Togo Economic Update: Boosting growth and restoring fiscal space in uncertain times

1. Economic resilience and growth prospects

• Togo's growth has been solid in recent years, exceeding 6% between 2021 and 2023, but is expected to slow to 5.3% in 2024 and 5.0% in 2025.
• The decline reflects the transition to tighter fiscal policy and lower global demand, as well as disruptions in electricity supply.
• Despite these challenges, the services sector remains dynamic, and agriculture is showing resilience, even in the face of food insecurity and climate hazards.
• To sustain sustainable and inclusive growth, Togo needs to rapidly implement structural reforms, including to boost the private sector and productive employment.

2. Budget improvements and constraints

• The fiscal deficit narrowed to 6.4% of GDP in 2024 on the back of better revenue mobilization and reduced public investment, but public debt reached 72.1percent of GDP, with increased reliance on short-term debt.
• It is essential to restore fiscal discipline while preserving investment in human capital and infrastructure and enhancing the efficiency of public spending.

3. Medium-term outlook and risks

• Growth could stabilize at around 5.5% in 2026-2027, provided that global uncertainties ease and fiscal consolidation objectives are met.
• Private investment, particularly in the Adétikopé industrial platform (PIA), and moderate inflation should support the recovery. However, significant risks remain: geopolitical tensions, conflict-related regional insecurity in the Sahel, and climate shocks, which could exacerbate poverty and fragility.

4. Tax mobilization, a strategic lever

• The share of domestic revenue in GDP increased from 12.1% in 2013 to 14.7% in 2023, thanks to institutional reforms and digitalization. Despite this progress, the tax base remains narrow.
• To strengthen resource mobilization, it is necessary to rationalize tax expenditures, better integrate the informal sector, expand property taxation, and introduce ecological measures (eco-taxes, carbon tax), which could generate up to 1% of GDP per year by 2035.

5. Priority reforms

• Strengthening the management of public investments through better project selection, planning and execution, integrating climate risks and promoting public-private partnerships (PPPs).
• Improve governance, transparency and accountability in the management of public projects.
• Increase the efficiency of public spending and target fiscal policies to safeguard essential services and human capital.

6. The way forward

• Togo needs to accelerate structural reforms to achieve growth potential of 6% or more, reduce extreme poverty, and aim for high-middle-income status by 2045.
• This requires increased domestic resource mobilization, strategic investments in human capital and infrastructure, and strong political commitment to ensure social cohesion and economic resilience.