The publication of IMF country reports on Cote d’Ivoire is just about the only time of the year when you can really get hold of decent statistics and information on the performance of the Ivorian economy, and government economic management. Of course, we do well to remember Morten Jerven’s warnings about the reliability of data on the continent, but keeping that in mind, it’s still about all we’ve got.
So what do we learn? To save you wading through the documents, I picked up some of the key facts below from the government side of thing. It’s always worth bearing in mind that you get two long documents at the same time – the government’s Letter of Intent, and then a review by IMF staff. The former has the tendency to look at things in a rosy light, while the latter is still diplomatic but is more hard-hitting about what the IMF wishes the country were doing more of. So, starting with the former document, I’ll cite the stats that jumped out, and then I’ll move on to the Staff Report.
Stats from Cote d’Ivoire government’s Letter of Intent:
– GDP per capita up by more than 21 percent over last three years (2012-14)
– Expectation of 9.4% growth rate in 2015 with inflation at 1.7%. [Interesting as this is the restart of acceleration since the immediate post-crisis bounce back in 2012.]
– Investment expected to rise from 16.1% of GDP in 2014 to 18.6% in 2015 (10.7% of which from private sector)
– GDP growth rates have been 10.7% (2012), 9.2% (2013), 8.5% (2014)
– 40% increase in Foreign Direction Investment 2012-2014
– 43,393 increase in net jobs (formal employment rose 6.2%). Formal jobs 2014 = 799,890
– Growth was driven by primary and tertiary sector (industrial sector continues to be the laggard, which is a little worrying given this is key to ‘emergence’)
– Food prices down (-2.1%) and transport prices also down (-0.4%)
– Trade balance in surplus, terms of trade improved by 3.2%
– Credit to the private sector increased by 27.4% [this is positive – a key frustration in the private sector is the difficulty of obtaining bank loans]
– WAEMA (the West Africa CFA monetary zone) growth was 7%
– BRVM stock market capitalization rose 11.4% and trading volumes increased 75.6%
– 6,487 new businesses created last year
– The average time for procurement, from examination of the call for tender documents to approval of contracts, decreased from 322 days at end-2013 to 126 days at end-2014.
– More than 15,000 classrooms built since 2012. The gross school enrollment rate increased from 76.2 percent in 2008 to 94.7 percent in 2014.
Two sentences jumped out at me from the government report that I thought a good number of Ivorians might question:
“On the political front, political institutions, such as the Independent Electoral Commission, have been reinforced and have the confidence of all political parties and the civil society.”
And then a sentence that’s not entirely clear but seems to indicate the Ivorians saying their economy is bigger than Ghana, which isn’t true from the measures that I see (though it could also be interpreted as saying the opposite):
“reclaimed its position as the second largest economy of the Economic Community of West African States (ECOWAS) after Nigeria”
For Ivorians interested in the recent announcement that electricity prices seem set to rise, the document is the best source of information on the reasons for this. [A clue – look up HVO (Heavy Vacuum Oil).]
So now on to the IMF staff report…
The overall summary reads as follows:
“Performance under the Fund-supported program continued to be strong. Over 2012–14, the growth in real GDP per capita has reached 20 percent. All performance criteria and all but one indicative targets for end-2014 were met. Significant progress has been made toward improving the business climate and the tax administration, and some inroads have been made towards public bank restructuring.
The fiscal stance for 2015 remains appropriate despite emerging budgetary pressures. The planned adjustments to the 2015 budget, which include additional revenues and spending cuts should allow to contain the overall deficit to 3.7 percent of GDP. Despite these adjustments, the budget remains broadly growth-friendly and pro-poor, with significant increases in public investment and poverty-reduction expenditures. The recent discovery of extra-budgetary spending is worrisome. However, the April 23, 2015 Communication by the Council of Ministers reaffirming that extra-budgetary spending should be avoided is welcomed, as is the government’s commitment to forcefully apply the provisions of the 1998 decree aimed at avoiding extra-budgetary spending, including through sanctions.”
Some bullet points…
– Major risks – political / social tensions especially around the upcoming election.
– Growth in 2014 seems to have been 7.9%, but 1.3% points of that comes from a reported 74% increase in cassava production (which seems a little strange).
– Some small banks continue to be below the regulatory minimum capital adequacy ratios.
– An interesting graph with figures from Bloomberg shows 10-year bond yields for Cote d’Ivoire are below those for other frontier market economies (Kenya, Ethiopia, Senegal and Zambia).
– If off-budget expenditure (private schools + military fuel) had been included in the government financial data, performance targets wouldn’t have been met (or rather adjustments would have needed to be made in order to hit targets).
– Delays in three areas of structural reforms – financial sector reform strategy implementation, reorganizing public debt department, and paying domestic arrears.
– The IMF’s growth predictions are considerably lower than the governments – 7.9% in 2015. As a reminder, the government sees 9.4% growth in 2015. The government seems to predict a big increase in private sector investment once the election goes smoothly (and the Ebola outbreak ends in the region). The IMF sees that as too uncertain to be included.
– There’s been a bit of concern about public debt levels among the political opposition and the general public. The IMF says it’s around 43% of GDP. Debt servicing levels are rising to around 13% (from 10.8% in 2014).
– The IMF thinks there are few external and internal risks to growth.
– There’s an interesting side-bar explainer on the automatic fuel price mechanism, which includes the detail that above a certain level, petrol prices subsidize diesel prices (politically sensitive). It also says that not all international fuel price drops have been passed on, leading to the potential of greater than expected fuel tax revenue.
– Private companies complained to the IMF that it was taking a long time for the government to pay them, and that they were being harassed by the tax department, allegations the government denies.
– Petroci and SIR don’t seem in amazing shape. In fact the oil sector has performed well below promised.
– The government says it’s aware of weaknesses in the statistical department – it is requesting technical support.
If you’ve made it just far, I’ll just say that plenty of reforms seem to be being carried out, which should leave public institutions much stronger when Ouattara steps down in 2020.