- Growth in 2024 is projected to remain robust, with moderate inflation. However, fiscal space remains limited considering development needs and outstanding external obligations.
- Amid an uncertain regional environment and constrained policy space, the immediate priority is to strengthen the economic resilience and the credibility of the policy framework.
- The authorities remain committed to policies that promote macroeconomic stability, restore debt sustainability, and advance economic diversification to support job creation.
Washington, DC: An International Monetary Fund (IMF) team, led by Ms. Esther Pérez Ruiz, visited Djibouti from December 8 to 12, 2024. The discussions centered on Djibouti's economic outlook amidst disruptions in the Red Sea and key policy measures to strengthen macroeconomic sustainability and policy credibility.
At the conclusion of the visit, Ms. Pérez Ruiz issued the following statement:
"Djibouti's maritime-dependent economy has demonstrated resilience to regional conflicts. Growth in FY24 is projected at a robust 6 ½ percent, driven by increased transshipments as shipping companies navigate Red Sea tensions. Inflation remains moderate as the authorities have stabilized energy and food prices to mitigate the impact of rising import costs. The fiscal deficit for FY24 is projected to stabilize at about 3 ½ percent of GDP, as reduced interest payments resulting from the debt service moratorium with a major creditor, effective through 2028, offset weaker tax revenues and grants. International reserves have been declining over the past two years standing at over three months of imports as of September 2023, which deserves attention in view of substantial outstanding external obligations.
"Djibouti's economic outlook faces several risks. Limited job creation or the recurrence of droughts could disproportionally affect the poor. On the positive side, stronger-than-expected growth in Ethiopia and a swift resolution of Red Sea disruptions could enhance Djibouti's overall outlook.
"The authorities remain committed to policies that promote macroeconomic sustainability and enhance the credibility of the policy framework. Efforts include expediting debt negotiations with key creditors, revising military base agreements, enhancing revenue mobilization by shifting from custom duties to inland revenues, and leveraging dividends from profitable state-owned enterprises. These efforts will also help support the Central Bank's independence from the fiscal authority under the currency board, thereby sustaining reserves, exchange rate and inflation stability. Under enhanced monitoring by the MENAFATF, the authorities are advancing reforms to sustain a favorable investment climate. To foster inclusive growth and strengthen economic resilience, the government aims to promote cost-effective energy and develop job-rich intensive sectors such as tourism, as outlined in Djibouti Vision 2035.
"The mission team deeply appreciates the Djiboutian authorities and other counterparts for their warm hospitality, excellent cooperation, and candid discussions. We look forward to continued closed engagement"
