Moody's Upgrades Togo's Economic Outlook to Stable

Economy

Tuesday, 01 October 2024 17:42

Moody's Upgrades Togo's Economic Outlook to Stable

(Togo First) - Moody's Ratings has upgraded Togo's economic outlook from "negative" to "stable." In a rating published on September 27, 2024, Moody's maintained Togo's B3 rating for foreign and local currency borrowings. This upgrade follows a positive assessment from Standard and Poor's (S&P) about the Togolese economy.

Moody's cites improvements in Togo's budget management as a key reason for the upgrade, noting a reduction in the public deficit from 8.3% of GDP in 2022 to 6.7% this year. The agency also mentioned that concerns about fiscal issues have eased. "The Togolese government has been able to chart a clear course towards a gradual reduction in the deficit, in collaboration with the International Monetary Fund (IMF), to place public debt on a downward slope from 2025," Moody's stated.

The Extended Credit Facility (ECF) agreement with the International Monetary Fund (IMF), approved in March 2024, has also contributed positively. "We consider that the Extended Credit Facility (ECF) agreement with the IMF will provide an effective anchor to the effectiveness of the government's fiscal policy, reducing the risks of a sudden deterioration in the future," Moody’s indicated.

Moody's also highlighted Togo's strong debt structure, which consists mainly of domestic borrowings and concessional external debt. This structure helps limit budgetary and liquidity risks.

In line with its agreement with the IMF, Togo aims to reduce its budget deficit to 3% of GDP by 2025, in line with WAEMU convergence criteria. Moody's forecasts a gradual decline in the budget deficit to 5.2% of GDP in 2024 and 4.1% in 2025.

"Our forecasts incorporate some revenue gains, albeit at a slower pace than anticipated by the authorities, and a more gradual reduction in spending in a context of strong pressure on security spending due to the difficult security situation in the north of the country, on the border with Burkina Faso," the rating agency said.

Esaïe Edoh

REFORMS OVERVIEW

STARTING A BUSINESS (more info)

At the fifteenth position, worldwide, and first in Africa, under the Starting a Business index of the 2020 Doing Business ranking, Togo sustains its reformative dynamics with more reforms….

ENFORCING CONTRACTS (more info)

Compared to some years ago when it was one of the lowest rankers under the Doing Business’ Enforcing Contracts indicator, Togo, leveraging many efforts to improve its business climate, was able to jump significantly on the index in the recent years... .

CONTRACT EXECUTION (more info)

Creation of special chambers of commerce for small debts • Creation of chambers of commerce at the Court of Appeal • Civil and commercial cases now handled by distinct clerks • Establishment of commercial courts in Lomé and Kara • Lawyers and bailiffs now have access to the FORSETI COMMERCIAL platform • A maximum period of 100 days was fixed to settle a commercial dispute .

TRADING ACROSS BORDERS (more info)

In comparison to previous years,Togo has significantly improved its ranking under the“Trading across borders” indicator by adopting multiple reforms that focus mainly on the digitization and reduction in delays, for import and export procedures related to import and export.

In comparison to previous years, Togo has significantly improved its ranking on the “Trading across borders” index by adopting multiple reforms that focus mainly on the digitalization and reduction in delays, for import and export procedures related to import and export.

CONSTRUCTION PERMIT (more info)

After moving from the 133rd to 127th place under the 2020 Doing Business’ construction permit index, Togo intends to reiterate this feat in the coming edition of the global ranking. To this end, it has introduced this year multiple reforms.

GETTING ELECTRICITY (more info)

Over the past two years, Togo’s ranking under the Doing Business’ Getting electricity and water indicator has increased consistently. Owing this performance to multiple reforms aimed at making it easier for businesses to access power and water, Lomé plans to introduce even more reforms this year to keep up its improvements.

REGISTERING A PROPERTY (more info)

Out of all the 'Doing Business’ indicators, Property Registration is where Togo has improved the most since 2018. Indeed, after spending years in the lowest part of this ranking, the country now seeks to beat Rwanda which is the best performer on this index in Africa. To do so, Lomé has been introducing many reforms, with the latest batch implemented this year.

PUBLIC PROCUREMENT (more info)

From professionalization to digitization, through legislative regulations, Togo’s public procurement framework is constantly being modernized. Several reforms have been implemented to improve the sector much to the benefit of the private sector, which is the focus of the National Development Plan.

PAYING TAXES AND DUTIES (more info)

To improve its business environment, Togo introduced some important reforms related to the payment of tax and duties. From the replacement of some taxes to the cancellation of others through exemptions, the country has only one objective: offer the most attractive tax framework to investors and economic operators. To achieve this, the authorities relied on digitization.