Recent debt relief measures will not help Togo, according to Moody’s

Public finance

Monday, 04 May 2020 16:41

Recent debt relief measures will not help Togo, according to Moody’s

(Togo First) - Recent debt relief measures will have very little impact on Togo’s needs for financing, according to US rating agency Moody’s.

In a recent assessment of the Togolese economy released on April 27, 2020, the agency explains that for 2020, debt servicing to official lenders (bilateral and multilateral) equals only 1% of the GDP, while payment of external interest rates for its part corresponds to around 0.2% of the GDP.

Meanwhile, the country’s financing needs are estimated at close to 18% of the GDP for the same period.

For Togo, the debt relief approved by the IMF for 25 developing countries on April 25 clears only about XOF3 billion of its debt. Moreover, the decision of the G20 to delay debt payment does not affect the country’s budget much. This is because Togo, for a long time, received no external funding and its debt is mostly internal.

Very recently, many African leaders, as well as major international finance actors, asked the IMF to proceed to an urgent issue of IMF’s special drawing rights for Africa.

Commenting on possible solutions, Boni Yayi, former President of Benin and ex-chief of the BOAD, declared in an interview with French newspaper Le Monde: “Concerning economic solutions adapted for the continent, I believe there are two main challenges: First, new funds should be mobilized to handle the crisis sparked by the virus; Second is writing off Africa’s debt in the framework of a strategic partnership, without impairing the continent’s attractiveness.”

Fiacre E. Kakpo

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.