Togo: Trade deficit deepens amid a stronger dollar and higher oil imports bill

Economy

Wednesday, 14 June 2023 03:29

Togo: Trade deficit deepens amid a stronger dollar and higher oil imports bill

(Togo First) - Last year, Togo’s trade deficit widened by 24% year-on-year, with the figure standing at CFA514 billion. This unprecedented increase happened despite exports going up, and a stronger dollar against the euro.

Togo recorded a trade deficit of CFA514 billion in 2022. That is 24% more than the previous year. The gap increase was strongly driven by a rise in goods imports. The latter soared from CFA1,202.7 billion in 2021 to CFA1,444.6 billion FCFA, up by 20%.

Oil was the main reason for the situation. Indeed Togo’s oil imports rose from CFA162.8 billion to CFA259.2 billion FCFA, over the period reviewed. Meanwhile, rising global oil prices, and a stronger dollar, put a lot of pressure on Togo's import budget, and this subsequently led to higher at-the-pump prices.

Regardless, the country’s exports increased by 21.89% to reach CFA900.3 billion in 2022. But this was not enough to balance the leap in imports.

Things were worsened by a significant drop (40%) in the balance of services. Usually in surplus, the latter stood at only CFA29.9 billion in 2022. The collapse was mainly attributed to the increase in freight and insurance bill, which is essential for transporting goods. This bill went up from CFA181.6 billion to CFA218.1 billion or 20.07%.

The strong dollar played a key role in the overall situation. By increasing the cost of dollar-denominated imports, notably the oil bill, the dollar's appreciation had a significant impact on the trade deficit. The potential benefits of this appreciation for exports - notably on phosphate, whose sales remained good, and cotton, despite a bad season - were not enough to counterbalance its effects on imports.

Fiacre E. Kakpo

REFORMS OVERVIEW

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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….

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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... .

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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 .

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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)

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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)

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