IMF appreciates Togo’s ‘moderate economic growth’ in 2017

16 Décembre 2017

Lome, Togo, December 16 (Infosplusgabon) - The Executive Board of the International Monetary Fund (IMF) on Friday announced a release of US$35.61 million to Togo under the Extended Credit Facility (ECF) arrangement saying it has completed the first review of the country’s performance under the ECF supported programme.

“Programme implementation under the ECF-supported programme has been good. All quantitative performance criteria and prior actions were met as well as four out of five structural benchmarks,” the Board said in a statement made available to PANA.

Noting that the fiscal consolidation envisaged under the ECF-supported programme has begun, the Board pointed out that Togo’s primary deficit improved from an annual average of about 6 percent of GDP in 2013-16 to a surplus of 1.4 percent of GDP in the first half of 2017, due primarily to expenditure rationalization and the halting of non-orthodox financing of public investment.

According to the statement, public debt is projected to decline from the peak of 81.5 percent of GDP at end-2016 to 77.3 percent of GDP by end-2017. Economic activity is estimated to have expanded by 4.8 percent in 2017, with low inflation. “The current account deficit remains large but is expected to narrow gradually,” it said.

“Fiscal consolidation, while protecting priority social spending, is essential to put debt firmly on a downward path and preserve macroeconomic stability. Successful restructuring of weak banks will be critical to restore financial stability and minimize the fiscal cost,” the Board emphasized.

Meanwhile, Togo’s medium-term growth projections were revised slightly downward and the balance of risks is tilted to the downside.

Recent infrastructure upgrading and external concessional financing are expected to support productivity, stimulate private investments, and thus compensate for the negative fiscal impulse resulting from the fiscal consolidation.

“However, country-specific and regional/global factors may cloud programme implementation. In particular, if the tensions in recent months persist, the private investment boost that is expected to compensate for the public investment retrenchment may not fully materialize,” the Board cautioned.

“Fiscal consolidation is set to continue in 2018, while accommodating tighter domestic and external constraints. Sustained fiscal efforts will help reduce debt further and create room for additional social spending, which is critical for poverty reduction.

“Strengthening fiscal institutions and debt management is essential. The efficiency of public spending will be improved by requiring that public investment projects follow established procurement and budgetary processes.”

According to the IMF, Togolese authorities are enhancing controls to broaden the taxpayer base and improve revenue collection.

Also, the Fund noted that improved cash management and prudent borrowing policies will result in lower government borrowing costs, further helping the fiscal adjustment.

Moreover, given the harmful impact of government payment arrears on economic activity, the authorities plan to step up efforts to verify the arrears stock, proceed with its clearance, and strengthen the system of public financial management to prevent new arrears accumulation.

It said that the restructuring of weak banks should be accelerated to help restore financial stability and prevent the reemergence of risks to the state budget.

“Broader structural reforms are essential to boost productivity, competitiveness, and inclusive growth. As public investment returns to a sustainable level, the private sector is expected to play an increasing role as the engine of growth. It is essential to improve the business climate, including by opening-up some key sectors,” it added.

FIN/INFOSPLUSGABON/IOP/GABON 2017

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