IMF Staff Reaches Staff-level Agreement with Togo on an Extended Credit Facility Arrangement

An International Monetary Fund (IMF) team, led by Cemile Sancak, visited Lomeacute; from January 5-18, 2017 to carry out discussions with the Togolese authorities on a program supported by the IMF's Extended Credit Facility (ECF) arrangement.

Ms. Sancak issued the following statement at the end of the discussions:

The IMF team reached staff-level agreement with the government, subject to approval by IMF Management and the Executive Board, on a three-year program that could be supported by an arrangement under the Extended Credit Facility (ECF) for SDR 176 million (about USD 238 million) or 120 percent of Togo's quota in the IMF.[1]

The agreed economic program supported by the ECF arrangement aims to improve the living conditions for the population and to maintain a stable macroeconomic environment that is compatible with public debt sustainability. The main objectives of the program are to (i) reduce the overall fiscal deficit to ensure long-term debt sustainability; (ii)refocus policies on sustainable and inclusive growth through targeted social spending and judiciously-financed infrastructure spending; and (iii)resolve the existing financial sector weaknesses. The program includes a comprehensive set of reforms aimed at accelerating implementation of key reforms in revenue administration and public financial management, strengthening debt management, addressing the weaknesses in the public banks, and supporting private sector development.

The government will strengthen the primary balance to progressively restore public debt sustainability. The program targets a primary surplus (cash basis, including grants) of 2percent of GDP by 2019. To this end, the government will control capital spending in the budget while improving public investment management and partnering with the private sector and technical and financial partners to continue to improve infrastructure. It will also mobilize additional revenues through further improving revenue administration and broadening the tax base, with an emphasis on overhauling the exemption and tax expenditure system.

The government plans to continue its policies on sustainable and inclusive growth through targeted social spending and judiciously-financed investment through programs such as the Emergency Program for Community Development (PUDC) and Support Program for Vulnerable Populations (PAPV). The authorities are in the process of identifying development priorities in the National Development Plan for 2018-2022 and aim to fully integrate these priorities into the budget.

The program is expected to catalyze significant support from development partners. In this context, official support in the form of grants and concessional lending will bolster debt sustainability. With steady and determined efforts, the authorities' program will reinforce macroeconomic stability and promote sustained and inclusive growth.

The IMF team thanks the authorities for their warm hospitality, strong cooperation, and the constructive discussions.

The staff-level agreement is expected to be submitted to the IMF Executive Board for its consideration in April 2017.rdquo;

[1]The ECF is a lending arrangement that provides sustained program engagement over the medium-term in case of protracted balance of payments problems.

SOurce:International Monetary Fund (IMF).