Country Report Djibouti November 2006

Economic policy: Budget data show growing deficits

Recently released revised data for Djibouti's 2005 and 2006 budgets show that the basic budget deficit grew from Dfr6.3bn (US$35m) in 2004 to Dfr7.3bn in 2005, but is expected to increase to Dfr9.3bn in 2006. Given the relatively constant level of grant aid available to Djibouti to finance this fiscal gap, the level of new borrowing is expected to increase by almost half, to Dfr5.5bn. Debt-servicing interest payments are expected to grow by 21.3% in 2006, and to account for 6.9% of government expenditure, compared with 6% in 2005. Although the IMF hinted earlier in the year that it might be prepared to take a less demanding approach to Djibouti's government finances in the light of the effects of the regional famine, it has so far given no indications that it is prepared to change its position on the PRGF. Details of the proposed 2007 budget are expected to emerge over the next few months, and the government will need to show that it is taking action on the deficit and on structural reforms if it is to win the support of the IMF.

Djibouti: government budget
(Dfr m unless otherwise indicated)
 20042005a2006b% changec
Receipts37,03239,04839,2200.4
 Fiscal receipts28,93131,09131,8682.5
 Non-fiscal receipts4,3684,9315,42610.0
 Grants3,7333,0261,926-36.4
Expenditure43,46246,34848,5414.7
 Interest2,7822,7703,35921.3
 Wages & salaries15,93816,87016,8920.1
 Goods & services10,82512,06011,236-6.8
 Transfers5,6115,8996,2465.9
 Capital expenditure8,3068,74910,80823.5
Balance-6,340-7,300-9,32127.7
Financing6,340d7,300d9,321d27.7
 Loans2,3343,6715,46148.8
 Grants4,0263,6303,8596.3
a Revised budget. b Initial budget. c Year on year. d Figures do not sum in source.
Source: Ministère de l'économie, des finances et de la planification, chargé de la privatisation.

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© 2006 The Economist lntelligence Unit Ltd. All rights reserved
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