The authorities and the IMF team have reached a staff-level agreement on the combined seventh and eighth reviews of the ECF and EFF arrangements, subject to approval by IMF management and the Executive Board; the country has been hit hard by the Covid-19 pandemic; thanks to the authorities’ swift response and the support of the international community including the IMF, the economic impact has been contained and growth, while significantly lower than initially forecasted, is projected to remain positive at 1.8 percent this year; going forward, fiscal consolidation will be essential to preserve debt sustainability and regional macroeconomic stability while creating space to support the authorities’ development strategy.
An International Monetary Fund (IMF) staff team led by Céline Allard held virtual meetings during September 15—October 4, 2020 to conduct the combined 7th and 8th reviews of the authorities’ economic and financial program supported by the IMF through arrangements under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF).
At the conclusion of these discussions, Ms. Allard issued the following statement:
“The authorities and the IMF team have reached a staff-level agreement on the combined seventh and eighth reviews of the ECF and EFF arrangements, subject to approval by IMF management and the Executive Board. Consideration by the Executive Board is expected in early December 2020. The seventh review of the program initially scheduled for March 2020 was delayed because of the outbreak of the Covid-19 pandemic and was overtaken by discussions that led to an emergency assistance under the Fund’s Rapid Credit Facility (RCF) and Rapid Financing Instrument (RFI) in April 2020.
“The Covid-19 pandemic presents an unprecedented challenge. The authorities acted swiftly through confinement measures and closing of international borders. In addition, the authorities have implemented a comprehensive response centered around a health spending package and an economic, social and humanitarian response plan aimed at containing the spread of the pandemic and helping the most affected households and firms. The international community has provided financial support for the implementation of these plans. The authorities have carefully established the mechanisms and qualification criteria for this support, which has meant that it has been relatively slowly disbursed up to now. While welcoming the careful and transparent set up of assistance, the IMF team encouraged the authorities to accelerate disbursements of these resources as these mechanisms are now fully operational.
“The socio-economic impact of the pandemic has been significant with several economic sectors negatively affected. Yet, thanks to the swift policy response and subsequent removal of confinement measures, strong starting fundamentals and Cote d’Ivoire’s relatively diversified economy, growth has been more resilient than elsewhere and is projected to reach 1.8 percent this year. The deterioration of the fiscal deficit in 2020 was appropriate to address the significant challenges presented by the COVID-19 crisis, and in that vein, the rapid adoption of the revised 2020 budget law will be key to frame this policy response.
“Program performance was satisfactory through end-2019 but several program targets were not met at end-June 2020 including two performance criteria out of five, namely the floor on overall fiscal balance and the ceiling on the present value of new external debt contracted by the central government; as the budget execution was altered to address the Covid-19 crisis.
“The authorities and staff concurred on the importance of carefully balancing the need to support the recovery next year while re-anchoring the fiscal path toward the regional fiscal deficit. To that effect, they agreed on a path of gradual fiscal consolidation back to the convergence criterion of 3 percent of GDP by 2023.
“The authorities and IMF staff concurred on the need to boost domestic revenue mobilization to support the economic recovery and continue to fund the authorities’ ambitious economic development strategy, notably their forthcoming National Development Plan (2021-25) in a sustainable manner while preserving debt sustainability. The authorities’ tax policy efforts contained in the draft 2021 budget are welcome.
“IMF staff highlighted the importance of carefully monitoring the financial pressures brought upon state-owned enterprises by the crisis and which could threaten the achievements made by the authorities in restoring their financial health. Staff noted that the financial sector has, thus far, seemingly weathered the crisis relatively well and progress has been achieved in strengthening some of the public banks although additional efforts are still needed.
“The IMF team thanks the authorities for the open and productive discussions.”
The IMF team held virtual meetings with Prime Minister and Defense Minister Hamed Bakayoko; Minister of Economy and Finance Adama Coulibaly; Minister of Budget and State Holdings Moussa Sanogo; Minister of Planning and Development Nialé Kaba; Minister of Public Health and Sanitation Aka Aouele; Minister of Transportation Amadou Koné; BCEAO National Director Chalouho Coulibaly; and other senior government and BCEAO officials.
End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.Distributed by APO Group on behalf of International Monetary Fund (IMF).