Moody's changes outlook to negative on Togo's B3 ratings

Government of Togo B3 negative: Regular Update - Credit Opinion – 2024/04/23 – US$ 250.00 – ...Togo's credit profile is constrained by its narrow economic base, low levels of income as well as weak fiscal policy effectiveness. Government debt, at about 66% of GDP, limits shock absorption capacity. The recently-approved IMF programme will anchor fiscal policy, although large fiscal deficits continue to drive risks of liquidity stress and of a further deterioration of the debt trajectory. Togo's West African Economic and Monetary Union (WAEMU) membership, however, contains external and government liquidity risks to a degree, a key risk mitigant amid tighter monetary conditions....

Government of Togo: Togos staff level agreement with the IMF will support fiscal consolidation, but significant challenges remain - Issuer Comment – 2023/12/12 – US$ 200.00 – ...On 8 December, the Government of Togo (B3 negative) reached a staff-level agreement with the International Monetary Fund (IMF) on a $390 million Extended Facility Agreement over a 42-month period. Once approved by the IMF board, the programme will anchor the government's fiscal consolidation efforts, while mitigating government liquidity pressures, a credit positive. However, the Togolese authorities still face significant hurdles in achieving their fiscal targets, while tight liquidity in the domestic market continues to pose risks to the government's liquidity profile. The IMF programme, which Togo initially requested in 2021, will support the government's goal of reducing its budget deficit to 3.0% of GDP by 2025, from its estimate of 6.6% for 2023, to comply with West African Economic and Monetary Union (WAEMU) fiscal rules and improve the sustainability of its debt. The programme will focus on increasing Togo's fiscal revenue by 0.5 percentage point (ppt) of GDP annually by improving...

Government of Togo B3 negative: Regular Update - Credit Opinion – 2023/11/28 – US$ 250.00 – ...Togo's credit profile is constrained by its narrow economic base, low levels of income as well as weak fiscal policy effectiveness. Government debt, at about 65% of GDP, limits shock absorption capacity. Meanwhile, the government's large fiscal deficits increase the risk of liquidity stress and a further deterioration of the country's debt trajectory going forward. Togo's West African Economic and Monetary Union (WAEMU) membership, however, contains external and government liquidity risks to a degree, a key risk mitigant amid tighter monetary conditions....

Government of Togo - B3 negative: Annual credit analysis - Issuer In-Depth – 2023/07/21 – US$ 750.00 – ...Togo's credit profile is constrained by its narrow economic base, which relies on agriculture and generates low levels of income, as well as the limited efficiency of its public administration and a high government debt burden at 64% of GDP as of 2022. High government debt levels leave the government with little capacity to weather shocks such as that triggered by the current period of high inflation and unfolding security challenges in the northern province. However, Togo's membership of the West African Economic and Monetary Union (WAEMU) is a key credit strength. The membership limits the risk of a balance-of-payments crisis because of its currency's credible peg to the euro, enabling the government to carry affordable debt with low foreign-exchange risk. WAEMU membership also provides access to local-currency funding and the pooling of foreign-exchange reserves with larger countries with stronger credit profiles. Robust economic growth, supported by reforms to strengthen the business...

Government of Togo B3 negative: Update following outlook change to negative; rating affirmation - Credit Opinion – 2023/06/02 – US$ 250.00 – ...Togo's credit profile is constrained by its lowly diversified and uncompetitive economy as well as weak fiscal policy effectiveness. Government debt, at about 64% of GDP, limits shock absorption capacity. Meanwhile, the government's fiscal policy loosening gradually increases the risk of liquidity stress and a further deterioration of the country's debt trajectory going forwards. Togo's West African Economic and Monetary Union (WAEMU) membership, however, contains external and government liquidity risks to a degree, a key risk mitigant amid tighter monetary conditions....

Government of Togo B3 stable: Update following methodology update - Credit Opinion – 2022/12/01 – US$ 250.00 – ...Togo's credit profile is constrained by its lowly diversified and uncompetitive economy as well as weak policy effectiveness and fiscal management. Government debt, which we expect to stabilise at about 68% of GDP over the medium term, limits shock absorption capacity. The country's West African Economic and Monetary Union (WAEMU) membership, however, contains external and government liquidity risks to a degree, a key risk mitigant amid the current price shock....

Government of Togo: Unwinding fiscal stimulus is Togo's key credit challenge - Issuer Comment – 2022/11/28 – US$ 200.00 – ...The Government of Togo (B3 stable) presented in November 2022 its budget for 2023, in which it forecasts a still-sizeable deficit worth 6.5% of GDP (primary deficit of 4%) in order to ease growing social pressures amid rising food prices. The budget announcement follows recent upward revisions to its deficit projection for 2022 to 8.3% of GDP from 5% initially. Higher-than-expected fiscal deficits in 2022 and 2023 are credit negative; the government's strategy for phasing out this fiscal stimulus will be a key driver of Togo's credit profile going forward. Indeed, while its membership in the West African Economic and Monetary Union (WAEMU) helps to buffer the current inflation shock, enabling looser fiscal policy at still- manageable costs, failing to reduce deficits in the future risks setting government debt on an unsustainable trend. Upward revisions to 2022 numbers in October ¡ primary and overall deficits of 5.8% and 8.3% respectively, compared to 2.6% and 5% outlined in the original...

Government of Togo - B3 stable: Annual credit analysis - Issuer In-Depth – 2022/08/04 – US$ 750.00 – ...Togo's credit profile is constrained by its narrow economic base, which relies on agriculture and generates low levels of income, as well as the constrained efficiency of its public administration and an elevated government debt burden at 62% of GDP. High government debt levels leave the government with little capacity to weather shocks such as that triggered by the current rise in commodity prices or the coronavirus pandemic. However, Togo's membership of the West African Economic and Monetary Union (WAEMU) is a key credit support. Membership of the monetary union limits the risk of a balance of payments crisis because of its currency's credible peg to the euro, enabling the government to carry affordable debt with contained foreign-exchange risk. WAEMU membership also provides access to local-currency funding and the pooling of foreign-exchange reserves with larger countries with stronger credit profiles. The stable outlook reflects our expectation that government debt will stabilise...

Government of Togo B3 stable: Regular update - Credit Opinion – 2022/06/14 – US$ 250.00 – ...Togo's credit profile is constrained by its lowly diversified and uncompetitive economy as well as weak policy effectiveness and fiscal management. Government debt, which we expect to stabilise at about 60% of GDP in 2022-23 before receding, limits shock absorption capacity. The country's West African Economic and Monetary Union (WAEMU) membership, however, contains external and government liquidity risks, a key risk mitigant amid the price shock induced by the Russian invasion in Ukraine (Caa3 negative)....

Government of Togo B3 stable: Update following rating affirmation; outlook unchanged - Credit Opinion – 2021/11/29 – US$ 250.00 – ...Togo's credit profile is constrained by its lowly diversified and uncompetitive economy as well as weak policy effectiveness and fiscal management. High government debt, which we expect to stabilise at about 60% of GDP in 2022-23 before receding, limits shock absorption capacity. The country's West African Economic and Monetary Union (WAEMU) membership, however, contains external and government liquidity risks, a key risk mitigant as the coronavirus crisis dampens economic activity and weighs on public finances....