Abstract
The overall fiscal position improved and the reduction in domestic arrears was triple the program target. The direct impact of the global financial crisis on Djibouti has been limited. The financial system has not been affected by the global crisis, and capital adequacy has improved slightly despite increased competition. GDP growth remained strong in 2008, and inflation decelerated during the fourth quarter. The risk of external debt distress remains high. Banks remain profitable and have not been affected by the global financial crisis.
1. This statement provides additional information that became available after the staff report for the first review under PRGF arrangement with Djibouti (EBS/09/72, 5/19/09) was circulated to Executive Directors. The new information does not alter the thrust of the staff appraisal.
2. Recent performance suggests that Djibouti is on track to meet the program’s continuous quantitative performance criteria (QPC) and structural benchmarks (SB) through end-March, with the exception of the ceiling on domestic arrears. Based on preliminary information, program performance is broadly in line with all the other fiscal, monetary and external sector quantitative targets. The SB on the introduction of a single treasury account was implemented by end-May, 2009, as agreed, and the authorities have confirmed that all external debt repayments vis-à-vis multilateral creditors have been made on time and that no new accumulation of external arrears has occurred. Bilateral agreements to implement the Paris Club debt rescheduling agreement of October 2008 have been concluded with some creditors and are being negotiated with the rest. The authorities continue to seek comparable treatment by non-Paris Club creditors. In this regard, negotiations with Saudi Arabia are well advanced.
3. End-April monetary data are broadly consistent with program projections. Inflation continued its downward trend, reaching 3.5 percent year-on-year. Official reserves have increased to $187 million, equivalent to a currency board cover of 127 percent and 2.6 months of prospective imports. Private sector credit growth decelerated but remains strong at 23 percent year-on-year.
4. Budget execution data up to end-March 2009 are also broadly in line with projections. The revenue performance was on target, but indirect taxation was weaker than projected on account of softening economic activity, lower import commodity prices, and low efficiency of the recently introduced VAT. Direct taxes, grants, and leasing fees from the foreign military bases held up well, and nontax domestic revenues were stronger than programmed. Total expenditure was in line with program projections, mainly due to the containment of wages, outlays on goods and services, and investment spending. Overall, the fiscal stance tightened in the first quarter of 2009 vis-à-vis the same period of 2008, with an overall fiscal deficit (including grants) of 0.9 percent of GDP, compared with 1.3 percent in the first quarter of 2008. The deficit was largely financed by concessional external borrowing.
Djibouti: Summary of Central Government Fiscal Operations, 2008-09
(In percent of GDP)
Annual leasing fees from French (€30 million) and US ($30 million) military bases.
Djibouti: Summary of Central Government Fiscal Operations, 2008-09
(In percent of GDP)
| 2008 | 2009 | ||||||
|---|---|---|---|---|---|---|---|
| Est. | Q1 | EBS/08/105 | Prog. | Q1 | |||
| Revenues and grants | 42.3 | 8.3 | 34.8 | 36.0 | 8.6 | ||
| Tax revenue | 20.2 | 6.0 | 18.6 | 19.4 | 4.9 | ||
| Direct taxes | 9.1 | 2.0 | 8.2 | 8.4 | 1.8 | ||
| Indirect and other taxes | 11.2 | 3.0 | 10.4 | 11.0 | 1.8 | ||
| Nontax domestic revenues | 2.7 | 0.4 | 2.1 | 3.7 | 0.8 | ||
| Nontax external revenues 1/ | 6.1 | 0.8 | 5.8 | 5.6 | 0.9 | ||
| Grants | 13.2 | 1.1 | 8.3 | 7.4 | 1.9 | ||
| Total expenditure | 41.0 | 9.6 | 36.6 | 37.8 | 9.5 | ||
| Current expenditure | 27.0 | 6.6 | 24.4 | 23.1 | 5.2 | ||
| Of which: | |||||||
| Wages and related expenditure | 12.8 | 3.5 | 10.9 | 12.4 | 3.4 | ||
| Goods and services | 9.5 | 2.1 | 6.0 | 6.0 | 1.0 | ||
| Investment expenditure | 14.0 | 3.0 | 12.3 | 14.7 | 4.3 | ||
| Overall balance (commitment basis, including grants) | 1.3 | -1.3 | -1.8 | -1.8 | -0.9 | ||
| Change in arrears (cash payments = -) | -3.3 | -0.7 | -1.3 | -1.3 | -0.3 | ||
| Overall balance (cash basis) | -2.0 | -2.0 | -3.1 | -3.1 | -1.2 | ||
Annual leasing fees from French (€30 million) and US ($30 million) military bases.
Djibouti: Summary of Central Government Fiscal Operations, 2008-09
(In percent of GDP)
| 2008 | 2009 | ||||||
|---|---|---|---|---|---|---|---|
| Est. | Q1 | EBS/08/105 | Prog. | Q1 | |||
| Revenues and grants | 42.3 | 8.3 | 34.8 | 36.0 | 8.6 | ||
| Tax revenue | 20.2 | 6.0 | 18.6 | 19.4 | 4.9 | ||
| Direct taxes | 9.1 | 2.0 | 8.2 | 8.4 | 1.8 | ||
| Indirect and other taxes | 11.2 | 3.0 | 10.4 | 11.0 | 1.8 | ||
| Nontax domestic revenues | 2.7 | 0.4 | 2.1 | 3.7 | 0.8 | ||
| Nontax external revenues 1/ | 6.1 | 0.8 | 5.8 | 5.6 | 0.9 | ||
| Grants | 13.2 | 1.1 | 8.3 | 7.4 | 1.9 | ||
| Total expenditure | 41.0 | 9.6 | 36.6 | 37.8 | 9.5 | ||
| Current expenditure | 27.0 | 6.6 | 24.4 | 23.1 | 5.2 | ||
| Of which: | |||||||
| Wages and related expenditure | 12.8 | 3.5 | 10.9 | 12.4 | 3.4 | ||
| Goods and services | 9.5 | 2.1 | 6.0 | 6.0 | 1.0 | ||
| Investment expenditure | 14.0 | 3.0 | 12.3 | 14.7 | 4.3 | ||
| Overall balance (commitment basis, including grants) | 1.3 | -1.3 | -1.8 | -1.8 | -0.9 | ||
| Change in arrears (cash payments = -) | -3.3 | -0.7 | -1.3 | -1.3 | -0.3 | ||
| Overall balance (cash basis) | -2.0 | -2.0 | -3.1 | -3.1 | -1.2 | ||
Annual leasing fees from French (€30 million) and US ($30 million) military bases.