Côte d’Ivoire: Staff Report for the 2009 Article IV Consultation, First Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility, Request for Waiver of Nonobservance of Performance Criteria, and Financing Assurances Review
Author:
International Monetary Fund
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Publication Date:
08 Dec 2009
eISBN:
9781451807967
Language:
English
Keywords:
ISCR; CR; Ivorian authorities; government; PRGF arrangement; Côte d'Ivoire; project funds; public finance; budgetary funds; SDR equivalent; common currency; Government finance statistics; Customs administration core functions; Government debt management; West Africa
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This 2009 Article IV Consultation highlights that Côte d’Ivoire has embarked on comprehensive reform policies to address the challenges of enhancing growth and reducing poverty. It adopted a Poverty Reduction Strategy Paper in February 2009, which covers the seven-year period 2009–15, and aims to transform the country into an emerging economy. The authorities have strengthened fiscal control and the transparency of budget implementation in recent years while making room to increase pro-poor spending. Significant revenue efforts have facilitated an increase in spending for urgent needs.

Abstract

This 2009 Article IV Consultation highlights that Côte d’Ivoire has embarked on comprehensive reform policies to address the challenges of enhancing growth and reducing poverty. It adopted a Poverty Reduction Strategy Paper in February 2009, which covers the seven-year period 2009–15, and aims to transform the country into an emerging economy. The authorities have strengthened fiscal control and the transparency of budget implementation in recent years while making room to increase pro-poor spending. Significant revenue efforts have facilitated an increase in spending for urgent needs.

Relations with the Fund

(As of September 30, 2009)

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 (without HIPC Assistance):1

(SDR million; based on existing use of resources and present holdings of SDRs):

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Projected Payments to Fund (with Board-approved HIPC Assistance):

(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

Decision point - point at which the IMF and the World Bank determine whether a country qualifies for assistance under the HIPC Initiative and decide on the amount of assistance to be committed.

Interim assistance - amount disbursed to a country during the period between decision and completion points, up to 20 percent annually and 60 percent in total of the assistance committed at the decision point (or 25 percent and 75 percent, respectively, in exceptional circumstances).

Completion point - point at which a country receives the remaining balance of its assistance committed at the decision point, together with an additional disbursement of interest income as defined in footnote 2 above. The timing of the completion point is linked to the implementation of pre-agreed key structural reforms (i.e., floating completion point).

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, which includes Côte d’Ivoire. The most recent safeguards assessment of the BCEAO was completed on November 4, 2005. The assessment indicated progress has been made in strengthening the bank’s safeguards framework since the 2002 assessment and identified some areas where further steps would help solidify it. An update of the assessment is in progress.

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, mechanisms for improving risk management have been established, and follow-up on internal and external audit recommendations has been strengthened.

The results of continuous safeguards monitoring indicate that while certain vulnerabilities remain in internal control systems and legal structure, there has been some progress in other areas, including through: (i) improving the external audit process by adopting a multi-year audit program; (ii) establishing an audit committee; (iii) expanding disclosures on financial positions of WAEMU countries with the Fund in the notes to the annual financial statements; and (iv) further strengthening of the effectiveness of the internal audit function.

X. Exchange Arrangements:

Côte d’Ivoire is a member of the WAEMU; the exchange system, common to all members of the union, is free of restrictions on payments and transfers for current international transactions. The common currency, the CFA franc, is pegged to the euro at the rate of €1 =CFAF 655.957.

Côte d’Ivoire applies temporary restrictions relating to UN-imposed sanction, based on WAEMU Regulation 14/2002/CM of September 2002, which provides for the enforcement of decisions by the UNSC Sanctions Committee to freeze funds. The authorities are in the process of notifying the Fund of these restrictions.

XI. Article IV Consultation:

Côte d’Ivoire is on the standard 12-month Article IV consultation cycle. The Executive Board completed the 2007 consultation on August 3, 2007.

XII. Technical Assistance:

A. AFRITAC West

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B. Headquarters

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XIII. Resident Representative:

A Fund resident representative was posted in Abidjan in January 2007 after an interruption of one and a half years.

Joint Bank-Fund Work Program, 2009

(As of October 14, 2009)

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African Development Bank Group Operations Strategy

1. Bank Group Portfolio. Of a total of 56 operations approved since the start of AfDB intervention in Côte d’Ivoire in 1971,4 for a net commitment of UA 1.135 million, the current project portfolio comprises two active operations, namely (i) the Institutional and Multisector Crisis-Exit Support Program (PAIMSC) financed with a UA 20.0 million ADF grant, and (ii) the Economic and Financial Sector Support Program (PAREF) - a UA 83.9 million grant-funded budgetary support program. As regards the PAIMSC, 54.6 percent of project funds were disbursed as of 31 May 2009. It is noteworthy that several activities have already been completed including: (i) launching the tender for equipment for students and teachers from the Center, North and West (CNW) zone; (ii) purchasing equipment for health centers;(iii) earmarking of the health centers to be rehabilitated; and (iv) elaborating an action plan for capacity building to assist women who are victims of domestic violence. AfDB also approved two emergency grants for a total of UA 1 million targeted at (i) war-affected children and (i) the fight against the Avian Flu, respectively in September 2006 and June 2008.

2. Portfolio management. The current projects have been seriously affected by the crisis arising from the suspension of disbursements starting in February 2003. Following discussions with an Ivorian delegation in Tunis in July 2004 and July 2005, the AfDB envisaged canceling the balances of 10 operations in accordance with its procedures. However, following several requests from the Ivorian government in 2008, the AfDB has not made any further cancellations with a strong hope of resumption of financial cooperation with Côte d’Ivoire in early 2009, thus freezing these operations. However, the clearance of arrears approved by the AfDB Board in March 2009 has paved the way for a progressive re-launching of the cooperation between AfDB and Côte d’Ivoire. A mission aimed at assessing the performance of the on-going operations and restructuring the frozen portfolio of projects was undertaken in June 2009.

3. Arrears Clearance. Following the intense process of negotiation which led in March 2009 to the clearance of the arrears of the country with AfDB the Government has made notable efforts in staying current with its maturities (see below).

Projected reimbursements by Côte d’Ivoire in UA (millions) at end-December 2008 1/

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Figures are subject to exchange rate fluctuations.

4. Strategy for reengagement by AfDB in Côte d’Ivoire. The lifting of sanctions on the country approved by the Board of AfDB on March 6, 2009 has allowed Côte d’Ivoire to become re-eligible to financial assistance from the AfDB under ADF 11 (2008-10). The current AfDB’s reengagement strategy approved by its Board of Directors on March 6, 2009 focuses on contributing to help the country out of its current situation of fragility. AfDB’s focus under the Africa Development Fund (ADF 11) (2008-10) will be to provide support to the government for strengthening governance, including through capacity building and developing economic infrastructure to reinforce regional integration and mitigating the adverse impact of the civil war on the population especially in rural areas. The AfDB reengagement strategy was approved by its Board of Directors on March 6, 2009. Consultations between the Government and the Bank for the preparation the new Country Strategy Paper (CSP) for the period 2011-15 will start in the second quarter of 2010. The country will host the AfDB’s Annual Meetings in Abidjan in May 2010.

Côte d’Ivoire—STATISTICAL ISSUES

As of September 30, 2009

General: Data provision has some shortcomings, but is broadly adequate for surveillance. There are weaknesses in the areas of national accounts and balance of payments and public finance statistics, as well as in the reconciliation of fiscal and monetary data. Generally, the authorities provided the required statistical indicators to the Fund (see attached table) on a timely basis.

National Accounts: Comprehensive national accounts data for 1996 onwards is compiled in line with the 1993 System of National Accounts methodologies, using 1996 as the base year. As the base year is dated, technical assistance has been provided by AFRITAC West to implement a new base year and update implicit deflators.

Price statistics: A harmonized consumer price index (CPI) has been adopted by all WAEMU members, although with a dated base year of 1996.

Labor market statistics: No such statistics are published regularly.

Government finance statistics: The authorities provide annual data on the budgetary central government for publication in the Government Finance Statistics Yearbook. While no monthly or quarterly fiscal data are provided for publication, they are made available to the IMF African Department, although metadata is lacking. The authorities have committed to address weaknesses in coverage of general government units and public enterprises and are making efforts to improve the reconciliation of fiscal and monetary data.

Monetary and financial sector statistics: Monetary data for Côte d’Ivoire are prepared by the national agency of the BCEAO and officially released by BCEAO headquarters. Some shortcomings of the monetary statistics are common to all eight member countries of the WAEMU, while others relate to systemic issues in Côte d’Ivoire’s bank and nonbank financing of the operations of the central government and the rest of the public sector. Recently there have been improvements in the timeliness of reporting data on depository corporations and interest rates. 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 BCEAO’s national agencies.

External sector statistics: The national agency of the BCEAO in Abidjan is responsible for compiling and disseminating annual balance of payments statistics and the international investment position. while BCEAO headquarters delineates the methodology and calculates international reserves managed on WAEMU countries. With respect to merchandise trade, the customs computer system allows for satisfactory monitoring of trade data, but the coverage of services and transfers, and particularly workers remittances, has shortcomings. Concerning the financial accounts, foreign assets of the private nonbanking sector are not adequately covered, while reporting of private capital flows, especially foreign direct investment in Côte d’Ivoire, is weak. There is also not sufficient information on private debt stocks and debt service flows.

II. Data Standards and Quality

Côte d’Ivoire has participated in the General Data Dissemination system (CDDS) since May 2000, and has posted the metadata on the Data Standards Bulletin Board.

NO data ROSC is available.

III. Reporting to STA

Côte d’Ivoire regularly reports data to STA for re-dissemination in IMF statistical publications.

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

(As of October 15,2009)

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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).

1

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

2

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.

3

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.

4

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

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Cover IMF Staff Country Reports
Côte d'Ivoire: 2009 Article IV Consultation, First Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility, Request for Waiver of Nonobservance of Performance Criteria, and Financing Assurances Review
Author:
International Monetary Fund
Volume/Issue:
Volume 2009: Issue 326
Publisher:
International Monetary Fund
ISBN:
9781451807967
ISSN:
1934-7685
Pages:
115
DOI:
https://doi.org/10.5089/9781451807967.002