Togo, AfDB Normalize Relations : Board Approves US$ 24 Million for Togo’s Arrears Clearance Program

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Tunis, 23 July 2008 – The Board of Directors of the African Development Bank (AfDB) Group approved on Tuesday, 22 July 2008 in Tunis, US$ 24 million for Togo’s arrears clearance program.

The approval followed the Board’s assessment which indicates that Togo, as a fragile state, had met the criteria to benefit from the Fragile States Facility financial assistance, a new mechanism set up by the Bank Group to provide supplementary operational support to post-conflict countries that meet the two main criteria relating to the country’s commitment to consolidate peace and security, and the implementation of sound macroeconomic and transparent public accounts management.

The Board of Directors were of the view that Togolese authorities had given several positive signals on their commitment to consolidate peace and security by organizing in Lome in 2006, a dialogue among various segments of the population which resulted in the General Political Agreement and the organization of legislative elections under relatively acceptable conditions in October 2007 followed by the formation of a new government. On the other hand, Togo had implemented major macro-economic and structural reforms since 2006. Fiscal management had become more prudent and stringent, and the country had begun to restructure several key sectors of the economy, notably the financial sector as well as the cotton and phosphates sub-sectors where serious problems of governance had been identified. In 2008, the country undertook to implement these reforms under a three-year programme backed by the IMF Poverty Reduction and Growth Facility (PRGF). The PRGF should pave the way for debt relief for Togo under the Heavily Indebted Poor Countries Initiative and the Multilateral Debt Relief Initiatives.

AfDB Assistance to Post-conflict Countries
  • Burundi (October 2004) ;
  • Republic of Congo (December 2004) ;
  • Central African Republic (December 2006) ;
  • Liberia and Comoros (December 2007).

The Board’s decision will enable Togo to normalize relations with the AfDB Group. Since 2001, Togo had been under sanction for accumulated arrears of up to US$ 24.2 million as at 31 December 2007, including outstanding payments for 2008. In view of Togo’s fragile financial situation, the country’s participation in the arrears clearance programme had been limited to a token contribution of 1%.

The Board’s decision is a clear indication of the Bank Group’s willingness to assist Togo’s efforts to overcome its post-conflict problems, in collaboration with other development partners. In view of the effective resumption of activities in the country, a Bank Group mission was in Togo last week for discussions on the preparation of an interim country strategy paper. The mission held discussions with Togolese authorities on the government’s short and medium-term priorities to guide the Bank Group’s interventions in the coming months.

The Bank Group’s commitment to post-conflict countries started in July 2004 when the Boards approved the creation of the Post-Conflict Country Facility (PCCF). To date, the Facility has helped to clear the arrears of five countries (see box). Drawing lessons from these operations, the AfDB decided to intensify its support to post-conflict countries. To this end, the Board, on 28 March 2008, approved a new Fragile States Facility (FSF), drawing on the PCCF mechanisms with significant innovations. The most significant of these innovations is the creation of several windows within the Facility not only to clear arrears, but also to make available to fragile states, a supplementary operational support in addition to the normal allocation and a selective support for capacity building. Togo is the first country to benefit from the Fragile States Facility.

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