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© 2003 International Monetary Fund

December 2003

IMF Country Report No. 03/383

Togo: 2002 Article IV Consultation and Review of the Staff-Monitored Program—Staff Report; and Public Information Notice on the Executive Board Discussion

Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of a combined discussion of the 2002 Article IV consultation with Togo and the Staff-Monitored Program, the following documents have been released and are included in this package:

  • the staff report for the 2002 Article IV consultation and review of the Staff-Monitored Program, prepared by a staff team of the IMF, following discussions that ended on February 6, 2002, with the officials of Togo on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on April 30, 2002. The views expressed in the staff report are those of the staff team and do not necessarily reflect the views of the Executive Board of the IMF.

  • a Public Information Notice (PIN) summarizing the views of the Executive Board as expressed during its May 17, 2002 discussion of the staff report that concluded the Article IV consultation.

The document(s) listed below have been or will be separately released.

Statistical Appendix

The policy of publication of staff reports and other documents allows for the deletion of market-sensitive information.

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Staff Report for the 2002 Article IV Consultation and Review of the Staff-Monitored Program

Prepared by the African Department (In consultation with the Fiscal Affairs, Legal, Monetary and Exchange Affairs, Policy Development and Review, Statistics, and Treasurer’s Departments)

Approved by Jean A. P. Clement and Martin Fetherston

April 30, 2002

  • A staff team visited Lomé from January 23 to February 6, 2002 to conduct discussions for the 2002 Article IV consultation and review the staff-monitored program (SMP) covering the period April-December 2001. The Togolese authorities have agreed to publish the 2002 Article IV staff report, following its consideration by the Executive Board.

  • The staff team comprised Mr. B. Sarr (head), Ms. Adenauer, Mr. Ossié, Ms. Williams-Smith (Administrative Assistant) (all AFR), Mr. Schulte (SEC) and Mr. Jean-Pierre Le Bouder, Senior Resident Representative in Lomé. Mr. Ondo Mane, Alternate Executive Director for Togo, participated in the policy discussions, and Mr. Souissi, a staff member from the African Development Bank, worked closely with the team. The mission met with President Eyadéma, the Prime Minister, the Minister of Economy, Finance and Privatization, the Minister of Planning and Development, and the National Director of the BCEAO, as well as with representatives of commercial banks and the private sector, and major bilateral and multilateral donors.

  • Discussions on a new PRGF arrangement could not be initiated at the expiration of the last Enhanced Structural Adjustment Facility (ESAF) arrangement in June 1998, mainly because of the need to establish beforehand a track record of policy performance. Regarding political developments, a consensus on the timing of the legislative elections has yet to emerge, and little progress has been made in normalizing Togo’s relations with development partners. The 2001 Article IV consultation with Togo was concluded on April 20, 2001.

  • Togo has accepted the obligation of Article VIII, Sections 2, 3 and 4 and maintains an exchange system free of restrictions subject to approval under Article VIII.


  • Executive Summary

  • I. Introduction

  • II. Recent Developments and Performance Under the Staff-Monitored Program

  • III. Report on the Discussions

    • A. Medium-Term Framework and Outlook for 2002

    • B. Macroeconomic Policy

    • C. Regional and Trade Issues

    • D. Other Structural Reforms

    • E. Statistical and Technical Assistance Issues

  • IV. Staff Appraisal

  • Boxes

  • 1. The Rehabilitation of the OTP

  • 2. Main Elements of the Authorities’ Economic Program

  • 3. Education and Health Spending, 2000-02

  • 4. Anti-money Laundering and combating the Financing of Terrorism

  • 5. WAEMU Budgetary Convergence Criteria, 1998–2002

  • 6. Cotton Sector

  • Figures

  • 1. Selected Economic Indicators

  • 2. Investment and Savings, 1992-2002

  • 3. Nominal and Real Effective Exchange Rates, January 1992-November 2001

  • Tables

  • 1. Selected Economic and Financial Indicators, 1997-2002

  • 2. Financial Operations of the Central Government, 1997-2002

  • 3. Monetary Survey, 1997-2002

  • 4. Balance of Payments, 1999-2007

  • 5. Public Sector External Debt and Debt Service by Creditor, 1999-2002

  • 6. Quantitative and Structural Benchmarks Under the SMP

  • Appendices

  • I. Relations with the Fund

  • II. BCEAO: Safeguards Assessment—Summary of Conclusions

  • III. Relations with the World Bank Group

  • IV. Statistical Issues

  • V Medium-Term Prospects, 2002-07

  • V. Medium-Term Projections, 2002-07

Executive Summary

  • On the political front, legislative elections scheduled to take place in October 2001 in Togo were initially postponed until March 2002. The authorities’ decision in February 2002 to amend unilaterally major provisions of the electoral code has jeopardized the participation of opposition parties in the elections, which have been postponed again to an unspecified date. The European Union (EU) and United Nations (UN) have temporarily suspended their support of the electoral process. The holding of free and fair legislative elections is necessary for the resumption of financial assistance from the international community.

  • The Togolese economy recovered somewhat in 2001, achieving a real GDP growth rate of 2.7 percent, compared with a contraction of 1.9 percent in 2000. This recovery was driven by solid growth in cash crop production, reflecting favorable climatic conditions and, in the case of cocoa, higher international prices. The average annual rate of inflation picked up to 3.9 percent, mainly owing to higher transportation costs. The external account deficit (including transfers) widened to 15.9 percent of GDP, reflecting a decline in phosphate production and weak international cotton prices. The consumer price-based real effective exchange rate appreciated by 1.6 percent in 2001.

  • The authorities’ medium-term objective is to create a favorable environment for a sustained real rate of economic growth averaging 5 percent, while keeping inflation at about 2-3 percent. To achieve these macroeconomic objectives, it will be critical to stabilize public finances. The main challenge is to limit expenditures to available budgetary resources, so as to avoid any further deterioration of public finances, and to restore full financial relations with development partners. The authorities will also need to show their determination to complete the privatization of public enterprises and state banks in the period ahead.

  • Performance under the staff-monitored program (SMP) covering the period April-December 2001 was mixed. Although significant progress was made on the structural front, most of the quantitative benchmarks were not met. In the context of the 2002 Article IV discussions, the authorities have prepared an economic program covering 2002 that will serve as a basis for continued policy dialogue with the Bretton Woods institutions, pending a full resolution of the present political situation and resumption of external assistance. The program should allow the authorities to demonstrate their commitment to stabilize public finances and complete the ongoing privatization of banks and public enterprises.

  • Budgetary resources are extremely tight and, given the present political environment and absence of external support, the authorities have little room for maneuver. The staff urges the authorities to implement their economic program forcefully and emphasizes that every effort will need to be made to regularize relations with their bilateral and multilateral external partners, so as to facilitate the resumption of normal budgetary assistance and development assistance as soon as possible.

  • The agreement reached with a private group to rehabilitate the physical infrastructure of the OTP (phosphate company) under a new management team before fully privatizing it is proceeding well. The authorities are to be commended for addressing the problem in this critical sector of the Togolese economy, including by successfully negotiating a rescheduling agreement of the OTP’s debt with all commercial banks.

  • The staff shares the authorities’ concern over the potential impact on growth and poverty alleviation of the looming problems in the cotton sector. The short-term measures under active consideration to limit the deficit supported by SOTOCO for the 2001/02 crop season are steps in the right direction. The recommendations of the diagnostic study to be prepared with the World Bank assistance should also help address the short-term problems; meanwhile, over the medium term, more in-depth complementary studies will be required to design the restructuring strategy for this sector, and the specific actions needed to improve the competitiveness of the cotton sector and reinforce the role of producers.

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Public Information Notice (PIN) No. 03/142


December 8, 2003

International Monetary Fund

700 19th Street, NW

Washington, D. C. 20431 USA

Togo: 2002 Article IV Consultation and Review of the Staff-Monitored Program-Staff Report; and Public Information Notice on the Executive Board Discussion
Author: International Monetary Fund