Abstract
Togo’s macroeconomic situation remains difficult, despite some modest improvements. Despite the impact of the global recession, program implementation has generally been satisfactory, although corrective actions are necessary for recent slippages. Debt management and monitoring are being strengthened. In light of the difficult macroeconomic conditions, a countercyclical fiscal policy stance is required. Sustainable fiscal policy requires a gradual consolidation, as global conditions improve further. Togo’s main economic challenges are continuing to strengthen public finances and completing structural reforms to enhance growth potential.
This statement provides information that has become available since the staff report was issued to the Executive Board on June 11, 2010. The new information does not alter the thrust of the staff appraisal.
1. The promissory notes that triggered the nonobservance of the external debt performance criterion have been canceled (paragraph 6 of the Staff Report and paragraph 14 of the Letter of Intent). The restitution of the promissory notes was part of the authorities’ agreement with the supplier to cancel the contract, which also included some costs.
2. The authorities raised the prices for petroleum products by 15–22 percent on June 19, 2010. They also publicly explained their intention to strengthen the pass-through of international prices with a smoothing mechanism, as envisioned under the program (paragraph 13 of the Staff Report and paragraph 33 of the Letter of Intent). A technical assistance mission from FAD conducted discussions on the petroleum product pricing mechanism on June 13–24, 2010.
3. Some steps in the restructuring of the financial sector are taking longer than expected in the original timetable, including updating the legal framework for privatization and issuing a pre-qualification notice (paragraph 14 of the Staff Report and paragraphs 17 and 31 of the Letter of Intent). While it remains feasible to issue the final call for bids by the end of September (as envisioned in the structural benchmark), expeditious action by the authorities will be necessary to maintain the original timetable.