(Ecofin Agency) - In early 2024, Côte d’Ivoire became the first sub-Saharan African country to raise Eurobonds since 2022. Following this, Moody's upgraded its credit rating, thanks in part to its efforts to mobilize domestic revenue.

Efforts by Côte d’Ivoire to increase domestic revenue collection have strengthened the country’s credit rating. Olaf Unteroberdoerster, head of the International Monetary Fund (IMF) mission to Côte d’Ivoire, highlighted this in a Country Focus report published on January 14.

In an interview, Unteroberdoerster emphasized the importance of mobilizing revenue to fund essential social protection and infrastructure investments. He also stressed the need for more efficient use of domestic revenues to give the government greater budget flexibility. Currently, Côte d’Ivoire relies on borrowing from both regional and international markets to finance its projects.

“Efforts to mobilize domestic revenue have thus far enabled significant progress, in particular toward complying with the West African Economic and Monetary Union’s deficit ceiling of 3 percent of GDP by 2025,” Unteroberdoerster stated. He added, “These efforts have also been instrumental in preserving Côte d’Iv643oire’s rating as a “moderate” debt-distress risk and, more broadly, in enabling the country to maintain one of the best credit ratings in sub-Saharan Africa.”

In March 2024, Moody’s upgraded Côte d’Ivoire’s credit rating from Ba3 to Ba2 with a stable outlook, ranking it as the second-best credit in sub-Saharan Africa after Botswana and on par with South Africa. The agency praised the country’s progress in fiscal consolidation and its measures to meet fiscal deficit targets.

“Despite global challenges, the decisive adjustments made under the IMF-supported MEDC and ECF programs since 2023 have preserved Côte d’Ivoire’s macroeconomic stability. This made it the first sub-Saharan African country to return to international financial markets since 2022,” said Finance Minister Adama Coulibaly. He also noted that Standard and Poor’s recently upgraded the country’s sovereign debt rating to BB, one of the top three ratings in Africa.

Since 2021, Côte d’Ivoire has seen increased tax revenues, with growth expected in the coming years. However, the country still lags behind its potential. According to the IMF, tax revenue as a percentage of GDP is expected to rise from 13.6% in 2023 to 14.4% in 2024, still below the WAEMU convergence pact requirement of 20%.

The World Bank’s Country Policy and Institutional Assessment (CPIA) ranks Côte d’Ivoire above the average for West African countries in fiscal efficiency but behind Benin, Cape Verde, and Senegal.

As part of its 2024-2028 national revenue mobilization strategy, Côte d’Ivoire has identified several measures to boost tax and customs revenue while managing its “moderate” debt risk. Key areas include corporate tax, which stands at 6% in the country compared to higher rates in Ghana, Morocco, and South Africa; value-added tax (VAT), which has a 35% compliance gap; and property tax, which accounts for only 4.6% of national tax revenues.