TOGO

Key conditions andchallenges

Table 12023

Population, million

9.1GDP, current US$ billion

9.1

GDP per capita, current US$1008.3

International poverty rate ($2.15)

a26.6
a58.8

a86.8

Lower middle-income poverty rate ($3.65)
Upper middle-income poverty rate ($6.85)
Gini index

a37.9

School enrollment, primary (% gross)b122.5

b61.6

Total GHG emissions (mtCO2e)

10.2Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2021), 2017 PPPs.
b/ WDI for School enrollment (2022); Life expectancy(2021).

Growth is projected to moderate in 2024
before picking up again in 2025-26, albeit at a slower-than-expected pace reflecting a deteriorated external environment including ECOWAS uncertainties,
and ongoing fiscal consolidation efforts.
As growth strengthens, the extreme
poverty rate should decline to 21.5 in
2026, down from an estimated 25.8 in
2023. Risks of regional instability, financial turbulence, and climate pressures callfor resilience-enhancing reforms combined with prudent fiscal policies.

Growth has been resilient to a sequence ofshocks since the COVID-19 pandemic, butvulnerable populations have been adversely impacted by elevated inflation, while
significant rural-urban disparities in economic opportunities and access to basic
services continued to hamper progress in
reducing poverty and inequality. A strong
fiscal response explains a significant partof the economic resilience in recent years
but contributed to bringing public debt torecord high levels, averaging 63.0 percent
of GDP in 2020-22. Amid tighter financing
conditions, rising debt service costs, andgrowing regional uncertainty, developing
a well calibrated fiscal consolidation strategy that preserves priority investments andcritical social spending, and privileging external concessional financing over more
expensive regional borrowing have become increasingly urgent. Mobilizing private investment, including for infrastructure development and in agriculture, could
help boost growth and the welfare of mostvulnerable and poorer populations while
fiscal space is being restored.

Recent developments
Despite a series of unprecedented shocks,
Togo maintained a robust 4.8 percent average growth rate over 2020-23, equivalent

to real income per capita gains of 2.4 percent per annum. Growth is estimated tohave moderated to 5.4 percent in 2023, reflecting weakness among key trading partners and a retrenchment in public spending as part of initial consolidation efforts.
While the extreme poverty rate (at $2.15
2017 PPP) dropped to 26.6 percent in 2021,
from 28.4 percent in 2018, the actual number of extreme poor increased. Moreover,
the rural-urban gap in welfare remained
persistently high, with 41.3 percent of therural population facing extreme poverty in
2021, compared to an urban rate of just 7.1
percent. Since 2021, rising inflation impacted households’ purchasing power, and despite sustained economic growth andhigher agricultural incomes, extreme
poverty remained nearly constant at 26.7
percent in 2022, dropping slightly to 25.6
percent in 2023. This slow poverty reduction coupled with faster population
growth led to about 40,000 additional extreme poor between 2021 and 2023.
The fiscal deficit remained elevated at 6.6
percent of GDP in 2023 but narrowed froma three-decade high of 8.3 percent in 2022.
The improvement resulted from lower
transfers and subsidies, restrained goods
and services expenditure, and increased
revenues. However, elevated security
spending and new economic and social infrastructure investments prevented fasterconsolidation, causing the debt-to-GDP ratio to further increase to 67.2 percent ofGDP. Regarding monetary policy, the Central Bank of West African States (BCEAO)
raised policy interest rates by a cumulative
150 basis points since mid-2022 (to 3.5 percent for liquidity calls and 5.5 percent for

FIGURE 1 Togo / Real GDP growth and fiscal balance

FIGURE 2 Togo / Actual and projected poverty rates andreal GDP per capita

Percent
7Poverty rate (%)

Percent of GDP
4

6Real GDP per capita (constant LCU)

100

70000090

2600000

80

50

4-2

70

50000060

400000

50

3-4

2-6

1-80-10
2010

2012

2014

2016

Fiscal balance (rhs)

2018

2020

UTB recap.

2022

2024

300000403020000020

10000010002011 2013 2015 2017 2019 2021 2023 2025

2026

Real GDP growth

Source: World Bank.
Note: World Bank projections start in 2023.

International poverty rateLower middle-income pov. rate

Upper middle-income pov. rate

Real GDP pc

Source: World Bank. Notes: see Table 2.

MPO

1Apr 24the marginal lending facility) but inflationin the region remained above the 1-3 percent target range and foreign exchange reserves dropped further to 3.5 months ofimports in 2023.

OutlookWith global demand remaining subdued
in 2024 and fiscal consolidation measuresintensifying, growth in Togo is projected
to slow to 5.1 percent in 2024 (2.8 percent
per capita terms), before graduallystrengthening to 5.4 percent in 2025 and 5.6
percent in 2026. While slower than initially
expected due to faster fiscal consolidation
and regional uncertainties, growth will besupported by domestic demand with ongoing and planned private investment projects and a recovery in consumer spending
as inflationary pressures taper. Exports
will provide an additional boost from 2025
as the global economy regains somestrength while public investment shouldregain momentum from 2026 as fiscal consolidation ends. Ongoing reforms should
help support agriculture productivity andboost private investment. The announced
exit of Mali, Niger, and Burkina Faso fromECOWAS is expected to lead to relatively
modest trade disruptions in the short term
but is heightening regional uncertainty,
which could weigh on investment sentiment, notably around the development of
the Lome-Ouagadougou-Niamey economic corridor. The BCEAO may need to continue tightening monetary policy in 2024
to bring inflation under control and prevent further declines in foreign reserves.
Poverty is projected to moderate gradually
in 2024 and 2025, and more substantially in2026, to reach 21.2 percent.
In line with the fiscal framework agreed in
the context of the new IMF program andWEAMU commitments, the fiscal deficit isexpected to decline to 4.5 percent of GDP in
2024 (excluding the one-off effect of the recapitalization of the state-owned bank UTBamounting to 1.6 percent of GDP) and 3.0
percent in 2025 driven by a drop in capital

TABLE 2 Togo / Macro poverty outlook indicators

spending and transfers on the expenditureside, and by tax and customs reforms andthe rationalization of tax exemptions on
the revenue side. The government faces
difficult tradeoffs in its fiscal consolidation
strategy to minimize disruptions to priority investments and public services.
The growth outlook is subject to multiple
downside risks. Longer lasting disruptions
to global trade, commodity, and financial
markets following a sequence of unprecedented shocks in recent years could havea significant knock-on effect on a small,open, and relatively indebted economy
like Togo. A disorderly exit of Mali, Niger,
and Burkina Faso from ECOWAS, and possibly from WAEMU, could lead to financial
market instability in the short term andtrade dislocations over the medium term.
Additional downside risks stem from rising insecurity in the North that could
weigh on investment, trade, and public finances, as well as climate shocks that negatively impact agricultural productivity. Finally, reforms could stall and hamper confidence in Togo’s development trajectory.

(annual percent change unless indicated otherwise)

Real GDP growth, at constant market prices
Private consumption
Government consumption
Gross fixed capital investment
Exports, goods and services
Imports, goods and services

2021
6.0
9.9
0.2
-0.2
5.3
6.9

2022
5.8
1.3
8.8
26.4
-1.1
5.1

2023e
5.4
4.8
5.6
7.2
4.2
3.8

2024f
5.1
6.0
3.1
4.4
4.9
4.3

2025f
5.4
5.9
6.1
3.7
6.4
5.0

2026f
5.6
5.8
5.9
4.8
6.8
5.4

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

5.3
3.4
5.7
5.9

6.2
5.0
7.3
6.2

5.3
5.1
7.1
4.6

5.0
4.1
6.4
4.8

5.4
4.5
6.8
5.1

5.6
4.2
6.9
5.5

Inflation (consumer price index)

4.5

7.5

5.3

3.5

3.0

2.7

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

-0.9
0.3

-3.0
0.3

-3.3
0.4

-3.4
0.4

-3.0
0.5

-3.0
0.4

Fiscal balance (% of GDP)
Revenues (% of GDP)
Debt (% of GDP)
Primary balance (% of GDP)

-4.7
17.1
63.0
-2.5

-8.3
17.6
65.8
-5.9

-6.6
17.8
67.1
-4.5

-6.2
18.1
68.8
-3.8

-3.0
17.9
67.0
-0.5

-3.0
18.0
65.0
-0.7

26.6
58.8
86.8

26.7
58.7
86.8

25.8
57.2
85.8

24.5
55.6
84.9

22.7
53.5
83.7

21.5
50.9
82.7

6.4
25.7

5.4
26.9

2.9
26.4

4.0
26.4

4.4
26.4

1.2
20.2

a,b

International poverty rate ($2.15 in 2017 PPP)
a,bLower middle-income poverty rate ($3.65 in 2017 PPP)a,b
Upper middle-income poverty rate ($6.85 in 2017 PPP)
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD.
Notes: e = estimate, f = forecast.
a/ Calculations based on 2018-EHCVM. Actual data: 2018. Nowcast: 2019-2023. Forecasts are from 2024 to 2026.
b/ Projections using microsimulation methodology.

MPO

2Apr 24