Cote d’Ivoire’s HIPC Hoop Hurdles
Cote d’Ivoire Eurobond prices enjoyed a bump as bilateral and multilateral creditors certified post-civil war progress toward the HIPC completion point, triggering $4.5 billion in relief for an external debt/GDP ratio fall to less than 20 percent. With the decision a $40 million interest payment resumed in July, along with token coverage of another $90 million in arrears since the December 2010 suspension as the Finance Ministry revealed a comprehensive reimbursement plan would be forthcoming without mention of further reduction from the previous London Club deal. A new poverty reduction strategy was completed which aims to slash the over 50 percent rate especially in rural areas through public-private investments that enable emerging market-status by 2020. GDP growth has rebounded from last year’s 5 percent drop with the medium-term prospect of breaking from the past decade’s “stagnation” according to the IMF. Fiscal performance is “satisfactory” with increased commodity tax revenue as high oil and cocoa prices yielded a near 7 percent of output current account surplus in 2011. The first review of the reactivated support program in May cited pension, civil service and cocoa industry reforms that can further underpin stability, despite continued human rights investigations at home and abroad that breed tension across ethnic and geographic divides. CFA Franc zone peer Senegal, which is under a Fund non-loan policy instrument, also received an upbeat assessment with 4 percent agricultural and mining-driven growth predicted at inflation half that figure. However it noted the new President who beat longtime incumbent Wade faces strong pressure to deliver on job and power generation promises as Europe’s crisis hurts export demand and remittances and Sahel drought punishes farmers. The budget gap will worsen to above 6 percent of GDP as alternatives to costly energy and food subsidies are pursued in the broader context of raising efficiency and transparency as stipulated in Francophone West African codes and by external bondholders.
In the center of the continent oil giant Gabon too belatedly paid a $30 million June coupon after settling a wrangle with a South African construction firm. 5 percent GDP growth is set and a revised mining regime is to be proposed by year-end in a bid for economic diversification which will include tax incentives and state control limits. In nearby Ghana where offshore petroleum finds recently were tapped growth will slip to high single digits heading into close elections with President Atta Mills seeking another term against a perennial rival. Inflation, fiscal deficit and currency indicators worried the IMF in its latest facility check, with the cedi down 20 percent against the dollar on a combination of political and economic fears, including uncertainty in gold prices which had encouraged the coast.
