IMF says Djibouti's logistics investments bring growth-Xinhua

IMF says Djibouti's logistics investments bring growth

Source: Xinhua

Editor: huaxia

2024-01-26 21:29:21

ADDIS ABABA, Jan. 26 (Xinhua) -- Djibouti's investments in logistics during the last decade have delivered efficiency and growth, a team of International Monetary Fund (IMF) experts have said.

The IMF team of experts made the statement in a preliminary finding issued Thursday after a visit to the Red Sea nation from Jan. 14 to 25.

With Djibouti's concerted investments in logistics during the last decade and as the country became the main port of transit to Ethiopia, its gross domestic product growth averaged over 6 percent between 2013 and 2019, and port performance increased significantly, the IMF statement quoted Joyce Wong, head of the team, as saying.

Wong, however, said the growth was financed by debt, which reached 68 percent at the end of 2022. The combined shocks of the pandemic, the conflict in neighboring Ethiopia, and commodity price increases revealed the need for a more resilient growth model as revenues decreased and fiscal space shrunk.

The IMF staff projected that the recovery will continue in 2024, albeit at a slower pace, and is subject to significant risks stemming from the situation in the Red Sea and developments in Ethiopia.

"The uncertain regional context stresses the need for Djibouti to strengthen its resilience by overhauling its growth model, building fiscal buffers and enhancing governance. In this regard, the authorities have progressed in some key reforms," Wong said.

The IMF experts' team advised a clear medium-term vision for fiscal policy, backed by the highest authorities and directed towards the government's growth and job creation goals, which would ensure policy coherence and consistency while supporting revenues.

"The authorities are cognizant that key constraints to increasing employment include high telecom and energy costs, weak private sector job creation, and informality in employment," Wong said. "They are committed to lowering telecoms costs, including by further liberalizing the sector."