Côte d’Ivoire: IMF stresses sound Ivorian macroeconomic policies

Abidjan, Côte d’Ivoire  (PANA) - Côte d’Ivoire’s political normalization, together with supportive fiscal policy and structural reforms to improve the business climate, enabled a strong pickup in economic activity, the Executive Board of the International Monetary Fund (IMF) has observed on conclusion of its 2016 Article IV consultation with the Ivorian government.

Though the country's economic performance over the past four years has been impressive, the IMF Directors said that challenges remained as poverty was still relatively high and other human development indicators have been slow to improve.

In a statement issued late on Friday, the Executive Board emphasized the need for continued commitment to sound macroeconomic policies and ambitious structural reforms to safeguard the favourable economic performance and cement the path for sustainable and inclusive growth.

Côte d’Ivoire’s 2015 fiscal deficit was below the 3.7 percent target at 3 percent, owing to stronger revenues and an under execution of externally-financed capital spending. Credit continued to grow at a rapid pace, while banking sector soundness indicators weakened.

During the year, real GDP grew by an estimated 8.6 percent driven by strong investment and private consumption. Inflation remained subdued, reflecting ample domestic food production and imported consumer products.

The IMF Directors welcomed the Ivorian authorities’ 2016–2020 National Development Plan (NDP), which aims at halving poverty and fostering structural transformation.

To support the structural transformation envisaged under the NDP, the private sector would play a large role, benefitting from strong public infrastructure investment and further structural reforms to improve the business climate.

According to the IMF Board, success will depend on the pace at which structural bottlenecks are addressed and productivity-enhancing reforms are carried out.

The Directors stressed that building fiscal buffers is necessary to preserve fiscal sustainability and called for a reduction in the overall fiscal deficit consistent with the West African Economic and Monetary Union (WAEMU) convergence criteria, which would provide the needed space to cope with fiscal risks while addressing infrastructure investment needs.

To this end, Directors stressed the importance of higher revenue mobilization, including by reducing tax exemptions, broadening the tax base, improving tax administration, and restraining expenditure growth. They recommended a more measured scaling up of public investment in line with implementation capacity.

The Director also noticed need for further action to strengthen the resilience of Côte d’Ivoire’s banking sector and foster financial inclusion.

Given the rapid increase in credit and associated decline in bank solvency, they called for a buildup of bank capital buffers and advised a rapid resolution of the troubled public banks.

Also, the Directors encouraged the authorities to modernize the regulatory framework in order to take advantage of opportunities to foster financial inclusion through new information and communication technologies.

Welcoming the authorities’ commitment to intensify structural reforms, the Directors agreed that priority should be given to enhancing productivity by addressing gaps in infrastructure and human capital, and improving the business climate.

They also called for further efforts to improve the production and dissemination of quality economic data, and supported technical assistance by the Fund and other development partners.

The Directors noted that continued engagement with the Fund would help support Côte d’Ivoire’s ambitious development agenda and address challenges ahead.
-0- PANA AR/MA 28May2016

28 may 2016 10:15:14

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