5.2.2.2.2 In business
Ø Encourage grain production in order to reduce imports
that are revealed through this study as one of the determinants of the
country's debt. To achieve this, the State must improve agricultural
productivity through the implementation of advanced farming techniques,
irrigation projects on a small scale and reduce taxes on producers so that the
workforce can benefit from an improved terms of trade.
Ø The revenues from imports of goods and services
should be the most effective factor in increasing the country's capacity to
meet its commitments and pay its debts. To promote exports of stable commodity,
production must meet local demand and be able to supply sufficient export
availably.
Ø Importation is also part of the causes of the public
debt of Togo. This call for a real industrialization policy in order to offer
to Togolese some of the goods imported and therefore reduce the deficit of the
balance of payment .
Like any scientific work our study could have a limit. In fact
the data are not from the same source, which may introduce bias in the analysis
and therefore in the recommendations on these analyses.
This analysis is a rational analysis made on the basis of a
mathematic model which in itself is not enough to explain the Togolese debt.
Historian and foreign partners such as the World Bank have revealed that some
of the borrowings were done to finance unnecessary investments with the
intention to commit fraud during the execution phase of the investments at the
advantage of some of the local politician and foreign investors. Togo has for
example finance an oil refinery which never worked and without having any oil
resource. There is also a public opinion that the high debt level of African
countries was engineered by occidental countries in order to control
economically this young and fragile countries that became independents in the
sixties and to latter imposed structural adjustment programs with the final
aim to open their markets to multinational countries and open their economies
to a liberalization for which they are not prepared. All this side explanations
of the level of public debt of African countries are not explored in the
context of the current dissertation while it might make sense to add them . Of
course, the difficulty to turn this kind of argument into a mathematical model
has contributed to their omission in the current dissertation.
As analyst I am for the opinion that the majority of the debt
of African countries has been contracted by regimes that were imposed to the
Africans in the context of the cold war by the west and that the debt is not
justified or at least does not have legitimacy. This could of course have an
influence on some of my recommendations, however I have tried to be as neutral
as possible in my conclusions and recommendations.
GENERAL CONCLUSION
The overall objective is to identify the factors explaining
the evolution of the public debt of Togo. Our studies have revealed the
fragility of the Togolese economy and debt problems related to low repayment
capacity and debt accumulation. Through an econometric study with an error
correction model, we have reached the following conclusions:
Ø Exchange rate is one of the factors explaining Togo's
debt;
Ø The devaluation of the CFA franc in 1994 was a major
event that affected the country's public debt; the country's imports also
proved determinant in the country's public debt.
The descriptive analysis shows that the country enjoys little
of its trade openness. Togo's debt is 60% external debt.
Following the results of our study we can say that the level
of indebtedness of the country is a matter of public finance, debt management
and poor economic policy orientations. Therefore, an effort to improve the
growth rate of GDP would be a solution. Finally, the substitution of certain
products in order to reduce imports is essential for reducing the debt. All
these efforts must be followed by a consolidation of public finances with a
view to improving the fiscal balance.
With the assets available to Togo, a sound and efficient
management, an institutional capacity building would enable the country to get
closer in the coming years to the path of economic takeoff. The Government of
Togo must develop a rational, clear and unambiguous terms of public debt. The
reduction of the debt with requires time and especially temporal coherence that
only a broad consensus with the population will achieve. External debt is not
the only obstacle to the country economic development. Given the demographic
changes ahead, the challenge of improving the living conditions of the
population remains whole.
Beyond Togo debt is an essential part of the budget of the
economy of most African countries. The debt service is for example the years
1992-1997, 35% of the budget of Cameroon and the Ivory Coast, 40% of the Kenya
and Zambia, 46% of that of Tanzania (in the same time the share of social
services is less than 15% of the budget, 4% in Cameroon). An essential part of
this external debt consists of the so-called multilateral debt that is to say
to the international financial institutions where representation of these
countries has virtually no weight. According to the Committee for the
Cancellation of Third World debt, the debt "is the result of specific
geopolitical choice». It now appears on the geopolitical map as a powerful
mechanism of subordination of the South because as soon as a country is forced
to stop his payments, the International Monetary Fund (IMF) agreed to lend the
money to a high rate if the country concerned agrees to conduct the policy
decided by its experts: the economic policy of the debtor State came under
control of the IMF. The recommended measures are included in a Structural
Adjustment Program (SAP), which is the same liberal scheme: elimination of
subsidies on products and services of necessity : bread, rice, milk, sugar,
fuel ..., fiscal austerity and reduced expenses generally drastic drop in
social spending considered as "non-productive" (health, education, subsidies
to commodities) devaluation of the local currency, high interest rates to
attract foreign capital with high pay; agricultural production entire
export-oriented (coffee, cotton, cocoa, peanuts, tea, etc..) to earn foreign
exchange, thus reducing deforestation and food crops to gain new areas, total
opening of markets by removing trade barriers; liberalization of the economy,
including surrender of control of capital movements and the removal of exchange
controls, taxation exacerbating inequality with the principle of value added
tax (VAT) and the preservation of capital income; massive privatization of
public companies, so a withdrawal of the state of the productive sectors
June 10, 2009, two associations French and Belgian claim in a
report on the "hedge funds" the establishment of a true international debt
tribunal. These associations emphasize that these hedge funds "redeem the debts
of the poor countries at an extremely low price in order to force them through
the courts to pay the full price, raking in huge gains on the back of the
people of Congo, Zambia, Peru, Argentina and Nicaragua.
They point to the responsibility of the rich countries,
especially considering that "the French or American justices have routinely
give reason to these hedge funds against poor countries" and that "the money
France and the rich countries have spent on debt relief is confiscated by
private funds instead of finance social spending, as announced.
There is therefore a real need to revise the mechanism of
public debt for south countries in order to allow their development and enable
them to play a more important role in the globalization. This is a matter of
international justice which should be considered by the international community
as important as or even more than the cases that are having all the attention
of the international penal court.
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Websites
http://www.persee.fr
http://www.imfstatistics.org.
http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/AFRICAEXT/TOGOEXTN/0,,menuPK:375275~pagePK:141132~piPK:141107~theSitePK:375265,00.html
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