Front Matter Page
© 2011 International Monetary Fund
November 2011
IMF Country Report No. 11/328
Côte d’Ivoire: 2011 Article IV Consultation and Requests for a Three-Year Arrangement Under the Extended Credit Facility and for Additional Interim Assistance Under the Enhanced Initiative for Heavily Indebted Poor Countries—Staff Report; Public Information Notice and Press Release on the Executive Board Discussion; and Statement by the Executive Director for Côte d’Ivoire.
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of a combined discussion of the 2011 Article IV consultation with Côte d’Ivoire and Requests for a Three-Year Arrangement Under the Extended Credit Facility and for Additional Interim Assistance Under the Enhanced Initiative for Heavily Indebted Poor Countries, the following documents have been released and are included in this package:
The staff report for the combined 2011 Article IV consultation and Requests for a Three-Year Arrangement Under the Extended Credit Facility and for Additional Interim Assistance Under the Enhanced Initiative for Heavily Indebted Poor Countries, prepared by a staff team of the IMF, following discussions that ended on September 15, 2011, with the officials of Côte d’Ivoire on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on October 20, 2011. The views expressed in the staff report are those of the staff team and do not necessarily reflect the views of the Executive Board of the IMF.
A Public Information Notice (PIN) and Press Release, summarizing the views of the Executive Board as expressed during its November 4, 2011, discussion of the staff report on issues related to the Article IV consultation and the IMF arrangement, respectively.
A statement by the Executive Director for Côte d’Ivoire.
The documents listed below have been or will be separately released.
- Letter of Intent sent to the IMF by the authorities of Côte d’Ivoire*
- Memorandum of Economic and Financial Policies by the authorities of Côte d’Ivoire*
- Technical Memorandum of Understanding*
*Also included in Staff Report
The policy of publication of staff reports and other documents allows for the deletion of market-sensitive information.
Copies of this report are available to the public from
International Monetary Fund • Publication Services
700 19th Street, N.W. • Washington, D.C. 20431
Telephone: (202) 623-7430 • Telefax: (202) 623-7201
E-mail: publications@imf.org Internet: http://www.imf.org
International Monetary Fund
Washington, D.C.
Front Matter Page
INTERNATIONAL MONETARY FUND
CÔTE D’IVOIRE
Staff Report for the 2011 Article IV Consultation and Requests for a Three-Year Arrangement Under the Extended Credit Facility and for Additional Interim Assistance Under the Enhanced Initiative for Heavily Indebted Poor Countries
Prepared by the African Department
(In consultation with other departments)
Approved by Roger Nord and Thomas Dorsey
October 20, 2011
Background: Côte d’Ivoire is recovering from a prolonged sociopolitical crisis, which culminated in the ousting of former President Gbagbo. After the end of the post-election crisis in April 2011, President Ouattara embarked on an ambitious investment-led recovery and development program that would take the country beyond the HIPC Completion Point on the path to sustained growth and poverty reduction. In the short term, the security situation remains fragile despite advances in recent months. Parliamentary elections announced for December 2011 should complete the political cycle and help rebuild confidence and social peace. Côte d’Ivoire is a member of the West African Economic and Monetary Union (WAEMU); its currency, the CFA franc, is pegged to the euro. It has accepted the obligations under Article VIII and maintains an exchange system free of restrictions on payments and transfers for current international transactions.
Program issues: Performance under the RCF-supported program has been good. The authorities have requested an arrangement under the Extended Credit Facility (ECF) in an amount equivalent to SDR 390.24 million (120 percent of quota), and a third allocation of interim HIPC assistance of SDR 5.042 million.
Mission: The staff team comprising Ms. Ross (head), Messrs. Ahokpossi and Koulet-Vickot (all AFR), Dicks-Mireaux (SPR), Thakoor (FAD), and Camard (Res. Rep.) visited Abidjan during August 31–September 15, 2011. The mission held discussions with Prime Minister Soro, Ministers Diby (Finance and Economy), Mabri (Planning and Development), Kone (Social Affairs), Toungara (Energy and Mines), Banzio (Commerce), Dosso (Industry), Coulibaly (Agriculture), Achi (Infrastructure), Jeannot (Justice), Gnamien (Civil Service) and Koffi (Defense), National Director of the regional central bank Aman, other senior officials, representatives of the private sector, civil society, and the diplomatic community. Mr. Allé (OED) attended some of the meetings.
Publication: The authorities agreed to the publication of the staff report, Letter of Intent, and Memorandum of Economic and Financial Policies.
Contents
Acronyms
Executive Summary
I. Emerging from the Sociopolitical Crisis
II. Recent Economic Developments
III. Outlook and Key Challenges—Moving from Recovery to Sustained Growth
A. Growth and Poverty Reduction: the Medium-term Macroeconomic Framework and Outlook
B. Competitiveness and the Business Climate
C. Reducing Financial Sector Vulnerabilities
D. Debt Restructuring and Sustainability
IV. Discussions for a New ECF-Supported Program
A. Fiscal Policy
B. Structural Reforms in 2011–12
V. Program Design, Financing, and Risks
A. External Arrears and Program Financing
B. Program Modalities
VI. Staff Appraisal
Boxes
1. Domestic Currency Debt Operations
2. Assessing External Competitiveness in Côte d’Ivoire
Figures
1. Selected Macroeconomic Indicators, 2007–12
2. WAEMU and SSA—Macroeconomic Developments and Outlook, 2007–12
Text Tables
1. Fiscal Operations, 2010–11
2. Fiscal Operations, 2011–12
Tables
1. Selected Economic Indicators, 2009–16
2. Monetary Survey, 2009–12
3. Balance of Payments, 2009–16
4a. Fiscal Operations of the Central Government, 2009–16 (Billions of CFA francs)
4b. Fiscal Operations of the Central Government, 2009–16 (Percent of GDP)
5. External Financing Requirements, 2009–12
6. Financial Soundness Indicators for the Banking Sector, 2007–11
7. Indicators of Capacity to Repay the Fund, 2009–21
8. Indicative Targets, RCF 2011
9. Performance Criteria and Indicative Targets, ECF 2011–12
10. Structural Benchmarks, ECF 2011–12
11. Proposed Schedule of Disbursements and Timing of Reviews Under ECF Arrangement, 2011–14
Appendices
I. Letter of Intent
Attachment I. Memorandum of Economic and Financial Policies
Attachment II. Technical Memorandum of Understanding
II. Summary of the Tax System, 2011
List of Acronyms
| AFD |
Agence française de développement |
| AfDB |
African Development Bank |
| AGOA |
African Growth and Opportunity Act |
| BCEAO |
Central Bank of West African States |
| CFAF |
African Financial Community Franc |
| CGRAE |
Civil Service Pension Fund |
| CNPS |
Private Sector Pension Fund |
| CNW |
Center-North-West (of Côte d’Ivoire) |
| CP |
Completion Point |
| DSA |
Debt Sustainability Analysis |
| ECF |
Extended Credit Facility |
| EITI |
Extractive Industries Transparency Initiative |
| ECOWAS |
Economic Community of West African States |
| EREER |
Equilibrium Real Effective Exchange Rate |
| FAD |
Fiscal Affairs Department |
| FIRST |
Financial Sector Reform and Strengthening Initiative |
| FSAP |
Financial Sector Assessment Program |
| GDP |
Gross Domestic Product |
| HIPC |
Heavily Indebted Poor Country |
| IFC |
International Finance Corporation |
| IT |
Indicative Target |
| LIC |
Low Income Country |
| MEFP |
Memorandum of Economic and Financial Policies |
| MGD |
Millennium Development Goal |
| MDRI |
Multilateral Debt Relief Initiative |
| MTEF |
Medium Term Expenditure Framework |
| OAT |
Government bonds issued through the BCEAO |
| PC |
Performance Criterion |
| PEMFAR |
Public Expenditure Management and Financial Accountability Review |
| PETROCI |
Government-Owned Petroleum Company |
| PFM |
Public Financial Management |
| PRGF |
Poverty Reduction and Growth Facility |
| PRSP |
Poverty Reduction Strategy Paper |
| RCF |
Rapid Credit Facility |
| REER |
Real Effective Exchange Rate |
| SIGFAE |
Integrated Personnel Management System |
| SME |
Small and medium-size enterprise |
| SPR |
Strategy, Policy and Review Department |
| SRF |
Single Reference File |
| SSA |
Sub-saharan Africa |
| SIR |
National Oil refinery |
| TMU |
Technical Memorandum of Understanding |
| TPCI |
Government bonds issued through syndication |
| VAT |
Value-Added tax |
| WAEMU |
West African Economic and Monetary Union |
Executive Summary
The Ivoirien economy is recovering quickly from the impact of the post-election crisis, and considerable strides have been made in restoring security. But challenges remain, notably to strengthen security throughout the country, to solidify social and political stability, and to transition to a robust growth path.
Performance under the RCF-supported program has been good, with most targets either met or exceeded. Fiscal policy has supported the recovery and addressed post-crisis humanitarian needs, while rebuilding public services. Conservative budget management has kept spending in line with available resources. In addition, the preparation of a medium-term structural reform was started, external arrears to multilateral institutions were cleared and progress has been made to regularize relations with other external creditors.
The authorities’ medium-term priorities are to achieve high sustained growth, reduce poverty, and restore a sustainable fiscal and external position. To achieve this, it will be essential to implement structural reforms to improve governance, the business climate, reduce vulnerabilities in the financial system, and strengthen competitiveness. Fiscal space is needed for pro-poor and investment spending and debt restructuring should be carried forward. These goals and policies reflect the country’s poverty reduction strategy, form the basis of the authorities’ medium-term program, and will also contribute to the external stability of the WAEMU.
The authorities request IMF support under the ECF and HIPC Initiative to support their medium-term program. The program’s objectives are in line with the authorities’ priorities: fiscal policy aims to expand the tax base, strengthen revenue administration, shift expenditure in favor of investment and pro-poor spending while strengthening public financial management and implementing civil service reform; and structural reforms focus on improving governance and efficiency in the energy and coffee/cocoa sectors, financial sector reform, and measures to improve the business climate and support private investment.
There are risks to the program, but the economy’s potential together with successful implementation of the authorities’ program could yield strong sustainable growth. Key risks to the outlook are a lack of decisive improvements in the security situation and in political normalization, an inability to implement much-needed structural reforms, or to access to the regional financial markets, external shocks, but there could also be a stronger-than-expected rebound in economic activity. Overall, the strong performance of the economy since May 2011 and the authorities’ commitment to their medium-term policy agenda bode well.
Front Matter Page
INTERNATIONAL MONETARY FUND
INTERNATIONAL DEVELOPMENT ASSOCIATION
CÔTE D’IVOIRE
Joint Debt Sustainability Analysis Under the Debt Sustainability Framework for Low-Income Countries1
Prepared by the Staffs of the World Bank and the International Monetary Fund
Approved by Roger Nord and Thomas Dorsey (IMF)
Jeffrey D. Lewis and Marcelo Giugale (IDA)
October 20, 2011
Côte d’Ivoire is in debt distress as evidenced by the accumulation of external debt service arrears. Under the external debt sustainability analysis (DSA) baseline scenario, the present value (PV) of debt-to-GDP, PV of debt-to-exports, and PV of debt-to-revenue are projected to stay above their indicative thresholds over the next few years. Under alternative scenarios assuming full delivery of HIPC and MDRI debt relief at the Completion Point and beyond HIPC debt relief after the Completion Point, the debt burden would become sustainable and all indicators would improve significantly. The inclusion of domestic debt raises debt burden indicators somewhat, but does not alter the assessment. As the initial debt level is high, the debt position of the country remains vulnerable to macroeconomic shocks, indicating the need for prudent fiscal policies and debt management.
Front Matter Page
INTERNATIONAL MONETARY FUND
CÔte D’IVOIRE
Staff Report for the 2011 Article IV Consultation and Requests for a Three-Year Arrangement Under the Extended Credit Facility and for Additional Interim Assistance Under the Enhanced Initiative for Heavily Indebted Poor Countries
Informational Annex
Prepared by the African Department
(In consultation with other departments)
Approved by Roger Nord and Thomas Dorsey
October 20, 2011
Contents
I. Relations with the Fund
II. Joint Bank-Fund Work Program, 2011–12
III. African Development Bank Group Operations and Strategy in Côte d’Ivoire
IV. Statistical Issues
Front Matter Page
Public Information Notice (PIN) No. 11/136
FOR IMMEDIATE RELEASE
November 10, 2011
International Monetary Fund
700 19th Street, NW
Washington, D. C. 20431 USA
Telephone 202-623-7100
Fax 202-623-6772
Front Matter Page
Press Release No. 11/399
FOR IMMEDIATE RELEASE
November 4, 2011
International Monetary Fund
Washington, D.C. 20431 USA
Telephone 202-623-7100
Fax 202-623-6772
Front Matter Page
November 4, 2011
