Ivory Coast on track for debt relief in June -IMF

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Ivory Coast is on track to achieve completion of an IMF-backed debt relief accord by the end of June and is expected to resume paying coupons on its defaulted Eurobond, the IMF representative in the country said.
“We’re working on a calendar that has a completion point before the end of June when we expect to also see the resumption of payments on the Cote d’Ivoire Eurobond,” Resident Representative Wayne Camard told Reuters.

Ivory Coast, the world’s top cocoa grower, defaulted on its $2.3 billion Eurobond during a four-month civil war that followed presidential elections in late 2010, Reuters reports.

The country has since missed payment on three coupons in 2010 and 2011. It is currently scheduled to pay its next coupon on June 30 and h a s pledged to make a good-faith payment on $87 million of arrears.

Debt relief is a key pillar of President Alassane Ouattara’s reconstruction plans following last year’s fighting and a decade-long political crisis that has left the West African country’s infrastructure in tatters.

The traditional economic powerhouse of French-speaking West Africa, Ivory Coast qualified in 2009 for possible debt relief under the IMF’s Heavily Indebted Poor Country (HIPC) scheme.

Reaching the HIPC completion point will trigger the cancelation of around half of Ivory Coast’s $13.5 billion external debt. Paris Club lenders will meet soon afterwards to work out the details, Camard said.
“It’s after the Paris Club that we will have a better idea of where we are going to end up,” he added.

Reform of the strategic cocoa sector, the most important precondition of debt relief, has lagged however.

Launched last October, the reform aims to boost incomes for farmers. Its implementation was initially marred by a boycott of forward auctions of the 2012/2013 main-crop by exporters unhappy with pricing scales used in the new arrangements.

The IMF said in February that the reform process was not advancing fast enough to allow for debt relief in the first quarter of the year, as initially requested by Ouattara.
“To my knowledge the (cocoa sector) reform is working. I haven’t heard about any particular problems recently,” Camard said. “There are a number of other things that need to be done to complete the completion point release conditions, but there’s nothing that’s an obstacle at this point.”

Ivory Coast is currently negotiating relief for a portion of its French-owned debt through a programme that would see scheduled debt payments go instead to development and infrastructure projects.