Togo: Staff Report for 2013 Article IV Consultation
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Summary:
KEY ISSUES Context. After several postponements, the July legislative elections—which were, peacefully conducted—gave an absolute majority to the incumbent party. The new government has thus a strong mandate to implement growth-promoting policies and meet the public’s expectations of improved living standards. Growth is accelerating, fuelled by private foreign and public infrastructure investments. Article IV discussions. Fiscal deficits have increased in recent years, constraining the room for fiscal maneuver and raising sustainability concerns. Although growth has picked up over the past few years, it has not been inclusive. The main medium-term challenge is to move to higher, sustainable, and inclusive growth. The government has an important role to play in raising the growth potential by providing critical infrastructure, improving the business environment, and deepening the financial sector. Key staff recommendations. These include: Resetting fiscal policy to ensure fiscal sustainability. Reverse the fiscal deterioration and implement fiscal adjustment to increase the primary balance progressively in order to lower the debt burden. Enhancing revenue and public financial management. Enhance revenue collection, leveraging the proposed new revenue authority. Improve treasury operations and debt management. Address the country’s social and development needs by reducing the cost of running the government and improving the targeting and efficiency of public expenditure. Addressing financial sector vulnerabilities. Take prompt corrective action to address emerging weaknesses which could undermine financial sector stability. Addressing growth bottlenecks and focus on inequality. Ensure that growth is broad-based and sustainable, and its dividends are widely shared. Exchange restrictions and regime. Togo, a member of the WAEMU, accepted the obligations under Article VIII, Sections 2, 3 and 4 of the Fund’s Articles of Agreement as of June 1, 1996, and maintains an exchange system free of restrictions on the making of payments and transfers for current international transactions. The WAEMU’s exchange regime is a conventional peg to the euro.
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