A rapid response of US$150 million to restore basic services and pay private sector arrears
WASHINGTON, September 15, 2011 - The World Bank today approved a US$150 million International Development Association (IDA) grant to provide a rapid response to the financial crisis faced by the Ivoirian government, while supporting essential reforms to improve governance, transparency and efficiency in public expenditure management and in the key sectors of cocoa, energy and finance.
The grant is an integral part of IDA’s Country Partnership Strategy for Côte d’Ivoire for the period FY10-FY13 as it directly supports its first pillar (reforms for economic governance), and is closely aligned with the government’s new Poverty Reduction Strategy. However, recognizing the dire financial straits of the new government, the size of the grant has been doubled from the level initially planned. The operation would provide financial support to the country as it emerges from its worst crisis ever, enabling it to meet urgent financing needs while moving rapidly to HIPC completion point. The grant is coordinated with assistance provided through the ongoing Governance and Institutional Development Grant, the Enhanced HIPC Initiative, and the IMF-supported RCF program.
“The World Bank is pleased to support Côte d'Ivoire's renewal through this operation as it will help give concrete content to the reconciliation program and facilitate economic and social progress for the Ivorian people” said Madani M. Tall, World Bank Country Director for Côte d'Ivoire, Benin, Burkina Faso and Togo.
Cote d’Ivoire’s economy has been severely impacted by trade sanctions, the closure of the banking system and extensive looting during the recent post-electoral crisis. There has been a sharp fall in revenues, as those revenues which were collected in the first three months of 2011 are not available to the new Government. At the same time, the authorities must honor salary and debt service obligations, coupled with extra spending requirements as a result of the crisis. Thus, the Government is in urgent need of external funding to avoid arrears to employees and suppliers which would have a devastating effect on economic recovery and job creation. It also needs to reassure the population of its commitment to good governance through pursuit of public financial management reforms, and to create the foundations for long-term development and poverty reduction through promotion of key productive sectors.
“The proposed grant provides a bridge between past DPOs and future operations, pursuing reforms initiated in previous grants while responding quickly to the emergency resulting from the recent crisis and the need to relaunch economic growth” said Philip English, World Bank lead Economist.
The proposed Post-Conflict Reconstruction Recovery Grant is consistent with the orientations for Bank engagement in fragile states as outlined in the 2011 World Development Report on Conflict, Security and Development and in the new Africa Strategy. Its objectives are modest, in recognition of the limited time available for the new Government to define its priorities, while promoting incremental institutional change to improve governance and build confidence.