Côte d’Ivoire: 2022 Article IV Consultation-Press Release; and Staff Report
Author: International Monetary Fund. African Dept.
Publication Date:
01 Jul 2022
eISBN:
9798400213892
Language:
English
Keywords:
Ivorian authorities; reform agenda; IMF staff calculation; value chain; response to the pandemic; COVID-19; Current account; Global; government payment arrears
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1. Côte d’Ivoire’s longstanding macroeconomic stability has served the country well throughout the recent period of global shocks and high economic uncertainty. During the past decade, GDP growth has exceeded the average across Sub-Saharan Africa (SSA) countries by more than 4 percentage points (Fig. 1a). Since 2012, inflation rates hovered nearly 8 percentage points below the average in SSA countries. Before the pandemic, investment associated with the 2016–2020 National Development Plan (NDP) had supported an increase in access to basic services and a decline in poverty rates and inequality, while astute fiscal policy management kept debt reasonably low. The socio-political environment improved further in 2021 amid a continuous dialogue between the government and the opposition which saw the peaceful return of some key opposition figures. While risks associated with armed groups on the northern border remain, the authorities raised security spending and investment on social protection and infrastructure in underserved areas.

Abstract

1. Côte d’Ivoire’s longstanding macroeconomic stability has served the country well throughout the recent period of global shocks and high economic uncertainty. During the past decade, GDP growth has exceeded the average across Sub-Saharan Africa (SSA) countries by more than 4 percentage points (Fig. 1a). Since 2012, inflation rates hovered nearly 8 percentage points below the average in SSA countries. Before the pandemic, investment associated with the 2016–2020 National Development Plan (NDP) had supported an increase in access to basic services and a decline in poverty rates and inequality, while astute fiscal policy management kept debt reasonably low. The socio-political environment improved further in 2021 amid a continuous dialogue between the government and the opposition which saw the peaceful return of some key opposition figures. While risks associated with armed groups on the northern border remain, the authorities raised security spending and investment on social protection and infrastructure in underserved areas.

Context and Recent Developments

1. Côte d’Ivoire’s longstanding macroeconomic stability has served the country well throughout the recent period of global shocks and high economic uncertainty. During the past decade, GDP growth has exceeded the average across Sub-Saharan Africa (SSA) countries by more than 4 percentage points (Fig. 1a). Since 2012, inflation rates hovered nearly 8 percentage points below the average in SSA countries. Before the pandemic, investment associated with the 2016–2020 National Development Plan (NDP) had supported an increase in access to basic services and a decline in poverty rates and inequality, while astute fiscal policy management kept debt reasonably low. The socio-political environment improved further in 2021 amid a continuous dialogue between the government and the opposition which saw the peaceful return of some key opposition figures. While risks associated with armed groups on the northern border remain, the authorities raised security spending and investment on social protection and infrastructure in underserved areas.

2. The COVID-19 pandemic had a limited effect on Côte d’Ivoire. Despite relatively low vaccination rates partly due to vaccine hesitancy, the spread of Covid-19 cases remained low compared to other countries (81,985 cases and 799 deaths as of May 12, 2022, according to official figures). Forty percent of the target population aged 12 years or older (about 20 million or 70 percent of the overall population) has received at least one dose of the Covid-19 vaccine, while about 28 percent is fully vaccinated. As of May 11, 2022, around 12.6 million vaccine doses have been administrated out of a total of 21.4 million doses received. About 22 million additional doses are necessary to vaccinate the target population and 10 million doses are expected by the authorities by the end of 2022. Côte d’Ivoire managed to avoid the Ebola outbreak that affected some neighboring countries last year, although a new health threat has recently emerged with an outbreak of Dengue fever in the greater Abidjan region.

3. The authorities’ response to the pandemic helped mute the economic fallout from the COVID-19 pandemic. The successful containment of the virus during the first wave allowed a swift removal of strict containment measures in mid-2020. In addition, the authorities introduced a fiscal package worth about 2.4 percent of GDP cumulatively for 2020 and 2021, including tax, social security contribution, and electricity bill deferrals for households and businesses, along with spending measures. As a result, the economy started recovering in 2020Q3, and growth remained positive at 2 percent in 2020.

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COVID-19 Cases and Fatalities

(Cumulative as of May 12, 2022)

Citation: IMF Staff Country Reports 2022, 205; 10.5089/9798400213892.002.A001

Sources: Our World in Data; and IMF staff calculations.
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Cross-country Distribution of GDP Growth Rate, 2020

(Density)

Citation: IMF Staff Country Reports 2022, 205; 10.5089/9798400213892.002.A001

Sources: IMF WEO; and IMF staff calculations.
Figure 1a.
Figure 1a.
Sources: Ivorian authorities; and IMF staff calculations.Notes: (*) Côte d’Ivoire data for Poverty and Inequality in 2009 panel is for year 2008.

4. A robust economic recovery took hold in 2021, amid rising inflation due to external and supply shocks. Staff estimates that GDP growth rebounded from 2 percent in 2020 to 7 percent in 2021 on account of strong domestic consumption and investment, despite electricity shortages that disrupted industrial production in 2021Q2. Consumer price inflation has increased above the upper limit of the BCEAO’s target band for the WAEMU region of 1 to 3 percent since February 2021 and reached 5.6 percent in December—reflecting a surge in global prices on the back of supply chain disruptions and other pandemic-related disruptions as well as regional instability and adverse weather shocks—before declining somewhat to 4.6 percent in March.

5. Worsening terms of trade led to a current account deterioration. The 2021 current account deficit is expected to worsen to 3.8 from 3.2 percent of GDP in 2020 mainly due to an increase in import prices. The balance of goods is expected to remain positive but less than in 2020, notably due to an increase in the price of fuel and of imports of vehicle and road transportation material, while the balance of services should deteriorate further from higher freight transportation costs linked to the global containers’ shortage. The rise of commodity prices in 2022Q1, especially fuel prices, continues to affect the current account balance this year.

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Current Account Balance and Oil price

(Percent of GDP, and YOY Percent Change)

Citation: IMF Staff Country Reports 2022, 205; 10.5089/9798400213892.002.A001

Sources: IMF WEO; and IMF staff calculationsNote: Area in red is COVID-19 pandemic years

6. Côte d’Ivoire’s sovereign ratings improved to historically high levels, despite rising debt. Fitch upgraded its rating for Côte d’Ivoire in July 2021 to BB- and reaffirmed this rating with a stable outlook in late April 2022, citing the country’s macroeconomic and political stability. The government successfully issued international bonds in November 2020 and February 2021, while the SDR allocation received from the IMF in 2021 (about $884 million) was used to substitute for a Eurobond issuance originally planned for 2021H2. Overall debt increased by 4½ percent of GDP in 2021, mainly on account of a higher domestic debt, which rose by 3.4 percent of GDP.

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SSA Sovereign Ratings

(1 = AAA Prine 1 to 4 = Investment Grade 8 = In default)

Citation: IMF Staff Country Reports 2022, 205; 10.5089/9798400213892.002.A001

Sources: Fitch, Moody s; and S&P
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Central Government Debt

(in percent of GDP)

Citation: IMF Staff Country Reports 2022, 205; 10.5089/9798400213892.002.A001

Sources: Ivorian authorities; and IMF staff calculations.

7. Tax administration reforms contributed to reduce the fiscal deficit in 2021. The 2021 fiscal deficit fell to 5.1 percent of GDP, a ½ percent improvement on what was targeted by the authorities (5.6 percent of GDP, also envisaged in the 2021 Article IV), as well as relative to the 2020 outturn (also 5.6 percent of GDP). Tax revenues reached 13.1 percent of GDP in 2021, up from an average of 11.7 percent in the preceding 9 years, and from 12.3 in both 2019 and 2020, reflecting mainly improvements in customs collection and tax administration. Such higher revenues more than offset higher-than-anticipated security spending and interest payments on debt, thus resulting in a lower deficit in 2021 than anticipated.

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Fiscal Balance, Revenues and Expenditures

(Percent of GDP)

Citation: IMF Staff Country Reports 2022, 205; 10.5089/9798400213892.002.A001

Sources: Ivorian authorities; and IMF staff calculations.

8. The authorities took several measures to contain the impact associated with the war in Ukraine on inflation and the economy.

  • To attenuate the impact from the surge in international oil prices (import parity benchmark prices for gasoline and diesel increased by 53 and 68 percent respectively from January to April 2022) the authorities introduced differentiated fuel price measures. Adapting the existing fuel pricing mechanisms (which adjusts taxes on fuel in order to keep pump prices stable), gasoline prices were allowed to increase by only 13 percent, while diesel prices were kept unchanged—given the higher incidence of the latter on transport services, overall inflation, and productive activity. These measures are expected to carry a fiscal cost of slightly over 1 percent of GDP during 2022, through lower tax revenues and new transfers to cover increased refinery costs.

  • To contain food price inflation, and preserve food security for the most vulnerable, price caps and export permits for essential food staples and a custom duty exemption on wheat were introduced for a period of three months. These were implemented in consultation with relevant stakeholders to ensure feasibility constraints are met. Other measures focused on introducing regulation changes (e.g., to allow the combination of wheat with other cereals for bread production) and reinforcing consumption protection practices (e.g., price posting in markets).

9. The financial sector remained sound throughout the pandemic, notwithstanding increases in non-performing loans (NPL). Credit to the private sector slowed to below 2 percent year-on-year in early 2020 but recovered thereafter, growing by 9.9 percent in 2021. The average lending rate fell to 5.3 percent at end-2021, from 5.8 percent at end-2019. After a steady decline between 2014 and end-2019, NPLs increased during the pandemic by 1.3 percentage points, reaching 9.7 percent in June 2021, but have since declined to 8.2 percent in January 2022. Banks’ solvency remained strong, with tier 1 capital to risk-weighted assets improving from 9.7 percent at end-2019 to 11.2 percent in June 2021.

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Côte d’Ivoire: Financial Indicators, 2018–22

(Percent)

Citation: IMF Staff Country Reports 2022, 205; 10.5089/9798400213892.002.A001

Sources: Ivorian authorities; and IMF staff calculations.
Figure 1b.
Figure 1b.

Côte d’Ivoire: Recent Economic Developments, 2017–21

Citation: IMF Staff Country Reports 2022, 205; 10.5089/9798400213892.002.A001

Sources: Ivorian authorities; and IMF staff calculations.

Outlook and Risks

10. The war in Ukraine and regional security challenges are clouding the macroeconomic outlook in the near-term. Growth is forecasted to moderate to 6 percent in 2022 due to subdued global demand, worsened terms of trade, and increased uncertainty.1 Annual inflation is expected to reach 5.5 percent in 2022 due to some pass-through (even if partial) from global food and fuel prices. The current account deficit is projected to deteriorate further to 4.8 percent of GDP in 2022 (with about 0.6 percentage points due to rising international oil2 and food prices).

11. Over the medium term, GDP growth is expected to remain robust stabilizing around 6 percent, while inflation and the fiscal deficit would return to the BCEAO and WEAMU targets, respectively. Growth is expected to average close to 6½ percent over 2023–25—while the National Development Plan (NDP) is implemented—before tapering down to 6 percent over the medium term. The secondary sector (notably construction, agribusiness, and other manufacturing industries) and services (especially telecommunication and transport industries) are expected to be the main drivers of growth over 2023–27, along an ongoing structural transformation of the Ivorian economy. Inflation is expected to start declining in 2022H2, as the effects of earlier supply disruptions ease and temporary factors associated with the war in Ukraine recede, and to converge to the mid-point of the BCEAO target of 2 percent in 2024.3 The current account deficit would gradually decline to around 3½ percent of GDP over the medium term, as exports would increase more than imports thanks to export diversification and development policies.

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Contribution to GDP Growth

(Percent)

Citation: IMF Staff Country Reports 2022, 205; 10.5089/9798400213892.002.A001

Sources: Ivorian authorities; and IMF staff calculations.
Text Table 1.

Selected Economic Indicators

article image
Sources: Ivorian authorities; and IMF staff calculations.

Only phase I of the recent oil and gas discovery is assumed.

Defined as total revenue minus total expenditure, excluding all interest and foreign-financed investment expenditure.

As of end-2021, when the 2022 budget was voted.

Figure 2.
Figure 2.

Côte d’Ivoire: Medium Term Outlook, 2016–27

Citation: IMF Staff Country Reports 2022, 205; 10.5089/9798400213892.002.A001

Sources: Ivorian authorities; and IMF staff calculations.

12. The balance of risks is tilted to the downside, especially in the near term, and uncertainty remains high (Annex I).

  • The near term is dominated by negative external risks. Escalating geopolitical tensions in Europe could lead to weaker external demand, higher and more volatile commodity prices, and bouts of volatility in financial markets, complicating access to international markets. New Covid-19 outbreaks remain a notable downside risk given low vaccination rates. Tighter global financial conditions would increase the cost of borrowing and debt vulnerabilities in Côte d’Ivoire. A worsening political situation in the Sahel region can negatively affect demand for Côte d’Ivoire exports and increase security spending pressures. A persistent increase in domestic inflation could lead to food insecurity and exacerbate poverty, while an abrupt rise in BCEAO policy rates could deteriorate private-sector balance sheets and public finances.

  • Some domestic factors represent salient medium-term upside risks. Significant oil and gas reserves were discovered in 2021 and might support growth prospects in the medium term. The Italian company ENI estimates the possible additional reserves at 1.5 to 2.0 billion barrels of oil (compared to 8.8 million barrels extracted in 2021). The first phase of the project should start in 2023, although production would only increase significantly in the second phase which has not been confirmed yet (and could start in 2026).4 Also a resolute implementation of the NDP reforms may attract more private investment and improve growth prospects in the near term.

Authorities’ Views

13. The authorities viewed staff growth projections as too conservative, but concurred with the presence of external downside risks. They noted that growth momentum was strong at the beginning of this year and remained confident that the effect of the Covid pandemic was well under control. They also noted that the recent measures will help contain the negative effects from a worsened external context. They project growth at 6.9 percent in 2022 (slightly down from their estimate of 7.4 percent in 2021) and an average of 7.2 percent over 2023–27. This is underpinned by strong public and private investment on the back of the NDPs far reaching and comprehensive structural reforms.5 The authorities shared the view that if external risks worsened, they could cloud the near-term outlook, including for food security. However, they also noted that medium-term growth is subject to considerable upside risk, including from investment related to substantial new oil and gas discoveries, which apart from phase I have not yet been included in their projections.

Policy Discussions

14. The country needs to leverage on the solid macroeconomic framework to continue promoting economic development, social convergence, and the business environment. Strengthening revenue mobilization and ensuring a transparent, temporary, and well-targeted response to the Ukraine war will safeguard fiscal sustainability. Creating conditions for sustainable and inclusive growth will require ensuring fiscal consolidation objectives, developing contingency plans to address increased risks, enhancing institutions and governance, and deepening the structural agenda.

A. Safeguarding Fiscal Sustainability

15. Fiscal measures in response to the war in Ukraine should be transparent, temporary, and well-targeted. While the measures implemented can be effective in preserving the purchasing power of the population in the near term, they should remain temporary and be reassessed on a continuous basis to make them increasingly targeted and avoid market distortions. In particular, the costly fuel price measures are regressive and need to be gradually scaled back soon. If further support is needed, the authorities should replace these measures with temporary and well-targeted cash transfers to the most vulnerable.

16. This policy response to the war in Ukraine and other unanticipated spending pressures can be accommodated through a moderately higher deficit in 2022, thus implying a limited additional pressure on borrowing needs. Fiscal policy in 2022 would need to strike a delicate balance between accommodating the emergency measures—and other spending needs—versus limiting additional borrowing pressures and preserving debt sustainability in a difficult global financial market environment. Staff baseline projections envisage such a balance can be met with a 2022 fiscal deficit of about 5.3 percent of GDP, a ½ percent wider than in the 2022 budget (and what was projected in the last Article IV report). The fall in petrol revenues collected and the increase in petrol subsidies are estimated to amount to slightly over 1 percent of GDP. Other subsidies and transfers to contend with the fallout from the Ukraine war and the pandemic, as well as increased security spending, are expected to amount to about ½ percent of GDP. These pressures would be offset by other revenues being higher than projected in the 2022 budget (due to both buoyancy and the strong 2021 outturn). To contain the worsening of the deficit to ½ percent of GDP would also require compressing capital expenditure by about ½ percent of GDP compared to the 2022 budget. Staff consider feasible to finance the additional deficit, despite the more difficult international environment, notably via domestic financing.

17. Reaching the WAEMU deficit target of 3 percent by 2024 remains feasible and desirable. To the extent that the situation improves and measures to address the war in Ukraine and the pandemic are well-targeted and temporary, reaching the 3 percent fiscal deficit target in 2024 remains feasible. Such a consolidation path will over time allow to rebuild fiscal space to cope with future shocks, help to avoid unduly increasing debt servicing costs, and contain demand for local market financing thus helping to sustain the reserves of the WAEMU region—key considerations for preserving market confidence and macroeconomic stability.

18. The authorities indicated that the deficit could reach 5.7 percent of GDP in 2022 and might converge to the WAEMU deficit target of 3 percent by 2025. The authorities revised projections envisage higher capital spending than staff by about ¾ percent of GDP in 2022 and over 1 percent of GDP in 2023–24. They expect the deficit to be higher than staff by about ½ to 1 percent of GDP a year over 2022–24, and to return to the 3 percent deficit target by 2025 instead of 2024. The authorities’ fiscal plan relies on both higher revenues associated with the higher growth path assumptions and additional borrowing on the local market, compared to staff projections.

19. Côte d’Ivoire’s risk of debt distress is expected to remain moderate but with limited space to absorb shocks (see DSA). Under staff projections, public debt increased from 47.6 to 52.1 percent of GDP over 2020–21 because of the authorities’ swift fiscal response to the pandemic and the sharp economic slowdown. Under current plans, debt is projected to get on a downward path over the medium term, while remaining higher than pre-crisis projections. The exchange rate depreciation and (to a lesser extent) the reclassification of the BOAD loans from domestic to external bring the external debt service-to-revenue ratio close to the threshold in 2024 and 2025.

Authorities’ Views

20. The authorities emphasized that measures introduced to cope with the effects of the war in Ukraine are temporary and targeted, and aim to safeguard macroeconomic and social stability, while a strong investment program is essential for their development goals. The authorities highlighted that the measures will support low-income segments of the population and preserve social cohesion. They emphasized that these measures, coupled with a strong investment program under the NDP, would imply larger deficits than envisaged by staff and thus require delaying convergence to the 3 percent fiscal target until 2025. While DSA external debt ratios are expected to remain below their respective thresholds, the authorities are aware that the external debt service to revenue ratio is close to the high risk of debt distress threshold and are monitoring closely the concessionality and sources of new borrowing to ensure the moderate risk of debt distress classification. They expressed discontent regarding what they saw as a sudden reclassification of the BOAD debt (issued in CFAF) from domestic to external debt, which they will discuss in a forthcoming WAEMU Council of Ministers.

B. Building Fiscal Space for Critical Spending and Resilience

21. Following the recent series of external crises, it has become even more essential to build fiscal space to finance critical spending and support inclusive growth while enhancing macroeconomic resilience. Beyond the pandemic and current global geopolitical events, the authorities will have to carefully prioritize resources to improve public service provisions to meet their Sustainable Development Goals (SDG). Despite recent progress, the country still scores low on poverty, health, inequality, and gender equality indicators. Reforms contained in the current NDP, and the new social program (PSGouv2, Annex VI) should help sustain progress recently made in those areas, particularly under the previous social program (PSGouv1) but will require significant resources. At the same time, spending pressures are arising from the need to promote social convergence in the aftermath of the pandemic, to support security, and to enhance social and infrastructure services in underserved regions, highlighting the need to continue to strengthen revenue mobilization. Moreover, a lower ratio of debt service to revenues would also enhance capacity to borrow and hence macroeconomic resilience.

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Sustainable Development Goals (Selected Indicators)

(Score per Goal, 0–100)

Citation: IMF Staff Country Reports 2022, 205; 10.5089/9798400213892.002.A001

Sources: UN 2022; and IMF staff calculations.

22. The authorities made significant efforts to increase tax revenues in recent years, and results have been limited so far but the recent progress is encouraging. Several initiatives have expanded the tax base through strengthened tax administration and a strategic reform plan in line with the 2021 TADAT recommendations (Annex IV). An inventory of taxable land plots (started in 2019) helped raise property tax revenue by 12 percent in 2021. An electronic land register simplified traceability of real estate transactions, increasing revenue by about 0.1 percent of GDP over 2018–21. Other digitalization efforts mandated electronic tax declarations and payment. Côte d’Ivoire’s tax revenue increased to 13.1 percent of GDP in 2021 from about 11.7 percent of GDP in the preceding nine years, but remains low by international standards.

23. Tax policy reforms should continue, leveraging on the recent gains. The still low level of taxation reflects tax exemptions—such as in agribusiness, construction, and transportation—as well as low levels of both direct and indirect taxation. Indeed, revenues remain mainly reliant on customs and include numerous tax exemptions, both in value added tax (VAT) and through the investment code, resulting in a complex system difficult to administer, which limits the tax base and disincentivizes formality. The complexity of the personal income tax (PIT) regime makes it inefficient, constrains the tax base, and reduces progressivity.

24. Once the ongoing global inflationary effects dissipate, eliminating VAT tax exemptions should be considered along with accelerating the removal of business tax exemptions and streamlining the personal income tax regime. Various pillars of reform can support higher domestic revenue mobilization over the medium term,6 including:

  • Eliminating VAT exemptions on sectors such as agribusiness, transportation, and construction, and streamlining reduced VAT rates on various goods while instead applying statutory VAT rates. If necessary, these could be replaced by a well-targeted system of cash transfers to the most vulnerable.

  • Accelerating the elimination of existing discretionary exemptions to businesses and exemptions arising from the investment code. This would not only increase revenues but also help level the playing field.

  • Redesigning and simplifying the PIT regime by adopting a simplified schedular system applied to wages, salaries, profits and income from mobile capital and real estate. Also, exemptions and credits such as the general deductions (abattement forfaitaire) and family allowance (quotient familial), which unnecessarily complicate the tax system and reduce its progressivity and should be eliminated.

  • Further modernizing tax and customs administration by consolidating a binding VAT threshold, while fully dematerializing customs clearance procedures, increasing compliance with electronic tax payments, and fully implementing a single taxpayer identification number.

25. Public financial management (PFM) should continue to be strengthened. Staff welcomed the annual reports on performance by all line ministries. Advancing on the implementation of budget reporting commitments by line ministries and full utilization of the dashboard and monitoring tools that have been put in place, would support enhancements in PFM. The ongoing implementation of the public procurement law passed in 2019, including to ensure higher levels of utilization of e-procurement procedures, will strengthen the public administration focus on medium-term objectives. Staff reiterated concerns on the use of exceptional procedures in procurement and highlighted the benefits of continuing efforts towards full transparency on procurement contracts, beneficiaries, and audits, for all procurement procedures and contracts, in line with the recommendations in the 2021 Staff Report for the 2021 Article IV Consultation (Annex II).

26. Communication should continue to be improved, also to garner stronger support for reforms. As fiscal reforms often entail important political economy obstacles, staff stressed the need for a strategy to generate broad based support from key stakeholders for domestic revenue mobilization reforms, relying also on clearly communicating the importance of such reforms for securing critical spending. Staff also noted the importance of releasing market information on domestic debt more regularly and timely.

Authorities’ Views

27. The authorities agreed on the objective of continuing to increase domestic revenue mobilization. They emphasized that their strategy of relying on tax administration and digitalization will continue to deliver revenue gains, as was the case markedly in 2021. They noted that a special task force has been created at the level of the Office of the Prime Minister to review options for increasing fiscal revenues and they would welcome technical assistance from the IMF in this regard. They are already considering additional measures to broaden the tax base and rationalize tax expenditures. The authorities also pointed to recent communication campaigns on both the budget process and fiscal policy, along with establishment of a debt information portal, to support public consensus on the budget process and market development, respectively. They also highlighted that the reduction in the size of the government that took office on April 20, 2022, was part of efforts to rationalize expenditure.

C. Transforming the Economy for Sustainable and Inclusive Growth

28. The authorities approved a new NDP in December 2021. The 2021–25 plan aims to deliver higher and more inclusive growth through faster economic and social transformation, underpinned by deepening industrialization, boosting human capital and productivity, and strengthening governance (Annex V). The authorities expect that the private sector will play a major role in the implementation of the NDP, and that private investment will increase by about 4 percentage points of GDP by 2025–26.

29. Côte d’Ivoire is well positioned to expand industrialization and diversify its exports, including by leveraging its comparative advantage in raw commodities.7 The country’s goods’ export structure remains very concentrated in a few products. There is scope for continuing to move up the export value chain by processing key raw commodities, such as cocoa and cashew nuts, in which the country has a globally dominant production and export position.8 Indeed, recent increases in the processing capacity of cashew are encouraging. There is also potential for producing and processing natural rubber and cotton. A policy environment that unlocks productivity and facilitates diversification into higher value-added agri-business industries, can boost growth, job creation, and inclusiveness.9 Moreover, while the country’s external position is assessed to be broadly in line with fundamentals (Annex III), diversifying its export base would also further enhance its resilience to external shocks and external sustainability.

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Export Product Concentration

(Theil Index, High=More Concentrated)

Citation: IMF Staff Country Reports 2022, 205; 10.5089/9798400213892.002.A001

Sources: COMTRADE; IMF WEO; and IMF staff calculations.Note: Excludes oil exporters. *=excluding CIV.

30. Continuing to upgrade public infrastructure is key to fostering industrialization and increasing the value-added content of Côte d’Ivoire’s exports:

  • The planned industrial zones can help easing bottlenecks for industrialization, and the private sector should play an important role in their development and management. The NDP envisages revamping several industrial zones that would offer dedicated land for industrial activity, with adequate connectivity to transport, electricity, and communication networks. They would also facilitate achieving economies of scale in certain industries10 and promote a more even development of economic activity across the country. The private sector should play a key role in the process—subject to transparency and good governance practices—not only to preserve fiscal space, but also to ensure alignment between the supply of services with market needs. Fiscal incentives related to industrial zones should be constrained to what is established in the tax code, to ensure a level playing field across economic actors.

  • More effort will be needed to ease transport bottlenecks for exporters. While the new terminal in the port of Abidjan and efforts to rehabilitate the road to San Pedro will remove key bottlenecks for exporters, the connectivity between the industrial zones and the ports, as well as the availability of suitable warehousing and transit backlogs remain a challenge. (World Bank 2022).

31. Continuing to ensure reliable access to electricity is also critical for industrialization prospects. Côte d’Ivoire significantly revamped its electricity sector over the past decade. Access to electricity is higher than that of peers and its production cost is among the lowest in West Africa (IFC, 2020).11 However, the sector is vulnerable to supply shocks like in H12021, which resulted in electricity rationing to industrial plants. The authorities project electricity consumption will increase by close to 50 percent between 2022 and 2027 and expect that about 15 percent of demand will be accounted for by exports to neighbor countries. Ongoing and planned projects imply a commensurate increase in installed production capacity, with about ¼ already expected in 2022.12 Attention should continue to be given to generating sufficient electricity buffers, especially in the context of rapidly rising electricity demand.

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Electricity Access, 2020

(Percent of Population)

Citation: IMF Staff Country Reports 2022, 205; 10.5089/9798400213892.002.A001

Sources: International Energy Agency; and IMF staff calculations.

32. Ongoing efforts to improve the business climate improvements should be further strengthened. Weaknesses in the regulatory framework and property rights protection, as well as uncertainty on the timing of government contract payables, remain key obstacles for the private sector and increase the risk of corruption. Recent significant progress in the digitalization of public services, as well as upgrading procurement and administrative procedures should help reduce government payment arrears. The new system to uniquely identify firms should also reduce administrative burden but its implementation is still incomplete. Ongoing improvements in the cadaster will aid business creation and formalization, but more progress is needed to ensure clear property rights. Efforts to streamline bureaucracy are ongoing, including the establishment of a single-stop shop for international trade, which should facilitate export diversification and reduce the cost of border handling procedures (World Bank 2022). Strengthened communication is needed to inform the private sector of innovations and improvements affecting the business climate.

33. Efforts to continue to improve governance and fight corruption remain key to fostering trust and attracting private sector investment. The High Authority for Good Governance (HABG) has been strengthening its monitoring capacity of asset declarations from public officials, including through digitalization, and asset declaration cases recorded by HABG tripled in 2021. Asset declaration compliance was 79 percent at end-2021, though a framework for sanctions is needed along with efforts to enhance verification and public access to information on asset declarations. Activities of Covid-support funds are regularly published and have been subject to internal audits.13 Moreover, audits of over 40 state-owned enterprises have resulted in leadership dismissals at some of those entities due to mismanagement. Staff encouraged the authorities to promptly finalize and adopt the national strategy to fight corruption while ensuring buy-in from key stakeholders.

34. Efforts to enhance the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) framework should continue and prioritize key reforms in line with the ongoing Fund-led AML/CFT assessment. The national AML/CFT strategy for 2020–30 is being implemented, and preparations for the IMF-led AML/CFT assessment are underway. Staff advised the authorities to make significant progress on priority reforms including requirements to identify beneficial ownership of clients who are legal persons by financial institutions, reinforcing efforts to investigate and prosecute terrorism financing offenses and activities as well as implementing preventive measures in line with the country’s evolving terrorism financing risk profile.

35. The authorities’ new social program (PSGouv2) should support higher and more inclusive growth through improvements in human capital, access to health services, and female labor participation (Annex VI):

  • While education attainment has increased in recent years, completion rates and education outcomes have lagged SSA peers, as evidenced by repetition rates and standardized tests (World Bank, 2018; IMF Country Report No. 21/171). Limited and unequal access to tertiary education remains a challenge, and school curricula are often not aligned with labor market demand, thus leading to skill mismatches. Plans to recruit teachers and improve infrastructure in rural areas (Annex VI) should improve student-teacher ratios, broaden the access to education, and promote inclusion. Anchoring teachers’ appraisals to student performance and promoting continuous teacher training would also help boost the quality of education. Programs to enhance access to technical and vocational training, internship programs, and adult digital literacy training should help reduce labor market skills mismatches, and regular consultation with businesses is needed to ensure the educational programs are aligned with their needs.

  • Ongoing efforts to enhance access to health care (via the additional construction of health centers and the exploratory development of telemedicine) and broaden formation of doctors and nurses are welcome. Despite the introduction of a universal health care system in 2014, limited access to health services—including due to high out of pocket costs for the most vulnerable— contributes to relatively poor health outcomes in Côte d’Ivoire, as evidenced by the still-high infant mortality rate. The authorities need to improve incentives and simplify requirements to boost the share of the population enrolled in the National Health Insurance Scheme, in line with targets in the PSGouv2.

  • PSGouv2 initiatives to enhance women autonomy, including through programs to reduce school dropout and promote socioeconomic and professional inclusion of young women, are welcome. They should help increase female labor participation in Côte d’Ivoire, which is still low compared to peers, and reduce gender inequality.

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Average Scores in PASEC, 2019

Citation: IMF Staff Country Reports 2022, 205; 10.5089/9798400213892.002.A001

Sources: PASEC; and IMF staff calculations.
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Primary School Indicators

(Percent of Relevant Population)

Citation: IMF Staff Country Reports 2022, 205; 10.5089/9798400213892.002.A001

Sources: World Bank (WDI); and IMF staff calculations.(*)=Latest available data for repetition rate is 2017 and completition rate is 2018.
uA001fig14

Infant Mortality Rate in SSA Frontier Markets

(Number per 1,000 live births)

Citation: IMF Staff Country Reports 2022, 205; 10.5089/9798400213892.002.A001

Sources: WDI; and IMF staff calculations.
uA001fig15

Female Labor Force Participation, 2021

(Percent of Female Population Aged 15+)

Citation: IMF Staff Country Reports 2022, 205; 10.5089/9798400213892.002.A001

Sources: World Bank; and International Labor Organization.

36. Financial inclusion and SME access to finance are critical for private sector development but are impeded by structural constraints. Credit to the private sector is still low, with SMEs particularly underserved, due to weak credit infrastructure and credit information systems, as well as regulatory and legal deficiencies (Box 1).

  • Ongoing efforts to enhance the land registry and secure property rights should be pursued as they will increase the pool of eligible collateral and facilitate access to credit

  • To improve banks’ risk assessment capacity, the authorities should ensure a comprehensive reporting of borrowers’ liabilities to the credit information system (Bureau conformation sur le Crédit, BIQ, while addressing problems to uniquely identify clients, and enforce compliance regarding submission of accounting records to the corporate registry.

  • Improving insolvency procedures to expedite the recovery of claims—including by increasing the number of judges specialized on business law and strengthening the regulation and supervision of trustees—is critical. It would help reducing NPLs (which can impair credit allocation), as well as incentivize banks to lend to more riskier borrowers, including SMEs.

  • A recently created guarantee fund can help channel credit to SMEs (Fonds de Garantie des Crédits aux PME), but firms will need dedicated support to overcome qualifying requirements, while the parameters of the scheme—including eligibility and pricing—may need to be reassessed to ensure it is appealing to banks.

uA001fig16

Domestic Credit to Private Sector by Banks

(Percent of GDP, 2019)

Citation: IMF Staff Country Reports 2022, 205; 10.5089/9798400213892.002.A001

Sources: WDI; and IMF staff calculations.Note: *=Excluding CIV

37. Finalizing the restructuring of undercapitalized public banks should also improve the ability of the banking sector to support private sector development. One of the three public banks (altogether accounting for 6.8 percent of assets, 0.7 percent of loans, and 8.2 percent of deposits of the banking system), that were in breach of capital requirements as of June 2021, reached the required solvency ratios by end-2021. The authorities should step up ongoing efforts to finalize the restructuring of the other two public banks (with overall capitalization needs estimated at 0.3 percent of GDP) as soon as possible, including by considering options for merging or privatizing these entities.

38. Policies to boost agricultural productivity would allow to diversify primary production, strengthen food security, and reduce rural poverty in Côte d’Ivoire. While agriculture accounts for about 20 percent of the Ivorian economy and employs more than half of its workforce, productivity is relatively low compared to peers and has remained stagnant in recent years (Figure 3).14 However, productivity dispersion across producers points to significant potential for improvement.15 Several obstacles prevent faster agriculture productivity growth.16 The consumption of fertilizers and the use of mechanization in Côte d’Ivoire are about half the average for SSA, while the proportion of land under irrigation is about one-sixth of the share in peer countries. Increasing productivity in export-oriented cash crops, such as cocoa and cotton, would allow farmers to diversify their production into other higher-value products (e.g., meat, dairy, fruits, and vegetables), increasing the level and resilience of rural incomes,17 while raising productivity in staple crops would contain food insecurity risks, especially in the context of surging global food prices. Higher farming productivity would also facilitate the reallocation of labor across sectors and increase non-agricultural income for rural households, diversifying their overall income sources and increasing their resilience to sectoral shocks.18 A key policy priority to improve agriculture productivity is it improve property and land tenure rights, which would improve the incentives for farmers to invest and ease their access to finance.19 Improving access to basic education and specialized training in rural areas, as well as devoting more resources to agricultural research and development, which is low compared to peers, are also key to foster productivity growth.

39. Durable resilience to climate change requires addressing deforestation concerns, making policy room for investment in climate adaptation. Progress has been made in enhancing traceability of sustainable farming products (notably cocoa), but more efforts need to be made in anticipation of some countries’ restrictions of imports of products associated with forest degradation and child labor. The authorities stated objective of shifting the energy matrix (from a 30 percent share for renewable energy in 2021 to 45 percent by 2030) is welcome and achievable, given the existing capacity and planned investment in hydro-electric power and other renewable sources. Their aim to reduce CO2 emissions from 0.49 metric tonnes per capita (which is already very low by international standards) to 0.37 by 2025 is also commendable. Further planned reforms such as updating the environmental code, introducing an environmental tax mechanism, and implementing a carbon market would all be welcome. Moreover, the authorities aim to participate in various international climate adaptation and resilience funds is commendable and the organization of the COP15 on desertification in Abidjan in May 2022 underlines the authorities’ commitment—including on their aim to utilize green-financing to combat deforestation.

40. Safeguards assessment. The BCEAO has implemented all recommendations provided in the 2018 safeguards assessment. The assessment found that the BCEAO had broadly appropriate governance arrangements and a robust control environment. In line with the safeguards policy’s four-year cycle for regional central banks, an update assessment of the BCEAO is due in 2022.

Figure 3.
Figure 3.

Productivity in Côte d’Ivoire’s Agriculture Sector

Citation: IMF Staff Country Reports 2022, 205; 10.5089/9798400213892.002.A001

Authorities’ Views

41. The authorities emphasized that their intention to sustain efforts on structural reforms, governance, and fighting corruption, will help unlock private-sector led growth. They particularly emphasized that one of the principal pillars of Côte d’Ivoire new 2030 strategy involves an increasing role of the private sector in the development of key infrastructure, including in the provision of industrial zones, and to continue to buttress a level-playing field. They also underscored their commitment to continue to increase the value-added content of commodity exports, notably by setting up a cashew-processing research and training center while continuing to provide support for the ability of commodity processing plants to obtain international certifications. The authorities emphasized that the resilience of the electricity sector to supply shocks is critical for industrialization and noted that a new backup thermal plant and further reduction in distribution losses provide ample buffers. They concurred with staff that continuing to enhance property rights and tackling the remaining deficiencies in the credit information and the insolvency frameworks can help boost credit and further reduce NPL. However, they highlighted that the adoption of Basel III regulation should allow to resume the downward trend in NPL observed before the pandemic, while ongoing initiatives should improve the effectiveness of the BIC. The authorities emphasized the criticality of increasing agricultural productivity to reduce poverty and food security risks, and pointed to the recent decree securing forestry rights for farmers. They recognized the need to further improve education performance in a context of rapid increase in access. The authorities are confident that the initiatives within the PSGouv2 will contribute to improve the quality of basic education and enhance the employability of the most vulnerable, including youth and women. The authorities concurred on the importance of further improving governance and addressing climate adaptation and mitigation, as evidenced by hosting the 15th United Nations Conference to Combat Desertification (COP15) and launching the “Abidjan Legacy Program” (a land restoration program, which they expect will increase food production, create rural jobs for unemployed youth, and improve the wellbeing of rural women).

Post-Financing Assessment

42. Côte d’Ivoire’s capacity to repay the Fund remains adequate overall and external debt is projected to stay on a downward trajectory. The debt risk and gross financing needs remain moderate.

A. Liquidity and Solvency Considerations

43. Côte d’Ivoire’s market access remains sound. Although global financial conditions have tightened, market access is well maintained with reasonable borrowing costs. Meanwhile, the regional market conditions remain liquid, and sovereign yields have declined.20

44. Côte d’Ivoire is projected to stay current on Fund obligations under the baseline. A metric-based approach and other traditional measures point to adequate WAEMU reserves. The Fund’s exposure stands at 3 percent of GDP in 2022 and is projected to fall sharply below 1 percent by 2025 (Figure 4). Total debt service to the Fund would reach 1 percent of total exports (around 0.3 percent of GDP) in 2022 and peak at 2.8 percent of exports (0.6 percent of GDP) in 2024 before declining consistently. Market financing risk analysis suggests that the sovereign spreads have increased moderately from the last consultation, while gross financing needs (GFN) remains below the benchmark (see DSA).

45. Côte d’Ivoire’s risk of debt distress remains moderate, but the capacity to absorb additional shocks is limited. The PV of public debt-to-GDP is expected to decline gradually from 49 in 2021 to 45 percent in 2032. Likewise, the PV of debt-to-revenue ratio would decline, while the debt service-to-revenue and grants ratio is projected to peak at 57.5 percent in 2024 and remain above 54 percent during the projection period. Going forward, a sustainable debt trajectory is predicated on disciplined fiscal policy, effective revenue mobilization, and active liability management.

46. While a feasible set of policies and interest rate trajectories should deliver sustainable debt dynamics in the baseline, the external debt service-to-revenue ratio is close to its threshold. Moreover, stress tests suggest the debt dynamics are most vulnerable to a shock to commodity prices. Under the standard DSA commodity prices stress test, the PV of public debt-to-GDP would breach its corresponding threshold of 55 percent starting in 2025 and would continue growing afterwards, pointing to the need to build resilience on greater competitiveness and economic diversification.

Figure 4.
Figure 4.

Côte d’Ivoire: Capacity to Repay Indicators Compared to UCT Arrangements for PRGT

(Percent)

Citation: IMF Staff Country Reports 2022, 205; 10.5089/9798400213892.002.A001

Sources: Ivorian authorities; and IMF staff calculations.Notes:1) T = date of arrangement approval. PPG = public and publicly guaranteed.2) Red lines/bars indicate the CtR indicator for the arrangement of interest.3) The median, interquartile range, and comparator bars reflect all UCT arrangements (including blends) approved for PRGT countries between 2010 and 2020.4) PRGT countries in the control group with multiple arrangements are entered as separate events in the database.5) Periods T to T+5 reflect actual/realized data (and T+6 onwards projections) in the case of Cote d’Ivoire, since the year of arrangement approval was 2016.

B. Capacity to Repay Risks

47. Risks to capacity to repay the Fund mainly stem from the fiscal sector, as well as potential external shocks. Côte d’Ivoire’s relatively high debt service-to-revenue ratio poses some risks, and the space to absorb shocks is limited.21 The debt dynamics are vulnerable to several potential shocks (identified in the RAM), such as economic and political disruptions and higher volatility in commodity prices and financial markets, which could adversely affect external demand and access to international borrowing, thereby undermining the ability to repay the Fund.

48. Addressing risks to the capacity to repay the Fund requires sound policies. Progress is being made in strengthening tax administration and advancing tax policy reforms. Additional safeguards include active risk control and debt management, durable access to the international and regional bond markets, and the potential to benefit from additional financing from IFIs and other donors.

Authorities’ Views

49. The authorities concurred with staff on this assessment. They indicated a strong commitment to honor the debt, which is backed by the adequate capacity to repay the Fund. The authorities have fully discussed in their budget statement risks to the public finance and the associated risk management strategy. They highlighted the importance of continuing domestic revenue mobilization, seeking concessional financing, control of exchange rate risk and active debt management.

Staff Appraisal

50. 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, but the war in Ukraine has clouded the outlook. Growth is expected to slow to 6 percent this year amid worsening terms of trade, weaker external demand, and heightened uncertainty. Inflation is expected to increase further and reach 5.5 percent this year on the back of surging global food and oil prices, and the current account is projected to reach 4.8 percent of GDP. Near-term external risks are tilted to the downside, related to repercussions from the war in Ukraine, tighter global financial conditions, and political instability in the region, while newly discovered oil and gas reserves and swift implementation of the authorities’ reform agenda could support medium term growth.

51. The fiscal outturn in 2021 illustrate the benefits of ongoing fiscal reforms. Revenue increased significantly in 2021, owing to tax administration reforms, including efforts to enhance digitalization. As a result, the 2021 fiscal deficit outturn, at 5.1 percent of GDP, was better than anticipated by ½ percent of GDP, despite the need for higher security spending.

52. 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 the measures implemented can be effective in the near term, they should remain temporary. If the external environment deteriorates further, any newly introduced measures should be temporary, avoid creating market distortions, and better targeted towards the most vulnerable segments of the population.

53. While a moderately higher-than-budgeted deficit is warranted to accommodate the emergency measures, reaching the WAEMU deficit target of 3 percent in 2024 remains feasible. The authorities will need to strike the right balance between accommodating urgent spending pressures—to offset the effects from the war in Ukraine on the most vulnerable and maintain critical spending for security—and preserving fiscal space to cope with future shocks amid worsening prospects for external borrowing. To navigate this balance, the authorities may need to contain the ambitious public investment agenda.

54. The debt sustainability analysis continues to point to a moderate risk of debt distress, but with very limited space to absorb future shocks. Debt is expected to peak in 2022, on the back of three years of expansionary fiscal policy to contend with a persistent crisis environment. The debt-service to revenue ratio is close to the high-risk threshold in 2024 and 2025, highlighting the continued importance of accelerating advancement of domestic revenue mobilization efforts.

55. Tax policy reform is critical to make room to finance priority spending and support inclusive growth. Despite the recent improvements in tax administration and customs collection, tax revenue remains well-below the WAEMU tax revenue convergence target of 20 percent of GDP. Such a convergence would help finance government spending for investment, social convergence, and services in underserved regions. To that end, it will be essential to continue ongoing efforts to improve tax administration, as well as to rationalize tax exemptions—in both the VAT and business taxation—once the ongoing global inflationary pressures dissipate. Redesigning and simplifying the PIT regime would also improve its progressivity.

56. The new social program of the government can continue improving human capital accumulation. While the country made significant progress in broadening access to education over recent years, further efforts are needed to improve the quality of basic education and professional training systems, to ease skills mismatch in the labor market. Despite notable progress, ensuring equitable access to health care remains a priority. Additional measures are needed to accelerate enrollment in the National Health Insurance Scheme.

57. 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. The authorities are committed to adopting sound climate adaptation and mitigation policies, including on sustainable farming and forest preservation.

58. Deepening financial inclusion and access to finance remain crucial for unlocking the private sector’s potential. Tackling deficiencies in insolvency procedures and the credit infrastructure should improve the banks’ ability to screen risk and boost access to credit, especially for SMEs, as well as contribute towards reducing the still-high level of NPL. A prompt restructuring of undercapitalized public banks would also improve the capacity of the banking sector to support growth.

59. Further improvements in governance and the fight against corruption will also contribute to attract private investment. Key priorities include strengthening the asset declaration scheme for public officials, notably by setting a sanctions framework and enhancing public access to information on asset declarations. Finalizing and adopting the national strategy to fight corruption and enhancing the AML/CFT framework are also important.

60. Côte d’Ivoire maintains an adequate capacity to repay the Fund. Increased market confidence as evidenced by ratings upgrades and generally contained debt risk, along with tax revenue improvements, all point to the country’s capacity to repay debt. It is, however, important to advance reforms to strengthen regional financial markets and rebuild fiscal buffers through enhanced domestic revenue mobilization to insure further resilience in the face of an increasingly uncertain external environment.

61. Data provision is broadly adequate for surveillance, but dissemination should be enhanced. Efforts to align the methodology of quarterly and annual national accounts data and to improve the timeliness of their publication should be stepped up.

62. Staff recommends that the next Article IV consultation for Cote d’Ivoire be held on the standard 12-month cycle.

Bottlenecks for Access to Credit by Small and Medium Enterprises

Access to credit, especially by poor for small and medium enterprises (SMEs), remains a key obstacle to Côte d’Ivoire’ development. Domestic credit to the private sector, at around 20 percent of GDP, is comparable to levels prevailing in SSA peers, but much lower than in emerging market economies. Banks are particularly reluctant to lend to SMEs as obtaining effective guarantees and reliable information on their financial situation is perceived to be more difficult. As a result, bank lending to SMEs accounts for less than 20 percent of total credit to businesses—and, when they do borrow, they pay high interest rates (about 15 percent, compared to an average of 5.3 percent at end-2021).

The credit infrastructure remains a key obstacle for broader access to financing. The digitalization of the land and the corporate registry (Registre du Commerce et du Crédit Mobilier, RCCM) have not been fully implemented. Weaknesses in the land registry, notably in terms of partial or delayed updates and absence of formal ownership, are particularly detrimental for SMEs’ ability to offer collateral for bank lending. SMEs in the formal sector do not always comply with obligations to submit accounting records to the RCCM on a regular basis, limiting its relevance.

Available credit reports do not allow banks to properly assess risks, especially when lending to SMEs. The WAEMU’s credit bureau (Bureau d’Information sur le Crédit, BIC) collects information on credit and payment history of individuals and legal entities from banks, public sources, and large billers (e.g., utility companies) since 2016. However, the data quality is subject to important weaknesses. First, the data submitted by financial institutions is not comprehensive enough nor updated at a regular frequency, including on changes in loan conditions. Second, the system lacks consistent identification of clients due to the use of homonyms, the small share of the population with national identification document, and lack of access to the identification system by banks. Third, financial institutions need to obtain the prior consent of the borrower to submit their information to the BIC, often resulting in an incomplete record of borrowers’ outstanding debts. However, the authorities’ planned information campaign to ensure the public is conscious of the advantages of providing consent should help improve coverage. In addition, the supply of products provided by the BIC is relatively narrow, mostly consisting of solvency report of individuals, due to limited reporting of corporate credit data by financial institutions.

Deficiencies of the regulatory environment and the judicial system affect the recovery of claims, dissuading banks from lending to more riskier borrowers. Judges are often inadequately trained in business and insolvency law, resulting in the failure to appropriately apply legal rules. In practice, legal (and even mandatory) deadlines are postponed or ignored, sometimes solely for dilatory purposes. The implementation of collective procedures is deemed ineffective, so banks rely more on individual negotiations, which can be less efficient. Moreover, although Côte d’Ivoire has a specific national regulation regarding the statute of trustees, who are key to the proper operation of the insolvency system, they are poorly trained, regulated, and supervised, and their incentives are not necessarily aligned with a swift resolution of collective procedures.

Limitations to competition from non-traditional players affect financial intermediation. The concentration of Côte d’Ivoire’s banking sector is not deemed excessive. However, the financial sector remains dominated by banks, despite changes in digital technologies that have encouraged financial innovation and the emergence of non-bank participants. While the entry of non-traditional participants has widened access to financial services, particularly for traditionally underserved segments, new entrants not always have equitable access to the credit infrastructure (e.g., to the BIC), and the regulatory framework has yet to catch up (e.g., by developing regulations for financial technology—fintech—companies).

Table 1.

Côte d’Ivoire: Selected Economic Indicators, 2019–27

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Sources: Ivorian authorities, World Bank, and IMF staff estimates and projections.

Defined as total revenue minus total expenditure, excluding all interest and foreign-financed investment expenditure.

Does not include debt guarantees.

Table 2a.

Côte d’Ivoire: Balance of Payments, 2019–27

(Billions of CFA Francs; unless otherwise indicated)

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Sources: Ivorian authorities; and IMF staff estimates and projections.
Table 2b.

Côte d’Ivoire: Balance of Payments, 2020–27

(Percent of GDP; unless otherwise indicated)

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Sources: Ivorian authorities; and IMF staff estimates and projections.
Table 3a.

Côte d’Ivoire: Fiscal Operations of the Central Government, 2019–27

(Billions of CFA Francs; unless otherwise indicated)

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Sources: Ivorian authorities; and IMF staff estimates and projections.