- The International Monetary Fund (IMF) has commended authorities in Cote d’Ivoire, saying the new economic programme provides the platform for strengthening the economic recovery and establishing the foundation for robust growth and higher living standards for the West African country’s 19 million people.
The Fund boldly said in a statement today, that after several years of civil conflict and flawed economic management, Cote d’Ivoire is set for a comeback.
"The Ivorian economy has so far shown remarkable resilience to the global economic downturn, yet there are risks. On the downside, unprecedented high cocoa prices may fall and lower exports, farm income and government revenue. The global crisis may deter or delay anticipated foreign direct investment," said the IMF, while on the upside, it said the domestic economy is operating at well below its potential and there is scope for some domestically driven post-conflict rebound.
The IMF noted that for almost two decades after independence in 1960, Côte d’Ivoire was an exemplary economic performer among low-income countries. Real growth exceeded 11 percent in the 1960s and 7 percent in the 1970s, and the country was set to emerge as the first developed country in sub-Saharan Africa, said the IMF, adding that high prices for key traditional exports and the ensuing investment boom helped establish its agro, textile and chemical industries and the foundation of its industrial sector.
The IMF however pointed out that a turnaround in commodity prices in the early 1980s, paired with relaxed external borrowing policies, put an end to the boom, while the government maintained a high level of expenditures resulting in an unsustainable level of public debt. "Although the decline in growth was reversed with the 1994 devaluation of the CFA franc, economic revival was cut short by a coup in 1999 and the start of a civil war in 2002 that triggered a political crisis and polarised the country.
Cote d’Ivoire's new transition government took office in April 2007, and was faced by the enormous challenge to achieve political stabilisation and arrest the economic downturn, said the IMF, further noting that at the same time, the government was facing competing needs to finance the post-conflict programmes related to demobilisation and reunification, as well as the preparation for elections.
"However, almost two decades of political instability had created bad habits and a disregard for normal procedures, and vested interests sought to maintain the status quo. The government also sought to reengage with the international community to get support, including financial, for its recovery programme," said the IMF.
In March 2009 the IMF approved a $566 million loan to Cote d’Ivoire under the Poverty Reduction and Growth Facility to support the authorities’ push toward establishing sustainable growth, reducing poverty, and advancing the country’s economic reform agenda.
The IMF also provided crucial support from two Emergency Post-Conflict Assistance (EPCA) credits, in 2007 and 2008, aimed at restoring a measure of transparency, reestablished relations with multilateral donors, and to start a range of structural reforms together with some consensus building for deeper reform.
"In less than two years, the government achieved modest primary basic surpluses, which permitted the payment of arrears to multilateral partners and domestic suppliers, giving a boost the business sector. Tax administration reforms mobilised greater resources for pro-poor spending and crisis-exit programmes, both essential for political stability," said the IMF, adding that Cote d’Ivoire's authorities have also restored a normal budget cycle and improved the transparency and monitoring of budget execution, such as by limiting the use of treasury advances.
The Fund concluded by saying that, to secure an early return to higher growth, many past obstacles must be overcome to advance structural reforms and to embrace discipline and transparency in public resource management.
"As creditors and donors await evidence of improvements in these areas, the scaling up of donor project support and the delivery of debt relief will take time. Popular expectations are high, and an active public debate can help allocate scarce public resources among competing priorities and promote structural reforms," concluded the Fund's statement.
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