- Djibouti's growth remains steady, driven by robust port activity, amidst latent tensions in the region.
- Accelerating fiscal consolidation by mobilizing greater tax revenues and optimizing state-owned enterprises (SOE) dividends, and finalizing debt negotiations, remain a priority to restoring debt sustainability and safeguarding the currency board.
Washington, DC: An International Monetary Fund (IMF) team, led by Ms. Esther Pérez Ruiz, visited Djibouti from January 11 to 15, 2025. The discussions centered on Djibouti's economic outlook amidst regional tensions, and the authorities' plans to restore debt sustainability and improve the reserves position under the currency board.
At the conclusion of the visit, Ms. Pérez Ruiz issued the following statement:
"2025 growth is estimated at 6.5 percent, driven by robust port activity—though slightly weaker than in 2024 due to reduced transshipments—and vibrant construction, transportation, telecommunications, and retail sectors. Ethiopia's expansive market and upcoming major infrastructure projects are expected to boost demand for Djibouti's port services, resulting in a positive growth outlook of about 6 percent 2027 onwards. Inflation eased markedly from 2.1 percent in 2024 to zero in 2025, as the decline in food prices was passed through to consumers. The fiscal deficit for 2025 is estimated to have moderated to about 0.7 percent of GDP, from 2.7 percent in 2024, reflecting expenditure restraint despite revenue shortfalls. The 2026 budget anticipates that the government will have no deficit this year. Gross reserves increased in 2025, but their ratio to the monetary base remains below the currency board requirements.
"Djibouti's economic outlook faces several risks. Rising tensions in neighboring Horn of Africa countries may increase uncertainty and refugee flows amidst reduced humanitarian aid. Potential trade diversion to other regional ports, which could lower revenues, may be mitigated by Ethiopia's fast growth and ongoing joint infrastructure projects with Djibouti.
"The authorities' policies are directed at reducing debt through fiscal consolidation, negotiations with creditors, and prudent debt management. Fiscal consolidation needs to be strengthened to secure government surpluses through effective revenue mobilization. Enhancing tax enforcement, narrowing tax exemptions, and revising military leases are top priorities for promptly addressing revenue shortfalls. Additionally, upscaling state-owned enterprises (SOE) dividend payments to the budget, setting binding limits on all public and publicly-guaranteed debt, and finalizing debt negotiations with creditors, are essential measures to ensure debt sustainability.
"Safeguarding the currency board relies on strengthening the central bank's autonomy and replenishing reserves. To this aim, a reimbursement plan should be established between the central bank of Djibouti (CBD) and the Ministry of Budget to settle outstanding Treasury overdrafts. The plan should rebuild reserves including through CBD profit retention, as allowed by its statuses, SOE dividends, or military base income. The financial sector remains solid. Under MENAFATF's enhanced monitoring, Djibouti is strengthening its AML/CFT framework.
"Strengthening investment in health and education, implementing efficiency-enhancing SOE and energy reforms, are essential elements in fostering jobs and a more diversified and competitive economy, as enshrined in the National Development Plan 2025–30.
"The mission team deeply appreciates the Djiboutian authorities and other counterparts for their warm hospitality, excellent cooperation, and candid discussions. We look forward to continued close engagement."
