The Togolese officials and the International Monetary Fund (IMF) agreed, at the end of January, on a financing of $ 238 million. Funded under the Extended Credit Facility (ECF), this amount represents 128% of Togo’s quota to the IMF. The financial institution was motivated by the efforts of the Togolese government to reduce the country’s public debt.
A week ago, the Togolese press welcomed a new era of cooperation between the IMF and Togo. After staying from 5 to 18 January 2017 in the Togolese capital, the IMF mission has just announced a financing agreement of $ 238 million with the government, though efforts still need to be made for debt control.
Social sector priority
Refundable over 10 years, with a 5-year deferral and 0% interest rate, the ultra-concession loan is made under the ECF. Its funds are intended to support the priority sectors, especially the social sector. According to the Minister of Economy and Finance of Togo, Yaya Sani, the concession loans are intended « to finance social and investment expenditure, such as the Community Development Emergency Program (CDEP) and the Program for Support to Vulnerable Populations (PSVP). »
More specifically, for Cemile Sancak, Head of the mission to Lomé and Assistant to the Head of IMF’s African Division in charge of Togo, « the agreement aims to improve people’s living conditions and maintain a stable and macroeconomic environment consistent with sustainable public debt. »
The public debt of Togo increases
Togo’s debt has increased in recent years, following investments linked to the construction of infrastructures, especially roads. According to the latest figures, the debt has risen from 48.6% of GDP in 2011 to 75.4% in 2015, while the West African Economic and Monetary Union (WAEMU) commission set the ceiling to 70%. Many reforms have already been undertaken by the government to better control its budget and revenues, which has convinced the IMF to renew its confidence in the country.
« What is important and which has led us to support Togo is the government’s commitment to gradually reduce the country’s domestic debt through a well-established program. This loan has perfect conditions for Togo, » stressed Mrs. Cemile Sancak. According to her, in addition, the efforts of the Togolese government allowed to maintain a growth of 5.3% in 2015, « with a medium term macroeconomic framework, allowing the country to further development. »
Efforts to be continued
By agreement with the IMF and under the supervision of the Minister of the Economy, the country is also committed to further reforms, especially the revenue administration and public finance management; the strengthening of debt management; resolving the weaknesses of public banks; and the support for the development of the private sector.
It should be noted that if the loan agreement to Togo still needs to be validated by the IMF’s top officials by April 2017, the program could already attract investor interest for the country. Especially, as Togo is expected to receive, as part of its partnership with the World Bank for the 2017-2020 period, an additional amount of $ 350 million US, as announced the same week by the second institution.
Auteur : Emmanuel Atcha // Photo : Cemile Sancak, la responsable de division adjoint du département Afrique du FMI en charge du Togo © Emil Kouton