Program implementation under the ECF arrangement has been broadly satisfactory; It aims to substantially reduce the fiscal deficit, refocus policies on inclusive growth, and resolve the financial weaknesses in the two public banks; Togo needs to safeguard the hard-won fiscal consolidation and pursue debt reduction.
On June 26, 2019, the Executive Board of the International Monetary Fund (IMF) completed the fourth review of Togo’s economic performance under a program supported by an Extended Credit Facility (ECF) arrangement.  The completion of the review enables the disbursement of SDR 25.17 million (about US$35 million), bringing total disbursements under the arrangement to SDR 125.9 million (about US$174.94 million).
In completing the fourth review, the Executive Board also approved the authorities’ request for a waiver for the non-observance of the performance criterion on net domestic financing and the modification of two performance criteria pertaining to the domestic primary balance and net domestic financing.
Togo’s three-year arrangement for SDR 176.16 million (about US$244.8 million, 120 percent of Togo’s quota), was approved on May 5, 2017 (see Press Release No.17/151). 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.
During the same meeting, the Board also concluded the 2019 Article IV consultation. A separate press release will be issued shortly.
Following the Executive Board discussion, Mr. Tao Zhang, Deputy Managing Director and Acting Chair, made the following statement:
“Togo’s performance under the economic program supported by an Extended Credit Facility (ECF) has been broadly satisfactory. Economic activity has been recovering since 2018, following a sharp deceleration in 2017. Togo complied with the WAEMU fiscal deficit criterion in 2017 and 2018, two years ahead of the timeline agreed by all member States.
“Large public investment projects completed in recent years and the improvement of the business environment are expected to boost private investment and economic growth in the medium term. However, risks remain tilted to the downside, including from socio-political tensions at the national level and security challenges at the regional level.
“A temporary increase in the fiscal deficit is warranted to accommodate some urgent spending. Notwithstanding this relaxation of fiscal targets, Togo is projected to remain within the WAEMU deficit criterion in 2019 and 2020.
“Public financial management reforms are advancing. A methodological guide for the cost-benefit analysis of public investment was finalized. A comprehensive review of public expenditure was completed. Arrears are gradually being cleared, in line with program objectives. Efforts to strengthen permanent revenue are critical to preserve the hard-won fiscal consolidation and create fiscal space for much-needed social and infrastructure spending. Improving the efficiency of social spending should be a focus going forward.
“It is important to complete the reforms of the two public banks. The privatization process should be finalized. The elevated non-performing loans also need to be addressed.
“The business environment has improved and further reforms are needed to build on the progress achieved. Measures are also needed to strengthen governance and reduce vulnerabilities to corruption, as well as to address gender and income inequality.”
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.Distributed by APO Group on behalf of International Monetary Fund (IMF).