Public debt of Togo: an attempt to identify the explanatory factors

5.2.2 ECONOMIC POLICY RECOMMENDATIONS

Analysis of the results of our model shows that the debt has not helped the economic takeoff of Togo. However, external debt is not the only obstacle to the country's economic development. The challenge of improving the living conditions of its population remains unchanged. That is why the economic policy recommendations set out below aim at creating not only a conducive environment to stimulate growth, but also and above all, laying the foundation of debt sustainability, and allowing economic development. It is, among other things to:

5.2.2.1 Framework of debt

5.2.2.1.1 Terms of debt management strategy

Ø Prioritize highly concessional financing. A sound and efficient management would minimize the country's exposure to risk. This will enable debt restructuring in order to bring it back to a sustainable level. Management must especially take into account the use of the debt. The authorities should therefore direct loans to the productive and social investments. Also, it would be wise appeal to market instruments to strengthen the deepening of the financial market. In this respect, good programming of the issuance of Treasury^14(*) bonds would contribute to enhancing the efficiency of financial markets.

5.2.2.1.1.1 Regarding the choice of creditors

Ø It would be desirable to prioritize debt from Asian countries (China, India, Japan and Arab countries) to transfer technology and more concessional loans.

Ø The choice of a country like China is motivated by the fact that the Chinese are accustomed to implementing themselves the projects and the works that they finance. Let us remind you that the agreement with the Chinese is often not binding and their achievements are less expensive. Also, it would be imperative that the government negotiate before signing a loan agreement, a transfer of knowledge and technology.

* ¹⁴ Treasury bonds: Short term securities issued by the government, usually sold at a discount instead of earning

interest with a maturity of at least one month.
bonds: medium and long-term instruments issued at par and with interest payable annually or semi-

annually by the Central, regional or local Authorities.