“The Financial Package to Cote d’Ivoire is an Innovative Solution,” asys Janvier Litse, Director, Operations West, AfDB
Question: The African Development Bank on Friday, March 6, 2009, approved a US$ 506 million arrears clearance package for Côte d’Ivoire and this will enable the institution to re-engage with the country. What role did the Fragile States Facility play in the process?
Answer: Allow me to recall that in 2008, the Bank set up a Fragile States Facility with US$ 900 million. Its main objective was to provide the Bank with an enlarged integrated framework that would enable it help eligible fragile states in a more efficient way in order for them to consolidate peace, stabilize their economies and set the stage for sustainable economic growth. After Togo, which is the first country to benefit from the facility, the discussions that we had started with Côte d’Ivoire and with other donors, especially the IMF and the World Bank, have enabled us to reach the decision that was made on March 6, 2009, by the AfDB board of directors. Côte d’Ivoire has therefore granted US$ 375 million to clear 68.3% of the total amount of its arrears with the Bank. As at April 30, 2007, which was the cut-off date, the arrears stood at US$ 550 million. The Fragile States Facility also contributed US$ 71 million for the financing of the country’s budget support of US$131 million. The Facility will also make it possible for the country to receive significant institutional support. This implies enabling the country to build the capacity of its human resources, especially in the areas of economic and financial governance.
All these actions will not only enable Côte d’Ivoire to consolidate the process that will help it emerge from its crisis, but also reduce its external debt burden which is weighing on the country.
Question: What implications can this decision have on relations between Côte d’Ivoire and the donor community?
Answer: It should be recalled that the Bank’s action is in line with a concerted and harmonized approach by major donors. Côte d’Ivoire’s financing needs for the period 2009-2011 have been estimated at 30% of the country’s GDP; the arrears clearance and budget support operation recently approved by the Bank opens the way for the mobilization of resources from the IMF, the World Bank and the European Union, for the attainment of the HIPC decision point and the rescheduling of the country’s debt within the framework of the Paris and London Clubs. This is a manifestation of the importance of the decision taken by the AfDB board, a decision that deeply involved the institution’s senior management, executive directors and the country team for Côte d’Ivoire. We achieved such results thanks to the flexibility that the Fragile States Facility offers and also to the attention the AfDB board has been paying to the country’s situation. I would also like to underscore the role played by France in the process by granting the country a loan for a few hours.
Question: Besides the Facility’s financing, can the country look forward to other initiatives?
Answer: Côte d’Ivoire is also benefiting from African Development Fund (ADF) resources which have made it possible to co-finance the budget support of US$131million to the tune of US$60 million. We are also expecting to finance an electrification project between Côte d’Ivoire and Mali through this window, by capitalizing on possibilities offered by the ADF multinational package. We can also add support opportunities that our private sector window offers to private entities. We are also looking to restructure our current portfolio in order to better help with the implementation of the poverty reduction strategy recently designed by Côte d’Ivoire.
Question: What are you, in this context, expecting from Côte d’Ivoire ?
Answer: By approving the overall package, the AfDB board has sent the institution’s message of support to Côte d’Ivoire. It has, at the same time, sent a message of expectations to the country, especially the implementation of macro-economic and sectoral reforms to which the country has committed. It will also be necessary for the country to regularly service its debt with the African Development Bank Group, especially during the 2009-2011 critical period, at the end of which the country would have reached the HIPC Initiative completion point. This will make it possible for a part of its multilateral debt to be completely written off; a debt estimated at US$ 2005 billion, including some US$ 312 million owed to the AfDB.