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IMF Country Report No. 13/171

CÔTE D’IVOIRE

Third Review Under the Three-Year Arrangement Under the Extended Credit Facility, Requests for Modifications of Performance Criteria and Waiver of Nonobservance of Performance Criterion

In the context of the Third Review Under the Three-Year Arrangement Under the Extended Credit Facility, Requests for Modifications of Performance Criteria and Waiver of Nonobservance of Performance Criterion with Côte d’Ivoire, the following documents have been released and are included in this package:

• Staff Report for the Third Review Under the Three-Year Arrangement Under the Extended Credit Facility, Requests for Modifications of Performance Criteria and Waiver of Nonobservance of Performance Criterion, prepared by a staff team of the IMF, following discussions that ended on March 27, 2013, with the officials of Côte d’Ivoire on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on May 22, 2013. The views expressed in the staff report are those of the staff team and do not necessarily reflect the views of the Executive Board of the IMF.

• Informational Annex prepared by the IMF.

• Press Release summarizing the views of the staff appraisal contained in the staff report.

  The documents listed below have been or will be separately released.

• Letter of Intent sent to the IMF by the authorities of Côte d’Ivoire^*

• Memorandum of Economic and Financial Policies^*

• Technical Memorandum of Understanding^*

• Joint Staff Advisory Note of the Poverty Reduction Strategy Paper

• Poverty Reduction Strategy Paper

^*Also included in Staff Report

The policy of publication of staff reports and other documents allows for the deletion of market-sensitive information

Copies of this report are available to the public from

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Price: $18.00 a copy

International Monetary Fund

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CÔTE D’IVOIRE

THIRD REVIEW UNDER THE THREE-YEAR ARRANGEMENT UNDER THE EXTENDED CREDIT FACILITY, REQUESTS FOR MODIFICATIONS OF PERFORMANCE CRITERIA AND WAIVER OF NONOBSERVANCE OF PERFORMANCE CRITERION

May 22, 2013

Executive Summary

• Extended credit facility arrangement. The Executive Board approved a three-year ECF arrangement for SDR 390.24 million (120 percent of quota) on November 4, 2011 to support the authorities’ medium-term program. The first and second reviews under the Extended Credit Facility (ECF) arrangement were concluded respectively in May and November, 2012.

• Recent developments. The political and security situations have improved somewhat over the past several months, but serious challenges remain. Côte d’Ivoire’s growth performance in 2012 exceeded expectations, with a 9.8 percent GDP increase; inflation remained low (1.3 percent), while the fiscal outcome was better than programmed. The sharp rise in investment-related imports turned the current account into deficit. Côte d’Ivoire no longer has any outstanding arrears to its external creditors.

• Performance under the program has been broadly satisfactory. All but one performance criteria and all but one indicative targets at end-December were met. Only 8 out of the 16 structural benchmarks for the third review were met. Noticeable progress was made to reduce the subsidies to the energy sector and improve the business climate; the reform of the cocoa sector was also completed. However, the preparation of the medium-term strategy to control the wage bill, the restructuring of the public sector, the adoption of a new electricity code, and the completion of an audit of domestic arrears were delayed.

• Policy discussions focused on the macroeconomic prospects for 2013 and beyond, the recalibration of the 2013 fiscal targets, and the structural reform agenda. The strong growth momentum, underpinned by strong public investment, will carry forward to 2013. Inflation is expected to remain low. The authorities and staff agreed to slightly adjust the fiscal targets to reflect the success of the December 2012 Consultative Group meeting and accommodate somewhat higher public investment. Reforms to contain fiscal risks, strengthen revenue collection, and improve public financial management and the business climate are set to continue, while the authorities will put emphasis on regularizing domestic debt.

• The economy of Côte d’Ivoire still faces short-term risk related to the fragile socio-political context, and challenges pertaining to structural weaknesses in infrastructure and the business environment. Addressing these deficiencies is critical to fostering private sector engagement and a durable recovery.

• Staff supports the completion of the third review under the ECF and the authorities’ requests for a waiver for nonobservance of the continuous performance criterion on new non-concessional external debt, and for modifications of performance criteria. Completion of the review will result in disbursement of an amount equivalent to SDR 48.78 million under the ECF arrangement.

• Publication. The authorities have consented to publication of the staff report, Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding.

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Approved By

Seán Nolan, AFR, and Peter Allum, SPR

Contents

• SOCIO-POLITICAL CONTEXT

• RECENT ECONOMIC DEVELOPMENTS

• PROGRAM PERFORMANCE

• POLICY DISCUSSIONS

• A. Growth Prospects for 2013 and Beyond are Positive

• B. Fiscal Policy: Revised 2013 Fiscal Targets Accommodate More Public Investment

• C. Structural Reforms: Further Progress Needed

• D. External Debt

• PROGRAM MONITORING, FINANCING AND RISKS

• STAFF APPRAISAL

• FIGURES

• 1. Real and External Developments, 2009–13

• 2. Fiscal Developments, 2009–13

• TABLES

• 1. Selected Economic Indicators, 2011–18

• 2. Balance of Payments, 2011–15

• 3a. Fiscal Operations of the Central Government, 2011–15

• 3b. Fiscal Operations of the Central Government, 2011–15

• 4. Monetary Survey, 2011–15

• 5. External Financing Requirements, 2011–15

• 6. Financial Soundness Indicators for the Banking Sector, 2007–12

• 7 Indicators of Capacity to Repay the Fund, 2011–22

• 8. Proposed Schedule of Disbursements and Timing of Reviews Under ECF Arrangement

• 9. Performance Criteria and Indicative Targets, ECF 2012–13

• APPENDICES

• I. Letter of Intent

  • Attachment I. Memorandum of Economic and Financial Policies

  • Attachment II. Technical Memorandum of Understanding

• II. Update to the Low-Income Country Debt Sustainability Analysis

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CÔTE D’IVOIRE

THIRD REVIEW UNDER THE THREE-YEAR ARRANGEMENT UNDER THE EXTENDED CREDIT FACILITY, REQUESTS FOR MODIFICATIONS OF PERFORMANCE CRITERIA AND WAIVER OF NONOBSERVANCE OF PERFORMANCE CRITERION—INFORMATIONAL ANNEX

May 22, 2013

Prepared By

Contents

• RELATIONS WITH THE FUND

• JOINT BANK-FUND WORK PROGRAM, 2012–13

• AFRICAN DEVELOPMENT BANK GROUP OPERATIONS AND STRATEGY IN CÔTE D’IVOIRE

• STATISTICAL ISSUES

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Press Release No. 13/201

FOR IMMEDIATE RELEASE

June 7, 2013

International Monetary Fund

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Telephone 202-623-7100

Fax 202-623-6772

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