The International Monetary Fund (IMF) Executive Board has completed the second review of Togo's Extended Credit Facility (ECF) arrangement. This decision allows for an immediate disbursement of approximately SDR 44.0 million, equivalent to about US$ 60.5 million, aimed at budget support. The ECF arrangement, approved in March 2024, provides a total financing of SDR 293.60 million or about US$ 403.4 million on favorable terms.
The ECF was established to help Togo manage the aftermath of various shocks since 2020, including the COVID-19 pandemic and rising global food and fuel prices. While the Togolese authorities managed to mitigate these impacts on their population, it resulted in significant fiscal deficits and increased public debt. The IMF-supported program focuses on promoting inclusive growth while ensuring debt sustainability and implementing structural reforms to support economic growth and limit fiscal risks.
The medium-term outlook for Togo remains positive with continued robust growth projected by IMF staff. Economic growth reached an estimated 5.3 percent in 2024 and is forecasted at 5.2 percent for 2025, with an annual increase to 5.5 percent thereafter if no major adverse shocks occur. Headline inflation decreased to 2.6 percent in April 2025, while core inflation dropped to 1.3 percent.
Despite this positive outlook, high risks remain due to security concerns from terrorist groups at Togo's northern border, which continue to strain government spending. The authorities face difficult trade-offs between reducing fiscal deficits and maintaining security while supporting growth.
Implementation of the IMF-supported program has been broadly satisfactory with most quantitative targets met by end-December 2024 except for the fiscal balance performance criterion. A notable achievement was exceeding non-tax revenue expectations despite higher-than-budgeted spending increasing debt levels.
Kenji Okamura, Deputy Managing Director and Acting Chair of the IMF Executive Board stated: “The authorities have implemented the IMF-supported program in an overall satisfactory manner in an environment marked by continued security challenges, tight financing conditions, and elevated global uncertainty."
Okamura acknowledged slower progress on fiscal consolidation than planned due to unforeseen operations but welcomed efforts such as publishing a note on budget execution and debt accumulation: “Against this background, the authorities are encouraged to redouble their efforts at fiscal consolidation while preserving growth and strengthening inclusion."
He further noted that "the IMF approves the authorities’ request for a limited relaxation of the fiscal deficit target for 2024" balancing security threats against debt sustainability needs.
Additionally, he emphasized continuing revenue enhancement efforts through a medium-term strategy while improving spending efficiency: “Reforms to improve the efficiency of spending and strengthen the effectiveness of the social safety net... will also be important."
Okamura concluded by highlighting ongoing financial sector reforms: “The IMF welcomes the authorities’ efforts to reduce financial sector and fiscal risks by recapitalizing the remaining state-owned bank.”
Togo’s economic indicators project steady GDP growth from 2023 through 2027 with gradual improvements in other financial metrics underlined by continued support from both domestic policies and international aid like that provided by the IMF.