Abstract
Sixth Reviews Under the Arrangement Under the Extended Credit Facility and the Extended Arrangement Under the Extended Fund Facility, and Request for Extension and Augmentation of Access; Press Release; Staff Report; Staff Supplement; and Statement by the Executive Director for the Cote d'Ivoire
1. This supplement provides an update on developments since the issuance of the staff report on November 21, 2019. The additional information does not change the thrust of the staff appraisal, but further underlines the need to accelerate domestic revenue mobilization and public bank restructuring.
2. Recent indicators confirm continued growth with low inflation. Third quarter data shows healthy growth in agriculture, including cocoa, and sustained pick-up in oil and gold production. Growth in domestic electricity consumption, transportation and imports of intermediate goods remained strong. CPI inflation remained modest, at 0.7 percent (y/y) at end-October.
3. According to preliminary data, both structural benchmarks (SBs) and eight out of nine quantitative indicative targets (ITs) for end-September 2019 were met (Tables 1 and 2). Regarding SBs, the authorities produced a summary table of public enterprises’ debt service at end 2019 Q3 and the retail fuel price mechanism was applied to preserve tax revenue at the level envisaged in the budget law. While all other ITs were met, including on the fiscal balance and net domestic financing, the IT on the floor of government tax revenue was not met, with deviation from target of 0.17 percent of GDP, mainly due to the continued underperformance of non-oil profit taxes. The authorities’ committed to offsetting revenue measures for 2019Q4 during the mission including intensified collection of 2018 tax arrears and strengthened control over petroleum imports.
Côte d’Ivoire: Indicative Targets (IT) for end-September 20191/
(Billions of CFA francs, unless otherwise indicated)
For 2019, cumulative amount from January 1, 2019.
Adjusted upward by the difference between programmed and disbursed budget support from the European Union, the World Bank and the African Development Bank, and the difference between the recourse to international capital markets envisaged under the program and the actual recourse.
Côte d’Ivoire: Indicative Targets (IT) for end-September 20191/
(Billions of CFA francs, unless otherwise indicated)
| IT | Adj. IT | Est. | Status | ||
|---|---|---|---|---|---|
| A. Performance criteria | |||||
| Floor on the overall fiscal balance (incl. grants) | -614.0 | -594.6 | MET | ||
| Ceiling on net domestic financing (incl. WAEMU paper) | -15.6 | 207.2 2/ | 165.7 | MET | |
| Ceiling on accumulation of new external arrears by the central government (continuous basis) | 0.0 | 0.0 | MET | ||
| Ceiling on accumulation of new domestic arrears by the central government (continuous basis) | MET | ||||
| B. Indicative targets | |||||
| Floor on government tax revenue | 2,983.6 | 2,938.4 |
|
||
| Ceiling on expenditures by treasury advance | 142.2 | 95.5 | MET | ||
| Floor on pro-poor expenditure | 1,690.1 | 1,855.1 | MET | ||
| Floor on net reduction of central government amounts payable (- = reduction) | -32.7 | -59.1 | MET | ||
| Floor on primary basic fiscal balance | 119.0 | 144.1 | MET | ||
| Memorandum items: | |||||
| Program grants | 79.4 | 79.4 | |||
| Program loans | 76.2 | 78.1 | |||
| Project grants | 107.9 | 56.1 | |||
| Project loans | 416.7 | 408.3 | |||
| Budget support from the European Union, World Bank, and African Development Bank | 0.0 | 0.0 | |||
| Fuel tax revenues | 287.2 | 313.2 | |||
For 2019, cumulative amount from January 1, 2019.
Adjusted upward by the difference between programmed and disbursed budget support from the European Union, the World Bank and the African Development Bank, and the difference between the recourse to international capital markets envisaged under the program and the actual recourse.
Côte d’Ivoire: Indicative Targets (IT) for end-September 20191/
(Billions of CFA francs, unless otherwise indicated)
| IT | Adj. IT | Est. | Status | ||
|---|---|---|---|---|---|
| A. Performance criteria | |||||
| Floor on the overall fiscal balance (incl. grants) | -614.0 | -594.6 | MET | ||
| Ceiling on net domestic financing (incl. WAEMU paper) | -15.6 | 207.2 2/ | 165.7 | MET | |
| Ceiling on accumulation of new external arrears by the central government (continuous basis) | 0.0 | 0.0 | MET | ||
| Ceiling on accumulation of new domestic arrears by the central government (continuous basis) | MET | ||||
| B. Indicative targets | |||||
| Floor on government tax revenue | 2,983.6 | 2,938.4 |
|
||
| Ceiling on expenditures by treasury advance | 142.2 | 95.5 | MET | ||
| Floor on pro-poor expenditure | 1,690.1 | 1,855.1 | MET | ||
| Floor on net reduction of central government amounts payable (- = reduction) | -32.7 | -59.1 | MET | ||
| Floor on primary basic fiscal balance | 119.0 | 144.1 | MET | ||
| Memorandum items: | |||||
| Program grants | 79.4 | 79.4 | |||
| Program loans | 76.2 | 78.1 | |||
| Project grants | 107.9 | 56.1 | |||
| Project loans | 416.7 | 408.3 | |||
| Budget support from the European Union, World Bank, and African Development Bank | 0.0 | 0.0 | |||
| Fuel tax revenues | 287.2 | 313.2 | |||
For 2019, cumulative amount from January 1, 2019.
Adjusted upward by the difference between programmed and disbursed budget support from the European Union, the World Bank and the African Development Bank, and the difference between the recourse to international capital markets envisaged under the program and the actual recourse.
Côte d’Ivoire: Structural Benchmarks for end-September 20191
See memorandum item “fuel tax revenues” in Table 1.
Côte d’Ivoire: Structural Benchmarks for end-September 20191
| Measures | Timetable | Macroeconomic Rationale | Documentation |
|---|---|---|---|
| Price Adjustment Mechanism | |||
| Apply the retail fuel price mechanism to preserve fuel tax revenue at a level not below the level in the supplementary budget law.1 | SB quarterly |
Improve budget revenue | Inter-ministerial decree |
| Public Debt Management | |||
| By the end of each quarter produce a summary table of public enterprise debt service in the previous quarter based on progress in the data availability. | SB quarterly, starting from end-June 2017 |
Enhance monitoring of debt service by public enterprises | Summary debt service table |
See memorandum item “fuel tax revenues” in Table 1.
Côte d’Ivoire: Structural Benchmarks for end-September 20191
| Measures | Timetable | Macroeconomic Rationale | Documentation |
|---|---|---|---|
| Price Adjustment Mechanism | |||
| Apply the retail fuel price mechanism to preserve fuel tax revenue at a level not below the level in the supplementary budget law.1 | SB quarterly |
Improve budget revenue | Inter-ministerial decree |
| Public Debt Management | |||
| By the end of each quarter produce a summary table of public enterprise debt service in the previous quarter based on progress in the data availability. | SB quarterly, starting from end-June 2017 |
Enhance monitoring of debt service by public enterprises | Summary debt service table |
See memorandum item “fuel tax revenues” in Table 1.
4. The authorities rescinded the privatization of a small public bank in mid-November.
At the time of the mission, the privatization of a small public bank was ongoing: following the approval of the Banking Commission, the entry of private shareholders had become effective on April 30, 2019, contingent on the new shareholders recapitalizing the bank within three months of that date. As this did not occur, the banking commission had given them until end of October 2019 to fulfill the recapitalization requirement.
Since then, the new shareholders did not comply with those requirements by the end-October 2019 deadline and liquidity pressures appeared. The authorities and private shareholders jointly agreed to rescind the privatization on November 13, 2019. The bank is non systemic, as it accounted for less than 1 percent of the banking sector’s assets at end-June 2019. However, the authorities felt this decision was necessary to avoid potential negative spillovers from its liquidity challenges. They are currently assessing the situation, including through a planned audit of the bank. They have stated their intention to re-launch the privatization process.