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.
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International Monetary Fund
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Publication Date:
22 Nov 2011
eISBN:
9781463925239
Language:
English
Keywords:
ISCR; CR; authority; IMF executive board Concludes; re-equipping government service; HIPC completion point; financing gap; financial situation; WAEMU financing; financing needs; budget support; Arrears; Budget planning and preparation
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This 2011 Article IV Consultation reviews Côte d’Ivoire’s economic condition. Côte d’Ivoire is emerging from a decade-long sociopolitical crisis that has held back its economic growth. In 2009, Côte d’Ivoire adopted an economic and financial program supported by a three-year Extended Credit Facility (ECF) arrangement with the aim of ensuring a stable macroeconomic framework, promoting sustained growth, and reducing poverty. Executive Directors have commended Côte d’Ivoire’s rapid progress in reviving the economy. Directors have also welcomed the authorities’ good performance under the economic recovery program, especially the prudent budgetary stance.

Abstract

This 2011 Article IV Consultation reviews Côte d’Ivoire’s economic condition. Côte d’Ivoire is emerging from a decade-long sociopolitical crisis that has held back its economic growth. In 2009, Côte d’Ivoire adopted an economic and financial program supported by a three-year Extended Credit Facility (ECF) arrangement with the aim of ensuring a stable macroeconomic framework, promoting sustained growth, and reducing poverty. Executive Directors have commended Côte d’Ivoire’s rapid progress in reviving the economy. Directors have also welcomed the authorities’ good performance under the economic recovery program, especially the prudent budgetary stance.

I. Emerging from the Sociopolitical Crisis

1. Coming out of the post-election crisis, Côte d’Ivoire has embarked swiftly on the road to economic recovery and political normalization, although many challenges remain. Progress is underway in the reunification of the country through the formation of new security forces, including the hiring of some 11,000 of former opposition fighters, and the redeployment of government agencies and staff to the Center-North-West regions that had been controlled by the Forces Nouvelles rebels since 2002. The security situation has improved significantly since May, but further progress is needed, particularly in the west of the country. Parliamentary elections announced for December 11, 2011 should complete the political cycle and help rebuild confidence. A Truth and Reconciliation Commission has been set up to further reconciliation and social cohesion.

MEFP ¶2

II. Recent Economic Developments

2. Performance under the RCF-supported program has been good with economic activity recovering faster than expected and inflation abating from its April peak. The projected decline in real GDP for 2011 was reduced in September from -6.3 to -5.8 percent with further upside potential (Tables 1–3, Figures 1–2). This reflects mainly stronger agricultural production and mining output, and the recovery of industrial production in July to just 2 percent below its level a year earlier, as against about 50 percent in April. Trade has picked up quickly after the end of the EU embargo. Annual inflation fell from over 9 percent at the peak of the crisis to 4½ percent in June–August.

MEFP ¶6

Table 1.

Côte d’Ivoire: Selected Economic Indicators, 2009–16

article image
Sources: Ivoirien authorities; and IMF staff estimates and projections.

Based on end-of-period changes in relative consumer prices and the nominal effective exchange rate.

2011 ratios based on Q2-Q4 fiscal aggregates over Q2-Q4 of GDP.

Defined as total revenue minus total expenditure, excluding all interest and foreign-financed investment expenditure.

Table 2.

Côte d’Ivoire: Monetary Survey, 2009–12

article image
Sources: Central Bank of West African States (BCEAO); and IMF staff estimates and projections.
Table 3.

Côte d’Ivoire: Balance of Payments, 2009–16

(Billions of CFA francs, unless otherwise indicated)

article image
Sources: Ivoirien authorities; and IMF staff estimates and projections.
Figure 1.
Figure 1.

Côte d’Ivoire: Selected Macroeconomic Indicators, 2007–12

(Percent of GDP, unless otherwise indicated)

Citation: IMF Staff Country Reports 2011, 328; 10.5089/9781463925239.002.A001

Sources: Ivoirian authorities; IMF staff estimates and projections.1/ Fiscal ratios for Q2-Q4, 2011 over period GDP.
Figure 2
Figure 2

Côte d’Ivoire: WAEMU, and SSA - Macroeconomic Development and Outlook, 2007–12

(Percent of GDP, unless otherwise indicated)

Citation: IMF Staff Country Reports 2011, 328; 10.5089/9781463925239.002.A001

Sources: WEO; and IMF staff estimates and projections.1/ WAEMU, excluding Côte d’Ivoire.2/ SSA, excluding Nigeria and South Africa.3/ For Côte d’Ivoire, Q2-Q4, 2011 over period GDP.
uA01fig01

Inflation

(2008=100)

Citation: IMF Staff Country Reports 2011, 328; 10.5089/9781463925239.002.A001

Source: Ivoirian authorities.
uA01fig02

Industrial Production

(1996=100)

Citation: IMF Staff Country Reports 2011, 328; 10.5089/9781463925239.002.A001

3. Budget execution through July was largely in line with the RCF-supported program. Revenue exceeded the June target, while spending was low, including pro-poor spending, as the 2011 budget only became operational in July. All other indicative targets for June were met except domestic financing that substituted in June for an expected foreign disbursement delayed to early July (Text table 1, Tables 4–5).

Text Table 1.

Côte d’Ivoire: Fiscal Operations, 2010–11

article image
Sources: Ivoirien authorities and IMF staff estimates and projections.

Basic balance=(Total revenue excluding grant+Crisis exit project grant)-(Total expenditure-Toxic waste-Debt relief on interest-Foreign financed expenditure).

Reflects funding indications to date.

Reflects debt relief granted under the May 2009 Paris Club debt restructuring agreement.

Table 4a.

Côte d’Ivoire: Fiscal Operations of the Central Government, 2009–16

(Billions of CFA francs, unless otherwise indicated)

article image
Sources: Ivoirien authorities; and IMF staff estimates and projections.

2011 aggregates are based on Q2–Q4.

Total revenue (excl. grants) minus expenditure net of scheduled interest and foreign-financed capital expenditure.

Program and arrear clearance grants in 2008 are below the line in the program column, and above the line in the projection column.

Table 4a.

Côte d’Ivoire: Fiscal Operations of the Central Government, 2009–16 (concluded)

(Billions of CFA francs, unless otherwise indicated)

article image
Sources: Ivoirien authorities; and IMF staff estimates and projections.

2011 aggregates are based on Q2–Q4.

In the CFA franc zone, Fund resources are channeled via the regional central bank that provides equivalent domestic currency credit to the relevant government.

Table 4b.

Côte d’Ivoire: Fiscal Operations of the Central Government, 2009–16

(Percent of GDP, unless otherwise indicated)

article image
Sources: Ivoirien authorities; and IMF staff estimates and projections.

2011 ratios based on Q2–Q4 fiscal aggregates over Q2–Q4 of GDP.

Total revenue (excl. grants) minus expenditure net of scheduled interest and foreign-financed capital expenditure.

Program and arrear clearance grants in 2008 are below the line in the program column, and above the line in the projection column.

Table 4b.

Côte d’Ivoire: Fiscal Operations of the Central Government, 2009–16 (concluded)

(Percent of GDP, unless otherwise indicated)

article image
Sources: Ivoirien authorities; and IMF staff estimates and projections.

2011 ratios based on Q2–Q4 fiscal aggregates over Q2–Q4 of GDP.

In the CFA franc zone, Fund resources are channeled via the regional central bank that provides equivalent domestic currency credit to the relevant government.

Table 5.

Côte d’Ivoire: External Financing Requirements, 2009–12

(Billions of CFA francs)

article image
Sources: Ivoirien authorities; IMF staff estimates and projections.

Fund disbursement in 2011 corresponds to the RCF disbursement in July 2011.

MEFP ¶7–9

Domestic Currency Debt Operations

Côte d’Ivoire’s total domestic currency debt at end-June 2011 is estimated at about 14.5 percent of GDP. The bulk is owed to investors in the regional securities market (60 percent) and the BCEAO1 (25 percent). One third of short-term securities are held by banks in Côte d’Ivoire, the rest mainly by banks in the region.

Domestic Debt, June 2011

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Source: Ministry of Economy and Finance.

With the onset of the post-election crisis in December 2010, regular auctions of Treasury securities were no longer possible because of uncertainty as to who constituted the legal government. In order to limit the impact on the regional banking system, it was agreed that the BCEAO would roll over maturing Ivoirien T-bills (maturities up to one year), which is still the case through October 2011. The government has initiated discussions to exit from this renewal. It proposed a plan to banks in Côte d’Ivoire to restructure the stock of short-term paper (CFAF 600 billion at interest rates of 5.1 to 6.4 percent) in October 2011 into 2-year T-bills, and 3- and 5-year bonds (at somewhat lower interest rates) while accumulated interest (CFAF 20 billion) would be paid in cash. A road show to the region is underway, and the authorities [asked] the BCEAO on an exceptional basis to enhance these new securities by admission for refinancing and for required reserves.

Despite the ongoing roll-over of T-bills, Côte d’Ivoire has been able to return to the regional market with longer maturities. In September 2011 the authorities launched a new 5-year bond, rolling over a maturing bond (CFAF 61 billion) and raising new money (CFAF 99 billion, equivalent to 0.9 percent of GDP).

1 The debt to the BCEAO corresponds mostly to the outstanding of consolidated statutory advances and the loans linked to the SDR allocation.

4. The government continued the rollover of Treasury bills through October as it feared a lack of demand for voluntary placements. It discussed a restructuring of the stock of T-bills with commercial banks that is to be completed in October (see Box 1). In the event, the authorities successfully launched a new 5-year bond in September.

5. Banks’ portfolio quality has weakened and credit extension remains subdued despite the sizeable financing needs of enterprises. Nonperforming loan ratios, which had improved gradually in recent years, deteriorated significantly in the first half of 2011 (Table 6) reflecting the impact of the post-election crisis on small- and medium-size enterprises (SMEs). The difficult financial situation of the public banks, which remained open during the crisis, was aggravated further and the authorities have replaced management in these 5 institutions as a first step toward containing losses and designing a restructuring strategy in cooperation with the regional Banking Commission.

Table 6.

Côte d’Ivoire: Financial Soundness Indicators for the Banking Sector, 2007–11

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Sources: BCEAO, Banking Commission, APBEF-CI, and IMF staff calculations.

Combined Fonds propres nets divided by combined assets of the banking sector.

June 2007 estimate.

III. Outlook and Key Challenges—Moving from Recovery to Sustained Growth

6. Policy discussions for the Article IV consultation focused on the challenges of achieving high and sustained growth over the medium term, reducing poverty and restoring a sustainable fiscal and external position. The authorities’ priorities for the medium term, with which the staff agreed, form the basis of their program to be supported by a new 3-year ECF arrangement. The authorities emphasized the need for stronger growth to translate into greater employment opportunities, especially for the youth. Their priorities are to:

MEFP ¶4, 10–11

  • Implement structural reforms to remove impediments to growth, improve governance and the business climate, and create employment opportunities. The focus is on reforming the coffee/cocoa sector so as to improve productivity and farm incomes; restoring the viability of the electricity sector and enlarging generating capacity to accommodate the demands of a growing economy; strengthening the judicial system; and facilitating business services for trade and new start-ups. PFM reforms are continuing, and governance in the public administration and enterprises is being strengthened.

  • Create fiscal space for pro-poor and investment spending, particularly in infrastructure, which has been neglected during the crisis years. HIPC debt relief, a sustainable wage bill, a reduction in subsidies, and containment of other current outlays are essential to target priorities and making spending more efficient. Together with renewed efforts to broaden the revenue base, a better mastery of current spending will be key to achieving a sustainable fiscal position over the medium term.

  • Reduce vulnerabilities in the financial system. This will include strengthening the pension funds and limiting their losses, restructuring the public banks, and defining a clear role for the government in the sector, in order to improve financial intermediation and provide support for investment and growth.

  • Carry forward the debt restructuring process. Early completion of HIPC/MDRI and other debt relief would significantly improve Côte d’Ivoire’s debt sustainability.

  • Strengthen competitiveness. Here as well, the planned structural reforms are essential to diversify the economy and reduce the vulnerability of exports to commodity price swings and the projected medium-term terms-of-trade decline.

7. The authorities are planning to update the PRSP (2009–13) following broad-based consultations. A progress report covering 2010–11 is to be prepared by early 2012. A new National Development Plan will cover 2012–15. Also, the Public Investment Program is being updated to enable the absorption of resources that will become available after the HIPC Completion Point.1

MEFP ¶4

A. Growth and Poverty Reduction: the Medium-Term Macroeconomic Framework and Outlook

8. Many of the recommendations of the 2009 Article IV discussions remain relevant. While the initial implementation of the 2009 ECF-supported program was broadly satisfactory and in line with the staff recommendations, structural reforms stalled in 2010 and the crisis reversed some of the reforms and some of the macroeconomic progress that had already been achieved.

MEFP ¶12–16

9. The medium-term objectives of the macroeconomic framework underlying the PRSP and the last ECF-supported program remain appropriate. With the political crisis overcome, real growth is expected to bounce back to 8–9 percent in 2012, in part reflecting base effects, but also a strengthening of confidence with the completion of the election cycle, political normalization, and progress toward the sizeable debt relief associated with the HIPC Completion Point. Reflecting higher investment, growth is projected to remain strong at around 6 percent over the medium term as the economy is rebuilt after a decade of conflict-induced stagnation. Inflation is expected to fall back to the WAEMU’s medium-term target of 3 percent.

10. The baseline scenario assumes an increase in investment, both public and private, from its low overall levels of 8.7 percent of GDP during 2009–11 to about 13.9 percent of GDP in 2012–14. Substantially higher investment is expected to boost construction and transport activities, and turn the crisis-years’ surplus in the external current account into a deficit that could be financed by foreign direct investment and new borrowing.

11. The fiscal strategy over the medium term should achieve sustainability and enable higher investment by strengthening revenue collection as well as containing and reprioritizing other expenditure. The overall budget deficit is expected to decline to around 3 percent of GDP, and the basic primary balance2 should recover from its deficit spike in 2011 to a small surplus over the medium term.

12. There are risks to the outlook, but the economy’s potential and determined reforms could yield strong results. A lack of continued clear improvements in the security situation and in political normalization would dampen private activity and investment; a lack of progress in restoring energy and transport infrastructure would impede the projected acceleration of economic activity; and external shocks, e.g., a large terms-of-trade loss, would endanger the achievement of external sustainability. At the same time, further positive surprises are possible: uncertainties over the pace of the recovery in coming months remain high, and the pick-up in activity in 2012 and beyond could be stronger or earlier than currently projected. Clearly the economy’s potential and a successful implementation of the authorities’ program could yield strong sustainable growth and attract much new investment.

B. Competitiveness and the Business Climate

13. The competitiveness of the Ivoirien economy needs to be strengthened. The analysis of the last Article IV discussions on this issue still remains valid.3 While there is no sign of real effective exchange rate misalignment for Côte d’Ivoire (Box 2), in line with the regional WAEMU real exchange rate assessment,4 other indicators of competitiveness highlight the need to remedy structural deficiencies and improve the business climate. Over the last decade, governance worsened and corruption is a widespread impediment. Lack of maintenance and investment has worn down the existing infrastructure, and the degradation of roads (and the railway) and the proliferation of roadblocks in recent years added to the cost of transportation and weakened competitiveness. The electricity sector remains vulnerable to shocks that would be disruptive of economic activity, as seen during the electricity crisis of early 2010. The judicial system, and contract enforcement in particular, is weak. As a result, banks are reluctant to lend to SMEs, which account for the bulk of urban employment.

14. The authorities shared the staff’s analysis and are determined to accelerate structural reforms and improve the business climate. Their structural reform plans are extensive, from measures to improve economic governance and a reform of public enterprises to reforms of the land register and the judicial system, a new investment code and competition law, a one-stop window for trade formalities and a center to facilitate business start-ups.

MEFP ¶25–40

Assessing External Competitiveness in Côte d’Ivoire

Côte d’Ivoire’s real effective exchange rate (REER) has steadily appreciated since the 1994 devaluation, although in 2010 it depreciated by about 6 percent as a result of the decline of the Euro (to which the CFAF is pegged) vis-à-vis the currencies of Côte d’Ivoire’s major trading partners, most notably the U.S. dollar.

Nevertheless, quantitative estimates of Côte d’Ivoire’s real effective exchange rate, based on the three CGER methodologies—macroeconomic balance (MB), external sustainability (ES), and equilibrium real effective exchange rate (EREER)—indicate its REER is broadly in line with economic fundamentals. This finding is similar to the real exchange rate assessment conducted for the 2011 Article IV consultation for the WAEMU region.1

Figure 1:
Figure 1:

Evolution of Côte d’Ivore’s NEER and REER (1993-2010)

Citation: IMF Staff Country Reports 2011, 328; 10.5089/9781463925239.002.A001

Source: IFS
Figure 2:
Figure 2:

Actual vs. Estimated Equilibrium Real Exchange Rate (1980-2010)

Citation: IMF Staff Country Reports 2011, 328; 10.5089/9781463925239.002.A001

Nevertheless, competitiveness, export growth and diversification has been held back by structural factors, in particular a poor business environment, as cited in many of the staff’s discussions with the private business sector. Nonprice indicators rank the competitiveness of Ivoirien economy as low relative to the SSA average and that of the WAEMU countries, and worsened over the past year partly owing to the recent crisis. The World Bank’s survey-based “Doing Business Index” for 2011 shows a deterioration in Côte d’Ivoire’s ranking from 168 to 169 (183 equals the worst possible ranking and 1 the best), mostly owing to the decline in the ease of registering property, which also affects a business’ ability to borrow. For comparison, other WAEMU countries ranked between 151 for Burkina Faso and 176 for Guinea-Bissau; 23 SSA countries, or about half of the total, were among the 32 lowest-ranked countries in the survey. According to the World Bank Enterprise Survey (2009), most Ivoirien firms surveyed identified access to finance and political instability as major constraints to business activity.

1 http://www.imf.org/external/pubs/ft/scr/2011/cr1198.pdf

15. The authorities plan to contribute to regional integration within the WAEMU and ECOWAS, which should give impetus to regional trade and open up new markets. Following agreement amongst member countries, a fifth tariff band (35 percent) is to be added to the existing 4 bands (0, 5, 10 and 20 percent) of the ECOWAS common external tariff, in order to offer temporary protection to selected industrial products. Discussions have made little progress on defining the coverage of products within each band. A regional interim Partnership Agreement with the European Union and accompanying development program have not been signed yet. In anticipation of an eventual agreement, the authorities will pursue a fiscal transition away from trade and toward domestic taxation within the context of regional policies. In addition, the authorities are seeking eligibility to AGOA trade preferences with a target date of 2012.

MEFP ¶41

C. Reducing Financial Sector Vulnerabilities

16. The post-election crisis has aggravated the vulnerabilities of the financial sector brought out in the 2009 FSAP.5 Bank portfolios have weakened, especially for smaller banks more exposed to SMEs, which bore the brunt of the destruction and looting during the crisis. While the Banking Commission is still analyzing the results of banks’ self-assessment, it is expected that several banks need recapitalization or guarantees to meet prudential norms. The underlying problems of the five state-owned banks have worsened; most of these banks are relatively small and were the only banks that remained open during the height of the crisis in February–April 2011. The insurance and pension sectors need major reforms to ensure the financial viability.

17. The authorities have resumed preparations for a comprehensive financial sector reform strategy to reduce these vulnerabilities, with the technical assistance of the IMF and the World Bank. This includes defining the government’s role in the sector, restructuring loss-making public banks, broadening access to financial services, reforming microfinance institutions, and improving the viability of the pension funds. In recent months, some banks have obtained support from various partners, including the French Development Agency (AFD),6 in the form of guarantees for credit to SMEs.

D. Debt restructuring and sustainability

18. Restoring debt sustainability is important to improve growth prospects and will require continued prudent fiscal and borrowing policies, debt relief and concessional donor support. The updated LIC DSA7 shows that while Côte d’Ivoire is currently in debt distress, the debt relief at the Completion Point would achieve debt sustainability, while creating scope for the significant new borrowing envisaged. Debt service payments are projected to increase after the Completion Point from their current (exceptionally low) levels. Following approval of a new ECF arrangement, the authorities intend to seek a rescheduling from Paris Club creditors, Eurobond holders,8 and other external official bilateral and commercial creditors, and have initiated discussions to that end.

19. The HIPC Completion Point (CP) is likely to slip beyond mid-2012 as the reform of the coffee/cocoa sector has not advanced quickly enough. Discussions are ongoing and consultations with stakeholders will take time. The adoption of a new sector strategy and its implementation for 6 months is a CP trigger. Progress on other triggers is more advanced.

MEFP Box 1

20. The authorities agreed with the staff that strengthening debt management is a priority, both in light of the crisis experience that resulted in the need for a restructuring of the stock of T-bills and in preparation for post-CP financing needs. The country’s debt management capacity is low and weaknesses have been evident repeatedly. Identifying the optimal mix of regional and external financing options for its investment plans and other financing needs will be a challenge. Staff encouraged the authorities to develop a debt strategy and improve debt management in order to take full advantage of domestic resources freed up and the space opened up for new borrowing after the CP. In the meantime, the authorities have requested technical assistance from the IMF and World Bank to formulate a comprehensive debt management strategy. They intend to set up a national debt agency in line with WAEMU guidelines.

IV. Discussions for a New ECF-Supported Program

A. Fiscal Policy

21. The authorities and staff agreed that the objective of the fiscal policy over the medium term is to create fiscal space for an increase in pro-poor and public investment outlays, while establishing fiscal and debt sustainability. For the period April–December 2011, an overall budget deficit of 8.1 percent of period GDP is now projected, slightly lower than under the RCF-supported program, mainly reflecting better revenue performance (Text tables 1–2, and Table 4). The overall deficit is expected to be reduced to about 4½ percent in 2012 and further to around 3 percent over the medium term. This deficit level should be financeable from available concessional resources, debt relief, and new regional and external borrowing. To anchor fiscal policy, the authorities are targeting a small basic primary surplus9 after the crisis-related deficit spike in 2011 so as to generate resources to at least service interest payments.

Text Table 2.

Côte d’Ivoire: Fiscal Operations, 2011–12

article image
Sources: Ivoirien authorities and IMF staff estimates and projections.

Primary basic balance=(Tax and non tax revenue)-{Total expenditure + Net lending (on payment order basis) - Interest payments - Foreign financed expenditure}.

Reflects funding indications to date.

Includes debt relief for 2011 granted under the May 2009 Paris Club debt restructuring agreement and projected debt relief for 2012.

22. The authorities are designing a 2012 budget with revenue weakened in part by the lagged effect of the crisis on the tax base and with investment spending given top priority.

MEFP ¶19, 20, 23

  • Revenue in 2012 is projected to fall almost 1½ percentage points of GDP below its 2010 level10 reflecting largely lower oil production and a large reduction in producer prices for natural gas and thus related government income (0.4 percent of GDP), and the impact of the recent domestic crisis on profits (0.4 percent), and lower fuel taxes due to the freeze in fuel prices since April 2010 (0.6 percent). At the same time, the authorities intend to strengthen revenue administration, streamline tax exemptions, tackle tax fraud and evasion, and restructure state-owned corporations to improve their net contribution to the budget. They are also planning to introduce new taxes on rubber and some telecommunications.

  • Expenditure is projected to rise by ½ percent of GDP in 2012 compared to 2010 with expenditures shifted sharply toward investment. Current spending is to be over 1 percentage point lower, reflecting savings in crisis-exit spending (largely election-related, but also due to the discontinuation of the frontline benefit for the military in July 2011) and other current outlays. In contrast, the wage bill is projected to increase with the absorption of about 11,000 ex-rebels in the new army and security forces, and the continued recruitment of previously unpaid volunteer teachers in the North of the country. The civil service census was delayed due to the crisis and estimates of potential savings are not yet available. Investment spending is budgeted to rise by almost 2 percentage points of GDP to a still relatively modest 5 percent of GDP in 2012.

  • As a result, the overall budget deficit including grants would be larger in 2012 than in the pre-2011 years (4.4 percent of GDP in 2012 compared to 2.3 percent in 2010). Similarly, the primary basic deficit, while improved from 2011, at 2 percent of GDP would far exceed the deficit of 0.2 percent registered in 2010.

23. The financing program for the 2012 budget envisages that the gap will be covered by concessional multilateral funding, debt relief, and domestic/regional borrowing. Nevertheless, the high level of net domestic/regional borrowing (CFAF450 billion or 3.6 percent of GDP)11 exceeds historical levels of access to this market and is a risk factor in the program. While resisting explicit contingency measures in the budget to deal with the funding risk, the authorities assured staff that they would continue to pursue a conservative budget management policy and not commit expenditures unless the corresponding resources had been secured.

MEFP ¶22, 43–44

B. Structural Reforms in 2011–12

24. The authorities are planning to speed up and broaden structural reforms as these are vital to improve the business climate and productivity. Key reform areas include public financial management, public enterprise reform, the coffee-cocoa sector, the energy sector, the financial sector, judicial reform, and the business environment. They are also moving forward with pension reform, preparing a new investment code, hydrocarbon law, and competition law. Good progress has been achieved on EITI as the reports for 2008–09 and a validation report are expected to be submitted by the end of the year as the basis for the country’s validation as conforming to the EITI criteria.

MEFP ¶25–42

25. The government intends to keep the wage bill under control and improve the management of the civil service. The strategy adopted in May 2010 for controlling the payroll will be updated in Q1 2012 based on the results of the census and a new Single Reference File (SRF) for civil servants. The SRF will be used to set up an integrated personnel management system (SIGFAE), which should be finalized in the course of 2012. The government plans to institute an Observatory of Public Services, create the positions of General Secretaries in all ministries, and adopt a code of ethics for the civil service.

MEFP ¶37–38

26. The authorities continue to implement their action plan to strengthen public financial management and debt management. Key reforms include further streamlining the use of treasury advances, improving the process for the reimbursement of VAT credits through a new joint State/private sector committee; and strengthening the debt management process. To this end, the government has requested technical assistance from the IMF and World Bank to prepare an action plan for a medium-term strategy. Also, the authorities are extending the implementation of medium-term expenditure framework (MTEF) to six new ministries. They expect to undertake, in collaboration with the World Bank and the Fund, an assessment regarding the implementation of the PEMFAR so far; they will then update their PEMFAR matrix accordingly.

MEFP ¶40, 42

27. Efforts to improve the management of state enterprises and to streamline the government’s portfolio are underway. The authorities want to reduce the number of public enterprises by 25 percent, and introduce performance contracts for state corporations and majority-owned public corporations. They are determined to accelerate the clearance of arrears owed by public enterprises to the pension funds (CGRAE and CNPS).

MEFP ¶33

28. The government is determined to improve governance, productivity and farm income in the coffee/cocoa sector. A reduction in effective taxation to a maximum of 22 percent ad valorem was achieved in 2010/11, and the focus is now on a new legal framework and institutional set-up as well as a new mechanism for marketing and extension services. Discussions with key players are ongoing, albeit difficult, and the authorities hope to adopt a new strategy during the crop year starting in October 2011.

MEFP ¶30

29. The authorities are committed to reforming the energy sector and reinstating market-based fuel pricing. A renegotiation of natural gas contracts expected to reduce the cost of natural gas used for thermal power generation by 1/3, thus lowering the electricity subsidy, is to be completed in November. To render the electricity sector financially viable over the medium term, an electricity tariff reform and increase in industrial tariffs will occur in early 2012, and investments to reduce technical losses are being undertaken. While fuel prices have remained frozen since April 2010 by reducing the tax wedge, a return to market-based fuel pricing and more realistic tax levels is expected as of mid-2012. The price review strategy will have to consider the impact on the poor, if any, and the subsequent costs of social safety nets.

MEFP ¶31, 34-5

30. The authorities are preparing a financial sector development strategy to reduce vulnerabilities and broaden access to financial services.

MEFP ¶29, 39

  • This strategy is to define the government’s role in the financial sector, and address the issues of the cost of credit, the rehabilitation of microfinance institutions, the mechanisms for financing housing, SMEs and agriculture. The government has requested technical assistance from the World Bank and the IMF, and funding from the Financial Sector Reform and Strengthening (FIRST) Initiative for this purpose.

  • The government intends to work with the Banking Commission to limit losses incurred by the 5 state-owned banks and improve their operations without injecting new resources. A restructuring strategy will be elaborated and fiscal implications, if any, clarified.

  • To improve the financial viability of the pension funds, the authorities plan to adopt the reform plans for CNPS and CGRAE in 2011; these will also require parliamentary approval. The retirement age for certain categories of government officials and agents will be raised from 57 to 62 years as of 2012, and collection efforts of overdue social contributions will be enhanced.

31. The authorities are stepping up efforts to improve the business climate. Measures in this area include setting up a Business Facilitation Center to simplify the administrative procedures required to start a business, and a one-stop window for trade formalities, reform of the property registry to facilitate the delivery of title and the use of land as a security, adoption of a competition law and new investment code, enforcement of arbitration awards (exequatur), setting up commercial courts and broader judicial reform.

MEFP ¶26-28

V. Program Design, Financing, and Risks

A. External Arrears and Program Financing

32. Côte d’Ivoire has arrears to official bilateral and commercial creditors, which it intends to regularize. The authorities have initiated discussions with Paris Club creditors on a restructuring of arrears and maturities due during mid-2011 to mid-2014 and with the holders of the Eurobond 2032 on the restructuring of 2 missed coupon payments (December 2010 and June 2011) and the next coupon falling due at end-2011. The authorities continue to make good faith efforts to negotiate the treatment of arrears with private external creditors. The Paris Club provided financing assurances on October 19, 2011.

MEFP ¶43-45

33. The financing gaps during 2011–14 (totalling 16 percent of 2012 GDP) are expected to be filled by debt restructuring, multilateral support, and new domestic/regional borrowing (Table 7). While the bulk of debt relief is expected in early 2012 with the restructuring of accumulated arrears, the remaining gap during 2011–12 after World Bank and AfDB support is projected to be met by disbursements under the ECF. The authorities have also requested the third tranche of HIPC Interim assistance in the amount of SDR 5.024 million, which will be sufficient to cover 86.1 percent of eligible ECF principal repayment obligations falling due during November 2011–October 2012. Furthermore, if the necessary requirements are met, Côte d’Ivoire could reach the HIPC Completion Point and benefit from the MDRI in the second half of 2012.

Table 7.

Côte d’Ivoire: Indicators of Capacity to Repay the Fund, 2009–21

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Sources: IMF staff estimates and projections.

The interest rate on ECF is zero for 2009–11 and assumed at 0.25 percent thereafter.

Including the proposed disbursements under the new ECF.

Total debt service includes IMF repurchases and repayments.

B. Program modalities

34. ECF access is proposed at 120 percent of quota (SDR 390.24 million). This request is based on the staff’s assessment of the overall financing needs and is consistent with the ECF access norm for a country with outstanding credit below 100 percent of quota (Côte d’Ivoire’s current outstanding credit is 99.6% of quota). A slightly front-loaded disbursement schedule is proposed as the critical challenges facing Côte d’Ivoire are immediate and external financing needs are projected to ease over time (Table 8). Strong Fund support would help catalyze support from donors. The authorities are planning to organize a donor roundtable in early 2012 once the PRSP has been updated, and a Consultative Group meeting after reaching the HIPC Completion Point to secure donor support over the medium term. Côte d’Ivoire has a long track record of meeting its obligations to the Fund and an adequate capacity to repay (Table 9), provided the country takes the necessary action to secure HIPC debt relief. Program performance would be monitored on the basis of quantitative indicators (Table 10) and structural benchmarks (Table 11).

Table 8.

Côte d’Ivoire: Indicative Targets, RCF 2011

(Billions of CFA francs)

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Sources: Ivoirien authorities and IMF staff.

Cumulative change from April 26, 2011, unless otherwise indicated. See Technical Memorandum of Understanding (TMU) for detailed definitions.

Basic balance = Tax and nontax revenue + (Grant - Project grants - WB budget support grant - AfDB budget support grant) - (Total expenditure - Debt relief on interest - Foreign financed capital expenditure - Toxic waste expenditure).

Continuous target.

Excluding loan (budget support of € 350 million) from Agence Francaise de Development (AFD).

Table 9.

Côte d’Ivoire: Performance Criteria (PC) and Indicative Targets, ECF 2011-12 1/

(Billions of CFA francs)

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Sources: Ivoirien authorities and IMF staff. Note: The terms in this table are defined in the TMU.

Cumulative change from June 30, 2011 for 2011 targets, and from December 31, 2011 for 2012 targets.

Continuous performance criterion.

Table 10.

Côte d’Ivoire: Structural Benchmarks (SB), ECF 2011–12

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Montagnat-Rentier G., Parent G. and Boilil A. M. (2011): Recommendations on the ongoing implementation of the customs administration modernization program, Aide-mémoire of August 24, 2011.

Table 11.

Côte d’Ivoire: Proposed Schedule of Disbursements and Timing of Reviews Under ECF Arrangement (SDR millions), 2011–14

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35. The risks to the program are dominated by internal factors in this post-conflict situation. While substantial progress has been made in improving security, the situation remains fragile. The speed of economic recovery will depend on how quickly confidence returns and banks resume lending to the private sector as well as investing in government securities. The government is operating under tight financial constraints and envisages a large access to the regional financial market in 2012, yet is facing the evolving cost of building a mixed army and security forces, and potential resource needs of a restructuring of state banks, while addressing urgent infrastructure needs. The completion of the election cycle in 2011–12 will test how far the country has stabilized. Côte d’Ivoire also remains vulnerable to external shocks such as oil, or to a lesser extent, food price increases, a weakening of the terms of trade, and a prolonged global slowdown.

VI. Staff Appraisal

36. Côte d’Ivoire is emerging quickly from the post-election political crisis, but major challenges remain in the transition from crisis recovery to sustained growth. These challenges include the need to further improve security to allow the free circulation of persons and goods, to advance national reconciliation and integration of the ex-combatants into the new security forces or civilian life, and to re-establish macroeconomic stability while fostering investment to relaunch economic growth.

37. The authorities’ fiscal response to the economic crisis in 2011 has been appropriate and the implementation of the RCF-supported program to date has been good. At the same time, while the sizeable budget deficit in April–December 2011 is being financed largely from external sources and debt service arrears that require a restructuring, fiscal policy in 2012 and beyond needs to restore the revenue base and limit current spending in order to create fiscal space for the planned, and much needed, and increase in public investment, especially in energy and infrastructure. Staff consider the planned fiscal stance in 2012 to be appropriate, though further consolidation will be needed over the medium term.

38. Staff support the planned revenue measures and the ending of most of the temporary tax relief measures granted in 2011. But commodity revenues will decline with the fall in oil production and the renegotiation of natural gas prices. Profit taxes in 2012 will reflect the hit the economy took in the first half of 2011. Thus continued efforts to enhance tax administration will be needed to achieve the revenue targets.

39. The authorities’ conservative budget management is welcome and has kept expenditures in line with available resources. The delayed adoption of the budget in June 2011 has led to a slow execution of expenditure, in particular for investment, and major efforts will be needed to fully implement the budgeted allocations. Continued vigilance will be required to control the wage bill; the census results should allow some savings that will need to balance out at least some of the costs of the ongoing new hiring into the integrated security forces and the education sector. The planned containment of electricity subsidies and tighter management of other current spending would allow room for the sizeable increase in investment spending. In this context, the preparation of an ambitious but realistic public investment program will be crucial for reaching the authorities’ expenditure goals and the successful implementation of projects.

40. Restarting the structural reforms will be essential to increase the economy’s efficiency, strengthen external competitiveness, and regain the confidence of private investors. The authorities’ plans are ambitious and appropriate, particularly the focus on restoring the financial viability of the electricity sector, rebuilding the transport infrastructure, restructuring the important coffee/cocoa sector, and the various efforts to improve the business climate. A financial sector development strategy should further financial deepening while controlling the losses of the public banks. A debt management strategy should help improve debt management and should guide future borrowing operations to identify the most appropriate vehicles to fund the economy’s extensive investment needs while maintaining debt sustainability after HIPC debt relief.

41. Staff supports the authorities’ request for assistance under the ECF in the amount of 120 percent of quota and for further interim HIPC assistance in light of the balance of payments and fiscal needs and the catalytic effect of Fund support on other external assistance. There are significant risks to the outlook in this post-conflict situation, including a lack of decisive improvements in the security situation and political normalization, lackluster progress on structural reforms, limited access to regional financial markets, external shocks, but there could also be a stronger-than-projected rebound in activity. These risks should be manageable in light of the authorities’ strong commitment to the policies to be supported by the ECF. If the challenges in the short term are addressed effectively, prospects are good for Côte d’Ivoire to embark on the ambitious growth trajectory envisaged by the authorities and make progress towards alleviating poverty and achieving the MDGs.

42. It is proposed that during the ECF arrangement Côte d’Ivoire stay on a 24-month Article IV cycle in accordance with the decision on consultation cycles.12

Appendix I. Côte d’Ivoire: Letter of Intent

Abidjan, October 20, 2011

Madame Managing Director

International Monetary Fund

Washington DC, 20431

Madame Managing Director,

1. Significant progress has been made in normalizing the security and economic situation in Côte d’Ivoire since the end of the post-election crisis. The government has begun the process of national reconciliation with a view to consolidate the peace. To this end, it created and established the Dialogue, Truth and Reconciliation Commission (CDVR). The security situation is improving progressively and the first legislative elections since the end of National Assembly’s term in 2005 are planned for December 11, 2011. The recovery of the economy, which is a priority of the government, should help to consolidate the peace. In this context, the economic and financial policies of the government, have benefited from the support if the international financial community, in particular through the Rapid Credit Facility of the IMF and exceptional financial assistance from the French Development Agency, the African Development Bank, and the World Bank. The result was a rapid recovery despite the deterioration of our infrastructure after more than a decade marked by a weak level of investment. In June 2011, the industrial production index was already at 95 percent of its June 2010 level. However, private investment is still suffering from a “wait-and-see” attitude among economic agents.

2. To restore confidence and ensure strong and sustained growth, the government resumed several months ago the implementation of certain structural reforms and launched many projects financed by public resources. To this end, we have set out a medium-term economic and financial program, which emphasizes policies to relaunch economic growth and poverty reduction, by promoting a more dynamic private sector that will create jobs. In regard to public finance, we expect to create fiscal space to increase public investment. To accomplish this, we expect to increase tax revenue, restore financial balance to the electricity sector, and to the private and the public pension funds. The government also intends to restructure its portfolio of enterprises with the aim of streamlining it. It will move ahead with the reform of the financial sector, in particular giving priority to the public banks, for which urgent actions have been formulated to avoid a deterioration in their financial situation. The government will not inject new resources in these banks outside of a restructuring plan discussed with the IMF. These actions will be supplemented by reform of public finances. We have started implementing measures to improve the business climate. The program as a whole will be strengthened by improved effectiveness of the public administration.

3. The attached Memorandum of Economic and Financial Policies (MEFP) describes the policies that we plan to implement during the program period. We are requesting the IMF to support our three-year economic and financial program through the Extended Credit Facility. In this context, we request financial support in an amount equivalent to 120 percent of our quota share, or SDR 390.24 million. At the same time, the government requests the resumption of interim assistance provided by the IMF in the context of the HIPC Initiative, specifically, the third tranche of this assistance in the amount of SDR 5.042 million.

4. The government is determined to reach the HIPC Completion Point as soon as possible. Debt relief on external debt at the Completion Point will be a major step in the economic and financial management of our country, and will confirm our commitment to advance Côte d’Ivoire. It will contribute (i) to the sustainability of public finances and the normalization of relations with our its creditors, (ii) to attracting investment; and (iii) to reducing poverty in our country, thanks to a sound reorientation of budgetary spending. To achieve this in 2012, the government will take all the steps needed to implement the remaining Completion Point conditions.

5. The government is convinced that the policies and measures presented in this memorandum are sufficient to turn the situation around. It will consult with IMF staff at its own initiative or at the request of the IMF Managing Director prior to the adoption of any additional measures that it may deem necessary or in the event of changes to the policies set forth in this Memorandum. The government also undertakes to cooperate fully with the IMF to achieve the program objectives.

6. The Ivoirien authorities agree to the publication of this Letter of Intent and the attached Memorandum of Economic and Financial Policies (MEFP) and Technical Memorandum of Understanding (TMU), as well as the IMF staff report relating to the request for an arrangement under the Extended Credit Facility (ECF). We hereby authorize their publication and posting on the IMF website following approval of the ECF-supported program by the IMF Executive Board.

Very truly yours,

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Attachments:

Memorandum of Economic and Financial Policies (MEFP)

Technical Memorandum of Understanding

Attachment I—Côte d’Ivoire: Memorandum of Economic and Financial Policies

October 20, 2011

I. Introduction

1. The crisis following the proclamation of the outcome of the second round of the presidential election of November 28, 2010 affected the country greatly. Lasting some six months, the crisis had serious repercussions on the political, economic, social and humanitarian situation. At the humanitarian level, it sparked a mass exodus of people to the interior of the country and also into neighboring countries. It also led to a generalized loss of security, a three-month shutdown of most banks, the imposition of economic sanctions, combat with heavy weapons, and supply problems for medications and foodstuffs. Regarding the economy, the government’s operational capacity was reduced through pillaging and theft. The private sector saw some of its productive capacity destroyed. The situation led to the closure of many businesses, particularly small- and medium-sized enterprises (SMEs), and many workers were laid off temporarily. The industrial production index was down by half in April 2011 from its level in April 2010. Disruptions in distribution channels were reflected in shortages of foodstuffs leading to generalized hikes in consumer prices. The “food” component of the consumer price index recorded a year-on-year increase of some 16 percent in April 2011.

2. Since the end of the post-election crisis, Côte d’Ivoire has made remarkable progress towards normalization, but important challenges remain. Normalization of the political situation accelerated after the inauguration of the President of the Republic on May 21, 2011 and the formation of a government on June 1. There has been a steady improvement in the security situation since May 2011. With the cessation of hostilities, the government has moved to unify the army, to reorganize and redeploy the gendarmerie and the police. On the social front, the government has established the Dialogue, Truth and Reconciliation Commission (CDVR) thereby opening the way to national reconciliation with a view to achieving a lasting settlement of the sociopolitical crisis that has gripped the country since 1999. To address social needs resulting from the disastrous humanitarian situation, the government has taken steps to guarantee free access to health care and to public hospitals and health centers since May 2011. Economic activity has gradually recovered since the reopening of banks and financial institutions at the end of April 2011 and the lifting of the European Union embargo. Thanks to the energetic measures taken by the government, nearly all economic indicators have turned favorable since May 2011. However, the fallout from the crisis persists, in the form of extortion rackets, roadblocks, and the continued weakness of private investment.

3. The government’s policy is to move on from the relaunch of activities to consolidation and a sustainable recovery of economic growth. This challenge will require significant efforts in terms of investment. During the last 10 years, the average investment rate remained below 10 percent of GDP, compared to 16 percent in the late 1990s and 25 percent during the 1970s. The public component of investment was particularly affected during the long period of crisis, to the point where the infrastructure needed to sustain growth and to maintain the country’s position as the engine of the subregional economy could not be guaranteed. The reforms undertaken during our ECF program concluded in March 2009, which remain in execution, will be pursued so as to allow key sectors of the economy to contribute to their full potential. The 2011 budget, adopted on June 22, recognizes this concern to support the recovery of activities, and to make a start at restoring infrastructure, while addressing the most pressing needs of the population. It is consistent with the framework of the interim economic and financial program supported by the Rapid Credit Facility (RCF).

4. The government is determined to restore the country to sustained growth, to promote good governance and to combat poverty effectively. To this end, it has set the following short and medium-term objectives:

  • To consolidate national reconciliation;

  • To reinforce security and free movement for persons and goods throughout the national territory;

  • To improve the business climate in order to bolster the confidence of households, economic operators and investors;

  • To increase the level and quality of investment, particularly the public component;

  • To promote good governance;

  • To promote economic growth and job creation.

The government firmly intends to respect the commitments made in 2011 under the Rapid Credit Facility (RCF) and to pursue implementation of the Poverty Reduction Strategy Paper (PRSP). It will give priority to economic policies that will foster growth and boost employment while reducing poverty. To this end, a government seminar was held on July 5 and 6, 2011 in Yamoussoukro, during which each of the 36 ministries established specific objectives for the second half of 2011, with benchmarks that allow for regular monitoring of progress achieved.

5. The government is determined to achieve the Completion Point under the HIPC Initiative as quickly as possible. To do so, it will take all the steps necessary to meet the remaining triggers for the HIPC Completion Point in 2011, including a start at implementing the coffee-cocoa reform and continued execution of the PRSP (Box 1).

This memorandum describes progress to date under the program supported by the RCF and sets out our medium-term economic program with our objectives for 201–12.

II. Recent economic performance and implementation of the RCF-Supported program in 2011

A. Recent Economic Developments

6. Since April 26, 2011, when the banks and financial institutions reopened, the government has pursued its economic and financial policy objectives despite a particularly difficult post-crisis context. It has worked for the rapid restoration of relations with its main international partners. It has also ensured that administrative actions were in strict accordance with the principles of sound management. At the same time, the restoration of dialogue with private sector operators has helped to speed the recovery.

  • In light of the trend in the main macroeconomic indicators to the end of June 2011, the growth objectives was revised from -6.3 percent to -5.8 percent. That relative improvement can be laid to the primary sector, where growth is expected to be 1.7 percent as compared to the initially forecast -0.3 percent, thanks to agricultural exports—cocoa in particular—and mining activity. The secondary and tertiary sectors have recovered in line with earlier forecasts. The industrial production index in June 2011 was already at 95 percent of its June 2010 level, and in July reached 98 percent of its level a year earlier.

  • Year-on-year inflation stood at 4.6 percent at the end of June, largely as a result of higher food prices (+9.3 percent) due in part to international prices and to racketeering. However, this level is lower than the situation in April, due to the renewed supply to the markets. Annual inflation stood at 4.5 percent in July. A continuation of this performance should help to dampen the resurgence of inflationary pressures, bringing the inflation rate for the year down to the Community threshold of 3 percent.

  • Regarding the external accounts, at the end of June 2011, the trade surplus (excluding exceptional goods) was up nearly 52 percent over June 2010. This sharp growth resulted from a recovery in exports, particularly of cocoa (23.6 percent) following the lifting of the embargo, as well as from a decline in imports associated with the reduced economic activity.

  • Ivoirien banks have reopened for business at the end of the post-election crisis. The crisis has aggravated their financial situation, particularly for the State-owned banks. At the end of June 2011, financial data for the banking system show a decline of 8 percent from December 2010 in sound loans, an increase of 44 percent in nonperforming loans, and abundant liquidity. The government will continue renewing government securities until October, as has been done since December 2010 as a result of the post-election crisis.

B. Budgetary Policy and Execution of the Economic and Financial Program in 2011

7. Budget execution to the end of June 2011 has been generally consistent with the budget. The performance at end-June 2011 against the benchmarks in the RCF-supported program is in line with the objectives. In fact, total revenues amounted to 483.0 billion compared to a projected 407.8 billion. The wage bill was held to CFAF 272.7 billion versus CFAF 282.1 billion programmed. The basic fiscal balance stood at CFAF -56.1 billion compared to a target of CFAF -134.1 billion, thanks to better revenue collection and under-execution of expenditures (Table 1).

Table 1.

Côte d’Ivoire: Indicative Targets, RCF 2011

(Billions of CFA francs)

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Sources: Ivoirien authorities and IMF staff.

Cumulative change from April 26, 2011, unless otherwise indicated. See Technical Memorandum of Understanding (TMU) for detailed definitions.

Basic balance = Tax and nontax revenue + (Grant - Project grants - WB budget support grant - AfDB budget support grant) - (Total expenditure - Debt relief on interest - Foreign financed capital expenditure - Toxic waste expenditure).

Continuous target.

Excluding loan (budget support of € 350 million) from Agence Francaise de Development (AFD).

8. Tax revenues exceeded forecasts thanks to: (i) a rapid reopening of the tax collection agencies (régies financières), (ii) efforts to collect the main taxes, in particular the VAT, the ITS, non-oil profit taxes and cocoa levies; and (iii) payments made since the end of April against tax returns for the first quarter. In fact, the government rehabilitated and re-equipped the tax collection services with basic work tools so that they could begin revenue collection as of April, despite the systematic looting they had suffered. Also, gradual improvements in security and efforts to pay down domestic arrears, combined with the return of a climate of confidence, have favored a greater-than-expected mobilization of domestic revenue.

9. Expenditures fell short of targets because of the late adoption of the budget. Current expenditures (dépenses ordinaries) were limited in May and June, but should be in line with planned amounts by the end of 2011. Thus, the program target for the payroll, projected at CFAF 727.4 billion, remains unchanged and reflects spending on the creation of the new army and on the recruitment of teachers and health personnel. Investment spending should also accelerate in the second half of the year, in the context of: (i) specific provisions taken with respect to public procurement; (ii) the execution of the Presidential Emergency Program; (iii) the start of work on the third bridge in Abidjan; (iv) the continuation of major public works; and (v) the execution of pro-poor spending under the PRSP.

10. The government has continued and has reviewed the reforms initiated under the Economic and Financial Program supported by the previous ECF arrangement. To this end, it has initiated an update of the PRSP in order to take account of new priorities stemming from the post-election crisis and to put in place a coherent framework for intervention that will address humanitarian, emergency, reconstruction, and development issues in 2011. It also organized a seminar on the outlook for the energy sector in June 2011, to prepare a diagnosis of the sector and to define new strategic directions. The financial sector, which suffered heavily from the Post-election crisis, was the object of an advisory mission sent at the government’s request from the Monetary and Capital Markets Department of the IMF. This mission addressed the development strategy for the financial sector as well as management of the domestic debt.

The other actions taken regarding sectoral reforms are:

  • The continuing efforts to finalize the coffee and cocoa sector reform;

  • The reduction of the deficit in the electricity sector, through the relaunch of negotiations on the price of gas and the export price for energy.

  • The launch of the study on the structure of petroleum product prices, with a view to adopting a new tax structure.

  • For customs, making operational the database on prices and putting into service the computerized module for managing exemptions in accordance with the recommendations from the Grand Bassam seminar of June 2010, and the continuation of other reforms with technical assistance from the IMF Fiscal Affairs Department.

  • The reform of the CNPS [private sector pension fund], which should be adopted before the end of December 2011.

  • The reform of the CGRAE [public sector pension fund], which should be finalized and adopted by the government before the end of December 2011.

  • The continuation of the reform of the public administration, including creation of the position of General Secretary in the ministries.

  • Improvements to debt management, through the establishment of a National Committee on the Public Debt, for which the draft decree has been prepared and submitted to members of the government for adoption before the end of November 2011.

  • The resumption of reports to the Council of Ministers on physical and financial flows in the energy and coffee-cocoa sectors, with the production of reports on the situation at end-June 2011.

  • The continued production of the quarterly report on gross petroleum shipments.

11. The government has also continued implementing the structural reforms in 2011 covered under the program supported by the Rapid Credit Facility. The actions taken concern:

  • The resumption of the census of government officials and agents, which was has been in progress since August 29, 2011.

  • The continued implementation of the PSRP through the execution of pro-poor spending and the Medium-Term Expenditure Framework (MTEF) for the social sectors (health and education/training).

  • The finalization of the software for monitoring exemptions in the Inland Revenue Directorate (DGI).

  • The implementation of the module for managing advances and the module for managing amendments in the Budget and Finance Directorate (DGBF).

In addition, in the context of strengthening governance and moral standards in public life, the government has adopted a code of ethics and conduct for members of the government. It has also adopted an annual matrix of actions that is subject to a monthly evaluation and quarterly review by a special Council of Ministers meeting.

III. Economic Program 2011–14

A. Macroeconomic Framework

12. The government intends to adopt and implement an economic and financial program for the period 2011–14 that is based on establishing a sustainable and durable growth dynamic supported by an increase in investment. After more than a decade of weak economic growth, the government’s program seeks to increase public and private investment in order to equip the country with high-quality economic infrastructure and support growth-generating sectors. This program to revive investment is part of the framework to achieve the Millennium Development Goals (MDG) in a country that is unified and at peace. In this regard, it takes into account the challenge of reducing poverty, through the implementation of the PRSP and a sustained recovery of private sector activity supported by an improvement in the business climate and the promotion of good governance. Fiscal policy will also be focused on a better management of the public finances, taking into account the broadening of the tax base.

13. The principal macroeconomic objectives for the period 2012–14 are to accelerate economic growth and control inflation. Growth will be supported by the resumption of large-scale development projects, in particular investments. The government intends to contain the increase in the wage bill and in operating expenditures in favor of investment spending. It also intends to take advantage of external debt relief beyond the HIPC Initiative, in particular through the “Debt Reduction and Development Contracts (C2D)” announced by France. The policy of boosting investment significantly relies heavily on public-private partnerships (PPP) with establishment of a National PPP Committee in August 2011. Private investments should also increase in line with the improvement in the business climate. Moreover, sectoral development policies, particularly for staple food crops, should improve the market supply situation and help contain consumer prices.

14. The Ivoirien economy should recover with positive growth of 8.5 percent in 2012, as the economic fabric is restored. This would reflect the catch-up effect after the major shock suffered in 2011 as a result of the crisis. It would result from a significant rebound in the secondary sector (12.6 percent) and in the tertiary sector (13.7 percent), which recorded negative rates of -9.7 percent and -12.7 percent, respectively, in 2011. The public investment rate should register a major increase, rising from 2.7 percent in 2011 to 5 percent in 2012. The overall increase in consumer prices should be contained so that the inflation rate would be 2.2 percent.

15. The recovery of growth in 2012 should continue in 2013 and 2014, at an average rate of 6 percent. The government intends to continue to promote investment in order to reach a level of 12.6 percent of GDP in 2013 and 14.3 percent in 2014. Specifically, public investment should rise from 5 percent of GDP in 2012 to 6.9 percent in 2014. During that time efforts will be aimed at attracting private investment. As of 2013, policies to contain prices by promoting staple food crops and improving road conditions should make it possible to keep inflation below 3 percent.

16. To achieve its macroeconomic objectives, the government plans to accelerate structural reforms and to create a framework that will encourage private sector activities and employment. It intends to pursue the restructuring of the coffee and cocoa sector and the energy sector, to update the plan for reforming the public finances (PEMFAR II), the reform of the public administration, an acceleration in the implementation of the PRSP, the adoption of a three-year Public Investment Program (PIP), and the strengthening of the financial system. It also plans to: (i) restore security throughout the national territory; (ii) rehabilitate and upgrade the country’s socioeconomic infrastructure; (iii) improve the business climate and governance; (iv) reinforce the rule of law; (v) guarantee free movement for persons and goods; and (vi) strengthen the role of Côte d’Ivoire in the regional integration process.

B. Fiscal Policy

17. Fiscal policy in 2011–14 seeks to increase public investment while keeping the public debt sustainable. To do this, the government intends to: (i) increase revenues by expanding the tax base and making tax administration more efficient; and (ii) control current expenditures, in particular the wage bill. The government is targeting an overall fiscal deficit (as defined in the attached technical memorandum of understanding) of 4.4 percent of GDP in 2012, and a further reduction in 2013–14.

18. The 2011 budget is designed to support the recovery and normalization of economic activities and to limit the effects of the crisis by responding to the urgent needs of the population. In particular, it has made it possible to address the humanitarian and social impact of the crisis, to improve security and to cover non-discretionary expenditures (public debt service, personnel costs) despite the decline in government revenues below the levels of previous years associated with the post-election crisis. The government has taken important steps to support the private sector in its recovery efforts. In this context, it granted tax relief to the private sector at an estimated cost of CFAF 32.4 billion in addition to direct general fiscal support in the amount of CFAF 12 billion and targeted sectoral measures. The government has also decided to significantly reduce balances outstanding to its suppliers. Cash payments planned in this respect amount to some CFAF 145 billion. It will also avoid the accumulation of new domestic arrears. Through these measures, the government intends to permit the private sector to restore its cash position and to play a major role in reviving the national economy. Based on performance through the end of June, the revenue agencies have made significant collection efforts while expenditure execution has remained fairly weak, reflecting the late adoption of the budget. The budgeted fiscal balances at end-December 2011 should be met.

19. The 2012 budgetary exercise will focus on raising tax revenues in the context of declining budgetary aid. It will give emphasis to promoting public investment, with an allocation of around 22.7 percent of budgetary revenues to investment versus 11.9 percent in 2010 and 15.9 percent in 2011. The overall fiscal deficit including grants should move from 8.1 percent of GDP in 2011 to 4.4 percent of GDP in 2012. To achieve these results, the following actions and initiatives are planned:

  • New taxes will be introduced, in particular on some telecommunications and on rubber.

  • Management of the “single taxpayer file” will be reorganized with the creation of an assessment and collection unit exclusively for the property tax, with a view to increasing its yield significantly.

  • Work on the property registry (cadastre) will be stepped up in order to take better account of tax opportunities offered by rapid urban growth. In particular, this will make it easier to locate taxpayers and assess them more realistically.

  • The tax administration will pursue its policy of decentralizing its services and broadening the tax base; the customs authorities will build on the reforms stemming from technical assistance recommendations, including those of the IMF, and will take steps to harmonize exemptions.

  • The customs and internal revenue administrations will also work to ensure effective tax collection throughout the national territory, including in the former CNW zones.

  • The government will step up the systematic collection of revenues from administrative fees.

  • The government will implement a policy to streamline the government’s portfolio of enterprises to improve their financial contribution to the budget.

  • The fight against tax fraud and evasion will be reinforced, together with campaigns to promote a taxpaying culture.

20. The government plans to give as much priority as possible to public investment to spur the reduction of poverty and support growth. To create fiscal space for public investment, the government will limit operating expenditures to CFAF 474.2 billion, electricity subsidies to CFAF 76.0 billion and crisis-exit spending to CFAF 30.0 billion. Furthermore, current spending will be limited through stricter controls on consumption of utilities. The wage bill will be contained, with due regard to staffing needs in the social and security sectors. Also the government intends to step up efforts to rehabilitate basic infrastructure, to pursue development programs, and to promote staple crops and export agriculture. In addition, the government plans to promote the revival of the secondary sector, in particular agro-industry and its potential for employment creation.

21. Implementation of the PRSP will be accelerated in 2012. The government will update the PRSP before the end of 2011, and during the first half of 2012 it will produce a progress report on implementation of the PRSP in 2010–11. Spending in 2012 will take account of the need to continue implementation of the PRSP. The government intends to give priority in budgetary spending to pro-poor expenditure, which amounts to CFAF 980.0 billion (7.9 percent of GDP) compared to CFAF 885.2 billion (7.8 percent of GDP) in 2010. Moreover, it will improve the supply of basic socioeconomic infrastructure, bearing in mind the needs identified in the updating of the PRSP. A Round Table to establish dialogue between the government and its partners on development priorities and on support for implementing the PRSP will be organized for during late 2011 and early 2012. There are also plans to organize a Consultative Group for the overall financing of the PRSP, once the Completion Point is reached.

22. The government will be prudent in its spending. It will make contingency provisions to execute expenditures within the limits of available domestic resources. In this regard, meetings of the Treasury Committee will continue so that the necessary adjustments can be made in the management of the budget through the Integrated Public Finance Management System (SIGFIP).

23. Investment spending will rise to meet the needs of reconstruction and fighting poverty. The 2012 budget calls for an increase in domestically financed investment expenditures of 110 percent from 2011. These funds will be used primarily for rehabilitating basic infrastructure, implementing the Presidential Emergency Program, development projects, and promoting agriculture, as well as for projects to support the commercialization of food products and the integration of young people into the trade sector.

24. The government plans to extend the maturity of public securities. To this end, it has prepared a plan to end the rollover of securities linked to the crisis. The plan foresees the payment in October 2011 of the capitalized interest of CFAF 20 billion, and the outstanding treasury bills, valued at CFAF 609.5 billion at end August 2011, will be replaced by a two-year treasury bond and two OAT bonds (Obligations Assimilables du Trésor) of three and five years, earning interest at 4.75 percent, 5 percent and 5.25 percent respectively. The government has undertaken broad consultation with its creditors and with the BCEAO. It has received agreement in principle from Ivoirien banks and from the BCEAO. It will request the BCEAO to take the necessary complementary measures, including acceptance of the securities for refinancing and as required reserves.

C. Structural Reforms

25. To accelerate economic growth will require defining and implementing significant reforms to bring more transparency to the government’s actions and to guarantee a greater contribution from the main sectors. To this end, the government intends to deepen the actions under way with respect to the public finances, the coffee-cocoa sector, the energy sector, the financial sector, the public administration, and the business environment (Boxes 2 to 8 and Table 3). It is also committed to addressing the challenges to establish security, reduce poverty and unemployment in order to consolidate peace and social cohesion.

Table 2.

Côte d’Ivoire: Performance Criteria (PC) and Indicative Targets, ECF 2011-12 1/

(Billions of CFA francs)

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Sources: Ivoirien authorities and IMF staff. Note: The terms in this table are defined in the TMU.

Cumulative change from June 30, 2011 for 2011 targets, and from December 31, 2011 for 2012 targets.

Continuous performance criterion.

Table 3.

Côte d’Ivoire: Structural Benchmarks (SB), 2011–12 ECF

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Montagnat-Rentier G., Parent G. and Boilil A. M. (2011): Recommendations on the ongoing implementation of the customs administration modernization program, Aide-mémoire of August 24, 2011.

26. The government will implement its action plan to improve governance. In this regard, in 2012 it will complete the reforms already begun, including adoption by the Council of Ministers of the national governance and anticorruption plan, the law on illicit enrichment, the charter of ethics and the code of conduct for civil servants. In addition, the government will strengthen the control, inspection and evaluation system within the public administration through operational audits, and a strengthening of the role of the General Inspectorate of State (Inspection Générale d’Etat), the General Inspectorate of Finance (Inspection Générale des Finances), and the sectoral audit offices.

27. The government will take appropriate steps to reinforce the independence, impartiality and effectiveness of the judicial system, as well as strengthen security conditions. It has begun to redeploy justice officials throughout the national territory, and to rehabilitate and reopen jails and detention centers. It also plans to adopt legislation concerning the decree on the enforcement of (exequatur) of decisions of the Arbitration Courts, the reform of the judicial system, and the creation of Commercial Courts (Tribunaux de Commerce). Particular emphasis will be placed on strengthening security and the free movement of goods and persons. Protection of the economic territory will be made effective through the full deployment of the Armed Forces and paramilitary forces, including the customs, over the entire national territory. These steps will improve the effectiveness of efforts to combat fraud, counterfeiting and smuggling.

28. Improving the business climate is an important objective of the government. The policy of growth, with its emphasis on reviving investment, will require a major contribution from the private sector. To achieve this, it is essential to create an environment attractive for capital inflows, by simplifying procedures and reducing the costs and charges that burden the running of a business. Taken together, these actions are intended, among others, to improve the indicators relating to industrial sector activities listed in the publication “Doing Business”. In particular, these indicators concern the streamlining of administrative procedures for obtaining industrial sites and building permits. In this context, the government intends to establish a Business Facilitation Center before the end of 2012 in order to give economic agents the opportunity to complete, in one place, all the formalities needed to create a business in Côte d’Ivoire. In addition, adoption by the government in 2012 of the draft law reforming the property registry should make it easier to obtain title and security for real estate property and should thereby help develop an active mortgage market. Also, the draft competition law will be adopted by the government before the end of March 2012, and the Council of Ministers is expected to approve the investment code in 2012.

29. An overall financial sector development strategy will be prepared and adopted. To ensure adequate financing for the economy, the government intends to help create conditions whereby the financial sector can play its full role. For this purpose, and taking into account the impact of the post-election crisis, the government plans:

  • To launch five studies in the first quarter of 2012, with technical and financial assistance from the IMF, the World Bank, and the FIRST Initiative, primarily covering financing mechanisms for housing, SMEs, and food agriculture, as well as the government’s role in the financial sector, and the cost of credit. The conclusions of these studies will be used to prepare the strategy, which is expected to be adopted before the end of 2012.

  • To make the primary issuance market more active by introducing primary dealers for securities (SVTs), which over time will facilitate the development of a secondary market among economic operators.

  • To ensure the follow-up of the recommendations of the WAEMU Banking Commission concerning banks’ observance of prudential norms. The government will continue its efforts to restructure the banks in difficulty, in particular those that are government-owned, without injecting new public funds outside a restructuring plan validated by the authorities and discussed with the IMF and the World Bank. The government-owned banks are included in the audits initiated by the government as part of the rationalization of the government’s portfolio. In addition, the government has established governance organs in these banks, notably the executive boards and Director Generals that have been instructed to ensure that the banks’ financial position does not deteriorate.

  • To reinforce the capacity of the Financial Sector Development Committee (CODESFI) and undertake the priority studies with the aim of preparing a plan for the reform of the financial sector before the end of August 2012. To this end, it will seek the technical assistance of World Bank and IMF to define and implement this strategy.

  • To further the stabilization of the microfinance sector through regular audits and stricter licensing requirements, with particular attention to the situation of UNACOOPEC-CI.

30. The government is determined to finalize the reform of the coffee-cocoa sector, in order to improve farmers’ living conditions and make its management more transparent. The new strategy, which will set out a new legal and regulatory framework as well as a new marketing mechanism, should be adopted and introduced during the crop year 2011/12. Producers will be offered a remunerative price, provided with basic social infrastructure and better conditions of access to production areas. This new organization should also help to boost productivity by encouraging programs for replanting the orchards. In addition, the government will both undertake investment spending in the sector and incorporate the operating costs of the sector in the government’s budget beginning with the 2013 crop year. The government will maintain the ad valorem tax at 22 percent of the maximum c.i.f. price for cocoa that was introduced in September 2010.

31. The government plans to apply the automatic price fixing mechanism for petroleum products. It has launched a study of the structure of petroleum product prices in order to adopt a new structure that takes into account the various parameters and economic agents involved in setting prices. The conclusions of the study, expected before the end of December 2011, will serve as input for the government’s petroleum product tax policy. The new strategy will take account of the need to reflect market prices, to avoid distortions harmful to the SIR (Société Ivoirienne de Raffinage, Ivoirien Refinery Corporation), to consider the social impact of the evolution of pump prices, and to support the SIR’s profit margin. The new strategy should be finalized in the coming months, and the government will put in place an automatic mechanism for setting petroleum product prices that will reflect market prices as of July 2012.

32. The government will continue to implement the requirements for meeting the Extractive Industries Transparency Initiative (EITI) criteria. It is committed to publishing an EITI report on the 2008 and 2009 data before the end of 2011. The Executive Board of EITI, after assessing this document and the EITI Validation Report, which has already been submitted, will be able to decide on the final status of Côte d’Ivoire in implementing the EITI process. The government will also begin preparation of the EITI report on the 2010 data before the end of November 2011.

33. The government will continue efforts to improve the management of public enterprises. The decision to streamline the portfolio of state enterprises, taken by the Council of Ministers on June 29, 2011, will be carried out. To do so, the government will first spell out its strategic vision for the management of public enterprises based on a reframing of their missions founded on an optimal allocation of public funds and a better socioeconomic and financial return. The Steering Committee on Evaluation and Restructuring, to be in place before the end of 2011, will identify overlaps and redundancies among these public enterprises and assess their economic and financial performance, so that their reframing can be finalized. The committee will then propose to the government a plan for reducing the scope of the portfolio of public enterprises by 25 percent, before the end of September 2012. In addition, the government intends to finalize preparation of performance contracts between the state, state corporations and majority-owned public corporations. It will also make sure of the application of the plan for clearing the arrears, validated jointly by the two sides, owed by public enterprises to the social security institutions (CGRAE and CNPS).

34. The government plans to increase electricity supply to support its policy for relaunching growth and restoring financial equilibrium in the power sector over the medium term. The recovery of growth and the promotion of private sector development will create a greater demand for energy. Given current production capacity, it is essential to expand the supply of electricity while reducing subsidies to the sector. In order to achieve financial equilibrium by 2014, the government intends to adopt and implement a strategy for the electricity sector, comprising: (i) the adoption of the draft electricity code, which reflects the new regulatory and legal framework; (ii) the conclusion of negotiations to reduce gas prices; (iii) a revision to the remuneration of the concessionaire; (iv) an improvement in the recovery rate of billing invoices, particularly in the former CNO zones; (v) the strengthening of measures to combat fraud; (vi) investments to improve the quality of the transportation and distribution network; (vii) the adoption of a new rate structure as of 2012, based on conclusions from the study; and (viii) a 10 percent adjustment for industrial rates as of April 2012, and for household rates later in the year; and (ix) expansion of production capacity by bringing in independent producers.

35. The government plans to increase crude oil and gas production. To encourage oil companies to invest in crude oil and gas exploration and production, the government intends, in the first quarter of 2012, to introduce significant amendments and reforms to the Hydrocarbon Code and the Standard Contract for Hydrocarbon Production Sharing.

36. Reforms and investments will be made to revitalize the water sector. The government will respect its financial commitments to SODECI so that it can ensure the supply of drinking water to the population. To this end, it has paid the securitized debt maturing in 2011 and intends to clear end-2010 arrears, and since June 2011 it has resumed monthly payments. For its part, the concessionaire must improve the recovery rate for water billing, particularly in the former CNO zones, and replenish the development fund.

37. The government intends to keep the wage bill under control. With respect to streamlining the wage bill, it will be necessary to contain it while taking into account the needs of the social and the security sectors, in order to free up fiscal room for investment. The financial difficulties intrinsic to the post-election crisis preclude full implementation of the measures set forth in the strategy note for controlling the wage bill be adopted in May 2010. The government plans to update the strategy before March 2012, and will reprogram the payment of outstanding balances from prior commitments to professional organizations. Similarly, the authorities will take advantage of the census of government officials and employees, as well as the rationalization of recruitment in the public administration. The combined effect of a rationalization of staffing levels and an increase in government revenues should make possible a gradual reduction in the ratio of the wage bill to revenues.

38. The government intends to continue the efficient management of its personnel. The census of government officials and agents recommenced in June 2011 and will be completed in the fourth quarter of 2011 with the establishment of the Single Reference File for the public administration. This file will be used in the Integrated Management System for Government Officials and Agents (SIGFAE), which is expected to be finalized in the course of 2012. To make the public administration more efficient, the government will create an Observatory of Public Services and will create the positions of General Secretaries in the Ministries. As well, the government plans to raise the retirement age for certain categories of government officials and agents from 57 to 62 years, as of January 2012, for the purpose, among others, of ensuring the financial viability of the CGRAE.

39. The reform of the public and private sector pension systems will be finalized. The draft law reforming the CNPS and draft implementing regulations have been prepared for adoption by the government before the end of 2011. With respect to the CGRAE, the discussions undertaken by the Inter-Ministerial Committee on Reform of the Public Pension Regime (CIRPP/CGRAE) with the various partners led to draft reforms that will be adopted by the government before the end of 2011.

40. The action plan for public finance management based on the PEMFAR (Public Expenditure Management and Financial Accountability Review) will be pursued. The following progress is planned, by strategic pillar:

  • To improve the legal and institutional framework, the government intends to finalize and adopt the six WAEMU directives in the Council of Ministers by the end of March 2012. The installation of the National Assembly and voting on the draft texts, should permit the transposition of these directives into national law no later than September 2012.

  • On fiscal discipline, the government intends to streamline its recourse to Treasury advances, in accordance with the provisions of Decree 178/Cab-01/20 of March 13, 2009, and to make continued use of the advances management module launched in September 2011 and the budget amendments management module starting with the 2012 budget.

  • On public procurement, the government intends provide training for civil servant and private suppliers to the government on, in particular, the new Public Procurement Code, to ensure a sound understanding of the new texts governing public procurement in Côte d’Ivoire. The government also intends to continue to reinforce the capacity of the National Regulatory Authority for Public Procurement (Autorité Nationale de Régulation des Marchés Publics (ANRMP)).

  • On processing VAT credits, the government will establish a joint State/private sector structure known as the “VAT Credits Reimbursement Monitoring Committee,” chaired by the General Inspectorate of Finance, by December 31, 2011. The committee will be responsible for coordinating, planning and evaluating the monitoring of VAT credit reimbursement. The government will take the measures necessary to keep the stock of new VAT credits, beginning 2012, below CFAF 10 billion; the old stock, evaluated and validated by the joint committee, will be the object of separate treatment.

41. The government will continue to promote regional integration. To maximize the benefit of its membership in WAEMU and ECOWAS, the government will give priority to the reforms initiated by those institutions. In this regard, it intends to continue to undertake the work related to the fiscal transition, which will shift the burden of taxation gradually from border levies to the domestic taxation. This will allow it to prepare for the impact of signing the regional Economic Partnership Agreements (EPA), in the negotiation of which the government has been heavily involved. In addition, emphasis will also be given to expanding the Common External Tariff (CET) at the ECOWAS level.

42. A medium-term debt management strategy will be prepared with technical assistance from the IMF and World Bank. Achievement of the Completion Point under the HIPC initiative will allow Côte d’Ivoire to obtain substantial relief on its external debt. To be able to take full advantage of that relief and to ensure payment of future external debt service, the government will work with its technical and financial partners, in particular the IMF and World Bank, to prepare an action plan leading to a medium-term public debt management strategy to be adopted in 2012. To this end, it intends to adopt the new public debt management framework consistent with WAEMU directives, to ensure an integrated and sound management of public debt. In addition, the government will institute beginning in 2012 a program to strengthen its capacity to analyze the sustainability of the debt, to use simulation techniques, and to use instruments for mobilizing savings, and will submit a request to participate in the medium-term debt strategy (MTDS) project of the World Bank and the IMF.

IV. Financing and Monitoring of the Program

43. The government believes that the program for 2011 can be entirely financed, but there is still a financing need for 2012. The financing needs for the 2011 program have been considerable. To meet those needs, the government has received emergency support from the French Development Agency, the African Development Bank, the IMF and the World Bank. The portfolio of projects with development partners has also been reactivated. Pending the restructuring of its debt to the Paris Club, to private holders of the “Eurobond2032” and to other private creditors, the government will have to accumulate further external arrears. The government intends to cover its residual needs primarily by borrowing on the domestic and regional markets.

44. To meet its financing needs for 2012, the government is counting on support from various sources, in particular its multilateral and bilateral partners. The government intends to conclude a restructuring agreement with the Paris Club. It will also resume payment of current maturities to holders of the “Eurobond 2032” in 2012, and intends to conclude an agreement on a treatment for arrears accumulated between December 2010 and December 2011. The government has opened negotiations with non-Paris Club bilateral creditors and with other commercial creditors (Standard Bank – BNI and Sphynx) on comparable terms to the Paris Club. It also hopes to obtain budgetary support from multilateral institutions (IMF, World Bank and AfDB) and from bilateral partners. The government intends to cover the financing gap primarily through borrowing on the WAEMU markets.

45. The government intends to remain play major role in the monetary and financial markets, but with a preference for the medium and long term. Following the restructuring of government securities in 2011, the government will define before August 2012 a market intervention strategy, which would involve restricting domestic borrowing backed by public securities.

46. The program will remain subject to semi-annual monitoring by the IMF Executive Board on the basis of the quantitative indicators and structural benchmarks shown in Tables 2–3 and defined in the attached Technical Memorandum of Understanding (TMU). The semi-annual reviews will be based on end-June and end-December test dates. The first year of the program covers July 2011-June 2012, and the first (second) program review will be based on end-December 2011 (end-June 2012) performance criteria and is scheduled to be completed by April/May (October/November) 2012. In particular, the government undertakes:

  • To refrain from accumulating new domestic arrears and from any form of advance on revenues, and to refrain from contracting nonconcessional external borrowing other than the borrowing specified in the TMU;

  • With respect to any new domestic financing, to issue public securities by auction through the BCEAO or by means of any other form of competitive call for tenders on the local financial market and on the WAEMU market, and to consult with Fund staff;

  • Not to introduce or increase restrictions on payments and transfers pertaining to current international transactions, to introduce multiple currency practices, to enter into any bilateral payment agreements not in conformity with Article VIII of the IMF Articles of Agreement, or to impose or intensify any import restrictions for balance of payments purposes;

  • To adopt any additional financial and structural measures that may prove necessary to ensure the success of its policies, in consultation with the IMF.

V. Statistics and Capacity Building

47. The government intends to continue its efforts to improve the statistical system, with a view to ensuring the regular production of quality economic and financial data. In this context, the government will update the draft master plan for statistics, taking account of short-term developments and new guidelines, before end-March 2012.

48. Côte d’Ivoire will continue its efforts to strengthen the capacities of the government, particularly in those areas affected by the crisis. The government will continue to benefit from assistance from the IMF and other development partners to: (i) strengthen the tax and customs administrations; (ii) improve training for staff in producing the data needed to prepare the TOFE; (iii) assist in implementing the fiscal reform plan; (iv) improve the national accounts, with a view to constructing a social accounting matrix; (v) enhance external and domestic public debt management; (vi) formulate a strategy for the financial sector; and (vii) relaunch the macroeconomic modeling project.

________/s/_________

Charles Koffi Diby

Minister of Economy and Finance

Triggers for the HIPC Completion Point

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Structural Fiscal Measures Relating to Revenues

Taxes (DGI)

  • Deploy the tax exemption software in the regional directorates in September 2011, and publish quarterly tax exemption details, beginning Q1:2012.

  • Significantly improve revenue yields from the property tax, through improved property registration, and setting up dedicated assessment and revenue units to implement this tax in 2012.

  • Set up regional tax inspection offices [to strengthen control and authority] by December 2011.

  • Enhanced supervision of the informal sector through the resumption of registration of small traders and artisans, and the reinforcement of licensed management centers in 2012.

  • Introduce an information sharing platform between the DGI and the CNPS as part of the campaign against fraud in wage and salary taxes, and against black-market hiring, in September 2012.

Customs (DGD)

  • Implement measures from the seminar on exemptions, in accordance with the Action Plan and produce quarterly reports as from Q1, 2012.

  • Produce detailed monthly data on revenues forgone due to exemptions—using the SYDAM-World customs clearance management package—and produce quarterly reports as from March 2012.

  • Implement the Sydonia World transit module between the Port of Abidjan and the three main frontier posts as from January 2012.

  • Adopt, disseminate and implement a simplified customs clearance procedure before the end of September 2012, with a view to rationalizing import formalities through use of a single, computerized advance declaration form that would replace the many forms (BSC, FRI) that currently delay import operations.

  • Establish a database and training for auditors before the end of March 2012 for analyzing customs value on the basis of the methodology designed with Technical Assistance support.

  • Reorganize the units responsible for customs investigation before the end of December 2011, while ensuring risk analysis remains operational.

  • Implement the recommendations from the audit of the customs IT system, in accordance with the action plan, and produce a quarterly report as from December 2011.

  • Conduct an audit of competencies and produce a human resource development plan by the end of June 2012.

DGI/DGD/DGTCP

  • Ensure effective implementation of an information sharing platform between DGI and DGD.

  • Evaluate the stock of VAT credits at end 2011 and elaborate a strategy for dealing with them at the level of the joint public-private committee set up in September 2011; and pursue efforts to refund new VAT credits incurred in 2012 so as to limit the amount outstanding to less than CFAF 10 billion.

  • Gradually reestablish tax administration services in the former CNO zones before end 2011.

  • Decentralize ASTER to five localities in 2012.

Structural Fiscal Measures Relating to Expenditures (concluded)

  • Communicate to the Council of Ministers and publish quarterly budget execution statements, including spending earmarked for poverty reduction, within 45 days after the end of the quarter.

  • Include the observance of the regulatory time limits for processing expenditures in the quarterly budget execution reports.

  • Continue the decentralization of SIGFIP through connection to five localities in 2012.

  • Produce and quarterly publish reports on the activities of the National Procurement Regulation Authority, within one month after the end of the quarter.

  • Continue production and transmission to IGF for all the DAAFs a quarterly report on physical and financial execution of expenditures within 30 days, followed by a summary report by IGF within 15 days.

  • Prepare an MTEF methodological guideline by end-2011 and extend the MTEF to six new ministries—mining, petroleum and energy, agriculture, justice, environment, social affairs and economic infrastructure—as part of the 2013 budget.

  • Finalize and adopt in the Council of Ministers the draft texts transposing the six WAEMU directives on public finances, by end-March 2012.

Structural Reforms to the Public Administration

  • Finalize the census of government officials and agents and prepare the Single Reference File by the end of 2011.

  • Introduce the Integrated Management System for Government Officials and Agents (SIGFAE) by the end of 2012.

  • Adopt a program of government reforms, including creation of the Observatory of Public Services in 2012 and the positions of General Secretaries in the Ministries by end 2011; and extend these posts in all ministries by end 2012.

  • Validate arrears owed to CNPS and CGRAE by public enterprises at end-June 2011 and prepare a plan to clear them by end-2011.

  • Produce a quarterly report on the application of the strategy for clearing arrears owed by public enterprises to CNPS and CGRAE in 2012, and avoid the accumulation of new arrears.

  • Adoption of the CNPS and CGRAE reforms by the Council of Ministers by end-2011.

Measures to Reform the Financial System

  • Prepare by end-August 2012 and adopt by end-2012 the strategy for reforming and developing the financial sector.

  • Pursue reforms of the state-owned banks, in line with recommendations from the financial system evaluation mission of August 2011, with a view to improving prudential ratios, limiting losses, and preparing a strategy for government divestiture.

  • Produce quarterly reports on improvements in the governance and portfolio quality of micro-finance institutions.

Reforms to Improve the Business Climate

  • Adopt the decree on the enforcement of arbitration tribunal decisions to speed up the settlement of commercial disputes and clear the backlog of cases in courts by end-2011.

  • Create the commercial courts by end-2011, and continue the training of justice officials in commercial matters.

  • Validate a reform plan [in 2011] to improve the effectiveness and fairness of the judicial system, and begin publication of court decisions in 2012, including via the Internet.

  • Institute a one-stop-shop window for trade formalities, and establish a Business Facilitation Center by end-2011.

  • Adoption by the Council of Ministers of the draft investment code in 2012.

  • Adoption the Council of Ministers of the draft law on competition to deal with anticompetitive practices by end 2011.

Measures Concerning the Coffee-Cocoa Sector

  • Continue quarterly reporting to the Council of Ministers, within a 45 day lag, and publish the report on physical and financial flows, including information on “farm-gate” price (prix bord champ) and export prices.

  • Preparation and adoption by the government of a strategy for the organization and development of the coffee-cocoa sector, with a timetable for implementation by end-2011.

Measures Concerning the Energy Sector

  • Continue reporting to the Council of Ministers, within 45 days after the end of each quarter, on physical and financial flows in the energy sector, with quarterly reports on petroleum shipments within the same time frame.

  • Reduce the financial deficit of the electricity sector by: (i) renegotiating gas prices; (ii) revising remuneration for the operator; (iii) improving the recovery rate of invoices, especially in the former CNW zone; (iv) combating fraud; (v) making investments; (vi) revising the rate structure based on the conclusions from the study; and (vii) adjusting the tariffs.

  • Adoption by the government of the draft electricity code before the end of Q1:2012.

  • Adoption by the government of a new price structure for petroleum products based on the findings of the study on the fuel price structure.

  • Finalize and publish the 2008–09 EITI report by end 2011, and begin work on the 2010 report by end-November 2011.

  • Adoption by the Council of Ministers in Q1, 2012 of significant amendments and reforms to the hydrocarbons code, including a standard production sharing contract, to make petroleum and gas exploration, and production, more attractive.

Attachment II—Côte d’Ivoire: Technical Memorandum of Understanding

Arrangement Under the Extended Credit Facility 2011–14

October 20, 2011

1. This Technical Memorandum of Understanding describes the quantitative and structural indicators established by the Ivoirien authorities and the staff of the International Monetary Fund (IMF) to monitor the program supported by the Extended Credit Facility (ECF). It also specifies the periodicity and deadlines for transmission of data to the staff of the IMF for monitoring purposes. Unless otherwise specified, the government is defined as the central government of Côte d’Ivoire, including the National Social Security Fund (Caisse Nationale de Prévoyance Sociale, CNPS) and the Civil Service Pension Fund (Caisse Générate de Retraite des Agents de l’Etat, CGRAE), and Treasury operations for public companies in liquidation; it does not include any local government, the Central Bank of West African States (BCEAO), or any government-owned entity with separate legal status.

I. Performance Criteria and Indicative Targets

2. For monitoring purposes, the performance criteria (PC) and indicative targets (IT) are set for December 31, 2011 and June 30, 2012; there are indicative targets for these variables for September 30, 2011, and March 31, 2012.

Performance criteria (PC) include:

  • (a) a floor on the overall fiscal balance (including grants);

  • (b) a ceiling for net domestic financing (including the issuance of securities on the WAEMU financial market);

  • (c) a zero ceiling on new nonconcessional external debt;

  • (d) a zero ceiling for the accumulation of new external arrears;

  • (e) a zero ceiling for the accumulation of new domestic arrears.

Indicative targets (IT) include:

  • (a) a floor on the primary basic fiscal balance;

  • (b) a ceiling on expenditures by treasury advance;

  • (c) a floor on “pro-poor” expenditures;

  • (d) a floor on the net reduction of government amounts payable; and

  • (e) a floor on total government revenue.

3. The PCs, ITs, and adjustors are calculated as the cumulative change from June 30, 2011 for 2011 targets, and from December 31, 2011 for 2012 targets (Table 2 of the Memorandum of Economic and Financial Policies, MEFP).

A. Government Revenue (IT)

4. Total government revenue is defined as revenue collected by the Tax Administration (DGI), the Directorate-General of the Treasury and Public Accounting (DGTCP), and the Customs Administration (DGD), the CNPS, and the CGRAE; and other nontax revenue as defined in the fiscal reporting table (TOFE).

B. Pro-Poor Expenditures (IT)

5. Pro-poor expenditures are defined in Table 1 and are derived from a detailed list of “pro-poor” expenditures produced in the SIFBUD /SIGFIP system.

Table 1.

Côte d’Ivoire: Pro-Poor Expenditures (incl. Social Spending), 2011 1/

(Billions of CFA francs)

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See detailed list of pro-poor spending produced in the SIFBUD /SIGFIP system.

C. Treasury Advances (IT)

6. Within the framework of the program, Treasury advances are defined as spending paid for by the Treasury outside normal execution and control procedures, and which have not been subject to prior commitment and authorization. They exclude the ‘régies d’avance,’ externally-financed expenditure, wages, subsidies and transfers, and debt service as set out through ministerial decree. The cumulative amount of expenditures by treasury advance as defined by the program will not exceed cumulative quarterly ceilings representing 10 percent of quarterly budget allocations (excluding externally-financed expenditures, wages, subsidies and transfers, and debt service). The nominative and restrictive list of expenditures eligible as treasury advances is as defined by ministerial decree no. 178/CAB-01/26 of March 13, 2009.

D. Primary Basic Balance (IT)

7. The primary basic balance is the difference between the government’s budgetary revenue (excluding grants) and total expenditure plus net lending, excluding interest payments, externally-financed capital expenditure (on a payment order basis for all expenditure items):

Tax and nontax revenue – {Expenditure + Net lending – Interest payments-Foreign financed capital expenditure (on a payment order basis for all expenditure items)}

E. Overall Fiscal Balance (including grants) (PC)

8. The overall fiscal balance is the difference between the government’s budgetary revenue (including grants except World Bank budget support grants and AfDB budget support grants) and total expenditure plus net lending (on a payment order basis):

{Tax and nontax revenue + (Grants – World Bank budget support grants – AfDB budget support grants)} – {Expenditure + Net lending (on a payment order basis)}

9. The floor on the overall fiscal balance will be adjusted downward (upward) for an excess (shortfall) of project loans relative to the programmed amount.

F. Net Domestic Financing (PC)

10. Domestic financing by the central government is defined as the issuance of all debt instruments in CFAF to domestic creditors and the WAEMU financial market, borrowing from the BCEAO (including drawings from the IMF), and the contraction of any kind of other liability in CFAF toward these creditors. The program ceiling on net domestic financing applies to net amounts of domestic/WAEMU borrowing defined as the gross amount of domestic/WAEMU borrowing less amortization during the period under consideration. This ceiling includes a margin of CFAF 10 billion above the net cumulative flow projected for each quarter.

Net domestic financing = Domestic financing (from Fiscal Operations of the Central Government)–Net change in balances outstanding + Treasury loans from abroad (WAEMU) + Treasury bills placed abroad (WAEMU) + Treasury bonds placed abroad (WAEMU)+ IMF drawings + residual gap

11. This ceiling does not apply to new agreements on restructuring domestic debt and securitization of domestic arrears, nor to new BOAD and BIDC project loans. For any new borrowing over and above a cumulative amount of CFAF 35 billion over each of years 2011 and 2012, the government undertakes not to issue government securities except by auction through the BCEAO or through public auction (appel d’offres compétitif on the domestic or WAEMU financial markets registered with the Regional Council for Public Savings and Financial Markets (CREPMF), in consultation with Fund staff.

G. New Nonconcessional External Debt (PC)

12. The quantitative performance criterion concerning external debt applies to all nonconcessional external debt, irrespective of maturity, and whether it has been contracted or guaranteed by the government.1 It applies not only to the debt as defined above, but also to commitments contracted or guaranteed for which no value has been received. This performance criterion does not apply to:

  • normal import-related commercial debts having a maturity of less than one year;

  • rescheduling agreements;

  • debts to the West African Development Bank (BOAD) loans up to the equivalent of CFAF 25 billion or debts to the ECOWAS Bank of Investment and Development (BIDC), up to the equivalent of CFAF 20 billion;

  • drawings on the IMF; and

  • CFAF-denominated government securities (or CFAF-denominated debt contracted or guaranteed by the government) which are initially purchased (or contracted) by WAEMU residents.

13. A debt is considered concessional if its grant element is at least 35 percent, the net present value (NPV) of the debt being calculated using a discount rate based on the average of the OECD’s Commercial Interest Reference Rates (CIRRs) over the last ten years for debt with a maturity of at least 15 years. For debt with a maturity of less than 15 years, the NPV is based on the average CIRRs of the preceding 6-month period (February 15 to August 14 or August 15 to February 14). The same margins for differing repayment periods are added to both the 10-year and 6-month averages (0.75 percentage point for repayment periods of less than 15 years, 1 percentage point for 15 to 19 years, 1.15 percentage points for 20 to 29 years, and 1.25 percentage points for 30 years or more).

14. The government undertakes not to contract or guarantee nonconcessional external debt under the conditions defined in ¶13 and 14, with the exception of debt constituting rescheduling of maturities. In this regard, the government undertakes to consult with IMF staff on terms and concessionality of proposed new debt in advance of contracting such external debt.

H. External Payment Arrears (PC)

15. External arrears are considered to be the nonpayment of any interest or principal amounts on their due dates (taking into account relevant contractual grace periods, if any). This performance criterion applies to arrears accumulated under external debt of the government and external debt guaranteed by the government for which the guarantee has been called by creditors, consistent with the definitions under the external debt performance criterion (paragraph 13). This performance criterion is monitored on a continuous basis.

Excluded from this performance criterion are:

  • Arrears accumulated under external debt contracted with official bilateral creditors covered under the Paris Club Agreed Minute of May 2009 or any new Paris Club rescheduling or restructuring, as well as such debts to non-Paris Club bilateral official creditors that are subject to restructuring.

  • Arrears accumulated under:

    • i) the Eurobonds 2032,

    • ii) the BNI-Standard Bank (London) 2007 and 2008 notes, and

    • iii) the Sphynx Capital Markets 2007 and 2008 notes.

I. Amounts Payable, Including Domestic Payment Arrears (IT and PC)

16. The “amounts payable” (or “balance outstanding”) comprise domestic payment arrears and domestic floating debt and represent the government’s overdue obligations. They are defined as expenditures accrued (engagées et liquidées), validated (visées par le contrôleur financier), subject to payment order (ordonnancées), but not paid. These include bills due and not paid to public and private enterprises, but exclude domestic debt service (principal and interest). For program purposes, domestic payment arrears are those balances outstanding for which the payment delay exceeds the time frame for payment stipulated by the administrative regulations in force (90 days). The floating debt is those balances outstanding for which the payment delay does not exceed the time frame for payment stipulated by the administrative regulations in force (90 days). The balances outstanding are broken down by payer/type, as well as by maturity and length of overdue period (< 90 days, 90–365 days, > 1 year). For example, at end-2010, the “balances outstanding” amounted to CFAF 183 billion, the floating debt to CFAF 114 billion, and the arrears to CFAF 69 billion.

17. In general, the stock of floating debt will not exceed three months’ worth of current operating expenditure (excluding utilities) and investment expenditure financed from own resources. For example, in 2010, the quarterly amount of such expenditure amounted to CFAF 106 billion, and the floating debt was CFAF 114 billion.

18. Within the framework of the program, the government will (i) undertake a cash reduction of CFAF 11.8 billion in 2011 in the amounts payable, and CFAF 30 billion in 2012; and (ii) not accumulate new domestic payment arrears on the current budget from July 1, 2011 and the next budget from January 1, 2012.

II. Memorandum Items

A. Net Bank Credit to the Government

19. Net bank credit to the government is defined as the difference between government debts and government claims with the central bank and commercial banks. The coverage of net bank credit to the government is that used by the BCEAO, and is the same as that shown in the net government position (NGP). For example, the level of net bank credit to the government amounted to CFAF 806.7 billion at end-December 2010.

B. External Financing (Definitions)

20. Within the framework of the program, the following definitions apply: (i) project grants are non-reimbursable amounts of money or goods received from a donor and aimed at financing a certain project; (ii) program grants are non-reimbursable amounts of money or goods received from a donor and not aimed at financing a specific project; (iii) project loans are reimbursable amounts of money or goods received from a donor at an interest rate to finance a specific project; and (iv) program loans are reimbursable amounts of money or goods received from a donor at an interest rate and not aimed at financing a specific project.

III. Program Monitoring and Data Reporting

21. A quarterly assessment report on the monitoring of the quantitative performance criteria, indicative targets, and structural benchmarks will be produced by the authorities within 45 days after each quarter.

22. The government will report the information specified in Table 2a on a monthly basis, within 45 days of month-end or quarter-end, unless otherwise indicated.

23. The BCEAO will report final data within 45 days of the end of the period in question. The information provided will include the complete, itemized listing of public sector liabilities and assets with (i) the BCEAO; (ii) the Banque Nationale d’Investissement (BNI); and (iii) the banking sector (including the BNI).

24. The authorities will consult with the Fund staff on any proposed new external debt contracts. The authorities will report to Fund staff, following signature, any new external debt contracted or guaranteed by the government, including the terms of these contracts. Data on new external debt, the amount outstanding, the accumulation, and repayment of the external payment arrears will be reported monthly within the six weeks from the end of each month.

25. More generally, the government will report to the IMF any information needed for effective policy monitoring.

IMF—Document Transmittals

Detailed tables to be transmitted monthly, quarterly, or annually to the IMF staff. Examples of each of these tables were provided for illustration.

The documents expected monthly are indicated by “M,” those expected quarterly by “Q,” and those expected annually by “AN.” This list is not necessarily exhaustive.

Real sector (R)
General:

Table R.1: Cyclical Indicators (M)

Table R.2.1: Macroeconomic Framework (AN)

Table R.2.2: Supply-use accounts, current francs (AN)

Table R.2.3: GDP in francs (n-1) annual variation in volume (AN)

Table R.2.4: GDP deflators year (n-1) (AN)

Table R.2.5: Macroeconomic framework, underlying assumptions (AN) Table R3: Price index (M)

Energy:

Table R4: Summary crude oil and gas production (M)

Table R.4.2: Crude oil and gas production – CI11 (M)

Table R.4.3: Crude oil and gas production – CI26 (M)

Table R.4.4: Crude oil and gas production – CI27 (M)

Table R.4.5: Crude oil and gas production – CI40 (M)

Table R.4.6: Crude oil and gas – volume, price, and financial flows (M)

Table R.4.7: Ivoirien refinery (SIR) activities (M)

Table R.4.8: SIR: transfers to warehouses and exports (M)

Table R.4.9: Activities of marketers (M)

Table R.4.10: Goods released to market by type of tax (M)

Table R.4.11: Financial flows (trésorerie), SOGEPE (M)

Table R.4.12: Financial flows (exploitation), SOGEPE (Q)

Table R.4.13: Crude oil: Shipment report (Q)

Table R.4.14: Petroleum revenue: Structure of maximum sales prices (M).

Coffee / cocoa:

Table R.5.1: Quasi-fiscal levies and fees, and utilization – operations (Q)

Table R.5.2: Quasi-fiscal levies and fees, and utilization – investment (Q)

Table R.5.3: Investments in funds managed by the Coffee/Cocoa Committee (Q)

Table R.5.4: Bank accounts (Q)

Sector balance of payments (B)

Table B.1.1: Summary table of foreign trade (AN)

Table B.1.2: Imports (source DGD - monthly) (M)

Table B.1.3: Exports (source DGD - monthly) (M)

Table B2.1: Detailed balance of payments (including capital account) CFA francs (AN)

Table B.2.1.a: Exports- quantities (Q)

Table B.2.1.b: Exports -unit prices (Q)

Table B.2.2.a: Imports –quantities (Q)

Table B.2.2.b: Imports –unit prices (Q)

Table B.3: Balance of Payments: Summary presentation (AN)

Monetary sector (M)

Table M.1: Banks (M)

Table M.2: Summary BCEAO position (M)

Table M.3: Net government position (M)

Table M.4: Net foreign assets (NFA) (M)

Table M.5: Integrated Monetary Survey (M)

Table M.6: Government liabilities to banks (M)

Fiscal sector (F)

Table F.1: Government flow of funds table (TOFE) (M)

Table F.2: Estimated government tax revenue (M)

Domestic arrears:

Table F.3.1: Domestic arrears (M)

Table F.3.2: Consolidated Treasury balances outstanding (M)

Table F.3.3: Treasury balances outstanding - targets/execution (M)

Table F.3.4: Clearings and securitizations (M)

Domestic and foreign debt:

Table F.4.1: Domestic debt (M)

Table F.4.2: Total domestic debt (M)

Table F.4.3: Negotiable instruments (M)

Table F.4.4: Explanation of variances in domestic debt service (M)

Table F.5.1: Foreign debt (M)

Table F.5.2: Details of foreign debt (M)

Table F.5.3: Analysis of projected foreign debt service variances (M)

Table F.5.4: Projected debt service (Q)

Post-crisis:

Table F.6: Crisis-and election-related expenditures (M)

Treasury advances:

Table F.7.1: Advances from the Treasury (M)

Table F.7.2: Treasury advances reclassified (M)

Investment:

Table F.8: Investment expenditures (M)

Social/pro-poor expenditures:

Table F.9.1: Education and health expenditures – other (M)

Table F.9.2: Education and health expenditures – personnel/operations/transfers/investments (M)

Table F.9.3: Subsidies and transfers: Targeted social expenditures. (M)

Table F.9.4: Execution of social expenditures (M)

Table F.9.5: Execution of pro-poor expenditures (M)

Table F9.6: Budget execution report (SIGFIP) detail/category (Q)

Other revenue and expenditures:

Table F.10: Other operating expenses (M)

Table F.11: Social security and civil service pension contributions CNPS and CGRAE (M)

Table F.12: Summary table of expenditures (M)

Table F.13: Summary table of nontax revenue and grants (M)

VAT credits:

Table F.14.1:Summary statistical statement of VAT credit refunds (monthly) (M)

Financing:

Table F.15.1:Issues/redemptions of public debt (M)

Table F.15.2:Bridge loans and other Treasury advances (M)

Wage bill:

Table F.16.1:Projected wage bill (Q)

Table F.16.2:Wage bill (Q)

Table F.16.3:Wage bill framing (AN)

Table F.16.4:Projected new recruits (AN)

Special accounts:

Table F.17.1:ECOWAS levy (PCC) (AN)

Table F.17.2:WAEMU levy (PCS) (AN)

Table F.18: Proceeds of privatization and sale of assets (AN)

Cash flow plan:

Table F.20.1: Annual cash flow, resources/expenditures plan (AN)

Table F20.2: Execution of cash flow plan (M)

Appendix II. Côte d’Ivoire: Summary of the Tax System, 2011

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Sources: Impôts et Taxes, Direction Générale des Impots, Ministéré de l’Economie et des Finances, Juillet 2011. Current tax rules can be found at www.dgi.gouv.ci/documentation/index.asp
1

After the HIPC Completion Point, additional bilateral debt relief of €2 billion is to be provided by France over time under the Contrats de Désendettement et de Développement (C2D) scheme, essentially a debt-for-development swap.

2

The basic primary balance is defined as total revenue (excluding grants) less expenditure net of scheduled interest and foreign-financed capital expenditure.

3

See Côte d’Ivoire Country Report No. 09/326: http://www.imf.org/external/pubs/cat/longres.aspx?sk=25069.0

6

Discussions on International Finance Corporation (IFC) support are still ongoing.

8

Only the missed coupons of the Eurobond 2032 (December 2010, June and December 2011) are expected to be rescheduled.

9

The basic primary balance is defined as total revenue (excluding grants) less expenditure net of scheduled interest and foreign-financed capital expenditure.

10

Comparisons here are made to 2010, the last “normal” year, as the 2011 figures cover only end-April—December and the ratios to period GDP are biased somewhat by developments during the crisis, which shifted some annual revenues and expenditures into the 2011 budget.

11

The 3.6 percent of GDP of net domestic/regional borrowing is made up of 1.7 percent of GDP of borrowing from other WAEMU countries and another 1.9 percent of GDP from Ivoirien banks, included as part of other domestic bank financing (net). The latter also includes -0.7 percent of GDP of amortization of non-securitized debt.

12

Decision No.14747-(10/96) (9/28/2010).

1

External debt is defined in “Guidelines on Performance Criteria with Respect to External Debt in Fund Arrangements,” Executive Board Decision No. 6230–(79/140), as amended by Executive Board Decision No 14416–(09/91) on August 31, 2009. External debt is defined on the basis of residency. However, for the assessment of the program, debt issued by Ivoirien entities in CFA francs and held by residents of the the member countries of the WAEMU zone shall not be considered to be external debt.

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Cover IMF Staff Country Reports
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.
Author:
International Monetary Fund
Volume/Issue:
Volume 2011: Issue 328
Publisher:
International Monetary Fund
ISBN:
9781463925239
ISSN:
1934-7685
Pages:
129
DOI:
https://doi.org/10.5089/9781463925239.002
  • Figure 1.
    View in gallery
    Figure 1.

    Côte d’Ivoire: Selected Macroeconomic Indicators, 2007–12

    (Percent of GDP, unless otherwise indicated)

  • Figure 2
    View in gallery
    Figure 2

    Côte d’Ivoire: WAEMU, and SSA - Macroeconomic Development and Outlook, 2007–12

    (Percent of GDP, unless otherwise indicated)

  • View in gallery

    Inflation

    (2008=100)

  • View in gallery

    Industrial Production

    (1996=100)

  • Figure 1:
    View in gallery
    Figure 1:

    Evolution of Côte d’Ivore’s NEER and REER (1993-2010)

  • Figure 2:
    View in gallery
    Figure 2:

    Actual vs. Estimated Equilibrium Real Exchange Rate (1980-2010)

Figure 1.

Côte d’Ivoire: Selected Macroeconomic Indicators, 2007–12

(Percent of GDP, unless otherwise indicated)
Figure 2

Côte d’Ivoire: WAEMU, and SSA - Macroeconomic Development and Outlook, 2007–12

(Percent of GDP, unless otherwise indicated)

Inflation

(2008=100)

Industrial Production

(1996=100)
Figure 1:

Evolution of Côte d’Ivore’s NEER and REER (1993-2010)
Figure 2:

Actual vs. Estimated Equilibrium Real Exchange Rate (1980-2010)