Economic conditions in Togo remain favorable, IMF

31/10/2012
Economic conditions in Togo remain favorable, IMF

An International Monetary Fund (IMF) mission led by Montfort Mlachila visited Togo during October 22-30, to review recent economic developments, the draft supplementary budget for 2012, and the draft 2013 budget. It also analyzed preparatory documents for the creation of a revenue authority.

The mission met with Prime Minister Kwessi Séléaodji Ahoomey-Zunu, Minister of the Economy and Finance Adji Otèth Ayassor, and senior officials of the Ministry of the Economy and Finance, the National Directorate of the Banque Centrale des États de l’Afrique de l’Ouest (BCEAO), and representatives of the donor community.

At the conclusion of the visit, Mr. Mlachila issued the following statement:

"Economic conditions in Togo remain favorable. The average inflation rate, at 2.6 percent in September, continues to decline thanks to subdued prices for food products as a result of improved domestic agricultural production. The average inflation rate for 2012 is projected at 2.5 percent. Despite a slight reduction compared to earlier projections, due to economic uncertainties, slowing world growth trends, and delayed implementation of the government investment budget, real gross domestic product (GDP) growth remains strong and is expected to reach about 5 percent in 2012. Real GDP growth in 2013 could accelerate to 5.3 percent. The current account balance deficit would remain unchanged at around 8 percent of GDP both in 2012 and in 2013.

“Revenue performance under the 2012 budget, notably customs, has been good, while fuel subsidies have exceeded budgeted amounts, and there have been shortfalls in privatization receipts and donors’ budget support. To reduce illiquidity risks would require additional short-term financing and some expenditure adjustments. The draft 2013 budget is generally in line with understandings in principle reached during the last IMF mission in June 2012. It reflects a better assessment of the capital budget, taking into account implementation capacity and significant savings in spending on goods and services. Other spending will be largely determined by public employment policy and the policy stance on fuel prices, which should be aligned with budgetary constraints.

“The mission had fruitful discussions with the authorities with a view to reinvigorating the structural reform agenda, which has been delayed. The mission reiterated the importance of consolidating progress made in public financial management and improving debt management capacity, while striving for appropriate financing. Also, the Togolese authorities have decided to implement the important reform of reorganizing the revenue services by regrouping the Tax General Directorate (DGI) and the Customs General Directorate (DGD) into a single institution, the Togolese revenue authority (Office togolais des recettes—OTR). IMF staff supports this initiative and will continue to provide technical assistance to the authorities in this area. In this vein, IMF staff has analyzed and provided its comments to the authorities on the draft law and available preparatory documents.

“The authorities are committed to reinvigorating their structural reform agenda. The recommendations of a future technical assistance mission on the establishment of the OTR could form the basis for concluding future discussions in early 2013 on a new program supported by the Enhanced Credit Facility.”

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