On May 5, 2017, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Togo. 1 The Board also approved a new three-year Extended Credit Facility Arrangement for Togo; a press release on this was issued separately.
The economy has expanded at a healthy rate in recent years. Growth was 5.2 percent in 2014-16 buoyed by infrastructure investments and strong agricultural production. Inflation was well contained, explained by the lower food, energy, and transport prices. Togo’s poverty rate declined from 61.7 percent in 2006 to 55.1 percent in 2015, though it remains geographically concentrated.
The fast pace of public investment has contributed to a pronounced increase in public debt and the current account deficit. Public debt, including prefinancing debt, domestic arrears, and public enterprise debt, increased from 48.6 percent of GDP in 2011 to 80.8 percent in 2016, reflecting public infrastructure investments financed by both domestic and external borrowing. The current account deficit remained high, reaching 9.8 percent of GDP in 2016, largely due to investment-related imports.
Economic growth is expected to increase gradually in the medium term as the fiscal stance is put on a sustainable path. Growth is expected to pick up from 5 percent in 2016 to 5.6 by 2021, with the economy reaping the benefits of an improved transportation network and productivity gains in the agricultural sector. The private sector is expected to play an increasing role as the engine of growth, as public investment returns to its long-term sustainable level. Downside risks to growth include capacity constraints in implementation of structural reforms, resistance to reforms from interest groups, and further slowdown in Togo’s main regional trading partners. With the improvement in the fiscal stance, public debt is expected to be reduced from a projected peak of 81.3 percent of GDP in 2017 to 73 percent by 2019.
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.
At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country’s authorities. An explanation of any qualifiers used in summings up can be found here: http://www.imf.org/external/np/sec/misc/qualifiers.htm.