Previous Quarterly Editions
Expropriation Risk: 57 54 54 53 ►Political Violence Risk:57 51 51 51 ►Terrorism Risk:46 46 46 44 ►Exchange Transfer and Trade Sanction Risk: 54 63 55 55 ►Sovereign Default Risk:73 73 73 73 ►
TREND ►
Protest intensity to date* 2022 2023 Low LowUnrest risk in 2024**Cost of living: HighAnti-austerity: Medium
The combined impact of the COVID-19 pandemic, rising global interest rates and the economic fallout arising out of Russia’s invasion of Ukraine in February 2022, along with more localized factors such as increased security spending, have all contributed to a steady widening of Côte d’Ivoire’s fiscal and external imbalances.
*Note: Protest intensity is calculated based on ACLED. **Risk levels are calculated by WTW. Where data are missing no risk level will be displayed. For details of 'anti-austerity' calculations, see the essays in the introduction; for details of 'cost-of-living' calculations, see the previous edition of the Index.
While the deterioration in the francophone West African country’s economic outlook constitutes a deterioration in the economic outlook rather than a full-blown crisis, it was nonetheless sufficient for the International Monetary Fund (IMF) to approve in April a request by President Alassane Ouattara’s government for a US$3.5 billion Extended Credit Facility, to help the country navigate these economic headwinds.
The three-and-a-half-year loan, the first disbursement of which was made in May 2023, will be used to support fiscal and debt sustainability and to promote the government’s 2021 – 2025 National Development Plan, which seeks to put West Africa’s largest economy on the path from lower to upper middle-income status by 2030.
Côte d’Ivoire’s US$70 billion economy saw its key economic indices rebound swiftly from the pandemic, with GDP growth recovering to 7% in 2021 after contracting to 1.7% in 2020. It is currently expected to see growth of around 7% for 2023, according to recent IMF and government forecasts.
President Ouattara — a U.S.-educated economist from the Muslim north with a long career in the IMF — has been in power since former President Laurent Gbagbo was forcibly ejected from office in 2010 for refusing to accept Ouattara’s election victory. He was reelected in 2015 and, more controversially, won a third term of office in 2020. Yet Ouattara will have to step down when his current term expires in 2025. A clear successor has yet to emerge.
During this time, Côte d’Ivoire has emerged as the most resilient economy in West Africa with one of the highest economic growth rates in the regional Economic Community of West Africa States grouping.
With little or no risk of the government defaulting on its stocks of public debt, and with investor perceptions of the risk of outright expropriation of private sector assets deemed extremely remote, Côte d’Ivoire is expected to retain its B-rated sovereign credit status despite the economic headwinds affecting the West Africa region.
But while confidence in Ouattara’s orthodox economic policies remains high, the government’s track record and Ouattara’s prestige as a distinguished former IMF official have not been sufficient to cushion the francophone country from all setbacks. Abidjan failed, for example, to issue a local currency debt in March as investors demanded higher interest rates than the government was prepared to offer — one of a series of Eurobond and Treasury bill auctions that have been postponed or canceled across the sub-Saharan Africa region amid tightening liquidity.
Moreover, while the IMF approval of a US$3.5 billion loan in April will help to shore up the country’s fiscal and debt positions, the additional funding comes with strings attached. One quid pro quo requires the government to phase out broad-based food and fuel subsidies in favor of more targeted cash transfers — something that is likely to prove highly unpopular with those losing government support.
The government continues to press ahead with plans to capture an ever-greater proportion of the US$130 billion global chocolate industry — forecast to rise to US$200 billion by 2028 — with a target of processing 100% of all cocoa produced domestically by 2030. This is likely to benefit processors that have invested in local processing capacity, while others could find themselves squeezed out of the value chain.
The rapid economic recovery from the COVID-19 pandemic has helped to obviate any threat of political protest arising out of the economic dislocations caused, although such threats were fanned anew with a sharp spike in food and fuel prices following Russia’s invasion of Ukraine.
Global consumers are fully aware of the higher oil, gas and coal prices triggered by the Russian invasion of Ukraine but have yet to feel the effect of higher cocoa prices currently in the pipeline. Cocoa prices reached a 50-year high on the London and New York markets earlier this year in response to growing shortages of supply.
Cocoa is a fertilizer-dependent crop, and with the supply and price affected by Russia’s aggression, cocoa farmers have not been able to buy sufficient fertilizer for their crops. This has resulted in a sharp drop in yields and higher prices. Fertilizer supply disruptions and price rises have also led to considerable hardship among low-income cocoa famers, which might require government intervention to ward off potential protests.
While political tensions between President Ouattara’s Rally of the Republicans party and assorted opposition groups have greatly diminished since the president won a third term in 2020, a fresh round of municipal elections due in October will be seen as a test of the depth of national reconciliation.
As jihadist groups in the Sahel steadily move southward, Côte d’Ivoire has progressively boosted security spending in the north and introduced a range of policies targeted at alleviating poverty and youth unemployment that provide the oxygen upon which extremist groups thrive.
Militant violence has declined markedly since the series of attacks that took place in 2020 to 2021 and the 2016 machine gun attack at the Grand Bassam tourist complex some 25 miles to the east of Abidjan in which 19 people were killed, for which Al-Qaida in the Islamic Maghreb claimed responsibility. Despite fears of further attacks, neither Al-Qaida nor Islamic State have so far managed to secure a foothold in the country.
Inflation fell to 4.1% in August, down from 4.6 % in July, thanks in no small part to the price caps introduced by the government in November, which helped forestall any threat of an inflationary spiral arising out of the triple external shocks due to the pandemic, the global rise in interest rates and Russia’s invasion of Ukraine.
The IMF’s decision to authorize the 40-month, US$3.5 billion Extended Credit Facility should enable the government to cope with any short-term pressures on its fiscal and external balances.
Despite the global economic fallout triggered by the pandemic, rising interest rates, and the fuel and food price rises arising from Russia’s war against Ukraine, public debt has remained steady at around 57% of GDP. Public debt is forecast to fall to 50.8% of GDP by 2027, and total debt stocks have remained steady at US$44 billion.
Strong economic growth underpins the country’s robust B-sovereign debt profile, and while spending on the Africa Cup of Nations tournament could strain the country’s fiscal balances, the overall fiscal deficit for 2023 is unlikely to exceed the projected 5% of GDP. As the Treasury is on target to reach its target of tax revenues of 14.6% of GDP by 2025, that deficit can be expected to narrow further.
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