Togo: Banks’ Public Debt Exposure Down 29% since 2019

Banking
Monday, 04 November 2024 11:46
Togo: Banks’ Public Debt Exposure Down 29% since 2019

(Togo First) - In five years, Togo's banks have cut their exposure to public debt by about 29% (28.88%). This information comes from a report by the International Monetary Fund (IMF) during Togo's recent economic assessment under the Extended Credit Facility (ECF). As of January 2024, the total receivables from the State and public enterprises made up 22.9% of the total assets in Togo's banking sector, down from 32.2% in 2019.

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While this percentage remains higher than averages for the West African Economic and Monetary Union (WAEMU) and sub-Saharan Africa, it shows a trend of reducing obligations to the government, according to IMF experts.

“This decline is mainly due to a reduction in the share of government securities and loans to state-owned enterprises in total banking sector assets,” they noted. Additionally, there has been a decrease in the ratio of government claims in the private sector, which fell from 59.3% to 47.8% during the same period.

At the same time, Togolese banks have increased their financing from other WAEMU countries, stating: “Bank exposure would rise to 38% of total assets and the ratio of public and private sector receivables to 79.3% at the end of 2023 if exposure to other UEMOA countries is considered.” This shift suggests that Togolese banks are increasingly favoring sovereign bonds, considered less risky than private sector loans. However, this could potentially hinder credit growth in underfunded sectors like agriculture.

Ayi Renaud Dossavi

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