Cote d'Ivoire: IMF Executive Board Completes the Final Reviews of Côte d'Ivoire's Extended Credit Facility and Extended Fund Facility Arrangements

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The Executive Board of the International Monetary Fund (IMF) completed the seventh and eighth reviews under the Extended Credit Facility (ECF) [1] Arrangement and the Extended Arrangement under the Extended Fund Facility (EFF) [2] for Côte d'Ivoire, and approved waivers of nonobservance of performance criteria on the overall budget balance and the new external debt, and the proposal for Post-Program Monitoring discussions.

The three-year ECF/EFF arrangements with a total access of SDR 650.4 million (about US$896.7 million) were approved by the IMF Executive Board on December 12, 2016. It was augmented by about US$278.2 million, as well as extended by one year on December 6, 2019. Completion of the final reviews enables the immediate disbursement of SDR 193.572 million (about US$278.2 million), bringing total disbursements under the arrangements to SDR 844 million (about US$1,207.71 million or 129.8 percent of Côte d'Ivoire's quota).

The four-year program performance was satisfactory, and the authorities reacted swiftly to the unprecedented challenge of the pandemic. Strong pre-crisis fundamentals, relative economic diversification, and timely relaxing of the fiscal stance allowed Côte d'Ivoire to remain amongst few Sub-Saharan African countries that maintained growth in 2020, currently projected to stand at 1.8 percent. Assuming global conditions gradually normalize, growth is projected to revert to 6½ percent in 2021, but with numerous downside risks. The authorities also intend to gradually consolidate the fiscal deficit to 3 percent of GDP by 2023.

Following the Executive Board discussion, Mr. Mitsuhiro Furusawa, Acting Chair and Deputy Managing Director, made the following statement:

"Strong record of sound macroeconomic policies, a swift COVID response, and substantive government support to the most impacted has helped Côte d'Ivoire in weathering the immediate consequences of the pandemic reasonably well. Performance under the Fund-supported program was satisfactory through end-2019 although several program targets were missed at end-June 2020 due to the pandemic response. Provided global economic conditions gradually normalize, growth is projected to revert to its medium-term trend in 2021, but with substantial downside risks.

"The authorities appropriately responded to the COVID shock by relaxing the fiscal stance to accommodate revenue setbacks, implement the government's emergency spending plan and limit the growth deceleration. The gradual fiscal consolidation projected over the next three years strikes the right balance between supporting the recovery and re-anchoring the fiscal path. A return to the WAEMU norm of a fiscal deficit of 3 percent of GDP by 2023 is key for regional stability.

"Over the medium term, it is essential to address pressing development needs, build buffers, and limit debt vulnerabilities. This hinges on implementing a much more ambitious strategy for domestic revenue mobilization, centered on bringing the informal economy into the fiscal net and limiting the proliferation of tax exemptions, complementing ongoing efforts to strengthen the revenue administration.

State-owned enterprises and public banks need to continue to be carefully monitored, and debt management will require balancing recourse to financing on the regional market and from external commercial sources. Reinforcing the statistical apparatus is key to timely identify policy priorities.

"Upon completion of the Extended Credit Facility and the Extended Arrangement under the Extended Fund facility, it is recommended that Côte d'Ivoire returns to the standard 12-month cycle for Article IV consultations and engages in Post-Program Monitoring, as outstanding credit to the Fund exceeds the 200 percent of quota threshold."

[1] The ECF is a lending arrangement that provides sustained program engagement over the medium to long term in case of protracted balance of payments problems.

[2] The EFF was established to provide assistance to countries: (i) experiencing serious payments imbalances because of structural impediments; or (ii) characterized by slow growth and an inherently weak balance of payments position.

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