Washington: The IMF Executive Board completed the second review of the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF), as well as the first review of the Resilience and Sustainability Facility (RSF) for Côte d'Ivoire on June 25, 2024, and endorsed the staff assessment without a meeting, based on the lapse-of-time procedure.

 

The ECF/EFF arrangements with total access of SDR 2,601.6 million (400% of Côte d'Ivoire's IMF quota, or about US$3.5 billion) approved in May 2023 have helped maintain macroeconomic stability and moderate debt distress risk, while the growing challenges of climate change are addressed under the newly approved RSF agreement for a total of SDR 975.6 million (150% of the quota, or about US$1.3 billion). The continued commitment of the authorities to reforms under both programs is expected to support Côte d'Ivoire's transformation to upper-middle-income status over the medium term and strengthen its climate resilience. Program implementation has been strong so far, with all end-December performance criteria and structural benchmarks for end-December and end-May met. The completion of the reviews results in immediate disbursements totaling US$570 million under the Fund's multi-year arrangements.

 

Côte d'Ivoire's economy remains resilient in a still challenging global environment. Despite lower-than-expected cocoa production, the medium-term outlook remains favorable, supported by strong consumption and investment demand, as well as new activities in the hydrocarbons exploration and production sector. Risks have become more balanced, reflected in increased interest from foreign investors and upgrades in ratings and outlooks by rating agencies. For 2024, growth is expected at 6.5%, while inflation is projected to return within the BCEAO's target range of 1-3% CPI by the end of 2024. In 2024, the current account deficit is expected to narrow to 3.8% of GDP, and the fiscal deficit is expected to further consolidate to 4% of GDP.

 

The authorities remain firmly committed to increasing tax revenue over the medium term and implementing the Medium-Term Revenue Mobilization Strategy approved in May 2024. Sustained effort is expected from the authorities to raise tax revenue relative to GDP by 0.5% of GDP each year between 2024 and 2026 through new, permanent, and high-quality measures in tax policy and administration. This effort will be strengthened by the authorities' efforts to incorporate into the budget revenues that are collected by line ministries but not recorded in budget accounts.

 

Significant structural reforms are underway to improve the business climate and increase private sector participation in the country's development. To this end, enhancements in the transparency and accountability of state-owned enterprises, strengthening governance and financial integrity (particularly the AML/CFT framework), and investing in human capital, expanded financial inclusion, and climate resilience will be critical to supporting higher productivity growth.

Executive Board Assessment

In conclusion of the second review of the ECF/EFF and the first review of the RSF for Côte d'Ivoire, Executive Directors endorsed the staff assessment as follows:

 

Côte d'Ivoire's economic resilience has been sustained despite consecutive global shocks. Despite a still challenging external environment, Côte d'Ivoire's economy has continued to post robust growth, and foreign investor interest has remained strong. This underscores the dividends of the authorities' determination to pursue important economic reforms. In particular, efforts to boost domestic revenue mobilization are yielding results. Continued reforms in tax policy and administration should be supported by the recently adopted MTRS. In addition, continued reforms in governance and public financial management, as well as other structural reforms aimed at increasing financial inclusion and climate resilience, will help rebuild fiscal buffers and improve the business environment. All these areas of reform remain critical to unlocking the financing necessary for the country's economic transformation.

 

The authorities' economic program remains on track and well-targeted. All performance criteria and structural benchmarks for the second review were met, and the authorities' achievements remain strong. New program commitments on revenue mobilization will support continued increases in tax revenue to close the gap with peer frontier markets and emerging market economies. Similarly, new structural benchmarks on public financial management and data dissemination will contribute to enhancing transparency in budget accounts and fiscal policy conduct, which can help garner public support for important reforms pursued under the Fund-supported programs.

 

The maintenance of revenue-based fiscal consolidation in 2024 and 2025 will also strengthen the country's moderate debt distress rating and support convergence toward the WAEMU deficit target of 3% of GDP. The authorities' strong commitment to implementing high-quality policy and administrative measures to support tax revenue increases of ½ percent of GDP for each of the years 2024 and 2025 is welcome. The revenue measures already underway in the 2024 budget remain sufficient to meet the program's revenue floor. In addition, the authorities should continue to include off-budget revenue from fees and duties collected by line ministries in the TOFE. However, these revenues, as well as any windfall from more favorable cocoa export prices, should not weaken the resolve to pursue reforms. Reprioritizing investment and non-priority spending to preserve the deficit target will be essential if unforeseen spending pressures arise from the deteriorating regional security situation. Moreover, the authorities' efforts to continue rationalizing non-priority spending are welcome.

 

The adoption of a Medium-Term Revenue Mobilization Strategy is an important reform that provides a comprehensive vision for tax policy and administrative reforms to ensure that domestic revenue mobilization is self-sustaining and enjoys broad public support. The authorities' MTRS plan appropriately focuses on broad-based improvements to the tax system to enhance its transparency, equity, and hence its effectiveness in achieving sufficient levels of domestic revenue mobilization to support the country's long-term sustainable and equitable growth and economic transformation objectives. Full implementation of the strategy and concerted efforts to monitor the execution of reforms and communicate with the public on the merits and progress of the difficult reforms envisioned under the MTRS will be essential to maintaining reform momentum in the coming years—especially regarding the rationalization of tax exemptions and expenditures. Notably, the MTRS also provides an opportunity to strengthen public trust in the role of tax administration in the country's development while fostering a culture of tax compliance.

 

The liability management operation ensured that debt sustainability risks remain at a moderate distress level. Nevertheless, maintaining debt at a level consistent with a moderate debt distress rating will need to remain a priority. Aligning the financing of new investments with the overall debt-carrying capacity remains essential. Fund staff commend the authorities' continued commitment to prudent debt portfolio management, as well as their efforts to strategically mitigate the effects of rising financing costs through liability management operations and a focus on concessional financing.

 

Maintaining the momentum of structural reforms under the program will be essential to supporting the objectives of the National Development Plan. Efforts toward higher and more inclusive growth will be underpinned by efforts to promote private sector-led growth, including by strengthening governance, financial inclusion, and reducing the cost of doing business. The authorities should closely monitor potential fiscal risks related to the electricity sector and accelerate plans to reduce domestic supplier arrears, including through further tariff adjustments. Efforts should also continue to address shortcomings in the anti-money laundering and counter-terrorism financing framework to enhance transparency and attract further private investment.

Côte d'Ivoire: Key Economic Indicators, 2022–26

Population (2021): 29 million	Gini Index (2018): 37.3
GDP per capita (2021): US$2,445	Life expectancy (2021): 60
Percentage of population below poverty line (2018): 39.5%
2022	2023	2024	2025	2026
National accounts and prices
Real GDP	6.7	6.8	6.5	6.5
Real GDP per capita
GDP deflator	2.7	4.2	2.8	2.8
Inflation (CPI, annual average)	4.2	4.7	2.6	2.5
External sector
Exports	30.4	33.8	33.9	33.4
Imports	37.8	41.2	40.9	40.1
Terms of trade	2.5	4.5	-0.7	-0.3
Money and credit
Broad money	16.8	9.9	13.2	11.4
Credit to the economy
19.4	12.5	8.0	10.0	11.6
Balance of payments
Current account balance (% of GDP)	-3.4	-4.6	-3.8	-3.0
Fiscal sector
Revenue and grants	17.8	18.6	18.5	18.4
Overall balance, incl. grants	-5.0	-5.5	-4.0	-3.0
Domestic debt (% of GDP)	29.2	30.7	30.3	29.4