IMF Staff, Côte d'Ivoire’s reach agreement on $1.3bn resilience & sustainability facility

The International Monetary Fund has recently finalized a staff level agreement with Côte d'Ivoire for a $1.3 billion programme aimed at combating climate change. This initiative is bolstered by the fund's Resilience and Sustainability Facility, indicating a significant step towards ensuring the country's preparedness for the challenges posed by climate change. To shed light on the implications of this agreement, Samuel Mathey, President of FAFEDE, shared insights during an exclusive interview with CNBC Africa. Mathey emphasized the pressing need for action, given the vulnerability of Côte d'Ivoire to climate change impacts. Côte d'Ivoire's susceptibility to the adverse effects of climate change has been underscored by unusual rainfall patterns, which led to a decline in cocoa output last year. Mathey highlighted the country's ranking on the ND gain vulnerability index, where Côte d'Ivoire currently stands at 142 out of 185 countries. This positioning reflects a concerning level of unpreparedness for potential climate change events, signifying the urgency of bolstering resilience. With Côte d'Ivoire serving as a key global cocoa producer, contributing over 45% of the world's cocoa output, any significant climate-related disruptions could have far-reaching implications on the global chocolate supply chain. The $1.3 billion allocated by the IMF is not merely for Côte d'Ivoire alone but for the greater global community that relies on the country's pivotal role in cocoa production. Mathey emphasized the critical nature of utilizing these funds effectively to enhance the country's capacity to withstand climate-related challenges. He cautioned against the risks of misallocation and corruption, noting that the success of this endeavor hinges on governance and transparent utilization of the financial resources. Moreover, the IMF's support aligns with Côte d'Ivoire's broader economic trajectory, aiming to elevate the nation to an upper middle-income status. Despite facing upcoming challenges such as the 2025 presidential election and persistent governance issues, Côte d'Ivoire has demonstrated a remarkable economic resilience. Throughout the COVID-19 pandemic, the country maintained positive economic growth, showcasing its diversified economy and robust investment landscape. While the IMF's extended credit facility and the Resilience and Sustainability Facility are poised to catalyze Côte d'Ivoire's growth, ongoing vigilance is crucial to mitigate potential risks. The country's ambitious economic targets, including a projected 6.8% GDP growth in 2024 as forecasted by the African Development Bank, underscore its capacity for sustainable development. However, challenges such as political uncertainties and governance deficiencies pose notable hurdles that must be addressed to ensure long-term economic stability. Furthermore, Côte d'Ivoire's strategic focus on cocoa processing presents an avenue for value addition and job creation within the agricultural sector. By aiming to process a substantial portion of its cocoa exports before sending them to the global market, Côte d'Ivoire seeks to maximize the economic benefits derived from its agricultural resources. This shift towards value-added processing signifies a proactive approach towards enhancing the country's export competitiveness and economic diversification. Inflationary trends in Côte d'Ivoire have remained relatively stable, attributed in part to the country's membership in the CFA franc monetary union. The effective management of inflation rates between 3% and 5% reflects the country's commitment to monetary stability and economic resilience. This consistency in containing inflation positions Côte d'Ivoire favorably compared to other regional counterparts and contributes to its attractiveness to investors seeking stable economic environments. As Côte d'Ivoire embarks on its journey towards climate resilience and sustainable economic development, the successful implementation of the IMF-funded programme will be pivotal in safeguarding the country's vital role in global cocoa production. By addressing climate change vulnerabilities, enhancing governance practices, and leveraging its economic strengths, Côte d'Ivoire is poised to navigate challenges and emerge as a beacon of economic resilience in the region.