Côte d’Ivoire: Staff Report for the 2007 Article Consultation and Request for Emergency Post-Conflict Assistance—Informational Annex

This 2007 Article IV Consultation highlights that Côte d’Ivoire’s crisis has taken a heavy toll on growth and social conditions. Per capita income fell by one-sixth, poverty rose, and many social indicators worsened. These developments have also hurt regional trade and output. The external current account has remained in surplus, helped by resilient cocoa production and favorable prices. The outlook for 2007 is for a modest recovery to 1½ percent output growth, depending on progress in political normalization and the restoration of public services throughout the country.


This 2007 Article IV Consultation highlights that Côte d’Ivoire’s crisis has taken a heavy toll on growth and social conditions. Per capita income fell by one-sixth, poverty rose, and many social indicators worsened. These developments have also hurt regional trade and output. The external current account has remained in surplus, helped by resilient cocoa production and favorable prices. The outlook for 2007 is for a modest recovery to 1½ percent output growth, depending on progress in political normalization and the restoration of public services throughout the country.

Appendix I. Côte d’lvoire: Relations with the Fund

(As of May 31, 2007)

I. Membership Status: Joined March 11, 1963; Article VIII

II. General Resources Account:

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III. SDR Department:

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IV. Outstanding Purchases and Loans

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V. Latest Financial Arrangements

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VI. Projected Payments to Fund (SDR million; based on existing use of resources and present holdings of SDRs):

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VII. Implementation of HIPC Initiative

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VIII. Implementation of Multilateral Debt Relief Initiative (MDRI): Not Applicable

IX. Safeguards Assessments

The Central Bank of West African States (BCEAO) is the common central bank of the countries of the West African Economic and Monetary Union (WAEMU) which includes Côte d’Ivoire. The most recent safeguards assessment of the BCEAO was completed on November 4, 2005. The assessment found that progress has been made in strengthening the BCEAO’s safeguards framework bank since the 2002 safeguards assessment.

The BCEAO now publishes a full set of audited financial statements and improvements have been made to move financial reporting closer to International Financial Reporting Standards (IFRS). Furthermore, an internal audit charter has been put in place, and mechanisms for improving risk management and risk prevention have been established and follow-up on internal and external audit recommendations has been strengthened.

The new assessment identified a number of areas where further steps would help solidify the progress made. The main recommendations relate to improvements in the external audit process (including the adoption of a formal rotation policy), further enhancement of the transparency of the financial statements by fully adopting IFRS, and further strengthening of the effectiveness of the internal audit function. The status report of the implementation of recommendations, received from the bank in March 2007, indicates that some progress was achieved.

X. Exchange Arrangements:

Côte d’Ivoire is a member of the West African Economic and Monetary Union (WAEMU). The exchange system, common to all members of the union, is free of restrictions on payments and transfers for current international transactions. The union’s common currency, the CFA franc, is pegged to the Euro at the rate of EUR 1 = CFAF 655.957.

XI. Article IV Consultation:

Côte d’Ivoire is on the standard 12-month Article IV consultation cycle. The 2003 Article IV consultation was completed by the Executive Board on March 31, 2004.

XII. Technical Assistance:

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XIII. Resident Representative:

A Fund resident representative has been reposted in Abidjan since January 2007, after an interruption of one and a half years.

Appendix II. Côte d’Ivoire: Relations with the World Bank Group3

(As of June 21, 2007)

1. Prior to the September 2002 crisis, the Bank Group’s Country Assistance Strategy sought to assist Côte d’Ivoire in reducing poverty through (i) sound macroeconomic management, including prudent debt management; (ii) increased private sector development and investment under an efficient and transparent regulatory framework; (iii) more efficient expenditure targeting in health, education, and basic infrastructure through innovative delivery approaches; (iv) strengthened institutional and human capacity; (v) emphasis on environmental sustainability; and (vi) improved governance, notably in the area of public expenditure management.

2. After an interruption caused by the country being in nonaccrual status the Bank resumed its lending operations in Côte d’Ivoire following the clearance of arrears in January 2002. An Economic Recovery Credit equivalent to US$200 million (over an 18-month period) was approved on June 11, 2002 and the first tranche of US$100 million was disbursed. The credit aimed at: (i) creating the conditions for renewed broad-based growth driven by rural recovery and resumed confidence in the private sector; (ii) improving public services delivery with participation of local communities; and (iii) improving efficiency and accountability in public resource management. Implementation of structural reforms underpinning the ERC, however, was delayed by the intervening conflict. Moreover, because of the lack of an adequate macroeconomic framework (the related IMF PRGF credit was also stopped) and stalling progress on structural reforms, the ERC was closed on December 31, 2003 (as originally envisaged), and the remaining two tranches were canceled. Côte d’Ivoire fell again into nonaccrual status on November 2, 2004, with arrears to the Bank estimated at end-June 2007 to total about US$480 million. World Bank arrears must be cleared prior to any disbursements from existing projects or the provision of new financing from the Bank, other than an exceptional pre-arrears clearance grant in support of the post-conflict transition.

3. Meanwhile, notwithstanding the suspension of disbursements and delays in presenting new projects to the Bank’s Board due to the arrears, the Bank has been providing limited financial support and addressing pressing needs via six Post-Conflict Fund grants totaling about US$2 million. They include: (i) support to establishing a “National Program for DDR” amounting to $100,000 (only half of which was spent because the then CNDDR did not request the second tranche); (ii) “Communication to Strengthen Social Cohesion” (US$270,000) executed by the NGO Search for Common Ground; (iii) “Community Reintegration Pilot Project 1” (US$ 538,690) implemented by CARE International; (iv) “Community Reintegration Pilot Project 2” (US$737,500) in partnership with CARE International; (v) “Reintegration of children associated with the armed groups and forces” (US$298,000) implemented by UNICEF; and (vi) a “Rapid Social Assessment” amounting to US$160,000. Two additional LICUS grants were recently approved as part of a US$6 million LICUS package. The first one, which the Bank executed, is for an amount of $1.9 million to provide assistance in post-conflict planning and improving governance, including audits in the energy sector. The second, for US$2.25 million, to be executed by the Prime Minister’s Office, is for support of the national identification process. The third and last part of the package will be to finance pilot initiatives in employment creation for youth at risk (US$2.25 million).

4. During the discussions at the World Bank-IMF Spring Meetings in April 2007, the World Bank and Ivoirien authorities discussed the issues concerning the implementation of the Ouagadougou Accord, the Disarmament, Demobilization, and Reintegration (DDR) process and the Bank’s re-engagement in Côte d’Ivoire. An agreement was reached for the government of Côte d’Ivoire to begin paying current debt service to the Bank in July, 2007 while the Bank agreed to aim to approve a pre-arrears clearance grant in support of post-conflict transition (Post-Conflict Assistance Project—PCAP), pending full clearance of Bank arrears over the next 8-9 months. The government of Côte d’Ivoire also committed to elaborate a plan for the full clearance of arrears acceptable to the Bank. The objective of the plan is to effect the complete payment of Bank arrears by February 2008. The plan will entail a contribution from the government of at least one-third of total accumulated arrears at the time of the beginning of the arrears clearance operation (end-June 2007). Within this framework, the Bank has accelerated the preparation of the PCAP grant of US$120 million—in support of the Ouagadougou Accord—and scheduled it for Board presentation on July 17, 2007. In addition, the Bank would request approval from the Board of Directors of an exceptional IDA allocation to facilitate the financing of the remainder of the arrears not financed from Côte d’Ivoire’s own resources.

5. The World Bank arrears clearance will take place within a credible macroeconomic fiscal framework supported by and closely coordinated with an IMF program. During a joint Bank-IMF mission in May 2007, the Bank has left with the government an Aide-Mémoire as a record of discussions and agreements and a basis for further dialogue and reforms in key economic sectors (including cocoa/coffee, energy and financial sectors) that will be the subject of a Public Expenditure Management and Financial Accountability Review (PEMFAR) and a budget support operation, Emergency Economic Recovery Credit (EERC) in the next fiscal year. The Bank’s dialogue with the authorities is centered on the following:

  • Finalizing of the ongoing three audits in the energy sector, launching of a new PEMFAR, and restarting of the PRSP process,

  • In FY08—if arrears are fully cleared—the Bank would reactivate its existing four projects (US$104 million) and finance a new HIV/AIDS US$20-40 million grant and a project for strengthening of institutions and governance.

  • As soon as satisfactory progress is made on the DDR program and the related security front (to guarantee safe access to conflict-affected areas), as part of the reconstruction process, the Bank is expected to take the lead in organizing a Multi-Donor Assessment close collaboration with the IMF, EU and other development partners (the LICUS-financed activities will inform the MAM). The purpose of the MAM is to identify reconstruction financing needs, new expenditure priorities, and the likely sources of external finance.

  • Also, analytical work is under way with regard to a poverty diagnostic and rapid social assessment, as well as other work on forestry, governance, infrastructure, and regional power integration; work would resume on public expenditure management following the full re-engagement. The ongoing LICUS package is also focused on analytical work.

  • After an adequate macroeconomic framework is established for a reasonable period of time, and basic measures to strengthen governance and transparency in energy, cocoa/coffee, financial, and public expenditure management are taken, a US$120-150 million—Emergency Economic Recovery credit (EERC)—could be provided in support of structural reforms, after a track record of policy performance under the IMF’s EPCA and full clearance of Bank arrears.

6. The IFC’s portfolio has been showing strains from the continued economic crisis as clients struggle in the prolonged uncertainty and economic downturn. The committed portfolio totals US$88.9 million. With the return of stability and an end to the economic crisis, new projects may again be selectively considered.

7. MIGA’s outstanding portfolio in Côte d’lvoire consists of one project, with two contracts of guarantee, in the manufacturing sector, with a total gross and net exposure of US$15.05 million. Currently, MIGA accepts applications for guarantees for projects in Côte d’Ivoire, but has no project in its active pipeline for the country.

Côte d’Ivoire: Debt Service to the World Bank

(In millions of U.S. dollars)

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Source: World Bank Controller’s debt-service projections.

IMF-World Bank collaboration in specific areas

8. The World Bank has worked closely with the IMF on the Ivoirien authorities’ reform program, and shares the same views on policy issues. There is broad agreement on the core reform program the authorities intend to pursue, namely: (i) streamlining public expenditure management and tax policy; (ii) enhancing governance and transparency in the energy and cocoa/coffee sectors; and (iii) reducing financial sector vulnerabilities. Broad division of labor between the Bank and the Fund is detailed in the Table 1 below.

Table 1.

Bank-Fund Collaboration

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Appendix III. African Development Bank Group Operations Strategy

1. Bank Group Portfolio and its Management. Out of a total of 49 operations,4 approved since the start of intervention in Côte d’Ivoire for a net commitment of UA5 1,030 million (US$1,535 million), the current project portfolio has now only four projects for a net commitment of UA 61.5 million, excluding projects whose balances have been cancelled. The outstanding balance of these projects is only UA 5.5 million, of which a UA 3.7 million grant for National Good Governance and Capacity Building Programme (PNBGRC). The remainder will be cancelled. The aim of the project (PNBGRC) is to contribute to strengthening the rule of law, to sound public resource management, and to poverty reduc-tion. Specifically, its purpose is to: (i) contribute to improving the operation of the legal system; (ii) strengthen structures and institutions involved in the decentralization process; (iii) support the public resources management capacity; and (iv) strengthen the PNBGRC coordinating structure.

2. Regarding portfolio management, the ongoing projects have been seriously affected by the crisis arising from the suspension of disbursements from February 1, 2003. Following discussions with an Ivoirien delegation in Tunis in July 2004 and July 2005, the Bank began canceling the balances of 10 operations in accordance with the relevant Bank procedures. As of end-February 2007, the total amount cancelled was UA 65.7 million. The Bank has not made any further cancellations since there is hope of resumption of financial cooperation with the country. While loan disbursements have been suspended in accordance with the sanctions for accumulation of arrears, the Bank has continued implementing operations financed with grants. These include the Study for formulation of the Irrigation Development Plan, the Road Toll and Weighbridge Study Plan and the Agneby Plan Study, which have been practically completed.

3. Status of Arrears to the Bank Group and Payment Schedule. Côte d’Ivoire’s arrears owed to the Bank Group stood at UA 335 million (US$463 million) at April 30, 2007, with UA 327 million for ADB and UA 8 million for ADF loans. The private sector arrears amounted to UA 1.52 million as at April 30, 2007. Côte d’Ivoire has no arrears on its subscription to the Bank’s capital.

Projected Côte d’Ivoire Reimbursement in UA million

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4. Steps by the Bank to facilitate arrears clearance. Following the clearance of arrears at end March 2002, the Board approved an interim strategy under ADF VII on April 3, 2002. This strategy could not be carried out since arrears began building up again from February 2003, and the Bank suspended all disbursements on loans, and no operations were approved under ADF IX and X. However, the Bank has maintained the dialogue with the government in order to be able to implement its strategy, as soon as it would re-engage in Côte d’Ivoire. During various consultative missions, the Ivoirien authorities reaffirmed their commitment to stabilize arrears and stay current on maturities. However, these commitments have not been carried out.

5. During the May 2006 IMF mission on Emergency Post-Conflict Assistance, in which the Bank participated, the government undertook to (i) demonstrate its willingness to cooperate, by repaying the Bank an amount of CFAF 10.2 billion representing partial payment of interest due in 2006; and (ii) adopt an arrears clearance plan by September 2006, for full implementation by July 2007 at the latest. Neither the interest payments nor the government mission to Tunis envisaged for July 2006 to discuss an arrears clearance plan with the Bank took place.

6. On April 28th, 2007, the Ivoirien authorities and the Bank came to an agreement on the modalities of an arrears clearance scheme. This scheme is included in the Memorandum of Economic and Financial Policies elaborated by the IMF in May 2007. Within the framework of the Post-Conflict Countries Facility (PCCF), it assumes moving the cut-off date from end-December 2003 to end-April 2007 and effective clearance of arrears in April 2008. The servicing of the maturities falling due between May 2007 and April 2008 must start no later than September 2007 and must be paid in full by April 2008. By this date, the Country will also have to pay one-third of the arrears outstanding as of end-April 2007. The remaining two-thirds will be shared between donors and the PCCF.

Strategy and Instruments for Macro-economic Dialogue and Arrears Clearance

7. Objective and Strategy. The strategy consists in identifying and implementing a new solution for arrears settlement that will enable the Bank to fully resume cooperation with the country. This strategy involves: (i) continued dialogue toward meeting the criteria for accessing the Post-Conflict Country Facility (PCCF); and (ii) institutional capacity building. With a view to resolving the arrears problem within the framework of the PCCF, the Bank will be taking the following actions: (i) Board submission of a Dialogue Note in October 2007, discussing the socio-economic situation in Côte d’Ivoire, as well as the way forward on clearing arrears outstanding to the Bank Group; (ii) preparation of a Technical Assistance and Capacity Building operation, to use the allowable 50 percent of the ADF X allocation before year end-2007; (iii) Board presentation of the interim Country Strategy Program (CSP); (iv) launching appraisal of new operations, starting with the post-conflict reconstruction program; and (v) a review of the portfolio with a view to resuming disbursements for ongoing operations. In the medium-term, when the arrears problem has been fully resolved, the Bank will submit to the Board a Country Strategy Paper that will serve as framework for its operations.

Appendix IV. Statistical Issues

While broadly adequate, the macroeconomic statistics need strengthening. While the authorities have generally provided the core statistical indicators to the Fund (see attached table), there are weaknesses in the areas of national accounts, balance of payments, and public finance, and the conciliation of fiscal and monetary data. Côte d’Ivoire participates in the General Data Dissemination System (GDDS) since May 2000, however, the metadata posted on the Data Standards Bulletin Board (DSBB) have not been updated since June 2001.

Real sector

The authorities have published comprehensive national accounts data for the period 1987-95, using 1986 as the base year. They have also published a new set of national accounts for the period 1996-2006 using 1996 as base year. GDP data reported for the IFS are now current. The authorities have updated the national accounts to bring them in line with the 1993 System of National Accounts and changed the base year to 1996. However, GDP deflators appear to be lacking in quality. Technical assistance (TA) in national accounts has been provided by AFRITAC West. A harmonized consumer price index (CPI) (base 1996) was adopted by all members of the West African Economic and Monetary Union (WAEMU),6 including Côte d’Ivoire. A revision of the CPI put in place in the beginning of January 1998 is currently being implemented. There are no regular publications on wages and employment.

Public finances

The Ministry of Finance has reported data up to 2006 for publication in the Government Finance Statistics Yearbook. The authorities do not provide monthly or quarterly fiscal data for publication in IFS. However, the Ministry of Finance has made available to AFR detailed monthly government finance data through March 2007. Documentation on the coverage of general government units and public enterprises is lacking. While the government has committed to addressing this weakness and to making a comprehensive effort to reconcile fiscal and monetary data, there is little progress to date. Deficiencies in the recording of expenditures undermine sound fiscal reporting.

Monetary accounts

Monetary data are prepared by the national agency of the Central Bank of West African States (BCEAO). Some of the problems with the monetary statistics are common to all eight member countries of the WAEMU, while others are specific to the systemic issues in Côte d’Ivoire’s bank and non-bank financing of the operations of the central government and the rest of the public sector. There has been improvement in the timeliness of data on monetary institutions and deposit money banks. The authorities now report monetary data to STA on a regular basis, with a reduction in the lag from about six months to three to four months. The BCEAO has also improved the estimates of currency in circulation in each WAEMU member country by addressing the large backlog of unsorted banknotes held by the central bank’s national agencies. In 2005, the BCEAO made substantial revisions to the estimates of banknotes in circulation in member states resulting from cross-border banknote movement. These revisions were due to changes in the method to estimate currency in circulation in the WAEMU countries. The revised method, based on updated sorting coefficients (initially established in 1990), has been applied retroactively from December 2003. The BCEAO is using sorting coefficients to evaluate the amounts of currency issued by each country, which in turn, are used to estimate currency in circulation and to adjust the net foreign assets of each member country.

A monetary and financial statistics mission visited the BCEAO headquarters in Dakar in May 2001, and STA participated in a BCEAO-sponsored seminar on monetary statistics in April 2003. In these regional fora, STA reviewed with the BCEAO representatives outstanding methodological issues that concern the member countries of the WAEMU and discussed the BCEAO’s plans to adopt the Monetary and Financial Statistics Manual.

In August 2006, as part of the authorities’ efforts to implement the methodology in the Monetary and Financial Statistics Manual, the BCEAO reported to STA monetary data for June 2006 for all member countries using Standardized Report Forms (1SR-central bank, 2SR-other depository corporations, and 5SR-monetary aggregates). These data were reviewed in STA and comments were provided to the authorities. An official response is pending.

Balance of payments

Since December 1998, the responsibility for compiling and disseminating balance of payments statistics is formally assigned to the BCEAO by an area-wide legislation adopted by all WAEMU members. The national agency of the BCEAO in Abidjan is responsible for completing and disseminating the balance of payments statement, while the BCEAO headquarters in Dakar delineate the methodology and calculate the international reserves managed on behalf of the participating countries. Data consistency has significantly improved over the past few years with the full transition to the Balance of Payments Manual, Fifth edition (BPM5), improved sourcing methods, and the training of staff. This has contributed to the reporting of balance of payments data in the framework of the BPM5 from 1996 onwards. The BCEAO national agency disseminates balance of payments statistics with seven months lag, which is longer than the recommendation of the GDDS. The BCEAO also compiles and disseminates the annual data of the international investment position. Data are reported regularly to STA for inclusion in IFS and the BOPSY.

Regarding trade, the customs computer system allows satisfactory monitoring of trade data. Further improvement of the coverage of services and transfers (especially workers’ remittances) is needed.

Concerning the financial accounts, the foreign assets of the private nonbanking sector are inadequately covered. Reporting of private capital flows, in particular foreign direct investment in Côte d’Ivoire, is unsatisfactory. Insufficient information exists on private debt stocks and private debt service flows.

The BCEAO has implemented a compilation system allowing commercial banks to report data on payments involving non-residents. The balance of payments compilers receive payment statements every 10 days. However, the information is not used in the compilation of the annual balance of payments, but is used to support data quality controls and to provide for early information to the BCEAO authorities.

Côte d’Ivoire: Table of Common Indicators Required for Surveillance

(As of July 12, 2007)

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Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

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

Including currency and maturity composition.

Daily (D), weekly (W), monthly (M), quarterly (Q), annually (A), irregular (I); and not available (NA).


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


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


This Appendix has been prepared by the World Bank. Questions may be addressed to: Mr. Zeljko Bogetic, Lead Economist (202-473-2143).


Not including four projects initiated by the private sector, for a total of UA 33 million.


UA (UC : Unité de compte): 1 SDR = USD 1.52 at end-June 2007.


Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo.