Togo: IMF lauds reforms but says economy will restart only if political crisis is resolved

Economic governance
Wednesday, 11 April 2018 16:19
Togo: IMF lauds reforms but says economy will restart only if political crisis is resolved

(Togo First) - Last Tuesday, the International Monetary Fund lauded reforms initiated by Togo’s government, saying it disburse in the coming months another tranche of its 3-year loan to the country. This tranche amounts to $241 million.

In Togo since last March 27, the IMF delegation led by Ivohasina Razafimahefa has deeply assessed reforms undertaken by the Togolese government in the framework of the extended credit facility (ECF) approved in May 2017.

“Results falling in the framework of the three-year program were good. All quantitative performance criteria at the end of December 2017 were met. Similarly, all structural benchmarks were reached,” the delegation concluded.

“Budget goals regarding internal primary balance and internal financing were met by far,” it added.

Economy’s restart depends on crisis end

However, the Fund noted that economic activity in Togo has slowed in H2 2017, due to the sociopolitical crisis that the nation has been experiencing since August, that year. This caused growth to fall to 4.4% this year, from 5.1% in 2017.

Actually, IMF’s delegation leader said economic growth should near 5% in 2018 and stand close to that figure in the long term. By 2020, Togo’s economy should fully restart with growth expected to reach 5.2%. Of course, this is subject to a successful dialogue between Togolese political actors. “Socio-political tensions represent a risk for economic growth and could negatively impact real economy and tax earnings,” the mission’s head intimated.  

According to him, looking at its exports, Togo’s economy should strengthen further but for now, political unrest still threatens that. 

Public debt slumps   

According to IMF, public debt, State firms’ debts and arrears which made up 82% of GDP at the end of 2016, reduced to 77% of GDP at the end of 2017.

This is one of the best performances worldwide, Ivohasina Razafimahefa said. This improvement was spurred by a good control of budget expenditures, despite tax collection being less satisfying than expected.

No budget cuts

In order to keep afloat amid the persistent crisis that impairs results of OTR, the agency in charge of collecting tax and customs revenues, Togo’s government plans to amend 2018 budget which exceeds CFA1,320 billion. In addition, authorities aim to diversify the tax base. In this regard, a land tax reform supported by IMF is being prepared at OTR. And while this suggested some budget cuts, the minister of finance reassured, indicating that the move is just a simple harmonization and rationalization process, and in no way would involve budget cuts.

Fiacre E. Kakpo

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