The Executive Board of the International Monetary Fund (IMF) today completed the second review of Togo's economic performance under the Poverty Reduction and Growth Facility (PRGF) arrangement. The completion of the review enables the immediate disbursement of an amount equivalent to SDR 17.9 million (about US$26.6 million), bringing total disbursements to SDR49.2 million (about US$72.9 million).
The Executive Board also concluded the 2008 Article IV consultation with Togo. Details of the findings will be published in a Public Information Notice.The three-year PRGF arrangement for Togo was approved by the Executive Board in April 2008 (see Press Release 08/90) in an amount equivalent to SDR 66.06 million (about US$108.4 million). In September 2008, the Executive Board approved an increase in financial support (see Press Release 08/216) by SDR18.3 million (about US$29 million).
Following the Executive Board's discussion, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, stated:
"The Togolese authorities are to be commended for their continuing strong implementation of economic reforms under the PRGF-supported program. Despite the adverse impact of the global price shocks and heavy flooding last year, all quantitative fiscal performance criteria for the second review were met by ample margins, and good progress was made on structural reforms.
"External conditions are likely to remain difficult for Togo owing to the global recession. The near-term challenge will be to manage the impact of the crisis on global demand for its commodity exports such as phosphate and cotton. Public investment to rehabilitate Togo's infrastructure, especially to repair the damage caused by the flooding last year, will play a major role in supporting economic activity.
"Against this background, the authorities' plans for a modest fiscal loosening in 2009 are appropriate. These plans include shifting unspent money intended for emergency projects from 2008 to 2009 and increasing the share of domestic arrears cleared in cash. Given capacity constraints for project spending, it will be important to follow through on plans to address slow project execution, with the support of development partners. The authorities also intend to continue to focus on targeted measures to mitigate the social impact of shocks and on support to agricultural production, especially food.
"Togo's structural reform agenda for the remainder of 2009 focuses on consolidating fiscal governance, reforming the state-owned phosphate sector, and restructuring the financial sector. The authorities have completed the important recapitalization of state-owned banks and intend to attract strategic investors for these banks as quickly as possible.
"Over the medium-term, the authorities remain firmly committed to sustainable macroeconomic policies and structural reform measures that support external stability, faster growth and accelerated poverty reduction. The projected increases in external assistance will be vital to finance the increased investment and social spending in a sustainable fashion, and to the success of Togo's economic recovery," Mr. Portugal said.