On December 10, 2018, the Executive Board of the International Monetary Fund (IMF) completed the third review of Togo's performance under the program supported by an Extended Credit Facility (ECF).
Program performance has been satisfactory. All quantitative performance criteria and three out of five structural benchmarks were met. The completion of the review enables the disbursement of SDR25.17 million (about US$34.9 million), bringing total disbursements since the beginning of the arrangement to SDR100.68 million (about US$139.5 million).
Togo's three-year arrangement was approved on May 5, 2017 for SDR176.16 million (120 percent of quota or about US$241.5 million at the time of approval of the arrangement) to support the country's economic and financial reforms. The program aims to reduce the overall fiscal deficit substantially to ensure long-term debt and external sustainability; refocus policies on inclusive growth through targeted social spending and sustainably-financed infrastructure spending; and resolve the financial weaknesses in the two public banks.
Following the Executive Board's discussion on Togo, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, issued the following statement:
"Togo's performance under the ECF-supported program has been satisfactory despite a challenging environment. The economy shows signs of incipient stabilization, growth is projected to accelerate, and inflation remains within the WAEMU criteria. Meanwhile, the structural reform agenda is advancing. With risks abating but still on the downside, it is important that the authorities remain committed to their macroeconomic adjustment and reform agenda.
"The authorities are determined to reduce public debt to sustainable levels and advance fiscal reforms. The fiscal framework is expected to achieve the debt reduction envisaged initially under the program, and Togo is projected to comply with the WAEMU convergence criteria by end-2019. The authorities are planning to pursue a debt reprofiling operation with appropriate safeguards, aimed at reducing the present value of total public debt.
"Ongoing fiscal reforms aim to create space for much-needed social and infrastructure spending. The authorities are making efforts to improve revenue mobilization in a permanent way, shift the composition of spending in favor of growth-supporting public investment, and enhance the efficiency of overall spending. Further progress is needed to finalize the cost-benefit analysis of public investment projects and strengthen arrears management.
"The authorities have revisited their financial sector strategy and have re-launched the privatization of the two remaining public banks. Implementation of the agreed safeguard measures will be important to ensure that the privatization is in line with international best practices.
"Efforts are underway to implement measures under the National Development Plan and the Compact with Africa, with a view to promoting Togo as a major logistical hub, a dynamic financial center, and a strong manufacturing base. To this end, priorities include fighting corruption, strengthening governance, and improving the business climate more broadly."