- Despite large private investments in the country, Djibouti's economic growth is slowing down. Djibouti port facilities, which generate a large part of national incomes, are reported to experience decreased activities. Further, several economic reform programmes are delayed.
According to the latest International Monetary Fund (IMF) review of Djibouti's economic performance, released today, developments are "broadly on track". This usually is the IMF's diplomatic way of telling national authorities adhering to the Fund's economic prescriptions that the situation is not under control.
Reviewing economic developments in Djibouti during the first six months of this year, IMF staff found that "inflation remained low while economic growth likely slowed down in the first half of 2004 on account of a decrease in trans-shipment port activity, despite a significant upswing in private investments, such as the Doraleh oil terminal."
Djiboutian authorities are supposed to implement a large number of economic reforms agreed to with the IMF, under the Fund's monitoring. The government was however found to be too slow in implementing these wide-ranging reforms.
The IMF had "noted a significant delay in adopting certain structural reforms included in the [IMF-monitored programme], particularly a new labour code and an investment code, which were to have been adopted at end-June 2004," the Fund said in a statement.
Meeting Djiboutian authorities in the capital, Djibouti, IMF representatives had urged the government to take "immediate steps" to avoid any further delay in the adoption of structural reforms. Djibouti authorities thus promised the IMF to achieve all the programme's objectives "by year's end," despite the delays and the sharp increase in government expenditure that took place in July.
The Fund however found it encouraging that the government wage bill had "remained under control owing to the demobilisation of 411 ex-combatants, allowing the hiring of additional staffs in the education and health sectors."
Nevertheless, the IMF said it would intensify its monitoring of Djibouti's reform implementation and expenditure. "In the months ahead, Fund staff will continue to work closely with the Djibouti authorities on the implementation of their program of economic and financial reforms," the statement said.
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