Togo has made significant progress in advancing economic and political reforms under the Staff-Monitored Program (SMP). Important fiscal governance reforms have boosted tax revenues and helped expenditure control. The I-PRSP is designed to preserve macroeconomic stability while reviving economic growth and reducing poverty. The Poverty Reduction Growth Facility (PRGF) helped to consolidate macroeconomic stability, achieve fiscal and debt sustainability and pave the way for HIPC/MDRI debt relief. On account of a strong performance under the SMP, a fast reviving economy and achieving fiscal and debt sustainability, Togo requested a three-year arrangement with the IMF under the PRGF.
1. This statement summarizes information that has become available since the staff report on Togo was circulated to the Executive Board on March 31, 2008. The new information does not change the thrust of the staff appraisal.
2. As in other countries, food and oil prices have risen rapidly in Togo over the past few months, pushing annual consumer price inflation to 4 percent in February 2008, from near zero in October 2007, driven mainly by a 17 percent increase in food prices over the past five months. The Togolese authorities are concerned about the economic and social impact of these pressures. They have initiated a social dialogue on the price shocks and cleared old wage arrears to assist (mostly urban) civil servants. The authorities also intend to help the rural population by supporting subsistence agriculture. An upcoming IMF staff mission will discuss the economic implications of the recent price shocks and possible policy responses.
3. The Togolese government has completed all prior actions and signed the minutes of negotiation for the arrears clearance operation with the World Bank (about $153 million), financed in full by an exceptional IDA allocation, planned for end-May 2008. The operation will also include $17.6 million as budget support out of the regular IDA allocation. The authorities have also signed a protocol with the AfDB on an arrears clearance operation financed under its new Fragile States Facility, with a 1 percent contribution by Togo (about $0.2 million) for which the authorities are seeking a grant from donors.