After a discussion between IMF staff and Ivorian authorities, an agreement was reached on a three-year programme supported by two arrangements under the Extended Credit Facility (ECF) and Extended Fund Facility (EFF) for about USD 674 million. The arrangement is aimed at supporting the government’s 2016-2020 National Development Plan (NDP) and is likely to be submitted to the IMF Executive Board for Approval in December this year. It will create additional fiscal space in order to more easily address possible future obstructions to a lasting sustainable balance-of-payment position. 

Impact on country risk

The NDP will focus on the industrialisation of the economy by the private sector and on investments in infrastructure and social sectors. In addition, the improvement of public financial management will be pursued in order to contain fiscal risks and the budget deficit should be limited to the WAEMU (West African Economic and Monetary Union) norm of 3% of GDP by 2019. The impressive growth achievements of the past four years are also likely to continue over the coming years (7%-8% GDP growth). Subsequently, the agreement with the IMF, if approved, should improve the outlook for Côte d’Ivoire’s economic and financial fundamentals. However, the need for more reconciliation between former rivalry groups of the past civil conflict remains the country’s main challenge. A major step was taken recently with the new constitution which addresses one of the main elements at the heart of the past conflict, notably the Ivorian nationality issue. Important symbols of ethnic exclusion were removed from the constitution, yet the marginalisation of opposition supporters from the political process after successive election boycotts still raises the risk for instability and street protests, especially in the run-up to the key 2020 general elections.

Analyst: Louise Van Cauwenbergh, l.vancauwenbergh@credendogroup.com