of value added in the sector. Food processing (beer, edible oils, and flour), textiles, and wood industries, with a combined contribution of 74 percent to total value added in the sector, also responded favorably to the stimulus provided by the devaluation, which induced a switch in consumption preferences from imported to locally produced goods. Production is still mainly undertaken by “informal” enterprises. Among the firms in the formal sector, the most important contributors include those engaged in food processing (beer, oil, and flour) and textile production, primarily for the local market, and a small but growing number of textile enterprises located in the duty-free export processing zone.

The duty-free export processing zone program was launched in 1990. The Free Zone Authority (SAZOF) was given the responsibility, through a “one-stop-shop,” of assisting individuals with the installation process, provided they could guarantee the export of at least 80 percent of their production, and could give priority to the creation of permanent jobs for nationals. The number of firms active in the tax free zone increased from 17 in 1993 to 31 in 1996. The zone’s contribution to industrial value added and employment is still relatively low,6 but is expected to become more significant within a few years.

Construction and energy

The construction sector responded particularly well to the improved political and economic environment in 1994 and 1995, and this is reflected in the growth in domestic cement and metal production and in the importation of construction material. There was a housing boom, particularly in the capital city, and new public investments also contributed to the recovery of the sector.

The electricity public utility, CEET, is responsible for the generation, transmission, and distribution of electricity in Togo. It purchases a major proportion of the electricity consumed in Togo from the regional distributor for Togo and Benin, the CEB. Electricity consumption rose steadily through 1992, when domestic consumption peaked at 282 million kilowatt-hours. (Appendix I, Table 16). In 1993, as a result of the disruptions caused by the social turmoil, total consumption fell by 14.9 percent, with the sharpest decline for medium/high voltage consumers (-18 percent). Domestic consumption fell by a further 3.6 percent in 1994. The growth in electricity consumption since 1994 mainly reflects a return to normal levels of consumption. In 1996, CEET’s total sales are expected to recover to their 1991-92 level, and the CEET is now facing a need to expand its capacity.

Both the domestic consumption of petroleum products and their import for reexport were severely depressed by the social tension in 1991-93; in 1993 domestic consumption had declined to 70,700 cubic meters from an average of 139,392 cubic meters during 1986-90, while transit imports, which had exceeded 105,000 cubic meters on average in the 1986-90 period, had practically ceased (Appendix I, Table 17). According to the petroleum trading companies, imports of petroleum products increased by some 230 percent from 1993 to 1995, to about their level in 1986-90.

Wood remains an important source of energy in the traditional sector. In order to protect the environment and provide adequately for future needs, the ODERF (Office de Développement et d’Exploitation des Ressources Forestiéres) has recently completed its current reforestation projects.

E. Commerce, tourism, transport, and communications

Togo covers a surface area of 56,600 square kilometers, and possesses a 50-km coastline. The country is endowed with a natural deep-water harbor with port facilities operated by the Port Autonome de Lomé. The port, which can handle some 2 million tons of merchandise a year, caters to trade and transit needs of landlocked neighboring countries, many of which own and operate storage facilities within the port’s free zone.

Commerce and transportation contributed 21 percent of nominal GDP in 1991, but their share dropped to 15 percent in 1993. The service sector in particular was hard hit by the sociopolitical turmoil that culminated in the strike that shut down formal activity for more than six months starting in November 1992. By 1995, the sector had fully recovered, and thus contributed 30 percent of nominal GDP. The volume of imports grew by 14 percent in 1994 and by 60 percent in 1995 (Appendix I, Table 18),7 and transit trade may have grown even faster.8 Export volumes also grew by 30 percent in 1994 and by 16 percent in 1995, reflecting the general recovery in economic activity.

F. Supply and use of resources

Over the 1991-93 period, the supply of resources available to the economy shrank by some 29 percent, as nominal GDP decreased by 24 percent and imports of goods and nonfactor services fell by 40 percent. In terms of the use of resources, exports of goods and nonfactor services fell by the same order of magnitude in nominal terms as imports, declining by some 44 percent between 1991 and 1993, and thus the resource gap remained essentially unchanged at about 8 percent of GDP (see Appendix I, Table 3). While gross domestic investment dropped by 77 percent in normal terms, falling from 17 percent of GDP in 1991 to about 5 percent of GDP in 1993, consumption was reduced by only some 14.4 percent in nominal terms over the period, and thus the consumption rate increased from 91 percent of GDP in 1991 to about 103 percent of GDP in 1993, with both private and government consumption rising sharply as a share of GDP; in conjunction with this trend, the domestic savings to GDP ratio shifted from 9 percent in 1991 to a dissavings equivalent to about 3 percent of GDP by 1993.

With the buoyant economic recovery in 1994-95, and a vigorous expansion of imports expressed in nominal CFA franc terms following the devaluation, available resources nearly doubled from 1993 to 1995. Domestic demand strengthening over the 1994-95 period was led by a surge in domestic investment, which returned to near-historical levels. The resource balance improved by some 4 percent of GDP. This improvement reflected an increase in the ratio of the exports of goods and nonfactor services to GDP from 25 percent of GDP in 1993 to 34 percent in 1995, while the imports to GDP ratio grew only by about 5 percentage points of GDP, from 33 percent to 38 percent over the same period.

Public consumption, investment, and saving

Government revenues plummeted in 1993, while domestically financed expenditures declined less rapidly. As a result, national public dissaving increased to 15 percent of GDP (Appendix I, Table 5). By 1995, government revenues had increased by almost 4 percentage points from 11 percent to 15 percent of GDP, and current expenditures had been reduced by 6 percentage points to 19 percent of GDP. With more program grants available (0.7 percent of GDP in 1995) and a Paris Club rescheduling, which reduced the weight of interest obligations on external debt to 3 percent of GDP in 1995, national public dissaving was reduced to less than 3 percent of GDP, a level similar to the one in 1991 and 1992. In 1995, public investments started to increase again, but in real terms they remain below their 1991/92 levels.

Private consumption, investment and saving

Private investment dropped between 1991 and 1993 from 13½ percent of GDP to less than 9 percent of GDP,9 but recovered slightly in 1994 and 1995 (Appendix I, Tables 3 and 5). With real GDP declining by some 22 percent between 1990 and 1993, private consumption’s share in GDP increased by 9 percentage points, to 85 percent in 1993. In 1994, following the devaluation of the CFA franc, the share of consumption fell to 76 percent of GDP, while enterprises’ profits grew strongly. The resulting increase in private saving contributed to a strong reduction in the resource gap, paralleling an increase in domestic investment. In 1995, the resource gap remained unchanged, as the increase in domestic investment was compensated by a further slight decline in consumption, mainly in government consumption. Gross domestic saving was 10.1 percent of GDP in 1995, compared with 9 percent in 1991, and gross national saving, at 11.2 percent of GDP, was under its 1991 level.


A. Prices

Following the devaluation, inflation (as measured by the consumer price index)10 was rapidly brought under control (Appendix I, Table 19), mainly through prudent wage and monetary policies. In particular, Togo was the only country in the CFA zone not to grant a general salary increase to civil servants in 1994. Prices of domestic goods were virtually free of control, except for a limited number of sensitive items;11 and in August 1995, the government eliminated all price control and profit margin regulations, except for electricity, water, and petroleum products. Moreover, tariffs for electricity and water were raised by 20 percent and 15 percent, respectively, in October 1995. Despite these administered price increases, average inflation declined from 35.3 percent (48.5 percent on an end-of-period basis) in 1994, to 15.7 percent (6.4 percent end-of-period) in 1995. Over the first six months of 1996, prices increased by 2.7 percent.

B. Wages and Labor Income

By law, all workers in Togo are guaranteed a minimum wage; at present it is CFAF 13,758 a month, unchanged since 1990 (Appendix I, Table 20). Salaries for public employees, which are established on a scale based on educational background, also have not changed since 1990. This scale distinguishes between civil servants and other contractual government employees (Appendix I, Table 21).

Relative changes in income distribution were strongly influenced by the devaluation and recent structural measures. Farmers benefited from higher producer prices, which more than compensated for the increase in the cost of inputs, while the position of civil servants deteriorated over the last two years, as their wages did not rise from the time of the devaluation until July 1996, when a 5 percent increase took effect. Wages in the private sector also declined in real terms as salary adjustments mirrored the evolution of wages in the public sector, although there is no formal indexation of private sector wages to the levels prevailing in the public sector.

C. Employment

Togo’s population was estimated at 4.0 million in 1995, and is growing at an annual rate of about 3.2 percent. The government is the largest employer (Appendix I, Tables 22 and 23). In 1994, employment in the formal sector was estimated to be only 88,270, including about 32,000 (36 percent) in the public sector. Most of the nongovernment jobs in the formal sector were found in the trade, tourism, and other services sectors.12 Agriculture is estimated to employ about two-thirds of the economically active labor force, while the contribution of the informal sector in commerce is also particularly important.

The authorities have been carrying out a number of actions to promote employment, including, inter alia: (i) encouraging public works with high labor content in urban areas, in the context of a comprehensive urban rehabilitation program; (ii) promoting employment of young graduates, through a program of contractual employment with a reduced wage scale; (iii) allocating resources to a Social Fund, which aims at promoting employment in the rural areas; and (iv) improving financial and technical assistance to small-scale employment-creating projects, with foreign donors’ participation. Moreover, the labor code is being revised with World Bank assistance in order to allow greater flexibility of the labor market, and thus facilitate labor mobility.


A. Overview of Recent Developments

Togo’s fiscal situation had improved by the end of the 1980s as the authorities had pursued structural adjustment efforts during the decade, albeit with intermittent setbacks, related in particular to delays in responding to the sharp decline in the terms of trade in 1986-87. Nevertheless, with the substantial progress in implementing structural reforms a significant degree of financial adjustment had been attained, so that by 1989-90, the overall fiscal deficit had been brought down to 6.1 percent of GDP on average, and a current fiscal surplus was achieved.

Since 1990, developments fall into two distinct phases. The first phase (1991-93) was characterized by a marked weakening of public finances in the aftermath of the social and political unrest that began in mid-1991. The second phase (1994-95) witnessed a significant improvement in public finances, as the economy, bolstered by favorable political and security conditions and the added stimulus of the 50 percent devaluation of the CFA franc in January 1994, rebounded sharply from the severe contraction of the previous three years.

B. Fiscal Deterioration in 1991-93

Togo’s fiscal deterioration was mainly attributable to a collapse of government revenue. Over the 1991-93 period, the tax-to-GDP ratio (which had averaged some 19.7 percent of GDP in 1986-90) fell dramatically, to 9.0 percent in 1993 (Appendix I, Tables 24-26). This decline reflected a general weakening of revenue performance, principally as a result of the economic and financial consequences of the social and political disruptions that had become particularly severe in 1991. Total government expenditure, which had averaged CFAF 126 billion a year (about 30 percent of GDP) during the 1986-90 period, declined steadily at the beginning of 1991 falling to CFAF 93 billion in 1993 (Appendix I, Tables 27 and 28). The declining trend was mainly due to the collapse of investment spending over this period because of the sharply reduced level of foreign-financed investment in response to the political uncertainties. The fiscal situation was particularly severe in 1993, primarily because of the impact on economic activity of the prolonged general strike. The authorities introduced several measures to enhance revenue collection and improve public finances with the 1993 budget. However, passage of the budget was delayed until July 1993, thereby hampering effective implementation the new measures. For the year, revenue was down sharply, while current expenditure actually rose slightly, mainly because of higher scheduled interest payments on external debt. The wage bill alone (CFAF 39 billion) exceeded total revenue by CFAF 0.3 billion.

The overall fiscal deficit, excluding grants, had doubled to 16.0 percent of GDP in 1993 from 8.0 percent of GDP in 1991. To finance these deficits, the Treasury drew down deposits it held abroad; sought extraordinary financing from large public enterprises; and increased its borrowing from the central bank, thereby exceeding the statutory ceiling. Despite these efforts, there were further large accumulations of both domestic and external payments arrears; by end 1993, domestic arrears reached an estimated CFAF 41 billion, including CFAF 19 billion of salary arrears to civil servants reflecting six months of unpaid wages and social security contributions, while external payments arrears to multilateral institutions had risen to CFAF 6.8 billion, and arrears to Paris Club creditors amounted to CFAF 18.7 billion.

C. Fiscal Recovery and Developments in 1994-95

Togo’s public finances improved significantly in 1994 as the robust economic recovery made it possible for the budgetary revenue objectives to be slightly exceeded, while total expenditure remained below budget, owing mainly to lower-than-expected capital expenditure. In 1994, government revenue increased by 74 percent, mainly on the strength of a 96 percent increase in tax revenue. The direct tax component in particular surged (by 126 percent), primarily reflecting the renewed contributions from OPAT and OTP, while the growth of indirect tax revenue was attributable to a doubling of receipts from taxes on international trade in the aftermath of the January 1994 devaluation of the CFA franc. The improvement in revenue performance in relation to GDP was somewhat less striking, given the robust (50 percent) growth of nominal GDP in 1994 On the expenditure side, the fact that the authorities had not been able to compress expenditure over the 1991-93 period in line with the reduction in revenue dampened the pressures for a more rapid expansion in the context of the recovery. It is noteworthy that, in contrast to other CFA franc zone countries, there was no post-devaluation general wage increase in Togo.

The primary fiscal deficit and the overall fiscal deficit (on a payment order basis, before grants) were both slightly lower than budgeted in 1994, at 6.1 percent of GDP and 13.7 percent of GDP, respectively. However, because of a shortfall in external program assistance,13 and a constraint on net financing from the domestic banking system as the government’s borrowing already exceeded the statutory limit, the deficit was financed mainly by a further accumulation of domestic and external payments arrears.

The government’s financial situation continued to improve in 1995, as revenue growth was buoyant, while expenditure, particularly with respect to capital outlays, was restrained. Total revenue increased by 46 percent to CFAF 97 billion (15 percent of GDP), as all tax revenue categories, except direct taxes of public enterprises, slightly exceeded the budget objectives. Meanwhile, the growth of public spending was held in check; current expenditure was essentially unchanged at about CFAF 124½ billion, while there was a jump of 84 percent in capital spending; thus total outlays rose by about 7½ percent to CFAF 147 billion. The primary fiscal deficit was reduced to 2 percent of GDP, and the overall fiscal deficit on a payment order basis, before grants, was brought down to the equivalent of 7.7 percent of GDP. In February 1995, Togo obtained debt relief from Paris Club creditors, calling for the rescheduling of CFAF 104 billion of current and past due debt-service obligations; and there was a net reduction of both domestic and external arrears.

D. Revenue Trends, 1991-95

The sharp decline in government revenue from 1991 to 1993 mostly stemmed from lower direct and indirect taxes. Receipts from direct taxes plunged by some 25 percent from 1990 to 1991, and continued to decline in each year over the 1992-93 period, mainly reflecting the absence of contributions from OTP and OPAT, and a 68 percent decrease in receipts of the petroleum product price stabilization fund (CPSPP); the receipts from these entities, which had averaged 4 percent of GDP in 1986-90, were thus reduced to less than 0.7 percent of GDP by 1993. The OTP contribution was adversely affected by a sharp drop in phosphate export earnings, as both the volume and unit value of phosphate exports plummeted in 1992 and 1993. Meanwhile, the direct contribution of OPAT averaged less than CFAF 1 billion in 1991-92, and was nil in 1993, as a result of the persistent weakness of world prices for its exports. The revenue from the petroleum product stabilization fund, which had averaged CFAF 6.9 billion over the 1991-92 period, dropped precipitously to only CFAF 2.3 billion in 1993, because of a sharp decline in domestic consumption. Receipts from direct taxes on income and profits of individuals remained relatively buoyant through 1992, but fell by 64 percent in 1993 because of the stagnation of economic activity and a significantly reduced collection effort, whereas the yield of the profits tax for enterprises declined steadily from CFAF 8.5 billion in 1990 to CFAF 1.6 billion in 1993, given the steady erosion of companies’ profitability as a result of the social and political turmoil.

Indirect receipts also experienced a decreasing trend over the period, the pattern of which was consistent with the accelerating decline in the level of economic activity, as total indirect tax receipts declined by 11.4 percent in 1991, 27.2 percent in 1992, and 41.7 percent in 1993, reflecting Togo’s progressively worsening economic and financial situation under the impact of the sociopolitical disturbances. Receipts from taxes on international trade, which had peaked at CFAF 38 billion (8.5 percent of GDP) in 1990, fell each year thereafter, declining to a low of CFAF 13.5 billion (3.9 percent of GDP) by 1993. The 64 percent decrease in receipts from these taxes was more pronounced than the 50 percent reduction in imports, in part because of weakened collection efforts in 1993. Indirect tax receipts on domestic goods and services remained relatively buoyant through 1991 (averaging CFAF 9.9 billion) before plunging to less than a third of this level (CFAF 3.2 billion, or less than 1 percent of GDP) by 1993.

The authorities had begun to introduce a series of revenue-neutral tax reforms starting in 1990 which aimed at rationalizing the tax system by, inter alia, (a) reducing the number of import taxes, and aligning the rates of the general turnover tax (TGA) levied at customs with domestic rates; (b) simplifying the import tax structure by reducing the number of applicable rates to four; (c) restructuring the TGA to make it similar to a value-added tax, with only three rates; and (d) reducing the number of exemptions. As the fiscal situation deteriorated further, a series of revenue-enhancing measures were initiated in 1992 and 1993.14 These additional measures included (a) the generalized use of procedures for spontaneous payment of income and profits taxes, (b) improved taxpayer identification and registration procedures, (c) a simplified business tax on small enterprises, (d) improved collection of taxes from the informal sector through the application of a withholding tax at the level of customs and at the time of wholesale purchases, with the proceeds being applied to the income and profits tax liabilities of the taxpayers, (e) introduction of a tax on the purchase of airline tickets, and (f) increased rates for various stamp taxes. However, effective implementation of these initiatives was hampered, as their introduction coincided with the sociopolitical crisis, and tax revenue continued to decline. To compensate the government came to rely increasingly on nontax revenue. The share of the latter15 in total revenue increased from an average of 12.6 percent in the 1986-90 period to 21.9 percent in 1992-93. These revenues correspond mostly to dividends from parastatals, proceeds from the sale of government assets, and transfers from public enterprises in payment of their debt service obligations.

Beginning in 1994, the buoyant economy together with the positive impetus from the devaluation of the CFA franc contributed to a sharp recovery of revenue performance. From 1993 to 1994, total fiscal revenue surged by 74 percent, led by a 96 percent increase in tax revenue. Direct tax receipts increased by 126 percent to 12 percent of tax revenue on the strength of renewed contributions from OTP and OPAT, a 257 percent rebound in revenue from the CPSPP, as well as a doubling of the tax receipts from individuals and companies. Indirect tax receipts grew by some 76 percent from 1993 to 1994, because whereas receipts from taxes on international trade doubled mainly as a result of the devaluation, the 67 percent increase in receipts from domestic taxes on goods and services more nearly mirrored the nominal increase in domestic economic activity, as GDP in current prices grew by 50 percent.

The vigorous growth of revenue continued in 1995, with total revenue rising by some 46 percent to the equivalent of 15 percent of GDP, again, thanks primarily to a strong (47 percent) increase in tax revenue. Direct tax receipts increased by 51 percent from 1994 to 1995, with vigorous growth registered in all key categories, while receipts from indirect taxes rose by 45 percent. After doubling in 1994, the growth of receipts from taxes on international trade slowed to 34 percent in 1995, in line with the nominal increase in the CFA franc value of imports. Meanwhile, receipts from domestic taxes on goods and services more than doubled, primarily as the result of the imposition of excise taxes on consumption of petroleum products. Thus, tax revenue accounted for 91 percent of total fiscal revenue on average in 1994-95, with nontax revenue falling to 9 percent of total revenue.

The improvement in revenue performance beginning in 1994 also reflected the impact of several tax measures implemented with the 1994 budget, including, inter alia, (a) the introduction of the withholding tax on imports at customs and on wholesale purchases, which can be used to offset the assessed tax liability of registered taxpayers; (b) the creation of a single unit responsible for tax assessment and collection for major taxpayers; and (c) the assignment of a single taxpayer identification number and creation of a single taxpayer registry, and a strengthening of tax administration, particularly the domestic tax service. The tax reform effort was intensified and expanded in 1995 with the introduction of a value-added tax (VAT) at rates of 7 percent and 18 percent to replace the more complicated general sales tax, further simplification of the customs tariff structure, and conversion of the remaining specific taxes (on rice, sugar, wax prints, alcoholic beverages, and tobacco products) to ad valorem rates.

E. Expenditure Trends, 1991-95

Current expenditure, excluding interest on external debt, had increased slightly in the second half of the 1980s, reaching CFAF 82 billion in 1990; it remained at this level in 1991, before falling to an average of CFAF 72 billion in 1992-93. Regarding the structure of current expenditure, the share of wages and salaries in the total increased from about 39 percent on average in 1986-90 to an average of over 45 percent in 1991-93. This reflected in part the impact of the substantial wage concessions granted in 1991 to meet demands associated with the heightened political activism of the civil service; but the trend was exacerbated because civil service staffing rigidities prevented the government from scaling back wage outlays when economic activity collapsed. In order to partially compensate for this expansion, the government curtailed the increase in spending for materials and supplies, which, after having remained constant from 1990 to 1991, declined by about 20 percent and 9 percent in 1992 and 1993, respectively. Thus, the share of the latter in total current expenditure fell to about 16 percent in 1993, from more than 19 percent in 1991. In relation to GDP, wages and salaries increased from about 8½ percent on average in 1986-90 to more than 11 percent in 1993, whereas spending on materials and supplies fell to about 4 percent of GDP in 1993.

During 1986-90, investment spending had averaged CFAF 36 billion (equivalent to just under 9 percent of GDP), of which the foreign project financing component averaged CFAF 21 billion; however, by 1993, investment outlays had fallen to less than CFAF 9 billion or, about 2.4 percent of GDP, with a foreign project financing of only CFAF 2.2 billion.

Total expenditure ballooned by some 47 percent in 1994, to CFAF 137 billion,16 mainly reflecting (a) the doubling of scheduled interest due on external debt following the devaluation, (b) a 52 percent increase in investment spending that largely was due to a fourfold increase in foreign project financing, and (c) a 35 percent rise in wage and salary expenditures that was mainly attributable to a return to work by civil servants for the whole year, when compared with the strike-induced reductions of 1993. For 1995, total expenditure rose by a modest 7.5 percent (CFAF 10 billion), reflecting mainly the offsetting effects of the 27 percent drop in scheduled interest on external debt (i.e., CFAF 7.5 billion), as against a 85 percent increase in government investment (i.e., CFAF 10.5 billion) and small increases for wages and materials and supplies. With the broad recovery in spending, the share of the wage bill in total government expenditure receded to 35.6 percent in 1995 from an average of 38.8 percent in the 1991-93 period; in relation to GDP, wages and salaries of civil servants declined to 8.1 percent of GDP in 1995.

Interest on external debt decreased from CFAF 16.9 billion in 1989 to about CFAF 13 billion in 1990 and 1991, and to CFAF 11.4 billion in 1992, reflecting the impact of the French debt cancellation under the Dakar initiative in 1989, and subsequent Paris Club reschedulings on Toronto terms; however, in the absence of a Paris Club rescheduling in 1993, scheduled interest payments on external debt increased by CFAF 2 billion. After doubling in 1994 as a result of the impact of the devaluation of the CFA franc, scheduled external interest payments declined by 27 percent as Togo benefited from a Paris Club rescheduling in February 1995.


A. Institutional Framework

Togo is a member of the West African Economic and Monetary Union (WAEMU), together with Benin, Burkina Faso, Cête d’Ivoire, Mali, Niger, and Senegal. The WAEMU was established by a treaty signed in January 1994 and ratified in early August 1994. The new union preserves the monetary functions of the Western African Monetary Union (WAMU), which had been established in 1962, while extending its institutional purposes to encompass free intraregional trade, liberalization of capital movements, and harmonization of policies in the areas of taxation, human resources, urban and rural development, transportation and telecommunications, environment, agriculture, energy, industry, and mining. The WAEMU provides for centralized foreign currency reserves and a single currency, the CFA franc, which is issued by a common central bank, the Central Bank for West African States (BCEAO) which has its headquarters in Dakar, and agencies in the capitals of each of the member countries. The CFA franc has been pegged to the French franc since 1948. On January 12, 1994, the fixed rate at which France guarantees the free convertibility was devalued for the first time from CFAF 50 = FF 1 to CFAF 100 = FF 1. As part of an agreement with France, the BCEAO is required to deposit the equivalent of at least 65 percent of its foreign assets in an operations account with the French Treasury, and the French Treasury in turn provides it with overdraft facilities The BCEAO maintains a subaccount for each member state.

A Council of Ministers, composed of two ministers from each country, determines the monetary and credit policy in the WAEMU; it fixes the minimum ratio between the BCEAO’s gross international reserves and its foreign liabilities, and determines the level of credit expansion compatible with this ratio. Each country also appoints two persons to the Board of Directors of the BCEAO, as does France. This board implements the monetary and credit policies based on the guidelines provided by the Council of Ministers, to achieve the targets for the external position of the union as a whole. In accordance with the decisions of the Board of Directors of the BCEAO, a national credit committee is responsible for the management of monetary and credit policy in each member country. Each national committee is chaired by the minister of finance, and comprises the country’s two representative on the Board of Directors of the BCEAO; four other senior officials appointed by the government; and since March 1988, a representative appointed by France. The WAEMU has a common interest rate policy, and there are no restrictions on capital transactions within the Union.

In 1995, Togo, which produced 5.2 percent of the union’s aggregate GDP, accounted for about 7.4 percent of its broad money, and contributed 5.1 percent of the union’s pooled foreign reserves. The lingering effects of the political and social turmoil led to a surge in credit to the government, raising Togo’s share to 7.0 percent of the BCEAO’s combined lending to the central governments of union members. With the economic recovery, credit granted by the Togolese banking system to the private sector rose to 7.7 percent of total credit to the private sector in the WAEMU.

Since October 1989, the BCEAO has gradually undertaken significant reforms in the implementation of monetary policy by replacing direct instruments with indirect instruments. The principal objective of these reforms was to foster a more efficient and flexible monetary policy that contributes toward developing a market-oriented system, through the use of money market auctions and minimum reserve requirements. In June 1994, the BCEAO issued secured bonds on behalf of the governments; these bonds represent only that part of the BCEAO’s consolidated claims on member governments arising from restructuring operations of the national banking systems in the late 1980s. They are expected to serve as a basis for the development of open market operations in the future.17 However, the increase in reliance on indirect instruments, and the expansion of money and interbank markets have altered the BCEAO’s ability to conduct country-specific monetary policies. Moreover, given the constraints dictated by the fixed parity of the CFA franc, the BCEAO enjoys only a limited degree of independence in the conduct of its monetary policy at the regional level.18 In a major step forward, the BCEAO started auctioning central bank bills to commercial banks in the zone, in July of 1996.

Banking supervision in Togo was reinforced with the establishment in 1990 of a regional banking supervision commission (Commission Bancaire de l’Union Economique et Monétaire Ouest Africaine) to oversee all banks operating within the union (55 banks and 19 other financial institutions). To carry out its mandate, the Banking Commission conducts on-site inspections and off-site analysis of monthly statistics; it is empowered to enforce its objectives through sanctions ranging from intensified monitoring bank’s activities to disciplinary decisions, such as removing managers or withdrawing a bank’s operating licence.19 The commission also covers the national entities charged with recovering nonperforming loans in the context of restructuring the respective banking systems. The most recent examination of banks in Togo took place in 1996. Some banks did not respect the various prudential ratios; furthermore, Togolese banks as well as other banks in the union face obstacles in the courts in enforcing their rights as creditors.

The Togolese financial system20 is composed of six commercial banks, a development bank, three nonbank financial institutions, and a network of savings and loan cooperatives (Appendix I, Table 39). Commercial banks dominate the market, since they account for more than three-fourths of the total assets of the system. The government holds a portion of the capital of the development bank and the two largest commercial banks and plays an active role in their management. The government, indirectly through its holdings in other public institutions, still retains of a 50 percent share of Banque Togolaise pour le Commerce et l’Industrie (BTCI),. Since the departure of Crédit Lyonnais in June 1994, the government has full ownership of Union Togolaise de Banque (UTB, the other major bank in Togo). Until mid-1992, Togo benefited from a healthy and liquid financial sector. The sector was severely affected by the deepening political turbulence and economic decline. Most banks were closed for more than six months, from November 1992 until the summer of 1993, during which time the quality of assets deteriorated substantially and liquidity in the system was reduced by almost half. Togo’s role as a regional business diminished.

Over the period 1994-95, Togolese banks succeeded in reversing this downward trend. Their balance sheets have started to grow again, and with operations returning to profitable levels for most banks, there has been a gradual restoration of the net worth position of banks. This improvement in profitability was attributed to the sharp decline in interest expenses paid by Togolese banks to their foreign counterparts, as a consequence of the decline in the level of international interest rates, and (to a greater extent) the relative increase in non-interest-bearing demand deposits in the banks’ funding base. At end-December 1995, the net foreign position of commercial banks had returned to equilibrium as a result of the strong economic recovery that contributed to a surge in exports. This economic recovery stimulated credit demand throughout the period; thus between December 1994 and December 1995, credit to the economy rose by 28.7 percent, thanks in large part to the increased trading activity. The trade and mining sectors received the bulk of bank credit (36.4 and 32.7 percent respectively), followed by manufacturing and services (Appendix I, Table 38). Meanwhile, total bank deposits remained stable at CFAF 146 billion.

Despite its recent recovery, the banking system is plagued by serious problems. Togolese banks have a large exposure to the public sector. Difficulties in public finances triggered the accumulation of sizable arrears by the government and public enterprises. The indebtedness of the public sector to banks amounted to almost 10 percent of GDP of 1995. Most of this outstanding debt is owed by state-owned enterprises, and has been recently rescheduled. For most of the banks, loans outstanding to Office Togolais des Phosphates (OTP) account for the largest share of the total loans to the public enterprise sector. Net provisions outstanding represented almost three times the aggregate net worth of banks at end-December 1995. In addition, Togolese banks continue to be burdened with high operating costs and overstating.

B. Recent Monetary and Credit Developments

During 1991-93, monetary developments were marked by a significant decline in the external position of the banking system. Net foreign assets fell from CFAF 81.3 billion in 1991 to CFAF 23.2 billion in 1993 (Appendix I, Tables 33), primarily because of a decrease in the net foreign assets of the central bank, from CFAF 69.6 billion at end-1991 to CFAF 24.1 billion at end-1993. Consequently, the Togolese position in the operations account with the French Treasury decreased sharply. During the same period, net domestic assets increased by the equivalent of 2.3 percent of broad money at end-December 1991, to CFAF 128.2 billion at December 1993, owing mainly to a rise in net credit to the government. At the same time, credit to the private sector decreased by 7.5 percent of broad money at end-December 1991 despite a 27.7 percent increase in credit to OTP. Reflecting these developments, broad money fell from CFAF 198.3 billion at end-December 1991 to CFAF 145.3 billion at end-December 1993.

The net foreign assets of the banking system increased by 21.9 percent of the beginning-of-period money supply in 1994. Improved export receipts, and the return of flight capital, were the most important factors behind this rise. In spite of a marginal decrease in credit to the private sector, an increase in credit to the government contributed to the growth of net domestic assets (10.2 percent of the beginning-of-period money stock). As a result, broad money increased by 32.3 percent in 1994, reflecting buoyant activity in the real sector.

The trend in net foreign assets was reversed in 1995, when they decreased from CFAF 35 billion at end-March to CFAF 24.5 billion at end-December, principally because of a decline in the external position of commercial banks. Despite an improvement in gross foreign reserves resulting from higher export receipts, the net foreign assets of these banks shrank by 47.3 percent between end-December 1994 and end-December 1995 because of an increase in their external liabilities (from CFAF 19.9 billion in 1994 to CFAF 33.7 billion in 1995), in part to finance the substantial increase in imports. In 1995, net domestic assets rose to CFAF 207.2 billion from CFAF 163 billion in 1994, owing to an increase in both net credit to the government and credit to the private sector. The rate of growth of credit to the private sector accelerated to 14.8 percent of beginning-of-period money supply in 1995, reflecting a sharp expansion in economic activity and investment. Broad money expanded by 16 percent between end-December 1994 and end-December 1995, as currency in circulation rose by 66.5 percent, while bank deposits remained unchanged.

Immediately following the devaluation, the BCEAO raised its discount rate to 14.5 percent to support the credibility of the new peg. Money market and interbank rates rose to a lesser extent in view of the zone-wide surge in liquidity in the banking system stemming from the rapid return of flight capital and sluggish credit demand. Accordingly, the BCEAO was able to lower its discount rate to 10 percent by August 1994, and to 7.5 percent by December 1995. During the same period the average money market rate fell from 7.9 percent to 5.5 percent, while the range of interbank rates was roughly halved, to 5-6 percent (Appendix I, Table 40). However, given the comfortable liquidity position of most of the banks in the zone, trading volumes in both markets remained limited and only picked up toward the end of 1995, when financing pressure emerged in some countries of the zone as a result of an exceptionally buoyant agricultural production. For these reasons, deposit interest rates declined substantially and there was a shift in the composition from long-term deposits to short-term deposits. In addition, lending rates have declined by 2 percentage points (to 12-14 percent).


A. Overview

The external sector of the Togolese economy is characterized by its reliance on primary commodity exports, and Togo’s traditional role as a regional trade center. Adverse terms of trade developments through most of the 1980s and political disruptions from 1991 to 1993 contributed to widening current account deficits. However, the 1994 devaluation of the CFA franc brought about a reversal of the previous trend, which gained added impetus from an improvement in the terms of trade in 1995.

Domestic exports accounted for some 69 percent of total exports of goods on average over the 1991-95 period, while reexports of represented about 31 percent of the total. The main domestic export commodities are phosphates, cotton, coffee, and cocoa, which together represented 83 percent of total domestic exports of goods, or 46 percent of total exports of goods and nonfactor services (GNFS) over the 1991-95 period (Appendix I, Tables 42-44.). Phosphate was Togo’s most important export in 1991-93, constituting 44.1 percent of total exports on average; however, with the continuing strong growth of cotton, the share of phosphate in overall domestic exports fell to an average of 35.6 percent in 1994-95. Cotton accounted for an average of 33.2 percent of total domestic commodity exports over the 1991-95 period (and 36.6 percent in 1994-95). The combined share of coffee and cocoa averaged some 10.2 percent, down substantially from the levels of 1980s.

Togo is an important center of regional trade and finance, in part because of its port facilities. Recorded re-exports, particularly of consumer goods, which had increased from 12.6 percent of exports of goods and nonfactor services in 1985 to 27.5 percent in 1990, averaged 31.4 percent of exports of goods in 1991-95. However, part of the rapid growth is probably due to improved recording of these types of transactions. The expanding role of Togo as a service economy resulted in a declining deficit of the service balance up to 1990. The share of services in total of exports of goods and nonfactor services rose from 21.1 percent in 1985 to an average of 23.7 percent between 1991 and 1995 (Appendix I, Table 46).

B. Developments in 1991-93

During the 1991-93 period, the adverse terms of trade and the dislocations caused by the social and political turmoil led to a deterioration of Togo’s balance of payments. The over-valuation of the exchange rate continued to hinder export diversification, causing export receipts to plummet, while facilitating an excessive reliance on imports. Export receipts including re-exports decreased steadily during the period under review, reflecting both price and volume declines (Appendix I, Table 44). The prices of the main export commodities plummeted in 1992-93 (cotton prices fell by 21.7 percent, and phosphate prices by 16.9 percent, while prices of coffee and cocoa dropped by 2.9 percent and 43.7 percent, respectively). Accordingly, the export price index fell by 20.0 percent over the period. The nationwide strike also depressed the level of both the production and the distribution of export commodities, as the volume of phosphates (which accounted for about 26 percent of total exports) fell drastically, from 3.1 million tons in 1991 to 1.6 million tons in 1993, while products other than cotton registered a major drop between 1992 and 1993. Meanwhile, reexports were diverted to other regional ports because of the strike-induced interruption of activities at the Port of Lomé. Consequently, export earnings decreased by a total of 45.1 percent throughout the period.

The political and social unrest contributed to the deterioration in Togo’s economic situation, which in turn brought about a 44.2 percent decline in the value of imports over the period under review. In particular, the disruptions to the Lomé harbor activities because of the sociopolitical turmoil and reduced inflows of both public and private capital investment were chiefly responsible for a decline in volume of imported goods (10.5 percent in 1992 and 35.2 percent in 1993), which more than offset an increase in the import price index. The 1993 trade deficit was correspondingly lower, dropping by the equivalent of 3.4 percent of GDP.

The services account followed a similar pattern, as service receipts fell from CFAF 48.6 billion in 1991 to CFAF 32.5 billion in 1993, mainly reflecting a decrease in reexports to landlocked neighboring countries. Service expenses, in particular those related to imports of goods (freight, transportation, and insurance) shrank from CFAF 77.1 billion to CFAF 56.7 billion in line with the depressed domestic demand for imported goods. Thus, during the period under review, the deficit of the balance of services averaged 6.5 percent of GDP. When international assistance to Togo was interrupted, as mentioned above, inflows of public assistance and private sector remittances dwindled. Moreover, the net transfer surplus declined by two-thirds (from CFAF 29.8 billion to CFAF 11.5 billion), and the current account deficit, excluding grants, therefore reached the equivalent of 9.3 percent of GDP.

The net capital account, which had been in surplus in 1991, shifted into a deficit in 1992-93, reflecting a lower level of international assistance, and a standstill in private investment. The expectation of a devaluation also contributed to private capital outflows. Thus, the capital account deficit, which amounted to the equivalent of 4.7 percent of GDP in 1992, widened to 11.4 percent in 1993. In 1991, the overall deficit of the balance of payments was essentially financed by a rescheduling of debt vis-à-vis the Paris Club creditors. The large 1992-93 deficit was covered by gross reserves, which decreased by CFAF 22.7 billion and by CFAF 35.4 billion, respectively, in 1992 and 1993. As a result, gross reserves represented 4.3 months of imports in 1993, down from 5.5 in 1991.

C. Recent Developments

The 1994 exchange rate devaluation has had positive effects in the external sector. Following the January 1994 devaluation of the CFA franc, the real effective exchange rate, based on relative consumer prices, declined by 34.5 percent, thus contributing to an improvement in the competitiveness of the Togolese economy. This development, combined with an amelioration of political and security conditions, led to a strong rebound in earnings from key exports. Moreover, as a result of a shift in domestic demand toward local products, the volume of imports dropped by 18.3 percent, thus contributing to a trade account surplus and an improvement in the current account balance. The resumption of external assistance, particularly project loans, together with a rise in private capital inflows, also resulted in a strengthening of the capital account after two years of massive outflows, with an ensuing increase in the Togolese contribution to the BCEAO reserves. As an important regional trade center, Togo also benefited from the economic recovery in neighboring landlocked countries (Burkina Faso, Mali, and Niger), which fostered a pickup in harbor activity in Lomé and related services provided by Togolese companies.

In 1995, the trade balance also improved, reflecting an improvement in Togo’s terms of trade, as export prices (excluding phosphates) rose on average by 14.9 percent, while import prices fell by 1.1 percent. Meanwhile, service receipts increased, principally because of the continued recovery of services related to the re-exports of goods, and official grants rose by 62.6 percent. Thus, the current account deficit, excluding grants, improved markedly in terms of GDP. At the same time, the capital account deficit widened, owing to a slowdown in the disbursement of nonproject loans and an outflow of private capital. Accordingly, the overall balance of payments recorded a large deficit; however, Togo benefitted from a debt rescheduling vis-à-vis Paris Club creditors in 1995. Overall, the external position strengthened throughout the period.

D. Trends in Merchandise Trade


Export receipts for goods, which had declined in 1992 and 1993, rose sharply in 1994, reflecting predominantly favorable developments in prices in CFA franc terms and a pickup in re-exports to the neighboring countries. Compared with 1993, exports (f.o.b.), excluding reexports, expanded vigorously (from CFAF 39.8 billion in 1993 to CFAF 92.4 billion in 1994), mainly on the strength of a surge in key commodities prices. In addition, the volume of phosphate exports grew by 37.5 percent in 1994, as Togo was able to recapture a large part of the market share lost during the strike. Re-export trade recovered as the Lomé harbor resumed its activities and the neighboring countries experienced economic recovery. On the whole, export receipts amounted to CFAF 125.5 billion in 1994 (24.5 percent of GDP), rising from CFAF 60.9 billion in 1993 (17.7 percent of GDP) and CFAF 86.5 billion in 1992 (19.9 percent of GDP).

Developments in 1995 were characterized by a further surge in export receipts, particularly for cotton, coffee, and phosphate. Cotton receipts expanded strongly, owing to improved export prices, and the startup of a private ginnery (SICOT). Cotton volume increased by 22 percent as a result of a rise in production (a record 132,000 tons in 1994/95, from 84,400 tons in 1993/94). The re-export of ginned cotton imported from Benin and processed by SICOT, also helped to raise the volume of total cotton exports. Meanwhile, the volume of phosphate exports grew by almost 15 percent, reflecting the continued effort by OTP to retain its traditional clients and to capture new markets; nevertheless, the volume of phosphate exports remained below the 1991 level. Attractive producer prices led to an increase of 16.5 percent in the volume of coffee, while the volume of cocoa declined by 14.5 percent. With the exception of phosphates, which suffered a price decline of 5.2 percent, all major export commodities benefited from significant world market price increases: cotton prices climbed from CFAF 638/kg in 1994 to CFAF 759.8/kg in 1995, coffee from CFAF 509.5/kg in 1994 to CFAF 831.7/kg in 1995, and cocoa rose from CFAF 685.4/kg in 1994 to CFAF 710.3/kg in 1995. Re-exports increased by 39.8 percent in 1995, owing to an improvement in the management of the Lomé harbor. Thus, the share of re-exports to total exports remained unchanged at almost 27 percent in 1995.


In response to the realignment of the exchange rate in January 1994, the value of imports (f.o.b.) expressed in local currency rose by 65.5 percent (from CFAF 71.1 billion to CFAF 117.1 billion) in 1994 from the exceptionally low level in 1993. In relation to GDP, imports rose from 20.7 percent in 1993 to 22.8 percent in 1994, thanks primarily to a surge in imports of intermediate goods and capital equipment, in line with the economic recovery. In contrast, there was a shift in domestic demand of consumer goods toward local products brought about by a 101 percent increase in import prices (expressed in local currency), thus contributing to an 18.3 percent decrease in the overall volume of imports. The value of imports (f.o.b.) rose significantly in 1995, mainly reflecting a 41.3 percent increase in volume that stemmed from a rebound in the import of foodstuffs, as well as a continued strong demand for intermediate and capital goods. With a 30 percent share of total imports (c.i.f.) in 1995, consumer goods continue to account for the largest proportion of total imports. The share of intermediate goods expanded from 17.1 percent in 1992 to 25.1 percent in 1994, before dropping to 21 percent in 1995. Capital equipment reached a record level of 23.2 percent of imports by 1995, following the devaluation and a resumption of foreign project financing. The share of petroleum products imports increased steadily from 6.8 percent in 1991 to 10.4 percent in 1995, driven by the growth in economic activity. Total imports (f.o.b.) rose to CFAF 164.4 billion in 1995, up from CFAF 117.7 billion in 1994.

Terms of trade

Togo’s terms of trade deteriorated in 1992-93, owing to a fall in prices of its principal commodities. After declining by 4.3 percent in 1992, the terms of trade tumbled by another 10.7 percent in 1993, reflecting mainly a decrease of 9.7 percent in export unit prices. This was principally due to the decreases in cotton and phosphate prices of 21 percent and 4 percent, respectively. The relative increase in import unit prices of 1.3 percent corresponded almost entirely to an appreciation of the CFA franc vis-à-vis Togo trading partners’ currencies. In 1994, import prices increased by more than export prices, resulting in a depreciation of 3 percent in the terms of trade. In spite of a decline in phosphate prices (in CFA franc terms), the terms of trade improved markedly (16.6 percent) in 1995.

E. Services and Unrequited Transfers

During the period 1991-93, the deficit of the balance in the services account was broadly stable, averaging CFAF 26.5 billion. This development resulted from the interaction of three factors: a decline in expenses (freight, insurance, and transport) related to imports of goods, lower scheduled interest payments due, and a shift into deficit of the balance of services for travel and tourism. The deficit increased in 1994, reflecting a higher scheduled interest payments in CFA franc terms and higher service costs related to imports. In 1995, despite an increase in import-related service costs, this deficit shrank, owing to a reduction in scheduled interest payments (Appendix I, Table 46.).

Net private transfers gained momentum in 1994, when emigrants’ remittances rose by 74.1 percent in CFA franc terms, in spite of constraints put on transfers from subregion countries hosting Togolese emigrants. Private transfer inflows are estimated to have increased by 17 percent in 1995 because of an improved economic environment. The balance on public transfers fell sharply in the period 1991-93, reflecting a substantial decrease in external budgetary and project assistance. In 1994, inflows picked up sharply as Togo implemented an adjustment program, and they continued to recover in 1995, returning to their 1992 level.

F. Capital Account and Financing

The capital account weakened over 1991-93, shifting from a modest positive inflow of CFAF 1.7 billion in 1991 to a large outflow of CFAF 39 billion in 1993. This was attributable to a slowdown in official disbursements because of the sociopolitical problems indicated above; private capital outflows that stemmed from a growing lack of confidence in Togo’s economy; and rumors of an impending devaluation. Private capital outflows reached 6.9 percent of GDP in 1993. In 1994, the capital account balance turned into a large surplus (CFAF 12.9 billion) because of a resumption in disbursements of international loans (4 percent of GDP), capital repatriation in the wake of the devaluation, and the reduction of sociopolitical tensions. In 1995, the capital account reverted to a deficit, owing to sharply lower international loan disbursements (in particular delays from the World Bank) and a reversal in the direction of private short-term capital flows.

The deterioration of the balance of payments in 1992-93 brought about a substantial decrease in gross external reserves. However, the improvement in the external situation in 1994 led to an increase in Togo’s contribution to the net foreign reserves of the regional central bank. In spite of a decline in the external situation of the country’s commercial banks, owing to a rise in foreign liabilities in 1995, the national agency of the central bank was able to achieve a modest strengthening of its international reserves.


From end-1993 to end-1995 the outstanding stock of public and publicly-guaranteed debt (including arrears) increased from CFAF 363.9 billion to CFAF 710.1 billion. Adjusted for the effect of the 1994 devaluation, however, the stock of debt decreased by CFAF 15.7 billion. In terms of GDP, the stock of debt increased from 106.2 percent to 109.8 percent (Appendix, Table 47). No new loans were contracted during this period; however, of four loans that had been contracted in 1992, with the International Fund for Agricultural Development, the African Development Bank, and the African Development Fund, the first disbursements were delayed until 1995. All the recorded debt was owed by the central government.

At the end of 1995, 54.2 percent of the stock of debt was owed to multilateral institutions, especially IDA (36.8 percent of the total), 33.3 percent to bilateral creditors, 8.9 percent to the IMF, and 3.6 percent to commercial banks. Almost all bilateral debt was owed to Paris Club creditors.

The debt-service ratio (measured in terms of exports of goods and nonfactor services) increased slightly between 1993 and 1994, from 38.2 percent to 38.8 percent, and fell sharply in 1995, to 22.9 percent. This decrease reflected the absence of late interest charges, and lower scheduled principal payments to Paris Club creditors. An agreement was reached with the Paris Club in February 1995 to reschedule on Naples terms the country’s debt service and arrears on previously rescheduled debt.21 The consolidation period covers January 1, 1995 through September 30, 1997. France forgave CFAF 25 billion of its loans to Togo in 1994. Negotiations with the London Club on a commercial debt buy-back operation which is mostly in arrears, have not yet been concluded.

The net accumulation of external arrears totaled CFAF 49.9 billion in 1994. By contrast, rescheduling (CFAF 102.8 billion) and some cash payments (CFAF 12.3 billion) led to a net reduction of arrears of CFAF 65.9 billion in 1995, with the stock of arrears falling to CFAF 13.4 billion.



Citation: IMF Staff Country Reports 1997, 013; 10.5089/9781451836547.002.A001

Sources: IMF, World Economic Outlook; staff estimates and projections.


(Base 1990 = 100)

Citation: IMF Staff Country Reports 1997, 013; 10.5089/9781451836547.002.A001

Source: Information Notice System, IMF.


Table 1.

Togo: Gross Domestic Product by Sector of Origin, 1991-95 1/

(In billions of CFA francs)

article image
Sources: Ministère du Plan et de l’Aménagement du Territoire, Direction de la Statistique; Banque Centrale des Etats d’Afrique de l’Ouest (BCEAO); and staff estimates.

At market prices.

Includes forestry, fishing, livestock, and hunting.

Table 2.

Togo: Sectoral Composition and Growth of GDP, 1991-95 1/

article image
Sources: Ministère du Plan et de l’Aménagement du Territoire, Direction de la Statistique; Banque Centrale des Etats d’Afrique de l’Ouest (BCEAO); and staff estimates.

At market prices.

Includes forestry, fishing, livestock, and hunting.

Table 3.

Togo: Supply and Use of Resources at Current Market Prices, 1991-95

article image
Sources: Ministère du Plan et de l’Aménagement du Territoire, Direction de la Statistique; Banque Centrale des Etats d’Afrique de l’Ouest (BCEAO); and staff estimates.
Table 4.

Togo: National Income at Market Prices, 1991-95

article image
Sources: Ministère du Plan et de l’Aménagement du Territoire, Direction de la Statistique; Banque Centrale des Etats d’Afrique de l’Ouest (BCEAO); and staff estimates.

Net investment income minus interest on external debt. The major component of the former is accrued interest on central bank reserves held on deposit in the operations account of the French Treasury.

Table 5.

Togo: Investment-Saving Balance, 1991-95 1/

(In percent of GDP)

article image
Source: Staff estimates.

The nongovernment sector includes public enterprises

Includes changes in stocks.

Defined as domestic savings plus unrequited transfers, excluding project grants, plus net factor income from abroad.

Table 6.

Togo: Price Structure of Coffee, Cocoa, and Cotton Marketed by OPAT, 1991/92-1995/96 1/

(In CFA francs per kilogram)

article image
Source: Office des Produits Agricoles du Togo (OPAT).

October 1 to September 30.

Including some administrative expenses.

Excluding handling, storage costs, input subsidies, and OPAT’s administrative costs. Also excludes export and sales taxes.

The price was raised from CFAF 90 to CFAF 110 in February 1994.

Table 7.

Togo: Marketing Operations of OPAT by Main Export Crops, 1991/92–1995/96 1/

article image
Sources: Office des Produits Agricoles du Togo (OPAT); Société Togolaise du Coton (SOTOCO); and staff estimates.

October 1 to September 30.

In 1995/96, 31,017 tons of ginned cotton were produced and exported by SOTOCO, and 27,250 tons of ginned cotton were produced by the Société Industrielle de Coton (SICOT).

Excluding handling, storage costs, input subsidies.

Before deduction of handling, storage costs, and subsidies.

Table 8.

Togo: Balance Sheet of OPAT, 1991/92–1994/95 1/

(In billions of CFA francs; end of period)

article image
Source: Office des Produits Agricoles du Togo (OPAT).

The financial year of OPAT runs from October 1 until September 30.

Mainly for price–support operations.

Table 9.

Togo: Income Statement of OPAT, 1991/92–1994/95 1/

(In millions of CFA francs)

article image
Source: Office des Produits Agricoles du Togo (OPAT).

Fiscal year: October 1 to September 30.

Includes various related expenses.

On a calendar–year basis.

Table 10.

Togo: Income Statement of SOTOCO, 1993/94–1995/96

(In millions of CFA francs)

article image
Source: Société Togolaise de Coton (SOTOCO).
Table 11.

Togo: Foodcrops – Acreage, Production, and Yield, 1991/92–95/96 1/

(Area in thousands of hectares; production in thousands of metric tons: yield in tons per hectare)

article image
Source: Direction des Enquêtes et Statistiques Agricoles.

Crop year from April 1 to March 31. Yield adjusted to take multicropping into account.

Table 12.

Togo: Number of Livestock, 1991–95

(In thousands of head)

article image
Source: Direction des Enquêtes et Statistiques Agricoles.
Table 13.

Togo: Balance Sheet of OTP, 1991–95

(In billions of CFA francs; end of period)

article image
Source: Office Togolais des Phosphates (OTP).
Table 14.

Togo: Financial Operations of OTP, 1991–95

(In billions of CFA francs)

article image
Source: Office Togolais des Phosphates (OTP).

Export receipts reported by OTP may not correspond exactly to those of the balance of payments (Table 46) because of different assumptions regarding both export volume and price.

Table 15.

Togo: Value Added of Manufacturing Industry, 1991–95

(In billions of CFA francs at current prices)

article image
Sources: Ministère du Plan et de l’Aménagement du Territoire, Direction de la Statistique Générale; and staff estimates.
Table 16.

Togo: Availability and Consumption of Electrical Energy, 1991–95

(In millions of kilowatt–hours)

article image
Source: Compagnie Energie Electrique du Togo (CEET).
Table 17.

Togo: Imports and Domestic Consumption of Selected Petroleum Products, 1991–95

(Volume in cubic meters, value in millions of CFA francs, price in thousands of CFA francs per cubic meter)

article image
Sources: Société Togolaise d’Entreposage (STE); Société Togolaise de Stockage de Lomé (STSL); and Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO).