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Togo has gained access to a $58.7 million loan from the International Monetary Fund (IMF) following the completion of the first review under an Extended Credit Facility (ECF) arrangement.
In an official statement, the IMF announced that its Executive Board had finalized the first review of the ECF arrangement for Togo, enabling the country to draw approximately $57.4 million. This arrangement, initially approved on March 1, 2024, aims to help Togo address the lingering impacts of shocks since 2020, including the COVID-19 pandemic and rising global food and fuel prices.
While the Togolese government successfully mitigated the effects of these shocks on its economy and population, this effort led to increased fiscal deficits and debt levels. The IMF-backed program focuses on promoting inclusive growth, ensuring debt sustainability, and implementing structural reforms to support economic expansion while mitigating financial sector risks.
The medium-term outlook for Togo remains broadly favorable, with robust growth expected. Economic growth was estimated at 5.6% in 2023 and is projected to reach 5.3% in 2024–25, stabilizing around 5.5% annually thereafter, according to IMF projections, barring significant adverse shocks. Additionally, headline inflation eased to 3.3% in October 2024, while core inflation, excluding food and transport, declined to 2.2% (annual averages).
Despite this optimism, the outlook faces high risks, particularly from ongoing terrorist attacks in northern Togo, which continue to escalate and strain government spending. Authorities face the difficult task of balancing fiscal consolidation to reduce debt while maintaining growth in the context of limited fiscal space.
Implementation of the ECF program is progressing well. The Togolese government met all end-of-June quantitative performance criteria and is on track to achieve the remaining targets for the year. Furthermore, two of four structural benchmarks have been completed, with prospects for addressing the outstanding elements. The government is also on track to meet the two end-December benchmarks and has made significant progress in reforming the remaining state-owned bank.
After the IMF Executive Board’s review, Deputy Managing Director and Acting Chair, Mr. Bo Li, commended Togo’s progress, stating:
“The Togolese authorities have demonstrated strong commitment to the ECF-supported program. Despite security challenges and tight financing conditions, they have met all quantitative targets and advanced structural reforms to enhance revenue mobilization, inclusion, and public financial management.”
However, Mr. Li cautioned that Togo’s outlook remains subject to elevated risks, particularly due to deteriorating security conditions. He emphasized the need for the government to remain resolute in implementing the program to achieve strong and sustainable growth.
On fiscal policies, the IMF recommended that Togo:
- Address debt vulnerabilities within a regionally volatile context.
- Limit budgetary deficits to 3% of GDP by 2025.
- Increase tax revenues while improving taxation efficiency.
- Implement structural reforms to enhance spending efficiency and improve social safety nets.
Mr. Li also highlighted the importance of strengthening governance, welcoming Togo’s request for an IMF Governance Diagnostic and its commitment to enhancing beneficial ownership declarations for companies involved in public procurement.
Regarding the financial sector, the IMF urged the continued reform of the remaining public banks to ensure regulatory compliance, stability, and profitability. Strengthening the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) framework was also emphasized as a critical priority.
Togo’s determined efforts to implement these measures are vital for securing sustainable growth and addressing the pressing economic challenges it faces.
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