Moody's Reaffirms Togo's B3 Rating with Outlook Stable

AFRICAN BUSINESS AND ECONOMYOctober 1, 2024 at 3:51 PM UTC

TLDR

Moody’s reaffirms Togo’s B3 rating on foreign and local currency loans with upgraded outlook to "stable" due to improved fiscal management.
Togo's public deficit has decreased to 6.7% of GDP in 2023, projected to further reduce to 5.2% in 2024 and 4.1% in 2025.
Despite fiscal improvements, Togo faces challenges with public debt at 66.8% of GDP and limited impact on the real economy.

Moody’s has reaffirmed Togo’s B3 rating on foreign and local currency loans while upgrading the country's outlook from "negative" to "stable." The agency cites improved fiscal management, highlighted by a reduction in the public deficit to 6.7% of GDP, down from 8.3% in 2022.

Moody’s projects the deficit will fall further to 5.2% in 2024 and 4.1% in 2025, supported by higher revenue relative to GDP. Togo has also bolstered access to concessional financing, securing a three-year $390 million IMF program and a $600 million package from the World Bank this year.

However, public debt remains a concern, at 66.8% of GDP in 2023, up 25 percentage points over eight years. Moody’s notes that public policies have yet to significantly impact the real economy, with GDP per capita in purchasing power parity at $2,764, one of the lowest in West Africa.

Key Takeaways

Moody’s decision to improve Togo’s outlook reflects cautious optimism about the country’s fiscal trajectory, driven by better deficit control and enhanced access to concessional funding. However, significant risks remain. Public debt has grown significantly without corresponding improvements in living standards or foreign investment. While Togo’s government has undertaken reforms to boost the business environment, Moody's indicates these efforts have yet to yield significant transformation in the real economy. The country's reliance on concessional financing from institutions like the IMF and World Bank is a positive sign for short-term fiscal stability. Still, long-term economic growth will require more robust reforms and improved debt management.

Togo

Economy

Moody's

Credit Rating

Sovereign Credit