IMF Lauds Ivory Coast’s New National Development Plan

Posted by Eric Ojo African News, Business News, Featured, Latest Headlines, News Around Africa Monday, July 26th, 2021

(AFRICAN EXAMINER) – The International Monetary Fund (IMF) has applauded the Government of Côte d’Ivoire for its resolve and preparation of a new National Development Plan, which is aimed at promoting inclusive growth, structural transformation and private sector development.

IMF gave the commendation at the conclusion of its 2021 Article IV Consultation with Côte d’Ivoire.

The Fund said the country’s new ambitious development plan underscored the importance of promoting good governance and improving the business environment, including by swiftly adopting the national strategy to fight corruption.

IMF added that Côte d’Ivoire’s other priorities include measures to promote financial inclusion, increase the effectiveness of labor markets to support the formalization of the economy, and enhance resilience to climate change.

The Fund also harped on the need for the West African nation to rebuild its fiscal buffers, pursue a prudent debt strategy, and advance reforms to deepen regional financial markets.

IMF also observed that Côte d’Ivoire has demonstrated strong resilience to the impact of COVID-19 pandemic, adding that while economic growth is expected to have dropped by some 4½ percent compared to the pre-COVID-19 forecast, it is still estimated at 2 percent in 2020, ranking among sub-Saharan Africa’s (SSA) best performing frontier market economies.

The Fund therefore welcomed the strong resilience of the Ivoirian economy, owing to the authorities’ prompt response to the pandemic, a decade of sound macroeconomic policies, as well as the support of the international community including the IMF

“Economic performance and resilience were underpinned by strong pre-crisis fundamentals, a rapid policy response, a relatively lower dependency on sectors that have been typically hit the hardest elsewhere, as well as the support of the international community including the IMF.

“The economy is set to return to a strong growth trend, contingent on a receding of the pandemic. The rebound in activity that started in the second half of 2020 remains strong, and growth in 2021 is projected at 6 percent, driven by a recovery in exports and investment, as pandemic headwinds abate and despite short-term electricity shortages”, the IMF said in a statement.

The statement however, pointed out that inflation is temporarily on the rise, which is also driven by pandemic-induced supply disruptions and the energy shortages.

It further noted that the authorities are continuing their economic and social support policies and stepping up efforts to secure and administer vaccines.

Continuing capital deepening anchored on an ambitious draft National Development Plan, robust domestic consumption, and the continuation of the ongoing reform agenda, according to the statement, are expected to keep growth around 6-6½ percent over 2021-26, despite a gradual fiscal consolidation.

“The fiscal deficit reached 5.6 percent of GDP in 2020, as the authorities appropriately increased spending to support firms and households affected by the pandemic. Public debt including debt guarantees rose to 49.8 percent of GDP. The current account deficit is expected to have widened to 3.5 percent of GDP in 2020, mainly reflecting reduced global demand.

“Risks remain tilted to the downside. The pandemic could prove harder to contain due to new variants or a protracted vaccine rollout, thus muting the global recovery. A sharp rise in global risk premia could complicate access to international markets. Domestically, possible prolongation of energy shortages and delays in reforms could reduce confidence, dampen private investment, while debt metrics could weaken if revenue mobilization continues to underperform”, the statement further explained.

It also warned that the security situation at the Northern border of the country could deteriorate, adding that on the upside, implementation of a strong reform agenda to be defined under the umbrella of the incoming National Development Plan would further boost growth and investment.

The statement equally underscored the importance of continued supportive policies until the recovery is well entrenched, while preserving debt sustainability and fostering economic transformation.

It further acknowledged the need to relax the fiscal stance in 2021 to accommodate additional investment and security spending, adding the authorities should return to the WAEMU fiscal deficit target as soon as feasible.

The statement also highlighted the urgency of significantly boosting domestic resource mobilization to create fiscal space for productive and social spending, by rationalizing tax expenditures, broadening the tax base, and strengthening tax administration.

It therefore called for continued efforts to strengthen public financial management, promote digitalization, and improve fiscal transparency, adding that further efforts are also needed to enhance social safety nets through proactive social policies.