The International Monetary Fund (IMF) Executive Board has completed the first review of Togo's Extended Credit Facility (ECF) arrangement, enabling an immediate disbursement of SDR 44.0 million, approximately US$ 58.7 million, for budget support. The ECF arrangement provides a total financing of SDR 293.60 million, or about US$ 390 million.
Approved on March 1, 2024, the ECF aims to assist Togo in addressing challenges from the COVID-19 pandemic and rising global food and fuel prices. These challenges have increased fiscal deficits and debt despite efforts by Togolese authorities to mitigate their impacts on the economy and population. The IMF-supported program seeks to promote inclusive growth while ensuring debt sustainability and implementing structural reforms to bolster growth and limit financial sector risks.
Togo's medium-term economic outlook remains positive with robust growth projected at 5.3 percent for 2024-25 and around 5.5 percent annually thereafter, according to IMF staff projections. Inflation rates have eased, with headline inflation at 3.3 percent in October 2024.
However, high risks persist due to ongoing terrorist attacks in northern Togo, which continue to strain public spending. Authorities face difficult trade-offs between reducing debt through fiscal consolidation and maintaining growth amid limited fiscal space.
Program implementation is progressing well; all end-June quantitative performance criteria have been met, with favorable prospects for meeting targets for the rest of the year. Two out of four structural benchmarks have been achieved, with potential for completing remaining elements later.
Deputy Managing Director and Acting Chair Mr. Bo Li stated: "The Togolese authorities have shown strong implementation of the program supported under the Extended Credit Facility (ECF). The authorities have met all quantitative targets despite security challenges and tight financing conditions."
He further emphasized that "Togo’s outlook is subject to elevated risks," urging continued commitment to implementing the program for sustainable growth.
Mr. Li highlighted fiscal policy priorities: "In the area of fiscal policies, the authorities should continue to aim to address debt vulnerabilities...while supporting growth and enhancing inclusion." He also stressed strengthening governance: "It will also be essential to continue efforts to strengthen governance."
The IMF welcomed Togo's request for a Governance Diagnostic and commitment to transparency in public procurement contracts as well as ongoing reforms in its financial sector.