Strong consumption, investment demand among factors boosting Côte d’Ivoire’s outlook
Abidjan, Côte d’Ivoire (PANA) - Côte d’Ivoire’s economy remains resilient against a still difficult global backdrop. Despite lower than expected cocoa production, the country’s medium-term outlook remains favourable and has been boosted by still strong consumption and investment demand, as well as new activity in the hydrocarbon exploration and production sector.
According to the International Monetary Fund (IMF), risks have become more balanced, reflected in increased interest from foreign investors along with ratings and outlook upgrades by ratings agencies.
For 2024, growth is projected to be 6.5 percent, while inflation is expected to return to within the BCEAO 1 to 3 percent CPI target range by end-2024.
Also, this year’s current account deficit is projected to narrow to 3.8 percent of GDP, and the fiscal deficit is expected to consolidate further to 4 percent of GDP.
The IMF Executive Board made this observation on Tuesday when it completed the second reviews of the Extended Fund Facility and Extended Credit Facility arrangements and the first review of the Resilience and Sustainability Facility arrangement for Côte d’Ivoire.
The Board noted that Ivorian authorities remain firmly committed to boosting tax revenue into the medium term, and to implementing the medium-term revenue strategy (MTRS) approved in May 2024.
Sustained effort is expected by the authorities to increase tax revenue by 0.5 percent of GDP, each year between 2024 and 2026 through new, high quality and permanent tax policy and tax administration measures. This will be buttressed by the authorities’ efforts to incorporate into the budget revenues which are being collected by line ministries but not recorded in fiscal accounts.
According to the IMF Board, important structural reforms are underway, to deliver business climate improvements and increase the involvement of the private sector in the country’s development.
To this end, enhancements in the transparency and accountability of public enterprises, further strengthening governance and financial integrity (particularly the AML/CFT framework), along with investment in human capital, broader financial inclusion, and climate resilience, to support higher productivity growth will be instrumental.
The Executive Board’s assessment affirmed that growth and interest from foreign investors has remained strong, highlighting the dividends from the authorities’ resolve to sustain important economic reforms. In particular, as efforts to boost domestic revenue mobilisation are bearing fruit.
The Board indicated its conviction that continuing to advance governance and public financial management reforms, along with other structural reforms to induce higher levels of financial inclusion and climate resilience will support rebuilding fiscal buffers, and enhancements to the business environment.
“All these reform areas remain critical to unlocking the necessary financing for the country’s economic transformation,” the Board said, pointing out that Côte d’Ivoire’s economic programme remains on track and appropriately focused.
Sustaining a revenue-based fiscal consolidation in 2024 and 2025 will also strengthen the country’s moderate rating of debt distress, and support convergence to the 3 percent of GDP WAEMU deficit target.
The debt management operation has been instrumental in ensuring that debt sustainability risks remain within the moderate rating of debt distress. Nevertheless, keeping debt at a level consistent with a moderate rating of debt distress will need to remain a priority.
The Board noted that maintaining momentum on structural reforms under the programme will be critical to support the objectives of the national development plan. Efforts towards 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.
In addition, the suggested that the authorities should carefully monitor potential budgetary risks arising from the electricity sector and accelerate plans to reduce payment arrears to domestic suppliers, including through potential further tariff adjustments.
-0- PANA AR/MA 25June2024
