See also:
» 27.04.2011 - Abidjan seeks quick economic recovery
» 01.10.2010 - Child labour in Ivorian cocoa farms still unchecked
» 06.07.2010 - West Africa happy for new cocoa deal
» 15.03.2010 - Côte d'Ivoire economy recovering
» 06.05.2009 - Ivorian economy on the come back, IMF
» 20.06.2008 - Côte d'Ivoire economy recovering
» 01.09.2004 - Strife brings poverty and recession to Côte d'Ivoire
» 30.06.2003 - Ivorian crisis hurts Burkinabe economy

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Côte d'Ivoire
Economy - Development

Côte d'Ivoire "poised for economic comeback"

afrol News, 30 July - "Côte d'Ivoire is set for a comeback," analysts at the International Monetary Fund (IMF) hold. GDP growth should double to 3 percent in 2008 and return to a 5-6 percent path in a few years as private sector confidence is returning to the country.

According to IMF analysts Holger Fabig and Bruno de Schaetzen, Côte d'Ivoire and its economy is now set to emerge from years of political instability that culminated in civil war in late 2002. An economic comeback should also bode well for a return to political stability and peace.

Since the transitional government's May 2007 launch of an IMF programme to restructure the Ivorian economy, progress has been noted. The authorities resumed debt service payments to the African Development Bank (AfDB) and the World Bank in mid-2007 and cleared, with the help of a World Bank grant, all arrears to the latter. They expect to clear AfDB arrears in July. Donors have pledged substantial assistance for crisis-exit programs, but disbursements have so far lagged.

Structural reforms had also progressed, the analysts hold in the Fund's internal publication 'IMF Survey'. The Ivorian government adopted the 2008 budget on time and started publishing detailed budget execution statements. Electricity tariffs, unchanged since 2001, were raised and audits of the extractive, refining, and electricity sectors were launched. Preparation of a Poverty Reduction Strategy Paper resumed, for completion by September 2008.

"With progress on a broad policy front, the economy grew by 1½ percent in 2007; with domestic and foreign investment picking up, growth should double in 2008," Mr Fabig and Mr Schaetzen write.

Unlike many other post-conflict countries, Côte d'Ivoire did not suffer wholesale destruction of its capital stock or of its policy and administrative capacity. In addition, reconstruction is taking place in a favourable environment of high energy and commodity prices. "These factors raise hopes that speedy progress can be made toward erasing the damage of the crisis years and quickly achieving a peace dividend," they write.

"But key to attaining that goal will be free and fair elections, full reunification, and the strengthening of state institutions," they warn. "The authorities must also step up efforts to mobilise resources - notably to strengthen and unify tax administration and collect adequate revenue from the petroleum and cocoa sectors, particularly in the former rebel zone."

The two IMF analysts hold that the economy indeed has had a predominant role in the past conflict. They hold that the seeds of the conflict had been planted by two decades of flawed economic management, immigration tensions and struggles over land, and a difficult transition to democracy. "If Côte d'Ivoire succeeds in overcoming the conflict's damage, it could become once again a driving force of the region," they hold.

For 20 years after independence in 1960, Côte d'Ivoire was an economic miracle. With growth rates of 7 percent per year anchored in a dominant position as a cocoa, coffee, and cotton producer, it was widely expected to be the first sub-Saharan African country to emerge as developed. Sudden losses in terms of trade combined with overly ambitious public investment and external borrowing however abruptly collapsed this dream in the mid-1980s.

Efforts to put the economy back on its feet were considered too little, too late, until the CFA franc devaluation in January 1994. By then, just after the death of President Houphouet-Boigny, the country was struggling with the transition from autocracy to democracy, one element of which was that one-quarter of the population was of recent immigrant origin. Tensions over land ownership were further exacerbated by high unemployment.

The civil war broke out in September 2002 and, after a few months of fighting, the country split into two: the north was held by the rebel Forces Nouvelles and the south by the government headed by President Laurent Gbagbo. Despite intermediation by the international community, the next four years saw little progress toward reunification. A turning point came in March 2007 with the Ouagadougou Accord, which established a transition government and set a roadmap for disarmament and elections in 2008.

The years of conflict and instability exacted a high toll: almost a million persons were displaced, several millions were pushed into poverty, and social indicators plunged. Infrastructure, once well above regional standards, declined, especially in the north.

Between 2000 and 2007, per capita GDP fell sharply, although the economy showed some resilience, thanks to favourable cocoa and other commodity prices and a sharp increase in oil production from 2004. However, Côte d'Ivoire stopped being the locomotive of the region, as trade and remittances were disrupted and investor confidence suffered. The port of Abidjan lost its pre-eminence as a regional hub.

With government revenue falling, donor funds drying up, and scarce fiscal resources being directed to the military, government investment and social spending fell, and domestic and external arrears mounted. Capital fled the country and private investment dropped. Governance deteriorated and corruption flourished, as individuals took advantage of lawlessness and a dysfunctional judiciary.

The transition government that took office in April 2007 however set out to restart the engine of growth and reverse the downward spiral of conflict and poverty. Among its first actions was to reengage with the international financial institutions and obtain assistance for its crisis-exit strategy. As the dialogue with the IMF had continued throughout the crisis, an economic programme was quickly agreed on, marking the start of economic recovery.

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