TOGO’S REAL GROSS DOMESTIC PRODUCT (GDP) growth fell to 0.8 per cent in 2008 from 1.9 per cent in 2007, while the inflation rate increased to 8.9 per cent in 2008 from 1.0 per cent in 2007. The rise in international oil and food prices, slow reaction to reforms, and other external factors all caused the tougher conditions.
Problems with the phosphate and cotton industries compounded the slowdown between 2006 and 2008, while power cuts and floods in 2008 disrupted transport and food production. In 2009, real GDP growth is expected to increase to 3.9 per cent with significant investment in infrastructure and a recovery from the supply shocks such as the huge leap in the cost of oil and food prices which pushed up inflation.
However, inflation is expected to fall back to 5.3 per cent in 2009 in line with the fall in international prices.
The government reacted prudently to the price surge by focusing on food production and social measures. It has avoided tax exemptions, export bans and price controls so that changing world prices can be passed on.
The international financial turmoil has not immediately affected remittances which account for an estimated 6 per cent of GDP and come mainly from France, Germany and the United States. The banking sector has not been affected because of the country’s low level of integration into the international financial system.
Substantial economic and political reforms have been undertaken following the government change after the death of President Gnassingbe Eyadema in 2005. The key phosphates, cotton, electricity, transport and state banking sectors are being restructured.
Following a parliamentary election in October 2007 and a three-year Poverty Reduction and Growth Facility (PRGF) programme agreed by the International Monetary Fund in April 2008, Togo has normalised relations with major international creditors. This has opened the way to increased development assistance, which was reflected in a substantial increase in contributions from a donor support conference held in Brussels in September 2008.
Togo is part of the IMF and World Bank’s Heavily Indebted Poor Countries Initiative (HIPC) in November 2008 and could soon get access to relief under the Multilateral Debt Relief Initiative (MDRI) when it completes the initiative.
Much of the 2009/10 GDP growth will come from the higher donor support but this spurt may be short-lived because of a skills shortage, especially in the public sector, which has meant development assistance is not quickly used.