2018年-IMF国际货币组织全球_Togo_Third_Review_under_the_Extended_Credit_Facility_Arrangement_and_Request_for_Modification_of_Performance_Criteria_89页_1mb

Togo: Third Review Under the Extended Credit Facility Arrangement

Core Content

The International Monetary Fund (IMF) completed the third review under Togo's Extended Credit Facility (ECF) arrangement on December 10, 2018. The review confirmed that program performance has been broadly satisfactory, with all quantitative performance criteria (QPCs) and three out of five structural benchmarks met. The review enabled the disbursement of SDR25.17 million (about US$34.9 million), bringing total disbursements since the start of the arrangement to SDR100.68 million (about US$139.5 million).

Togo's three-year ECF program, approved in May 2017, was designed to support economic and financial reforms, reduce the fiscal deficit, and ensure long-term debt and external sustainability. The program also aims to resolve financial weaknesses in the two public banks and promote inclusive growth through targeted social and infrastructure spending.

Main Views and Key Information

1. Economic and Fiscal Developments

• Economic Activity: There are incipient signs of stabilization in some sectors, though others remain weak. Economic growth is projected to accelerate slightly to 4.7 percent in 2018, with improvements in export-oriented activities like phosphate and cotton production. The service sector recovery remains fragile.
• Inflation: Inflation turned positive in September 2018 at 0.9 percent, and is expected to remain within the WAEMU convergence criterion of up to 3 percent.
• Fiscal Performance:
  • The domestic primary balance improved from -0.8 percent of GDP in June 2017 to 1.8 percent in June 2018.
  • The overall fiscal balance (commitment basis) improved from -3.3 percent to -0.7 percent of GDP.
  • The fiscal deficit is projected to decrease from 9.5 percent of GDP in 2016 to 1.5 percent in 2019.
  • Public debt is expected to decline from 81 percent of GDP in 2016 to 70 percent by 2019.

2. Program Performance

• All QPCs were met, including the domestic primary balance and net domestic financing.
• Three out of five structural benchmarks were achieved.
• The indicative target on revenue was met, but the target on social spending was not.
• Corrective actions are being taken to address the underperformance in social spending, including the implementation of two social programs: the Program to Support Vulnerable Groups (PAPV) and the Community Development Program (PUDC).

3. Structural Reforms

• Revenue Measures: Efforts to improve permanent revenue mobilization are ongoing, with the aim of increasing fiscal space for social and infrastructure spending.
• Expenditure Management: The government is streamlining current spending by 1 percent of GDP through measures like centralizing public procurement, benchmarking costs, and reducing inefficiencies.
• Debt Management: The government is planning a debt reprofiling operation with appropriate safeguards to reduce the present value of total public debt.
• Financial Sector Reform: The government has re-launched the privatization of the two remaining public banks, with the support of the WAMU Banking Commission and the implementation of safeguard measures.

4. Medium-Term Outlook

• Economic growth is projected to rise to about 5.4 percent annually in the medium term.
• Inflation is expected to stay below the WAEMU convergence criterion.
• The current account deficit is forecasted to narrow to below 6 percent of GDP.
• Public debt is expected to fall below 60 percent of GDP by 2022 and the net present value of public debt below 55 percent of GDP by 2021.

5. Risks and Challenges

• Risks remain tilted to the downside, with sociopolitical tensions still present, especially ahead of the end-2018 elections.
• The opposition's demand for a two-term limit on the President could delay reforms and affect public expenditure.
• The private sector may remain cautious, potentially slowing investment.
• External risks include weaker global growth and tighter financial conditions.

Key Objectives of the Program

• Reduce public debt to sustainable levels.
• Strengthen fiscal reforms to improve revenue, enhance expenditure efficiency, and prioritize public investment.
• Restore the financial viability of the two public banks through privatization.
• Promote inclusive and sustainable growth via the National Development Plan and the Compact with Africa.

Program Modality and Implementation

• The ECF program is scheduled to end in May 2020.
• The fiscal framework for 2019 allows for a modest loosening of the domestic primary balance (by 0.2 percent of GDP) to support economic stabilization.
• The government is working to improve the business environment, fight corruption, and strengthen governance to enhance Togo's position as a logistical hub and financial center.

Conclusion

The IMF staff supports the completion of the third review, recognizing the satisfactory implementation of reforms and the government's commitment to fiscal adjustment and structural changes. The program has been effective in reducing the fiscal deficit and public debt, and in improving the financial sustainability of the country. However, continued efforts are needed to finalize the cost-benefit analysis of public investment projects and to ensure that the privatization of public banks is conducted in accordance with international best practices. The government's adherence to WAEMU convergence criteria is a key success of the program, with further reforms required to fully meet the second-order criteria on tax revenue and wages.