IMF Staff Concludes 2016 Article IV Consultation Visit to Togo

An International Monetary Fund (IMF) staff team, led by Ms. Cemile Sancak, visited Lomé from October 20 to November 2 to conduct the 2016 Article IV Consultation. At the conclusion of the visit, Ms. Sancak made the following statement:

“The IMF staff mission held productive discussions with the Togolese authorities and other stakeholders, focusing on policies and structural reforms to promote sustainable and inclusive growth and to maintain macroeconomic and financial stability.

“The economy has expanded at a healthy rate in recent years. With the impact of lower commodity prices and tighter global financing conditions fairly muted, the economy expanded at 5.3 percent in 2015. Public investment initiatives and increases in productivity in the agricultural sector have been the key drivers of growth. Inflation was well contained at 1.8 percent in 2015, explained by the lower petroleum and transport prices.

“At the same time, public debt, including the debt of public sector enterprises, increased from 48.6 percent of GDP in 2011 to 75.4 percent of GDP in 2015—above WAEMU’s total public debt limit of 70 percent of GDP, reflecting public infrastructure investments financed by both domestic and external borrowing. While economic players acknowledge that these investments were needed to address the deficiencies in the transport infrastructure, the large debt service payments have increasingly put large pressures on the budget. The IMF team welcomes the authorities’ firm commitment to take the necessary measures to reduce the public debt to a sustainable level and implement key structural reforms.

“Reducing this debt to a sustainable level is an attainable objective in the medium term, if the authorities persist on their renewed commitment to debt sustainability. The authorities plan to reduce domestically-financed capital investment and partner with the private sector and technical and financial partners to continue to improve infrastructure. They will refocus their policies on sustainably-financed infrastructure spending and targeted social programs such as Programme d’Urgence de Développement Communautaire (PUDC) and Programme d’Appui aux Populations Vulnérables (PAPV). The government will identify its development priorities in the Plan National de Développement (PND) for 2018-2022 and integrate these priorities into the budget.

“The economy is expected to grow at 5 percent in 2016, with a solid rise in agricultural production weighed down by a slowdown in public infrastructure investments, a decline in growth in major trading partners, and the diversion of shipments to other ports in the region. Economic growth is expected to increase gradually to 5.6 percent 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. Inflation remains well contained, forecasted at 2.1 percent in 2016 and should remain moderate in coming years. With the improvement in the fiscal stance, public debt is expected to be reduced from 75.4 percent of GDP in 2015 to 56.4 percent of GDP by 2021.

“Key structural reforms include leveraging the Revenue Authority (Office Togolais des Recettes) to modernize revenue administration, accelerating implementation of key measures in public financial management, including debt management, and improving public investment management.

“In the financial sector, a stricter enforcement of the current regulatory framework is needed. Banks that are not currently in full compliance with prudential ratios need to take immediate remediating actions. Financial stability of the microfinance sector also needs to be improved, starting by strengthening the supervisory body for microfinance institutions in the Ministry of Finance.

“The IMF Executive Board is expected to discuss the staff report on the 2016 Article IV Consultation in January 2017.

“The IMF team thanks the authorities for their warm hospitality, close cooperation and the frank atmosphere, which allowed for a fruitful exchange of views.”

During the visit, the team held discussions with Sani Yaya, Minister of Finance and Development; Kossi Assimaidou, Minister of Planning; Kossi Ténou, BCEAO National Director, and other senior officials. The mission also met with representatives of the private sector and development partners.



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