The Executive Board of the International Monetary Fund (IMF) on Friday approved a new three-year arrangement for Togo under the Extended Credit Facility (ECF) for about US$241.5million to support the country’s economic and financial reforms.
The Executive Board’s decision enables an immediate disbursement of about US$34.5 million. The remaining amount will be phased over the duration of the program, subject to semi-annual reviews.
The authorities’ ECF-supported program aims to reinforce macroeconomic stability and to promote sustainable and inclusive growth. It aims to reduce the overall fiscal deficit substantially upfront to ensure long-term debt and external sustainability; refocus policies on sustainable and inclusive growth through targeted social spending and infrastructure spending that is financially sustainable; and resolve the existing financial sector weaknesses, especially in the two public banks.
During the same meeting, the Board also concluded the 2016 Article IV consultation. A separate press release will be issued shortly.
Following the Executive Board discussion on Togo, Deputy Managing Director Mr. Tao Zhang, and Acting Chair, said:
“Togo’s economy has shown solid performance in recent years, with sustained growth and low inflation. The country’s growth performance has been underpinned by high levels of public investment to address significant infrastructure gaps. However, this capital spending has also increased public debt and debt service pressures, crowding out needed social expenditures. At the same time, lingering deficiencies in the financial sector have remained unresolved.
“The new arrangement under the ECF will support the authorities’ efforts towards fiscal consolidation while maintaining space for pro-poor spending. Public financial and debt management will be strengthened and revenue administration bolstered. The two under-capitalized public banks will be consolidated into one healthy institution. Regulation and supervision standards in the microfinance sector will be strengthened.
“The medium-term economic outlook is favorable, with private sector activity benefiting from stronger infrastructure and an improved business climate. However, further progress will hinge on the authorities’ successful implementation of their ambitious macroeconomic program, as well as pursuing broader structural reforms to improve public financial management and address social needs.”