The IMF Executive Board approved the disbursement of $886.2 million to help Côte d'Ivoire meet the urgent financing needs created by the Covid-19 pandemic.

While the IMF had delivered, in December 2019, an overall satisfaction to Côte d'Ivoire, whose economic outlook was favorable, with growth expected of 7.5% for 2020 and a strengthening of fiscal discipline, the coronavirus pandemic has upset the dynamics.

Its impact will be considerable, and the short-term outlook is rapidly deteriorating, warns the institution, which believes, however, that " the Ivorian authorities have responded promptly to the pandemic by relying on an emergency medical plan and an ambitious economic policy plan aimed at providing targeted support to the populations. vulnerable and businesses affected by the pandemic ."

More aid than the initial plan

As part of its response plan, on 17 April the institution approved a disbursement of $295.4 million under the Rapid Credit Facility, i.e. in the form of a 0-rate loan repayable in ten years, and a disbursement of $590.8 million under the Rapid Financing Instrument (RFI), a credit to be repaid between three and five years.

In total, this assistance of $886.2 million represents 100 per cent of Côte d'Ivoire's quota. Quota is a figure assigned by the IMF to each country based on its relative position in the global economy and is used to define the amount of financial assistance that a member state can obtain from the institution. It provides that each member country may borrow up to 200% of its quota annually and may have a maximum outstanding credit of 600% of its quota with the institution. However, these access limits may be raised in exceptional circumstances.

This is the case with the current crisis, which has caused the IMF to review its rapid financing mechanism: whereas at the beginning of April, it planned to allow its members to borrow only 50% of its quota under its two emergency procedures, it ended up doubling that funding limit.

A health and economic response plan

While Côte d'Ivoire quickly formulated a strong response to the health crisis, with social distancing measures, containment measures and an emergency medical plan, these measures have, as elsewhere, had a negative impact on the economy. Added to this is the sharp slowdown in economic activity among Côte d'Ivoire's trading partners and the negative shock to investor confidence.

" But the authorities have announced an ambitious economic response plan, amounting to 1.5% of GDP for 2020, to support the income of the most vulnerable populations, through measures to support agricultural inputs and wider coverage of social safety nets; and to support the sectors and businesses most affected. és; and finally, to sustain supply chains by supporting state-owned enterprises in the logistics sector," the IMF said.

Absorbing the deficit in the post-crisis period to "preserve the gains"

"Given the severity of the pandemic, the envisaged temporary increase in the budget deficit is appropriate, even if it means a temporary deviation from the convergence criterion of 3% of GDP [which Côte d'Ivoire had moved closer to in 2019 and was expected to reach in 2020]," said IMF Deputy Managing Director Mitsuhiro Furusawa, who chaired the April 17 Executive Board meeting at which the aid plan was voted.

Mitsuhiro Furusawa insisted on the importance of transparency in the allocation of Covid-19 aid, and affirmed that when the crisis is resolved, " it will be important that the budget deficit returns to its pre-crisis trajectory, to preserve both the achievements made under the program with the IMF and medium-term debt sustainability."

Under a program with the IMF since 2016, Côte d'Ivoire saw in December 2019 its three-year agreements with the institution extended by one year. These, which provided for total access to $896.7 million, or 100 per cent of Côte d'Ivoire's assessed contribution, were thus increased to $1,163.6 million, or 129.8 per cent of Yamoussoukro's quota. A response to the "considerable development gains that Côte d'Ivoire has made over the past decade," the institution said.