This Joint Staff Advisory Note focuses on the Poverty Reduction Strategy Paper (PRSP) for Djibouti. Djibouti’s National Initiative for Social Development (“Initiative Nationale pour le Développement Social”—INDS) provides a comprehensive vision for economic growth and poverty reduction. Notwithstanding some important achievements of the PRSP-I, overall progress in achieving its objectives has been limited. IMF staff commends the government for a well-designed and ambitious poverty reduction strategy. IMF staff considers that the INDS benefits from better prioritization and draws lessons from the shortcomings in the implementation of the PRSP-I.
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1. Djibouti's National Initiative for Social Development (“InitiativeNationalepourleDéveloppementSocial”—INDS) provides a comprehensive vision for economic growth and poverty reduction . The strategy was completed in January 2008, one year after the launch of the initatitive, and covers the period of 2008-11. The INDS document includes an assessment of the previous poverty reduction strategy (PRS-I), and outlines the second PRS. It maintains the thrust of the PRS-I, which was presented to the IMF and World Bank Executive Boards in May
development challenge. This underscores the critical importance of clarifying the vision of the country’s future and implementing in a sustained manner policies and reforms that pave the way for robust and equitable economic growth and for a sustainable reduction in unemployment. This vision was articulated by the President of Djibouti on January 9, 2007, at the official launch of the second generation PRSP, when ownership was taken of this process under the title National Initiative for Social Development [ InitiativeNationalepourleDéveloppementSocial INDS] .
and reforms that can lay the groundwork for strong and equitable economic growth, in addition to achieving sustainable reductions in unemployment. This vision was outlined by the President of the Republic on January 9, 2007, who officially launched the second generation PRSP, for which the country had taken full ownership, and entitled: the “National Initiative for Social Development” [InitiativeNationalepourleDéveloppementSocial (INDS)].
“The INDS is a societal project aimed at turning Djibouti by 2015 into a country that is peaceful, modern, fair, open
The modern economy of the Republic of Djibouti is based on rents directly or indirectly originating from the international port of Djibouti and from the country’s strategic position. The Poverty Reduction Strategy Paper discusses that the growth recorded over the last five years is essentially driven by the increase in foreign direct investment—but especially by the activities of the Port of Djibouti. The informal economy constitutes a major proportion of the economic activities of Djibouti and provides a livelihood for much of the Djibouti population.
economic disruption in Djibouti. With the support of the World Bank, a study aiming at the reduction of personnel at the Electricité de Djibouti (EDD) will be conducted and finalized by end-September 2009. Efforts to strengthen the coordination of the national investment promotion agency with the Ministry of Finance are also underway. The authorities remain committed to liberalize the labor market. In order to fully implement the InitiativeNationalepourleDéveloppementSocial (INDS), a population census was launched last February and the ensuing poverty and
the results of the ongoing census could be used as a basis for the analysis of the poverty situation in the country.
6. Fiscal policy will remain the principal instrument for implementing the macroeconomic framework defined in the Poverty Reduction Strategy Paper (PRSP)—“InitiativeNationalepourleDéveloppementSocial” (INDS). Our fiscal policy will continue to be designed to ensure a gradual narrowing of the overall deficit (on a commitment basis) over the program period. Although performance was better than expected in 2008, we intend to maintain the original
The overall fiscal position improved and the reduction in domestic arrears was triple the program target. The direct impact of the global financial crisis on Djibouti has been limited. The financial system has not been affected by the global crisis, and capital adequacy has improved slightly despite increased competition. GDP growth remained strong in 2008, and inflation decelerated during the fourth quarter. The risk of external debt distress remains high. Banks remain profitable and have not been affected by the global financial crisis.