IMF COUNTRY FOCUS

 

Côte d’Ivoire Côte d’Ivoire: Fostering Economic Transformation and Adapting to Climate Change (Credit: Leamus/iStock by Getty Images) Read this article in French. The Ivoirien economy has performed strongly over the past decade, with GDP growth averaging 6.4 percent, inflation hovering around 2.2 percent, and a declining proportion of the population living below the national poverty line. The country has maintained macroeconomic stability despite the major shocks that have buffeted the world in recent years. Nonetheless, structural obstacles persist, including the informal nature of employment, which has diminished but remains pervasive, thereby complicating the country’s mission to achieve stronger and more inclusive growth, broaden the tax base, and deepen the ongoing economic transformation. At the same time, the relative predominance of the cocoa sector and the concentration of industry and services in coastal zones make Côte d’Ivoire vulnerable to the effects of climate change. The economic diversification that is currently under way should help to strengthen economic resilience further. The Executive Board and staff of the IMF analyzed the situation of Côte d’Ivoire as part of the (recently completed) 2024 Article IV consultations and the reviews conducted under the Extended Credit Facility (ECF), the Extended Fund Facility (EFF), and the Resilience and Sustainability Facility (RSF). As the country continues to make progress toward joining the ranks of upper middle-income countries and in tackling climate change, the IMF Country Focus editorial team spoke with Côte d’Ivoire’s Minister of Finance and Budget, Adama Coulibaly, and IMF Mission Chief Olaf Unteroberdoerster. Côte d’Ivoire is on track to achieve upper middle-income status. What role is the Fund playing in helping the country implement its ambitious development agenda? Adama Coulibaly: Côte d’Ivoire has become West Africa’s engine of growth and stability. Over the past decade, its GDP growth has been about 3 percentage points higher and inflation almost 4.4 points lower than the respective sub-Saharan African averages. Continuous public investment in high-priority, socially-oriented, infrastructure has helped reduce poverty, despite the growing influx of refugees from neighboring countries. The Fund’s support has been crucial. Despite the severe shocks that have reverberated around the world, the critical adjustment made since 2023, under Côte d’Ivoire’s EFF- and ECF-supported program, has preserved macroeconomic stability and enabled it to become the first sub-Saharan African country to return to international financial markets since 2022. Standard and Poor’s recently upgraded our country’s sovereign debt rating to BB, one of the best three ratings in Africa.  At the same time, the RSF arrangement, approved in March 2024, is helping us to meet the increasing challenges of climate change. In particular, our continued commitment to reforms under these two programs should help Côte d’Ivoire achieve upper middle-income status and strengthen its resilience to climate change. Why does domestic revenue mobilization play such an important role in the authorities’ reform agenda? Olaf Unteroberdoerster: Domestic revenue mobilization is key to creating the fiscal space needed to meet Côte d’Ivoire’s high-priority social protection and infrastructure needs, such as education, health, and transportation. All of this will support the country’s ambitious economic transformation agenda aimed at achieving upper middle-income status. Efforts to mobilize domestic revenue have thus far enabled significant progress, in particular toward complying with the West African Economic and Monetary Union’s deficit ceiling of 3 percent of GDP by 2025. These efforts have also been instrumental in preserving Côte d’Ivoire’s rating as a “moderate” debt-distress risk and, more broadly, in enabling the country to maintain one of the best credit ratings in sub-Saharan Africa. To capitalize on these good results, the authorities recently adopted a global medium-term revenue mobilization strategy that provides a roadmap toward a fairer, simpler, and more inclusive tax system. This is designed to improve outcomes and drive revenue mobilization more autonomously, with strong popular support. What are Côte d’Ivoire’s priorities for improving the business climate and increasing private sector involvement in the country’s development? Adama Coulibaly: To stimulate private sector productivity and economic diversification, Côte d’Ivoire is prioritizing the delivery of high-quality public services, particularly in the energy sector, and improving governance. This will require actions targeted on human capital building, financial inclusion, and climate change resilience. The government will continue to reduce the prevalence of informal work by tackling gender inequalities, providing vocational training aligned with the needs of the private sector, making it even easier for businesses to register officially, and expanding social protection and universal health coverage—all of which are in keeping with our national development plan. The government is also committed to complying with the recommendations of the Financial Action Task Force (FATF) on anti-money laundering and combating the financing of terrorism. The aim is to be removed from the FATF “grey list” as soon as possible, based on the significant progress made to date and rapid implementation of the remaining measures in the action plan. What are Côte d’Ivoire’s main climate change vulnerabilities, and how is the Fund helping it to address them? Olaf Unteroberdoerster: Côte d’Ivoire is highly vulnerable to climate change owing to rising temperatures and sea levels, and changes in rainfall patterns that increase the risk of flooding and coastal erosion. As the world’s largest producer and exporter of cocoa, it is heavily dependent on agriculture; and, as industrial and service activities are concentrated in coastal zones, it is important to continue adopting the measures needed to avoid a potentially considerable impact on the country’s economy. Côte d’Ivoire has embarked on an ambitious reform agenda, supported by the IMF and a US$1.3 billion arrangement under the RSF. The program is built around the following six key pillars: integrating climate change into key aspects of public finance management; strengthening governance of climate policies; reinforcing safeguards for the agricultural sector; creating a framework for green and sustainable financing; building resilience to climate hazards; and controlling and reducing greenhouse gas emissions. Following a climate financing roundtable in July, convened jointly by the Ivoirien government, the IMF and the World Bank, Côte d’Ivoire announced a wide range of initiatives at the recent COP29 meetings to catalyze climate financing in the country. These include strengthening the coordination of budget support, including grants; speeding up the implementation of adaptation projects through a project preparation financing mechanism; establishing a green finance facility for Côte d’Ivoire with a view to promoting green growth; and enhancing support for the financing of private-sector investment. RELATED LINKS Côte d’Ivoire and the IMF Extended Credit Facility (ECF) Extended Fund Facility (EFF) Resilience and Sustainability Facility (RSF)