WAEMU: Medium-term growth outlook subject to risks

LAGOS (Capital Markets in Africa) – The International Monetary Fund projected real GDP growth in the economies of the West African Economic & Monetary Union (WAEMU), which consist of Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo, at more than 6% annually over the medium term. It said that achieving this growth rate is conditional on all member countries making a strong commitment to implement their fiscal consolidation and development programs, which would improve competitiveness and encourage private investment. It noted that growth is subject to downside risks, including delays in implementing reforms, persistent security risks, as well as uncertainties about the global economic outlook and financial conditions.

In parallel, the IMF indicated that the region’s aggregate fiscal deficit narrowed from 4.3% of GDP in 2017 to 3.9% of GDP in 2018 amid fiscal consolidation. Still, it said that the public debt level and debt servicing cost increased in 2018, due to the still wide fiscal deficits and large public-sector operations. It noted that the convergence of budget deficits pf member countries to the union criterion of 3% of GDP starting this year will be crucial to ensure macroeconomic stability and sustain economic growth. Further, the Fund pointed out that foreign  currency  reserves  at  La  Banque  Centrale  des  États  de l’Afrique de l’Ouest increased from 3.9 months of import cover at the end of 2017 to 4.3 months of import cover at end-2018, supported by Eurobond issuances in Côte d’Ivoire and Senegal.