Moody's Ratings has upgraded Togo's economic outlook from "negative" to "stable." In a rating published on September 27, 2024, Moody's maintained Togo's B3 rating for foreign and local currency borrowings. This upgrade follows a positive assessment from Standard and Poor's (S&P) about the Togolese economy.
Moody's cites improvements in Togo's budget management as a key reason for the upgrade, noting a reduction in the public deficit from 8.3% of GDP in 2022 to 6.7% this year. The agency also mentioned that concerns about fiscal issues have eased. "The Togolese government has been able to chart a clear course towards a gradual reduction in the deficit, in collaboration with the International Monetary Fund (IMF), to place public debt on a downward slope from 2025," Moody's stated.
The Extended Credit Facility (ECF) agreement with the International Monetary Fund (IMF), approved in March 2024, has also contributed positively. "We consider that the Extended Credit Facility (ECF) agreement with the IMF will provide an effective anchor to the effectiveness of the government's fiscal policy, reducing the risks of a sudden deterioration in the future," Moody’s indicated.
Moody's also highlighted Togo's strong debt structure, which consists mainly of domestic borrowings and concessional external debt. This structure helps limit budgetary and liquidity risks.
In line with its agreement with the IMF, Togo aims to reduce its budget deficit to 3% of GDP by 2025, in line with WAEMU convergence criteria. Moody's forecasts a gradual decline in the budget deficit to 5.2% of GDP in 2024 and 4.1% in 2025.
"Our forecasts incorporate some revenue gains, albeit at a slower pace than anticipated by the authorities, and a more gradual reduction in spending in a context of strong pressure on security spending due to the difficult security situation in the north of the country, on the border with Burkina Faso," the rating agency said.
Esaïe Edoh