Statement by Ngueto Tiraina Yambaye, Executive Director for Côte d’Ivoire and Marcellin Koffi Alle, Senior Advisor to the Executive Director, December 9, 2015

This paper discusses Côte d'Ivoire's Eighth Review Under the Extended Credit Facility (ECF) Arrangement. The macroeconomic outlook remains strong with high projected growth rates supported by sustained improvements in the business climate and rising private investment, including in large private-public infrastructure projects. Risks to the near-term growth outlook are moderately tilted to the downside. Adverse weather owing to El Niño could lower output, and the failure to contain fiscal risks could weaken the fiscal accounts. The IMF staff supports the authorities' request for completion of the eighth ECF review.


This paper discusses Côte d'Ivoire's Eighth Review Under the Extended Credit Facility (ECF) Arrangement. The macroeconomic outlook remains strong with high projected growth rates supported by sustained improvements in the business climate and rising private investment, including in large private-public infrastructure projects. Risks to the near-term growth outlook are moderately tilted to the downside. Adverse weather owing to El Niño could lower output, and the failure to contain fiscal risks could weaken the fiscal accounts. The IMF staff supports the authorities' request for completion of the eighth ECF review.

1. Our Ivorian authorities would like to thank the Board, Management and Staff for their support over the past years. The fruitful discussions recently held with Staff in the context of the 8th review were another manifestation of the excellent policy dialogue maintained during the course of the 2011–15 ECF arrangement. As the program ends, the authorities fully measure the critical role the cooperation with the Fund has played in Côte d’Ivoire’s path from the 2011 political crisis-linked recession to the current robust and sustained growth and macroeconomic stability.

2. Côte d’Ivoire is at an important juncture as President Ouattara debuts his second term following the October 2015 elections. The peaceful conditions observed before and after these elections mark a positive turn in the country’s efforts to enhance democracy after the post-electoral crisis it went through five years ago. The 2015 presidential race also completed four years of impressive economic performance characterized by strong growth of almost 9 percent on average, rising per capita income and important strides in poverty reduction. These achievements have been underpinned by critical structural reforms, buoyant public and private investments and enhanced business environment.

3. Looking ahead, our authorities remain committed to maintaining the momentum of economic reforms and to making further inroads towards their overarching goal of transforming Côte d’Ivoire into an emerging market economy by 2020. To this end, the government’s successor National Development Plan (PND 2016–20), which will be adopted before end-2015, aims at further diversifying the economy with an emphasis on industrial production. In this endeavor, the authorities intend to also leverage the support of the international financial community, especially from the Fund. They have expressed their interest in requesting a new ECF-supported program in early 2016, which could serve as a helpful anchor for their medium-term policies and help garner the external resources needed for the successful implementation of their 2016–20 development agenda.

Recent Developments and Program Performance

4. Our authorities have continued their strong performance observed since the inception of the 2011–15 ECF arrangement. All quantitative performance criteria and indicative targets at end-June 2015 were met; 4 out of 7 structural benchmarks through end-September were met. An additional benchmark was recently met, regarding the adoption of a protocol clarifying the responsibilities of the respective parties, including the government, as regards the payment of Heavy Vacuum Oil (HVO) for producing electricity. The second one related to the adoption of a draft law aimed at developing leasing will be met with its approval by Cabinet soon. The final benchmark on regularizing domestic arrears on securitized and contractual debt (“dette conventionnée”) will be implemented before end-2015 as agreed upon with staff.

5. The authorities’ efforts in implementing reforms have translated into buoyant macroeconomic figures, including over the period under review. In light of the recent positive developments, staff and the authorities concurred to revise growth projections upward, to 8.4 percent in 2015 and 2016 - from a 7.9 percent staff estimate at the time of the 7th review. Growth will benefit from the particular dynamism in the cocoa, mining, construction, and transport sectors. Buoyant public investments mainly in critical infrastructure projects have also laid the ground for increasing private investments, all contributing to further improve growth prospects. Inflation has been kept low, at an annual average of 1.2 percent. The end-June fiscal stance was strong, with the primary basic balance deficit and the overall deficit both narrower than programmed. The fiscal stance benefitted from strong revenue collection due in particular to higher fuel and cocoa tax; and despite higher-than-programmed spending on the back of acceleration in the execution of selected investment projects and election-related outlays. The authorities are also committed to their poverty reduction goals and pro-poor spending exceeded the program objective by a large margin.

6. The external position continued to reflect the favorable environment characterized by the oil price slump, high cocoa prices, and the depreciation of the CFA franc vis-à-vis the US dollar. Favorable terms of trade and rising exports have well balanced the high imports of consumption goods and investment-linked materials.

7. The authorities have also made progress on the front of other structural reforms. The restructuring of public banks has proceeded well. After the closing down in September 2014 of the Banque de Financement de l’Agriculture, the restructuring of a second one is programmed to be finalized by Cabinet by end-2015. The business environment has improved significantly, owing to comprehensive reforms including simplified procedures for incorporating companies, streamlined regulations, settlements of business lawsuits in a commercial tribunal and lower business registration fees. The Doing Business reports and many other major reports continue to rank Côte d’Ivoire among the top performers in business climate-related reforms.

8. In the public finance sector, our authorities have also implemented critical structural reforms. Reimbursements of VAT credits are now expedited through a computerized system, and the average payment time has plummeted from 13.7 months in 2013 to less than seven days since July 2015. The long-stalling issue of accumulating stocks of delinquent VAT credits is now resolved. Notable improvements have been brought to the public procurement sector, hence significantly bringing down the amount of public procurements granted on a non-competitive basis. The authorities have also initiated audits to accurately assess domestic arrears and extra-budgetary spending incurred prior to 2011. Most of the arrears have been cleared and steps are being taken to complete the process. A similar effort is underway to finalize before end-2015, the audit of the extra-budgetary spending incurred prior to 2011.

9. Moreover, it is our authorities’ resolve to continue such initiatives with the view to address governance issues and significantly reduce the use of exceptional spending procedures. While the recourse to such procedures is oftentimes called by emergency government operations, the authorities are of the view that current efforts to strengthen and modernize budget processes will help address the issue. Steps are also underway to implement the Treasury Single Account (TSA). After adopting an action plan, many public accounts have been closed in the commercial banks and the process is on track. A technical support center has been set and begun a pilot project in October 2015 to run through December 2015 before the actual setting of the TSA.

2016 and Medium-term Policies

10. Bolstering economic transformation. In 2016 and the medium term, the authorities’ policies will be geared on further enhancing macroeconomic stability and accelerating reforms with the view to bolster economic transformation as envisaged in the National Development Plan 2016–20. The plan emphasizes the industrial sector as one of its key pillars. Strategies evolve around the development of the mining sector and the scaling up of the processing of raw materials as well as the development of linkages to international value chains. This bold agenda will go hand in hand with efforts to ensure fiscal sustainability, including through a close monitoring of public debt, and to advance structural reforms in key sectors for supporting growth and employment.

11. Sustaining growth momentum for job creation. Sustaining growth is at the forefront of our authorities’ agenda. It is projected to remain strong (8.4 percent) in 2016, supported by higher investment in basic infrastructure, in the agro-business industry (cocoa, rice and cashew processing) and in housing and other services. Over the medium term, the authorities expect a further pick-up in output on the back of the diversification of industrial production and the scaling up of key PPP projects, including the extension of the Port of Abidjan, the construction of Abidjan Metrorail, and the renovation of the Abidjan-Ouagadougou railway. As regards employment, the government has begun overhauling its institutional framework to better promote job creation alongside its efforts to bolster growth and economic transformation. Various entities have been merged into a single Youth Employment Agency in June 2015. Efforts will focus on: (i) recruiting a larger number of young people in ongoing projects; (ii) improving job quality; and (iii) promoting self-employment and entrepreneurship among the youth.

12. Maintaining fiscal sustainability. The fiscal framework for 2016 reflects the authorities’ ambition to sustain the high growth momentum while keeping public debt under check. The 2016 budget plans a drop in current spending to make room for an increase in growth-enhancing domestically-financed capital spending (+0.6 percent of GDP). Overall, fiscal deficits will be kept at their 2015 levels - a small reduction in the overall deficit to 3½ percent of GDP, while the basic primary deficit would remain stable at ½ percent of GDP.

13. Efforts to mobilize revenue will continue, with an expected 9 percent increase compared to 2015. Measures planned include: (i) broadening the tax base by giving incentives to businesses to formally register; (ii) stepping up efforts to collect VAT by establishing a time limit of three years for credits eligible for a refund; (iii) making tax payable online; (iv) improving the recording and valuation of goods for customs duties through weighbridges and new scanners; and (v) scaling up the overall fight against tax fraud. On the expenditure side, besides restraining current spending, actions underway to improve budget and treasury processes will gain further traction, with a special emphasis on significantly reducing exceptional spending procedures (“lettres d’avances” and “régies d’avances”).

14. Enhancing the financial sector. The authorities have started the implementation of their Financial Sector Development Plan following the appointment of a program manager. The recent drafting of the law on leasing soon to be approved by Cabinet is among the first major steps. In the context of a regional effort including the central bank - BCEAO - a credit bureau company has been selected and work is underway for the inception of this important institution for boosting lending activity. The BCEAO is also working with national authorities to initiate a strategy for financial inclusion. Preliminary steps have been completed in terms of lifting fees on a number of financial services. Actions also involve the development of mobile banking to cover unbanked populations. Likewise, the government will pursue its efforts of overhauling the microfinance sector by implementing its adopted Recovery Plan.

15. Monitoring debt sustainability. Our authorities are committed to maintaining debt sustainability along the way of the implementation of their development agenda. In this regard, public debt management will continue to be strengthened in line with international best practices and standards agreed upon within the WAEMU. The government’s Medium-Term Debt Strategy (MTDS) will serve as an anchor for external borrowing. In addition, the authorities will continue to strengthen the monitoring of the debt of public enterprises, including by upgrading the related database.

16. The authorities welcome staff conclusion in the DSA that Côte d’Ivoire is still at a moderate risk of debt distress. It is also worth noting that in the context of the Fund’s new debt limits policy, staff now consider Côte d’Ivoire’s debt monitoring capacity to be adequate. As regards the DSA itself, while broadly concurring with its main conclusions, the authorities continue to believe that the baseline macroeconomic assumptions used in this report as in previous ones are too conservative. They are of the view that the expected dividends of impressive reforms underway are not sufficiently factored in the analysis.


17. Over the 2011–15 period, Côte d’Ivoire has made important strides in recording strong growth and reducing poverty. The ECF-supported program has been instrumental in achieving the impressive results of turning a post-crisis country into a thriving economy attracting growing private investment. These achievements have been underpinned by the authorities’ commitment to reforms and their policies on the front of fiscal discipline, good governance, improved business climate and sound borrowing strategy.

18. As the program ends, the way forward will be geared on sustaining the efforts for reforms to address the still daunting challenges of further improving public financial management, deepening the financial sector and fostering economic transformation for job creation. Our authorities would appreciate Directors’ support for the conclusion of the 8th and final review of the ECF-supported program as well as for their future endeavors.