Recent developments

• The sociopolitical tensions of the past 18 months appear to be easing. But further progress toward national reconciliation is needed to secure social and political stability. Having found that the political conditions agreed upon with the Ivoirien authorities had only partially been met, the EU announced on June 25, 2001 that it would resume gradually financial assistance to Côte d’Ivoire with an immediate but limited disbursement. Further assistance would depend on a positive review of progress in meeting the remaining political conditions (possibly by September 2001), with the reestablishment of full financial cooperation after a positive final review (possibly by January 2002).

• The economy continues to be buffeted by adverse external shocks and a fragile sociopolitical climate. Real GDP contracted by 2½ percent in 2000, reflecting deterioration in the terms of trade, political uncertainty, and a severely weakened fiscal position. Average annual inflation remained subdued at 2½ percent.

• The external current account deficit (including grants) widened to 5½ percent of GDP in 2000 from 4 percent of GDP in 1999. This outcome, together with a deterioration in the capital and financial account, contributed to an overall balance of payment deficit equivalent to 6 percent of GDP, which was financed by the accumulation of external payment arrears.

• The public finance situation deteriorated significantly, with a substantial new accumulation of domestic and external payment arrears. The total stock of arrears and DENOs increased from the equivalent of 7 percent of GDP in 1999 to about 12 percent at end-2000.

• Little progress was made over the past 18 months in the implementation of key structural reforms, and the outstanding governance issues remained unresolved. In the coffee and cocoa sectors, new institutions were created, including a commodity stock exchange, Bourse du Café et du Cacao (BCC) in charge of carrying out technical, financial, and supervisory missions in the marketing of cocoa, and a new regulatory body, Autorité de Régulation du Café et du Cacao (ARCC).

• The medium-term outlook is a cause for concern. Even under the staffs preliminary baseline scenario, which is based on a resumption of external assistance starting in early 2002, real GDP growth would reach only 5 percent by 2004, which is still below Côte d’Ivoire’s growth potential and barely adequate to begin addressing the problem of the country’s rising poverty.

Issues stressed in the discussions on the staff-monitored program:

• Attainment of the fiscal program targets hinges critically on the authorities’ efforts to improve revenue performance and their putting in place rigorous expenditure controls, while avoiding off-budget spending.

• There is a need to address swiftly the deficit of the energy sector and contingent liabilities stemming from weaknesses in the public financial institutions (CAA and CECP).

• Steps should be taken to reinvigorate the structural reform program: the study on the regulatory framework needed to achieve the privatization of the SIR needs to be completed, and the reforms envisaged in the coffee and cocoa sectors should remain consistent with the principles of the liberalized marketing arrangements in these sectors.

• The authorities should make every effort to normalize relations with their bilateral and multilateral external partners, so as to facilitate the resumption of budgetary and development assistance as soon as possible. At a minimum, they need to remain current on their debt-service obligations vis-à-vis the multilateral creditors, as currently envisaged in the budget.

• Implementing the actions agreed on with the authorities in the context of the staff-monitored program (SMP) is critical. The SMP could be developed into a PRGF-supported program after satisfactory performance under the SMP, and once donors have fully resumed their financial relations with Côte d’Ivoire.

Selected Economic and Financial Indicators, 1999-2004

Sources: Ivoirien authorities; and Fund staff estimates and projections.

^1/Assuming implementation of adjustment measures.

Selected Economic and Financial Indicators, 1999-2004

		1999	2000	2001	2002	2003	2004
			Est.	Projections 1/
		(Annual percentage change)
Real GDP		1.6	−2.3	–1.0	3.7	4.5	5.0
Consumer price index (annual average)		0.7	2.5	4.0	3.6	3.4	3.1
Broad money		0.8	−0.9	1.8	5.1	5.3	5.7
		In percent of GDP
Overall budget balance
	Including grants	−3.2	−1.4	−1.2	−1.2	−0.9	−0.6
	Excluding grants	−3.8	−2.0	−1.7	−1.6	−1.3	−1.0
External current account balance
	(including grants)	−4.2	−5.4	−5.6	−4.8	−4.6	−3.8

Sources: Ivoirien authorities; and Fund staff estimates and projections.

^1/Assuming implementation of adjustment measures.

View Table

Selected Economic and Financial Indicators, 1999-2004

		1999	2000	2001	2002	2003	2004
			Est.	Projections 1/
		(Annual percentage change)
Real GDP		1.6	−2.3	–1.0	3.7	4.5	5.0
Consumer price index (annual average)		0.7	2.5	4.0	3.6	3.4	3.1
Broad money		0.8	−0.9	1.8	5.1	5.3	5.7
		In percent of GDP
Overall budget balance
	Including grants	−3.2	−1.4	−1.2	−1.2	−0.9	−0.6
	Excluding grants	−3.8	−2.0	−1.7	−1.6	−1.3	−1.0
External current account balance
	(including grants)	−4.2	−5.4	−5.6	−4.8	−4.6	−3.8

Sources: Ivoirien authorities; and Fund staff estimates and projections.

^1/Assuming implementation of adjustment measures.