Abstract
IMF Country Report No. 22/205
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IMF Country Report No. 22/205
CÔTE D’IVOIRE
2022 ARTICLE IV CONSULTATION—PRESS RELEASE; AND STAFF REPORT
July 2022
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of the 2022 Article IV consultation with Côte d’Ivoire, the following documents have been released and are included in this package:
A Press Release
The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on Lapse of Time basis, following discussions that ended on April 15, 2022, with the officials of Côte d’Ivoire on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on May 31, 2022.
An Informational Annex prepared by the IMF staff.
A Debt Sustainability Analysis prepared by the staffs of the IMF and the International Development Association.
The document listed below has been or will be separately released.
Selected Issues
The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents.
Copies of this report are available to the public from
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© 2022 International Monetary Fund
Press Release
PR22/210
IMF Executive Board Concludes 2022 Article IV Consultation with Côte d’Ivoire
FOR IMMEDIATE RELEASE
The Ivorian economy proved resilient to the COVID-19 pandemic, thanks to the authorities’ effective policy response, and recovered strongly in 2021 with growth estimated at 7% from 2% in 2020.
The impact of the war in Ukraine and regional security challenges are expected to weigh on the macroeconomic outlook in 2022.
The medium-term growth outlook remains robust. A resolute implementation of reforms under the 2021–25 National Development Plan (NDP) would boost medium-term growth.
Washington, DC – June 16, 2022: The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Côte d’Ivoire and endorsed the staff appraisal without a meeting on a lapse-of-time basis.1
Supported by solid macroeconomic stability, the Ivorian economy proved resilient to the COVID-19 pandemic thanks to the authorities’ effective policy response. COVID-related fatalities remain at low levels by international standards. Vaccination efforts continue and about 70 percent of the target population has already received a first dose.
The economy recovered strongly in 2021, with growth estimated at 7 percent (from 2 percent in 2020), while annual inflation rose to 4.2 percent due to external and supply shocks. The overall fiscal deficit reached 5.1 percent of GDP, lower than anticipated, mainly due to improvements in customs collection and tax administration which offset higher security spending.
The deterioration in the external environment linked to the war in Ukraine and regional security challenges are expected to weigh on the macroeconomic outlook in 2022. IMF staff forecasts growth to slow down to 6 percent this year due to subdued global demand, worsened terms of trade, and increased uncertainty, while inflation is expected to increase further to about 5½ percent. The Ivorian authorities took several temporary measures to contain the impact of the war in Ukraine, such as introducing price ceilings on several food items.
However, the near term is dominated by negative risks, stemming mainly from the global repercussions of the war in Ukraine, tighter monetary policy in advanced countries and the associated increase in borrowing cost, as well as new COVID-19 variants’ outbreaks and continued instability in some neighboring countries. The medium-term growth projections remain robust with the country facing also upside risks, notably related to the discovery of substantial oil and gas reserves. A resolute implementation of reforms under the 2021–25 National Development Plan (NDP) would boost medium-term growth.
Executive Board Assessment2
A swift and well-designed policy response, underpinned by strong macroeconomic policies over the past decade, helped contain the economic cost of the COVID-19 pandemic. The war in Ukraine has nonetheless clouded Côte d’Ivoire’s outlook. The recent measures to contain its impact on inflation and the economy should remain temporary and become increasingly targeted to the most vulnerable if the shock proves persistent. The authorities need to find the right balance between accommodating urgent spending pressures, which also include higher security spending, and preserving fiscal space to cope with future shocks.
The current circumstances could warrant a slightly higher-than-budgeted deficit this year. However, converging to the WAEMU target deficit of 3 percent of GDP in 2024 remains feasible. The debt sustainability analysis continues to point to a moderate risk of debt distress, but with very limited space to absorb future shocks amid worsening market conditions, highlighting the authorities’ need to accelerate efforts to mobilize domestic revenue.
Pursuing fiscal reforms remains critical for Côte d’Ivoire to make room to finance priority spending and support inclusive growth. While the better-than-anticipated 2021 fiscal outturn is in part due to ongoing improvements in tax administration reforms and customs collection, especially on account of digitalization, tax revenue remains well below the WAEMU tax convergence target of 20 percent of GDP. Continuing ongoing efforts to improve tax administration as well as to rationalize tax exemptions are critical to finance government spending for investment, social convergence, and services in underserved regions. Redesigning and simplifying the personal income tax regime would also improve its progressivity.
The new social program of the government can continue enhancing human capital. While the country made significant progress in broadening access to education over recent years, further efforts aimed at improving the quality of basic education and professional training systems would help easing skills mismatch in the labor market. Despite notable progress, ensuring equitable access to health care remains a priority.
Sustaining efforts to improve the business climate, strengthen public services, and tackle climate change challenges are key to boost inclusive and sustainable growth. The authorities need to accelerate reforms to tackle infrastructure bottlenecks, regulatory framework deficiencies, enhance the protection of land tenure and property rights, and streamline bureaucracy. A swift implementation of the 2021–25 NDP reforms would help, and a strong involvement of the private sector is key to ensure efforts are focused where they are needed the most, as well as to contain fiscal costs. Further improvements in governance and the fight against corruption will also contribute to attract private investment. The authorities are committed to adopting sound climate adaptation and mitigation policies, including on sustainable farming and forest preservation.
Deepening financial inclusion and access to finance remain crucial for unlocking the private sector’s potential. Tackling deficiencies in insolvency procedures, improving the credit infrastructure, and a prompt restructuring of undercapitalized public banks, would improve the capacity of the banking sector to support growth.
It is expected that the next Article IV consultation for Cote d’Ivoire be held on the standard 12-month cycle.
Côte d’Ivoire: Selected Economic Indicators (2019–23)
Côte d’Ivoire: Selected Economic Indicators (2019–23)
| Population (2020): 27 million | Gini Index (2015): 41.5 | ||||
| Per capita GDP (2020): 2,279 USD | Life Expectancy (years): 58 | ||||
| Share of population below the poverty line (2015): 44.4% | Literacy rate: 47.2% | ||||
| 2019 | 2020 | 2021 | 2022 | 2023 | |
| Est. | Proj. | Proj. | |||
| Output | |||||
| Real GDP Growth (%) | 6.2 | 2.0 | 7.0 | 6.0 | 6.7 |
| Prices | |||||
| Inflation (annual average, %) | 0.8 | 2.4 | 4.2 | 5.5 | 2.3 |
| Central government finances | |||||
| Revenues (% GDP) | 14.2 | 14.4 | 15.3 | 14.2 | 14.7 |
| Expenditure (% GDP) | 17.3 | 20.5 | 20.9 | 20.0 | 19.2 |
| Fiscal balance (% GDP) | -2.3 | -5.6 | -5.1 | -5.3 | -4.0 |
| Public debt (% GDP) | 38.4 | 47.6 | 52.1 | 52.9 | 52.3 |
| Money and Credit | |||||
| Broad money (% change) | 11.0 | 21.4 | 17.7 | 10.4 | … |
| Credit to private sector (% change) | 6.1 | 9.2 | 12.6 | 4.5 | … |
| Balance of payments | |||||
| Current account (% GDP) | -2.3 | -3.2 | -3.8 | -4.8 | -4.6 |
| Net FDI Inflows (% GDP) | 1.3 | 1.2 | 1.1 | 1.1 | 1.2 |
| WAEMU reserves (in months of imports) | 5.6 | 5.5 | … | … | … |
| External public debt (% GDP) | 25.5 | 30.5 | 31.6 | 31.4 | 30.3 |
| Exchange rate | |||||
| REER (% change, depreciation –) | -3.9 | 5.1 | 1.9 | … | … |
Côte d’Ivoire: Selected Economic Indicators (2019–23)
| Population (2020): 27 million | Gini Index (2015): 41.5 | ||||
| Per capita GDP (2020): 2,279 USD | Life Expectancy (years): 58 | ||||
| Share of population below the poverty line (2015): 44.4% | Literacy rate: 47.2% | ||||
| 2019 | 2020 | 2021 | 2022 | 2023 | |
| Est. | Proj. | Proj. | |||
| Output | |||||
| Real GDP Growth (%) | 6.2 | 2.0 | 7.0 | 6.0 | 6.7 |
| Prices | |||||
| Inflation (annual average, %) | 0.8 | 2.4 | 4.2 | 5.5 | 2.3 |
| Central government finances | |||||
| Revenues (% GDP) | 14.2 | 14.4 | 15.3 | 14.2 | 14.7 |
| Expenditure (% GDP) | 17.3 | 20.5 | 20.9 | 20.0 | 19.2 |
| Fiscal balance (% GDP) | -2.3 | -5.6 | -5.1 | -5.3 | -4.0 |
| Public debt (% GDP) | 38.4 | 47.6 | 52.1 | 52.9 | 52.3 |
| Money and Credit | |||||
| Broad money (% change) | 11.0 | 21.4 | 17.7 | 10.4 | … |
| Credit to private sector (% change) | 6.1 | 9.2 | 12.6 | 4.5 | … |
| Balance of payments | |||||
| Current account (% GDP) | -2.3 | -3.2 | -3.8 | -4.8 | -4.6 |
| Net FDI Inflows (% GDP) | 1.3 | 1.2 | 1.1 | 1.1 | 1.2 |
| WAEMU reserves (in months of imports) | 5.6 | 5.5 | … | … | … |
| External public debt (% GDP) | 25.5 | 30.5 | 31.6 | 31.4 | 30.3 |
| Exchange rate | |||||
| REER (% change, depreciation –) | -3.9 | 5.1 | 1.9 | … | … |
Title page
CÔTE D’IVOIRE
STAFF REPORT FOR THE 2022 ARTICLE IV CONSULTATION
May 31, 2022
KEY ISSUES
Context: The economy proved resilient to Covid-19 and continued recovering in 2021, with growth estimated at 7 percent Growth is forecasted to slow to 6 percent this year due to the war in Ukraine. Inflation increased to 4.2 percent last year, on the back of surging food prices, and is expected at 5.5 percent this year, while the current account deficit is projected to reach 4.8 percent of GDP. Risks are tilted to the downside, as a result of the war in Ukraine, global financing conditions, and regional instability.
Policies: While the swift policy response to the pandemic prevented a worse outcome and facilitated a strong recovery, Côte d’Ivoire emerged with higher debt and thinner fiscal buffers. As the economy is hit by another large external shock, the authorities will need to strike a delicate balance between cushioning the effect of the war in Ukraine on the most vulnerable and building fiscal space for critical spending and resilience. The overarching priorities to navigate this balance and support inclusive growth are:
Supporting the most vulnerable. Recent measures in response to the war in Ukraine will need to remain temporary and become increasingly targeted to the most vulnerable if the shock proves persistent. While a moderately higher-than-budgeted deficit is warranted to accommodate emergency measures, reaching the 3 percent fiscal deficit target in 2024 remains feasible.
Boosting domestic revenue mobilization for critical spending and resilience. Recent progress in tax administration is welcome, but the low level of fiscal revenues remains a key challenge given social and investment needs and limited fiscal buffers. A stronger effort on tax policy reforms is needed, including by removing exemptions when the crisis recedes, and streamlining the PIT.
Deepening the structural reform and governance agenda to support inclusive growth. The authorities should continue enhancing public services, the business climate, and governance, including by a swift implementation of the 2021–25 National Development Plan. Tackling deficiencies in insolvency procedures and credit infrastructure should help boosting access to credit, especially for SMEs.
Approved By
Montfort Mlachila (AFR) and Natalia Tamirisa (SPR)
Discussions were held in Abidjan from April 5 to 15, 2022. The mission comprised Mr. Luca Antonio Ricci (head), Ms. Claire Gicquel, Mr. Bertrand Gruss, Ms. Darcia Datshkovsky, Mr. Karim Youssef, (all AFR), Mr. Kaleb Tamiru Gulilat (FAD), Mr. Jiangyan Yu (SPR), and Mr. Kadima Kalonji (IMF Resident Representative). Mr. Kadio Kouao, Mr. Edwin Lester Magno and Ms. Marguerite Signe assisted the team in the preparation of this report. Ms. Esso Solim Boukpessi (OED) participated in the discussions.
Contents
CONTEXT AND RECENT DEVELOPMENTS
OUTLOOK AND RISKS
POLICY DISCUSSIONS
A. Safeguarding Fiscal Sustainability
B. Building Fiscal Space for Critical Spending and Resilience
C. Transforming the Economy for Sustainable and Inclusive Growth
POST-FINANCING ASSESSMENT
A. Liquidity and Solvency Considerations
B. Capacity to Repay Risks
STAFF APPRAISAL
BOX
1. Bottlenecks for Access to Credit by Small and Medium Enterprises
FIGURES
1a. Recent Economic Developments, 2012–21
1b. Recent Economic Developments, 2017–21
2. Medium Term Outlook, 2016–27
3. Productivity in Côte d’Ivoire’s Agriculture Sector
4. Capacity to Repay Indicators Compared to UCT Arrangements for PRGT
TABLES
1. Selected Economic Indicators, 2019–27
2a. Balance of Payments, 2019–27 (Billions of CFA Francs)
2b. Balance of Payments, 2020–27 (Percent of GDP)
3a. Fiscal Operations of the Central Government, 2019–27 (Billions of CFA Francs)
3b. Fiscal Operations of the Central Government, 2019–27 (Percent of GDP)
4. Monetary Survey, 2020–23
5. Financial Soundness Indicators for the Banking Sector, 2015–21
6. Indicators of Capacity to Repay the Fund, 2022–31
ANNEXES
I. Risk Assessment Matrix
II. Status of the 2021 Article IV Main Recommendations
III. External Sector Assessment
IV. IMF Capacity Development
V. The 2021–25 National Development Plan
VI. The Social Program of the Government
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.
The Executive Board takes decisions under its lapse-of-time procedure when the Board agrees that a proposal can be considered without convening formal discussions.
