Moody's Investors Service ("Moody's") has upgraded the Government of Côte d'Ivoire's local and foreign currency long-term issuer ratings and foreign currency senior unsecured ratings to Ba2 from Ba3. The outlook has been changed to stable from positive. The sovereign's local and foreign currency short-term issuer ratings were affirmed at Not Prime (NP).
The upgrade reflects Côte d'Ivoire's increased economic resiliency supported by growing economic diversification, rising income levels from a low level and robust economic prospects, all driven by rising private sector investments and a track record of steady improvements in governance. Additionally, ongoing fiscal consolidation efforts under the current IMF program and efficient management of the government debt profile, will result in durable improvements in government fiscal metrics and reduced liquidity risks.
The stable outlook reflects balanced risks over the medium term. Moody's expects that Côte d'Ivoire's economic performance will be broadly resilient to shocks emanating from the political crisis in West Africa while domestic political will likely continue to wane. Despite the rapid growth of its economy, the risks of emergence of large imbalances remain low in part thanks to the macro financial stability derived from participation in the West African Economic and Monetary Union (WAEMU) and the large IMF programme. The commitment to fiscal consolidation means the gradual decline of the debt burden towards 50% of GDP by 2030, and associated improvement in government fiscal metrics, are unlikely to be derailed.
Concurrently, Côte d'Ivoire's local and foreign currency country ceilings have been raised to Baa1 and Baa2 from Baa2 and Baa3, respectively. The local currency country ceiling remains four notches above the sovereign rating to take into account the moderate footprint of the government in the economy, as well as the mitigating impact on external risks of Côte d'Ivoire's membership of the WAEMU. The country is the largest economy of the Union and the largest contributor to the pool of foreign exchange reserves. The foreign currency country ceiling maintains a one-notch gap to the local currency country ceiling to reflect Moody's assessment of limited, albeit non-zero, transfer and convertibility risks due to the French Treasury guarantee of the peg between the CFA franc and the euro.
