Togo Delays UTB Reform to 2026 Amid IMF Pressure and Unresolved Banking Risks

Public Management

Monday, 14 July 2025 14:20

Togo Delays UTB Reform to 2026 Amid IMF Pressure and Unresolved Banking Risks

(Togo First) - Togo will take longer than planned to restructure its public bank, Union Togolaise de Banque (UTB). The International Monetary Fund (IMF) has granted an extension to complete this vital reform.

The full overhaul of UTB, part of the IMF-backed program, will now finish after 2026. Originally set for completion this year, the operational reorganization plan’s approval has shifted to March 2026. Implementation will follow in December 2026. The delay stems from incomplete diagnostic work.

UTB, which holds nearly 9% of Togo’s banking assets, received a recapitalization of CFA15.2 billion last December. This capital boost aimed to raise its equity to the regulatory minimum of CFA20 billion, as required by the WAEMU Banking Commission. Although this injection stabilized the bank’s prudential situation temporarily, the IMF says core structural problems remain unresolved.

“The initial audit highlighted certain weaknesses but does not yet allow for a credible operational recovery plan,” the IMF report states. UTB still breaches three prudential standards, including the solvency ratio and risk concentration limits. Non-performing loans remain high, though they dropped to 8.6% of assets at the end of 2024 from 13.2% a year earlier.

The IMF insists on a more ambitious restructuring plan based on verifiable data before continuing the FEC program. The plan must ensure management independence, restore profitability, and reduce budget risks. This demand aligns with ongoing banking and public governance reforms led by Togo’s authorities. These reforms include clarifying liabilities from former privatized banks and improving public enterprise debt reporting.

“This schedule extension does not call into question the government’s commitment to clean up the sector,” a government source said. Officials stress that the funds injected into UTB have not been wasted but must now drive lasting operational changes.

The UTB reform stands as a test of Togo’s budgetary credibility. The country aims to balance economic support, fiscal consolidation, and reduce vulnerabilities in the public sector.

Fiacre E. Kakpo

REFORMS OVERVIEW

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