Recent political and economic problems have delayed Cote d'Ivoire's planned public investment program. The government's public investment plan accords priority to investment in human capital, but it also will provide for significant spending on economic infrastructure needed to sustain growth. Continued infrastructure development has been brought into question because of private sector uncertainty. In the new environment of government disengagement from productive activities and in the wake of recent privatization, anticipated investments in the petroleum, electricity, water, and telecommunications sectors, and in part in the transportation sector, will be financed without any direct government intervention. A return to political and economic stability is critical if Cote d'Ivoire is to realize its potential in the region.

The 1994 devaluation of the CFA franc helped return Cote d'Ivoire to rapid economic growth until the slowdown evident by 1999. Increased aid flows, rigorous macroeconomic policies, and high international commodity prices, along with devaluation, yielded 6%-7% annual GDP growth rates from 1994-98. Cote d'Ivoire also benefited from Paris Club debt rescheduling in 1994, a London Club agreement in 1996, and the 1997 G-7 decision to include Cote d'Ivoire in the IMF-World Bank debt forgiveness initiative for highly indebted poor countries.

With the economic improvement, Cote d'Ivoire began turning the corner on its daunting debt load. For several years running, it met its IMF targets for growth, inflation, government finance, and balance of payments. Government revenues increased, which in combination with spending restraint resulted in 3 years of primary surpluses (that is, receipts minus expenditure, excluding borrowing and debt service). Following a concerted government repayment effort, domestic arrears were virtually eliminated by the end of 1996. The pre-devaluation stagnation which caused local businesses and potential outside investors to delay capital expenditures accentuated the post-devaluation investment boom.

Lower inflation followed as the government kept a tight lid both on salary increases and on the size of the public sector work force devaluation and has continued with the economic slowdown of the last several years. The consumer price index measure of inflation slid from 13.6% in 1995 to 5.4% in 1997 and 0.7% in 1999. Through the first three quarters of 2003, inflation was estimated at 3.0%, according to the Ivoirian Institute of Statistics.

In the past several years, economic decline has resulted in declining living standards. Falling commodity prices along with government corruption and fiscal mismanagement brought the economy to its knees by the end of 1999. At that point, the coup d'etat and the subsequent institution of the military junta government caused the loss of foreign assistance. Private foreign investment declined precipitously. Government internal and external debt ballooned. As a result, the Ivoirian economy contracted 2.3% in 2000. The government signed a Staff Monitoring Program with the IMF in July 2001, but plans for a subsequent Poverty Reduction and Growth Facility were disrupted by the onset of the crisis in September 2002. The signs of economic and business recovery were encouraging in the mid-year of 2002, but the political and social crisis that began in September 2002 undermined all the efforts to resume cooperation with international donors. The economy has been in a slow decline since the outbreak of the armed rebellion in late 2002, with a cutoff of most external assistance (except humanitarian aid), mounting domestic and foreign arrearages, and a drastic slowdown in foreign and domestic investment. Prospects for an economic rebound are currently not expected until after scheduled presidential elections in 2006.