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afrol News, 5 December - In a letter to the International Monetary Fund (IMF) by the Djiboutian government and National Bank, the IMF is asked to resume its funding. The government, presenting its reform programme, states it is "to take any additional measures appropriate for this purpose." Following "slippages and delays in some reforms in 2000," the government of Djibouti says it has "introduced corrective measures to bring the program back on track in 2001 and thereafter." In support of this program, Djibouti requests a completion of the second review under the Poverty Reduction and Growth Facility (PRGF), which would resume IMF funding of the country. An attached memorandum of economic and financial policies describes the structural reform and macroeconomic adjustment program for 2001 and 2002. According to the memorandum, in 2000, Djibouti's economy recorded real GDP growth estimated at about 1 percent, "resulting in a further deterioration in per capita incomes." - The fiscal deficit amounted to 1.8 percent of GDP in 2000 (on a payment order basis), compared to the equilibrium projected in the program, according to the government memorandum. "The deterioration in the fiscal position resulted in the accumulation of new domestic payments arrears (0.9 percent of GDP)." Current expenditure totalled DF 29.6 billion, thereby exceeding the program target by 1.3 percent of GDP. According to the government, "This overrun stems largely from exceptional factors, associated for the most part with the organisation of the Somalia Peace Conference, the occurrence of epidemics, and the drought besetting the region." The organisation of the Somalia Peace Conference, which lasted several months, had "resulted in such pressures" on the Djiboutian government that several important reforms could "not receive the attention they required." This had especially weakened planned measures aimed at improving the management and monitoring of public expenditure. Also, preparatory work on the privatisation strategy by the World Bank and the reform plan for the pension funds had been delayed for the same reasons. Further, it had "not yet been possible to submit the final draft version of the new labour code to parliament because the labour unions, as a result of internal dissension, have yet to provide their evaluation of the draft." The government however was to "continue and intensify "its reform program in 2001 and 2002 "so as to put the economy of Djibouti on the path of higher growth, boost per capita incomes, reduce unemployment, roll back poverty, and ensure domestic financial viability," the memorandum stated. The Djiboutian government's macroeconomic objectives for 2001-02 consisted, of particular, in "ensuring GDP growth in volume terms of at least 1.5 percent and limiting inflation to 2.5 percent." - Structural reforms will be implemented in order to make it possible for the targeted increase in economic growth in the medium term to be achieved, the memorandum reads." In addition, the macroeconomic program will be based on a fiscal discipline and rehabilitation effort. In the short term, regaining control over public finances will receive particular priority." Poverty reduction was to continue to "attract the authorities' full attention." In the 2001 budget, the social sectors of education and health had their share in current expenditure projected to increase from 13.6 percent to 14.3 percent. Based on its new economic reforms, the Djiboutian government asked the IMF to review its economic performance and to evaluate whether the implementation of the IMF's cash flow plan could be resumed.
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