Economic policy during the forecast period will be guided by the requirements of Togo's three-year extended credit facility (ECF) with the IMF, which expires in August 2011. A successor programme is likely to be put in place before the end of the year. Togo remains broadly on track with the ECF, according to the fifth review of the programme, approved by the IMF's Executive Board in December 2010. Most fiscal and monetary benchmarks are being met, and structural reforms are advancing in state-owned enterprises in the banking, phosphate and cotton sectors, although there will be delays in meeting some targets, largely because of capacity constraints. It will therefore take time for the reforms to have an impact, and economic performance is likely to remain sluggish.

The policymaking environment will improve in 2011-12 as a dividend of the political settlement between the regime and the opposition, which will make it easier to attract strategic investors into parastatal enterprises. Structural reform is likely to speed up, helped by rising assistance from donors-especially the World Bank, which is supporting several major projects in the fields of infrastructure rehabilitation, public administration and the financial sector; these will continue throughout the forecast period. In a key development, the IMF and World Bank decided in December 2010 that Togo had reached completion point under the heavily indebted poor countries initiative, enabling a massive cancellation of debt by bilateral and multilateral lenders. Togo's debt burden has fallen by US$1.8bn within two years, and now stands at around US$400m with no outstanding arrears. Debt-servicing costs will fall sharply, freeing resources for more productive uses, although there is a risk that debt will rise again unless Togo maintains strict prudential controls.