Togo wants to lower domestic debt to 54.6% by 2026

Economic governance

Monday, 08 April 2024 17:08

Togo wants to lower domestic debt to 54.6% by 2026

(Togo First) - Togo hopes to lower its domestic debt by 7 percentage points over the next three years, bringing it to 54.6% in 2026. The ambition was disclosed in the public administration's medium-term debt management strategy.

Last year, Togo’s outstanding public debt stood at CFA3.707 trillion–mostly denominated in CFA. External debt represented 61% (CFA2.276 trillion) and domestic debt 38.61% (CFA1.431 trillion). Over the same period, the country’s debt to multilateral partners stood at CFA864.02 billion (23.3% of the total debt or 15.53% of GDP).

Over the next three years, Lomé will focus on reducing its exposure to domestic lenders. According to the recently disclosed strategy, the country will focus on “increasing external debt to further lower refinancing risk and relying on debt raised in the regional market with maturities ranging from 1 to 10 years to meet financing needs”.

Among its fundraising tools abroad, the State plans to emphasize concessional and commercial external borrowings.

Low Foreign Exchange Risks

Regarding foreign exchange risks, it should be underscored that Togo's debt, primarily denominated in CFA and euros, remains less exposed to exchange rate fluctuations than in 2022.

“The outstanding debt consists of 71.30% in CFA and 14.95% in euros, representing 86.25% non-fluctuating debt and 13.75% debt exposed to exchange rate fluctuations.” However, “the country remains vulnerable to fluctuations in major currencies such as the US dollar and the Chinese yuan,” with exposures of 5.42% for the US dollar and 3.62% for the Chinese yuan (CNY), respectively.

From 2019 to 2023, Togo's debt has increased from CFA2.197 trillion to CFA3.707 trillion, at an average growth rate of 17% per annum.

Ayi Renaud Dossavi

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