The Ivorian debt is sustainable, an official of the Bretton Woods institution reassures.
After a slowdown of its growth to 2 percent in 2020 because of the Covid-19 pandemic, the Ivorian economy has rebounded with a rate of 7.1 percent in 2021.
This convinced the Resident Representative of the International Monetary Fund (IMF) in the country, Kadima Kalonji to conclude that Cote d’Ivoire is “below the alert thresholds” of the risks of over-indebtedness.
“The Ivorian debt is sustainable” if we look at the five indicators that govern the issue of over-indebtedness, namely three indicators of solvency and two indicators of liquidity, said Mr. Kalonji, in Abidjan, during last Thursday’s panel discussion on the theme: “The Major Projects of the Ivorian Economic Recovery.”
For Cote d’Ivoire, “the threshold of the risk of debt distress which is moderate is the threshold of liquidity of debt service vis-à-vis revenues. There, the threshold is 18 percent (in particular),” he said.
However, he stressed, “when we do tests, projecting a crisis, we see that the rate goes beyond this limit. So, we must be very careful with this risk and increase tax revenues.”
“Above these thresholds, we see high risks and also risks of default” in terms of settlement, continued the IMF economist, supporting that the expansion of the tax base comes as a solution, but the current inflation related to the Russian-Ukrainian crisis makes it delicate.
The Ivorian Minister of Budget and State Portfolio, Moussa Sanogo, said that “the risk of over-indebtedness of Cote d’Ivoire is considered moderate” admitting nevertheless that the curve “requires vigilance.”
“We have a debt maturity and an average interest rate below 4 percent. The debt costs a little more at the local level with a short maturity, (but) it costs less at the international level because the maturities are longer,” Sanogo said.
According to him, with the inflationary pressure observed in the world with regard to the Russia-Ukraine conflict, “there are points of attention on which we must be careful to avoid falling into over-indebtedness.”
After a slowdown in growth to 2 percent in 2020 due to Covid-19, the Ivorian economy has rebounded with a rate of 7.1 percent in 2021.
The World Bank’s outlook for the country is a 5.7 percent GDP growth this year, a situation blamed on the Russia-Ukraine war.
At the end of March 2021, the Ivorian debt was estimated at 17,676 billion CFA francs, 65 percent of which is external debt and 36 percent domestic debt.
AP/ls/te/fss/as/APA