From the Executive Board

• Pages: 225-227

Page 225

Togo: ESAF

The IMF today approved the third annual loan under the enhanced structural adjustment facility (ESAF) for Togo in an amount equivalent to SDR 21.7 million (about $30 million) to support the government's 1997 economic program. The loan is available in two semiannual installments, the first of which is available immediately.

Togo's performance in 1996 under the program supported by the second annual ESAF loan was mixed, and the midterm review of the program could not be completed. Performance was satisfactory in terms of a robust 6 percent annual GDP growth and the slowing of inflation to 4.6 percent from 15.9 percent in 1995. However, both the primary fiscal balance and the external current account were well short of the program's original targets, and new domestic and external arrears were accumulated. The implementation of the structural reform program was also uneven. There was mixed progress in liberalizing the agricultural sector, restructuring telecommunications, and implementing price reforms, but significant delays occurred in the privatization program.

Page 226

The 1997 Program

The objectives of the 1997 program are to correct the weaknesses that occurred in 1996, particularly in the fiscal consolidation effort, and to accelerate the implementation of the agreed structural reforms. The government's revised medium-term macroeconomic projections for the period 1997-99 are to achieve an average annual real GDP growth of more than 5.5 percent, reduce annual average inflation to 3 percent by the end of the period, and lower the external current account deficit (excluding grants) to an annual average of less than 5 percent of GDP. Overall investment is projected to increase to 17.1 percent of GDP in 1999 from 13.7 percent in 1996, while domestic saving is expected to rise to 13.2 percent in 1999 from 6.4 percent in 1996. For 1997, real GDP is expected to grow at a rate of 5.8 percent, the rate of inflation is to be reduced to 3.9 percent on average for the year, and the current account deficit is to be narrowed to 6.6 percent of GDP, from 8.5 percent in 1996.

[ GRAPHICS ARE NOT INCLUDED ]

To achieve these objectives, the fiscal program for 1997 aims at reducing the overall deficit to 4.3 percent of GDP from 6.5 percent in 1996, while improving the primary balance (excluding interest payments, foreign-financed investment, and privatization receipts) to a surplus of 0.8 percent of GDP from a deficit of 1.4 percent in 1996. To attain these targets, the...