Togo : IMF allows a temporary increase in fiscal deficit

Public finance
Thursday, 27 June 2019 17:25
Togo : IMF allows a temporary increase in fiscal deficit

(Togo First) - The International Monetary Fund (IMF) has allowed a slight increase of Togo’s budget deficit. A true relief for the country struggling to increase internal revenues while social expenditures keep growing.

“A temporary increase in the fiscal deficit is warranted to accommodate some urgent spending. Notwithstanding this relaxation of fiscal targets, Togo is projected to remain within the WAEMU deficit criterion (ed.note: 3%) in 2019 and 2020,” said Tao Zhang, Deputy Managing Director and Acting Chair of the IMF’s Executive Board. This was at the end of the fourth review of Togo’s economic performance under a program supported by and Extended Credit Facility (ECF).

Togo, it should be noted, spends more than 40% of its budget to service debt. Recently also, it launched its National Development Plan, for about XOF4.6 billion. After securing part of this amount from the regional market, the nation is expected to seek €500 million on the international market by September 2019.

In this regard, though the IMF insists that improving social spending efficiency should be a priority, the institution warned against widening of fiscal deficit following the international operation. It indeed emphasized on the need to “increase permanent revenues to preserve the hardly achieved budget improvement and preparation of an adequate budget space for social and infrastructure spending.

In 2016, Togo’s fiscal deficit stood at 9.6% of GDP. The two following years, it was at 2.1% and 6.7% of GDP respectively. This year, which is a year before the WAEMU 3% criterion comes into effect, it was forecasted to improve to 1.6%.

Last year, the country soared 19 places in the Doing Business Index, spurred by major improvements in the business environment.

Fiacre E. Kakpo

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