Sistema automático y sistema reflexivo

Côte d’Ivoire’s relation with multilateral donors during the period under study may be divided into three periods – before the coup of December 1999, the period of suspension of aid (2000) and the period of renegotiation (2001).

Despite continuing to suffer from a huge debt burden, Côte d’Ivoire experienced rapid economic growth in the three years after devaluation.330 In 1997 World Bank lending was high, and Côte d’Ivoire signed its second three-year ESAF in February 1998, which released over a billion dollars of loans from the World Bank and IMF.331 In addition, Côte d’Ivoire was declared by the IMF in March 1998 to be eligible for the HIPC initiative, which would bring substantial debt relief from bilateral and multilateral lenders over three to six years. Both these decisions helped trigger a debt relief decision from the Paris club of bilateral lenders (in April 1998).332

Increasingly dense interaction between donors was apparent during this period. The exchange of information at the general level was far more regular and thorough than in the 1980s, while an increasing number of sector wide projects were co-financed by different donors. Equally, there was a far greater coordination of conditionalities than before, with the IFIs taking an accepted lead on formulating those on economic policy. It is notable for example that a major donor consultation meeting was held in Abidjan in May 1998 to endorse the ESAF linked Policy Framework Document negotiated by the IMF in March.333

329 _{Personal interviews. Many analysts and journalists shared these doubts. See the RFI editorial of 25}

December 2000 and Jeune Afrique, 5 décembre 2000.

330 _{Debt as a percentage of government revenue was 42.2 % in 1997, 43.6 % in 1998 and 47.6 % in 1999,}

in IMF Public Information Notice, 2 October 2001. Côte d’Ivoire's economic growth rates were as follows during this period: 1995: 7.12%; 1996: 7.72%; 1997: 5.72% 1998: 4.75% 1999: 1.58%. It is instructive to compare these figures to the figure for 2000, after the coup: -2.47%. (source: World Bank).

331 _{See Jeune Afrique, 17 février 1998 and the announcement of the first IMF tranche of $167 million}

covered in Marchés Tropicaux, 20 mars 1998. The ESAF loan is essentially a way of packaging a series of World Bank sector based loans (World Bank loans account for $800 million of the $1185 million ESAF announcement).

332 _{This decision, for a total of $1.4 billion, was announced in April 1998 and followed a similar decision}

in May 1997 (see Marchés Tropicaux, 1 mai 1998). Note that France accounted for 51% of Côte d’Ivoire’s bilateral public debt and 52% of Côte d’Ivoire’s private debt is to French banks. See Marchés Tropicaux, 27 mars 1998.

333 _{This analysis has been helped by interviews with French, European Commission and Ivorian officials}

One result of this donor interaction is that relations with donors tend to oscillate between upswings, when donors agree on a positive assessment of a country’s progress, and downswings when a break in relations with one donor can lead to others following suit (this implicit or explicit link between conditions set by donors is referred to as “cross conditionality”). In the first half of 1998, Côte d’Ivoire’s relations with donors were in an upswing, allowing both sides to talk optimistically of the “last generation” of adjustment lending and looking forward to moving from adjustment lending to conclusive debt relief.

However, with extremely tight financial margins, optimism can be short lived. By the late summer 1998, the IMF ESAF lending had been delayed due to unfulfilled conditions.334 _{By the beginning of 1999, Côte d’Ivoire and the IMF were in open}

conflict, with Bedié publicly attacking IMF officials (and by implication his main political rival Ouattara, who had returned to the IMF). The second year of the ESAF agreement was not in place by the summer of 1999, with the IMF citing concern over the willingness of the Ivorian government to carry out reforms and questions over accounting practices.335 While the IMF avoided the word corruption in its carefully worded statements, the breakdown in relations with the European Union (EU), also in 1999, was more spectacular as the details of a major corruption scandal in an EU- funded health sector project was splashed across the newspapers.336

Relations with donors, as well as the Ivorian economy as a whole, were therefore at a low point at the end of 1999. The effect of the coup of December 1999 was simply to accentuate this. Initially, aware that relations with the IFIs were crucial to keeping his newly acquired state machinery above water, Gueï kept up a minimum of repayments to private donors and the World Bank. However, he could not prevent the economy continuing its slide started in 1999, and the increased disorder in the wake of the coup simply served to make donors and investors hesitate or pull out.337

The FPI regime started intense negotiations with the IFIs in February 2001. The instability of 2000 had left the country’s public coffers empty, and IFI lending was still

334 _{See Marchés Tropicaux, 9 octobre 1998 and Africa Confidential, 11 September 1998, which claims}

that the difficulties were due to a “spending spree” by the Ivorian government after the signing of the ESAF in March.

335 _{See IMF public information notice 16 July 1999. See also Le Monde, “Crise ouverte entre la Côte}

d’Ivoire et le Fonds Monétaire International”, 16 mars 1998.

336 _{See Le Monde, “Les Ivoriens apprennent par la presse le détournement de l’aide européenne”, 21 juin}

1999.

337 _{Details of donor relations in this period are found in IMF Public Information Notice, 12 July 2000 and}

blocked due to arrears.338 A visit by IMF officials to Abidjan in April ended in familiar acrimony due to disorganisation in the Ivorian Finance Ministry (despite the presence of French coopérants). In late April the IFIs laid down 14 conditions for restarting their aid, covering public accounting, fiscal coverage, accelerating the privatisation process and starting the preparation for a Poverty Reduction Strategy Paper (PRSP), the latter necessary for a Poverty Reduction and Growth Facility (PRGF) loan. The IFIs also demanded a “secured budget”, which balanced the books independently of IFI lending, thereby stopping the build up of further arrears while new disbursements were frozen. This was duly passed at the end of May.339

The hesitant attitude of the IFIs in 2001 was mirrored in the position of the European Union. Negotiations opened in February 2001 under article 96 of the Cotonou agreement, which made provision for negotiations between the parties in the case of violations of obligations concerning human rights, democratic principles and the rule of law, and allowed the EU to take “appropriate measures” in the case of non-compliance (that is suspend aid payments). The European Union’s assessment, concentrating on human rights, judicial process and elections, was damning. A six-month assessment period was agreed, accompanied by demands that the Ivorian authorities pursue national reconciliation and carry out prosecutions for human rights abuses. The Ivorian side left the negotiations with an unsuccessful plea that some European Commission spending be resumed before the end of the six-month review.340

One of the more remarkable features of this period was that the IFIs made an agreement with the European Commission a precondition for restarting their aid, in an unprecedented inversion of the customary procedure. This may be seen as a way for the IFIs indirectly to impose political conditions on their aid, which they are not allowed to do directly (under their charter). A division of labour in the imposition of conditionalities therefore emerged, with the IFIs setting economic conditions, while

338 _{On 1 March 2001 the World Bank put Côte d’Ivoire in “non-payment status” due to overdue payments}

of six months. This meant that all World Bank lending on new or outstanding projects was suspended. See World Bank, news release, 1 March 2001.

339 _{The ESAF was renamed the PRGF in November 1999 to reflect the new holistic and poverty}

orientated approach the IFIs wanted to present. See Chapter 2 and Marchés Tropicaux, 20 avril 2001. Details of the Côte d’Ivoire budget at this time are in Fraternité Matin, 22 mai 2001. The hesitant approach of the IMF during the first six months of 2001 is expressed in the IMF Public Information Notice (PIN) of 31 August 2001.

340 _{The EU position is found in the presidential statement of 15 February 2001. Note that while}

condemning the unrepresentative nature of the elections of 2000, the EU did not demand fresh elections, but saw the political reconciliation process as compensation.

deferring to those of the European Commission on human rights and democracy.341 Under pressure from the French, the European Council decided in June 2001 to restart Commission aid. This decision was based on the successful local elections of March 2001, ongoing political dialogue and an improvement in the security and human rights situation. However, the level of spending was made conditional on further progress, and the European Council and Commission made further demands and outlined areas of “further concern” including the continued failure to bring to justice the perpetrators of human rights abuses in 2000.342

The EU decision and the payment of some arrears to the World Bank enabled the IMF to start an interim Staff Monitored Programme (SMP) in July 2001. Côte d’Ivoire was again into an upswing period of donor relations, not experienced since 1998, although donor disbursements were extremely slow in the later half of 2001.343 The holding of a major “National Reconciliation Forum” in November 2001 reassured the European Commission, which restarted aid fully in February 2002. Negotiations with the IMF for a new three-year programme started in November and in January 2002 World Bank lending resumed. In March 2002 the IMF agreed to a three-year PRGF loan, which in turn stimulated bilateral donors to agree to a large debt reduction package in April. Côte d’Ivoire, in the words of its president in February 2002, “is back”.344

What is remarkable in this period of relations with multilateral donors is the continuity in the nature of the tortuous negotiations. Various assumptions of the development aid relationship hold true both before and after the coup, especially the idea that the recipient country government does not wish to implement reforms, and that multilateral lending is used to “purchase” policy. Lead negotiations, even with the Guei junta in 2000, concerned fiscal coverage, public accounting and so forth. Swathes of the Ivorian administration were and remain permanently occupied in trying to meet the IMF

341 _{See La Lettre du Continent, 17 mai 2001. Note that in August 2001 the IMF directors “encouraged the}

[Ivorian] authorities to make every possible effort to regularise their relations with their bilateral and multilateral external partners”, in IMF PIN, 31 August 2001. Some in the FPI and some in Paris saw in this the hand of Ouattara, as in 1999. While there is no evidence to support this, it is indicative of how Ouattara’s position in the IMF was sensitive in terms of domestic Ivorian politics.

342 _{See RFI, “Gbagbo à Paris pour convaincre”, 18 juin 20; Le Monde, “Gbagbo demande à Paris de faire}

cesser le boycottage de l’UE”, 20 juin 2001; and RFI, “l’Union européenne reprend son aide”, 11 juillet 2001.

343 _{On the slowness of disbursements in the second half of 2001, see Africa confidential, “Conditionally}

Yours”, 10 October 2001.

344 _{On this period, see AFP, “Ivory Coast, IMF agree to start talks on three yearly programme”, 16}

November 2001; AFP, “World Bank ready to resume aid to Ivory Coast after Abidjan clears dues”, 1 December 2001; AFP, “World Bank to resume financial aid to Ivory Coast”, 31 January 200; Jeune Afrique, “Abidjan fait la paix avec ses créanciers”, 11 février 2002; AFP, “Paris Club cancels 911 mn Dollars of Ivory Coast Debt”, 11 April 2002 and World Bank news releases, various dates.

demands, starting with the prime minister, who in reality acts as the external finance minister.

The debt trap has proven a heavy burden for successive Côte d’Ivoire regimes. Instability has slowed the economy down overall and has hence diminished government tax receipts and its ability to service debt. While servicing debt takes up a significant proportion of government revenues, Côte d’Ivoire is constantly obliged to borrow more in order to pay existing debts. It is clear that at several points they were borrowing from one donor in order to pay arrears and thereby restart lending from another.345 _Côte

d’Ivoire therefore was and remains in a classic debt trap. Donor conditionalities attempt to tackle this by raising the government’s tax base and introducing efficiency savings into public services so that debt repayments do not have a detrimental effect on the poor. This has not been successful – fiscal coverage remains low and poverty has not decreased. This failure has led to the mutual recriminations that have characterised Côte d’Ivoire’s relations with the IFIs. In particular, the IFIs believe that successive Côte d’Ivoire governments have been reluctant to increase fiscal coverage due to corrupt relations with the business sector. Although 2002 represented a small upswing, the “end to adjustment” envisaged in 1998, to be followed by HIPC debt relief, was some way off, even before renewed instability in September 2002.