Following the post-election crisis, the IMF’s HIPC (Heavily Indebted Poor Countries) Completion Point was recently reached by Côte d’Ivoire, qualifying the world’s leading cocoa exporter for profound multilateral and bilateral debt relief. According to the IMF, the country’s debt burden will reduce considerably, with external public debt expected to drop from 54.7% of GDP in 2011 to 26.9% in 2012 and to 21.6% of GDP in 2017. Although public finances will improve with HIPC debt relief, the Ivorian government still faces vast challenges in the reconciliation process. Recently militia groupings killed at least 22 people - including seven UN peacekeepers – further destabilizing the western region and triggering a new domestic refugee wave. International organizations confirm the raids were executed by fighters loyal to former Ivorian President Gbagbo and Liberian mercenaries operating from across the Liberian border. In addition, the government foiled a coup attempt on June 12 allegedly planned by senior figures of the Gbagbo regime operating from Ghana. Ivorian neighbouring countries are heavily pressured to crack down on these militia and individuals in order to safeguard future political stability in Côte d’Ivoire.

Impact on country risk

Since the November 2010 crisis Côte d’Ivoire defaulted on its external debt payments  after civil conflict and trade sanctions  were detrimental to the economy. As expected after reaching HIPC completion, the government restated it would swiftly resume coupon payments and start clearing arrears. With new President Ouattara boosting international confidence after eleven years of conflict, combined with strong economic potential and the HIPC scheme which will thoroughly ameliorate the country’s financial position and henceforth reduce the risk for debt distress, Côte d’Ivoire’s outlook is improving.

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