DJIBOUTI ECONOMIC MONITOR Navigating through the Pandemic and Regional Tensions Winter 2021 Middle East and North Africa Region Djibouti Economic Monitor Navigating through the Pandemic and Regional Tensions Winter 2021 Middle East and North Africa Region © 2022 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. 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TABLE OF CONTENTS Abbreviations and Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .vii Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Résumé analytique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi ‫ الموجز التنفيذي‬. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv 1. Recent Economic Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Real Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Inflation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Fiscal Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Public Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Monetary Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 External Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2. Macroeconomic Outlook and Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Real Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Fiscal Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 External Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 3. Covid-19 Pandemic Impact on the Labor Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Annex: Djibouti High Frequency Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 iii List of Figures Figure 1.1 The Volume of Merchandise Handled by Djibouti’s Ports for the Ethiopian Demand Fell in the Second Half of 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Figure 1.2 The Volume of Containers Processed by Djibouti’s Ports Fell by 19 Percent in 2021… . . . . . . . . . .2 Figure 1.3 …as Well as the Volume of Bulk Hydrocarbon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Figure 1.4 Domestic Services Sector Drove the Recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Figure 1.5 Private Consumption Became the Largest Contributor to Growth in 2021 . . . . . . . . . . . . . . . . . . . . 3 Figure 1.6 Year-on-Year Headline Inflation is Driven by Domestic and Global Recovery . . . . . . . . . . . . . . . . . . 3 Figure 1.7 Public Infrastructure Remained the Largest Budget Component in 2021 . . . . . . . . . . . . . . . . . . . . . 5 Figure 1.8 On-Lending to SOEs is Driving Up Public Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Figure 1.9 Two Thirds of Djibouti’s Public Debt is Owed to Bilateral Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Figure 1.10 The Currency Board Arrangement (CBA) Cover Rebounded in September 2021, Boosted by the IMF SDR Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Figure 1.11 The External Current Account (percent of GDP) Improved During the First Half of 2021, Driven by Re-Exports to Ethiopia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Figure 2.1 GDP Growth (in percent) Could Hover between 4.3 and 2.7 Percent in 2022 . . . . . . . . . . . . . . . . .11 Figure 2.2 The Overall Fiscal Deficit is Expected Widen by 1 to 2 Percentage in 2022 and 2023 Compared to 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Figure 2.3 The External Current Account Balance Would Deteriorate Further in 2022 and 2023 . . . . . . . . . 12 Figure 3.1 Stringent Initial Government Response to the Pandemic Eased over Time . . . . . . . . . . . . . . . . . . .16 Figure 3.2 Initial Drop in Breadwinners Work Status and a Subsequent Recovery Trend, June 2020–March 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 Figure 3.3 Reliance on Income from Family Business and Wage-Work Increased with the Economic Recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 Figure 3.4 Access to Basic Goods Was Adversely Affected but Continues to Recover . . . . . . . . . . . . . . . . . .18 Figure 3.5 More Households Declare Having Enough Resources for the Next 30 Days with Notable Differences by Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 List of Tables Table 1.1 Summary Government Fiscal Situation in 2020–2021 (in % of GDP) . . . . . . . . . . . . . . . . . . . . . . . . . 4 Table 1.2 Djibouti Selected Economic Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Table A1 Sample of Djibouti Nationals Broken Down by Survey Domain in 4th Wave . . . . . . . . . . . . . . . . . .17 List of Boxes Box 1 Djibouti High-Frequency Phone Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 iv DJIBOUTI ECONOMIC MONITOR – NAVIGATING THROUGH THE PANDEMIC AND REGIONAL TENSIONS ABBREVIATIONS AND ACRONYMS AfDB African Development Bank IMF International Monetary Fund AGOA The African Growth and Opportunity Act INGO International non-governmental CBA Currency Board Arrangement organization DCT Doraleh Container Terminal INSTAD Institut National de la Statistique de DMP Doraleh Multi-Purpose Port Djibouti DPCR Agences Djiboutienne des Routes LCU Local Currency Unit DSSI Debt Service Suspension Initiative MASS Ministry of Social Affairs and Solidarity DTS Droit de tirage spécial MW megawatt  EDAM Enquête Djiboutienne auprès des MWH megawatt hour  Ménages xpour les Indicateurs Sociaux PIB Produit Intérieur Brût FDI Foreign Direct Investment SDR Special Drawing Rights FMI Fonds Monétaire International SGTD Société de Gestion du Terminal à GDP Gross Domestic Product  conteneurs de Doraleh ILO International Labour Organization SOEs State Owned Enterprises v ACKNOWLEDGEMENTS T he first Djibouti Economic Monitor was This report was enriched by the valuable prepared by a team led by Rick Emery comments and suggestions received from Jaime de Tsouck Ibounde (Senior Economist, EMNMT) Pinies Bianchi (Senior Economist, EMNMT), Gianluca under the guidance of Marina Wes (Country Director, Mele (Senior Economist, EMNMT), Lawrence Norton MNC03), Nadir Mohammed (Regional Director, (Senior Economist, IMF) and Kadar Mouhoumed EMNDR), Eric Le Borgne (Practice Manager, Omar (Operations Officer, MNCDJ). EMNMT), Johannes G. Hoogeveen (Practice The team would like to acknowledge the Manager, EMNPV), Boubacar-Sid Barry (Resident cooperation of the various government entities, including Representative, MNCDJ), Kevin Carey (Advisor, the Central Bank of Djibouti, the Direction de l’Economie EMNDR) and Mark Eugene Ahern (Lead Country et du Plan (DEP), the Direction de la Dette Publique Economist, EMNDR). (DEP), l’ Institut de la Statistique de Djibouti (INSTAD) The recent macroeconomic developments and the Djibouti Ports and Free Zones Authority (DPFZA) (Chapter I) Macroeconomic Outlook and Risks who availed data necessary for the analysis. (Chapter II) were prepared by Rick Emery Tsouck For information about the World Bank and Ibounde. The Covid-19 impact on the labor market its activities in Djibouti, please visit https://www. (Chapter III) was prepared by Bilal Malaeb (Poverty worldbank.org/en/country/djibouti (English). Economist, EMNPV) based on high-frequency data For questions and comments on the content of that the World Bank and the Institute of Statistics this publication, please contact Rick Emery Tsouck (INSTAD) of Djibouti produced in June, September, Ibounde (rtsouckibounde@worldbank.org) and Éric and December 2020, and March 2021. Le Borgne (eleborgne@worldbank.org). vii EXECUTIVE SUMMARY S everely impacted by the COVID-19 exemptions introduced in the 2021 Finance Act. Public pandemic in 2020, Djibouti’s economic and publicly-guaranteed debt, however, remains activity has shown signs of recovery in high, and again rose above 70 percent of GDP after 2021. GDP growth rate in 2020 dropped to a decade falling slightly in 2018–2019. Djibouti is assessed at low of about 0.5 percent but rebounded in 2021 high risk of debt distress with unsustainable outlook. to a projected 5.1 percent. The recovery is mostly The 2020 Debt Service Suspension Initiative (DSSI), driven by a withdrawal of COVID-19 related lockdown whereby Djibouti’s debt service to official creditors measures in late 2020, which has facilitated a rebound were deferred, provided budget buffers to Djibouti in in investment and construction. Broad containment both 2020 and 2021. of the virus and continued government support have The current account will more likely swing also bolstered household consumption. It is worth to deficit. The current account surplus is expected to noticing that the economic rebound was dampened turn from a positive 11.6 percent of GDP in 2020 to a by a fall in the Ethiopian demand for logistics services negative 1 percent of GDP in 2021, as import growth of during the second half of 2021. goods and services (mostly for infrastructure projects) Inflation has risen with international com- is expected to outpace exports. The financial account modity prices. Headline inflation has risen by 2.6 per- is estimated to have recorded a net outflow after a cent in October 2021 (year-on-year), and core inflation US$200 million bond emission by the local subsidiary 3.2 percent because of several factors. These include of Bank of China to support a mining project in the passthrough of higher global oil and food prices Central Africa. Nonetheless, thanks to the recent and factors which pushed up domestic prices, such International Monetary Fund (IMF) Special Drawing as the strong demand-side pressures following real Rights (SDRs) allocation (equivalent to US$40 million sector recovery in 2021, and periodic shortages of transferred to Djibouti in August 2021), the currency imported fresh products from Ethiopia. board arrangement has avoided stress. Public finances are under pressure. The Amid the covid-related recovery, the overall deficit of the central government is expected to prolonged conflict in Ethiopia has increased remain low at 1.6 percent of GDP in 2021. This owes downside risks for Djibouti’s economic outlook. to measures such as the rationalization of wages The declaration of a six-month state of emergency in and salaries, transfers to public agencies, and the November 2021 by the Ethiopian federal government expectation that higher dividends from companies has delayed prospects of a peaceful short-term operating in Ports and Free zones will partially offset resolution of the conflict. A prolonged conflict in the fall in tax revenues resulting from generous new Ethiopia would affect railway and road corridors through ix which most trade between Djibouti and Ethiopia takes compliance behavior, and a large informal sector. place. It would deteriorate further Ethiopian’s trade and On the debt side, liquidity tensions are likely to arise growth in both the short and medium terms and have due to the payment of deferred debt service linked to substantial spillover on Djibouti’s economy. In light the DSSI, the maturing of the two loans on the water of the severe uncertainty regarding the neighboring pipeline project connecting Djibouti to Ethiopia loan in conflict, this first edition of the Djibouti Economic 2022, and the Addis Ababa-Djibouti railway project in Monitor considers two scenarios for the medium-term 2025. An estimated financing gap resulting from the outlook: (1) a baseline scenario, whereby the conflict in Ethiopian crisis would be US$70.7 million in 2022 and Ethiopia is expected to find a peaceful solution within US$52.1 million in 2023 under the baseline scenario. six months; and (2) a downside scenario, that assumes Under the downside scenario, the financing gap the conflict intensifies and lasts through December is expected to increase to US$91.3 million in 2022 2022. Economic activity is expected to rebound in and US$72.4million in 2023. In such a context, the 2023 with the end of the conflict. government would need to engage with its bilateral Based on our two scenarios of the conflict creditors to negotiate further debt restructurings and in Ethiopia, real GDP growth in Djibouti could explore additional measures to strengthen domestic hover between 4.3 and 2.7 percent in 2022 revenue mobilization, including by rationalizing tax (baseline and downside scenarios, respectively). exemptions and negotiating more favorable bilateral Under the baseline scenario, the overall fiscal deficit deals on rents paid by military bases. would widen to 2.7 percent of GDP in 2022 and The pandemic severely and negatively 2.8 percent of GDP in 2023 mostly due to lower tax impacted households overall, although some revenues and dividends from port-related SOEs. welfare indicators are trending upwards—see Under the downside scenario, the adverse effect of Special Focus (Chapter 3). The Special Focus the prolonged conflict in Ethiopia on bilateral trade, details the employment and welfare trends among security expenditure to secure borders, and rising urban households during the crisis and the recovery social expenditure to support flows of refugees, would in Djibouti. The analysis is based on high-frequency widen the overall fiscal deficit to 3.7 percent of GDP in data that the World Bank and the Institute of 2022 and 3.6 percent of GDP in 2023. Statistics of Djibouti produced in June, September, Djibouti has very limited fiscal buffers to and December 2020, and March 2021. It reveals face a prolonged crisis in Ethiopia, as the country that from a labor market and welfare perspective, is already at high risk of debt distress and has a the COVID-19 pandemic has taken a toll on narrow tax base. Domestic revenue has fallen by households in Djibouti. Although, welfare indicators, 3 percent of GDP to about 18.7 percent of GDP in including subjective wellbeing and food security, 2020, mostly because of rising and widespread tax are on a positive trend, vulnerable and marginalized expenditures (these represent at least 127 percent populations must receive special policy attention to of tax revenue or 15 percent of GDP), non-tax build back better. x DJIBOUTI ECONOMIC MONITOR – NAVIGATING THROUGH THE PANDEMIC AND REGIONAL TENSIONS RÉSUMÉ ANALYTIQUE G ravement affectée par la pandémie de publics qui devraient partiellement compenser la COVID-19 en 2020, l’activité économique baisse attendue des recettes fiscales résultant de de Djibouti s’est redressée en 2021. nouvelles exonérations généreuses introduites dans La croissance du PIB en 2020 qui était tombée la loi de finances 2021. La dette publique et garantie à 0,5 %, son plus bas niveau de la décennie, a par l’État reste cependant élevée et a dépassé vigoureusement rebondi en 2021, à environ 5,1 %. 70 % du PIB après avoir légèrement diminué en La reprise a été principalement tirée par le retrait 2018–2019. Djibouti est évalué pays à risque élevé des mesures de confinement liées à la COVID-19 de surendettement avec des perspectives non en fin d’année 2020, qui a facilité un rebond de soutenables. L’initiative de suspension du service de l’investissement et des activités de construction de la dette (ISSD) du G20, par laquelle, le service de la bâtiments et d’infrastructures. Le soutien continu du dette de Djibouti aux créanciers officiels a été différé, gouvernement a également stimulé la consommation a fourni des liquidités et des marges budgétaires à des ménages. Le rebond a cependant été atténué par Djibouti en 2020 et 2021. une baisse de la demande éthiopienne de services Le compte courant devrait devenir logistiques au cours du second semestre 2021. déficitaire. La balance courante devrait passer d’un L’inflation a augmenté avec les prix excédent de 11,6 % du PIB à un déficit de 1 % du PIB, internationaux des matières premières. L’inflation car la croissance des importations de biens et services globale a observé une hausse de 2,6 % en octobre (principalement pour les projets d’infrastructure) devrait 2021 (en glissement annuel) et l’inflation sous-jacente surpasser celle des exportations. Le compte financier de 3,2 % en raison de plusieurs facteurs. Il s’agit aurait enregistré une sortie nette après une émission notamment de la répercussion des prix mondiaux du obligataire de 200 millions de dollars par la filiale pétrole et des denrées alimentaires plus élevés et des locale de Bank of China pour soutenir un projet minier facteurs qui font monter les prix intérieurs, tels que en Afrique centrale. Néanmoins, grâce à la récente les fortes pressions du côté de la demande à la suite allocation de DTS du FMI (équivalent à 40 millions de de la reprise du secteur réel en 2021, et les pénuries dollars américains transférés à Djibouti en août 2021), périodiques d’importations de produits frais d’Éthiopie. le système de caisse d’émission a évité des tensions. Les finances publiques sont sous pression. En pleine reprise post Covid-19, le conflit Le déficit global de l’administration centrale devrait en Éthiopie a considérablement accru les risques rester faible à 1,6 % du PIB en 2021. Ce serait le de détérioration des perspectives économiques résultat des mesures de rationalisation des salaires de Djibouti. La déclaration de l’état d’urgence de six et traitements et des transferts aux établissements mois en novembre 2021 par le gouvernement fédéral xi éthiopien a assombri les perspectives d’un règlement l’augmentation et de l’ampleur des dépenses fiscales pacifique à court terme du conflit. Un conflit prolongé (celles-ci représentent 127 % des recettes fiscales en Éthiopie affecterait les corridors ferroviaires ou 15 % du PIB), un taux de recouvrement faible et et routiers par lesquels la plupart des échanges un vaste secteur informel. Du côté de la dette, des commerciaux entre Djibouti et l’Éthiopie ont lieu. Cela tensions de liquidité sont susceptibles de survenir en détériorerait davantage le commerce et la Croissance raison du paiement du service de la dette différé lié à de l’Éthiopie à court et à moyen terme et aurait des l’Initiative de suspension du service de la dette (ISSD, retombées importantes sur l’économie djiboutienne. du début de l’amortissement du prêt pour le pipeline Compte tenu de l’incertitude extrême entourant d’eau reliant Djibouti à l’Éthiopie en 2022 et du prêt le conflit voisin, cette première édition du Bulletin de pour le chemin de fer Addis-Abeba-Djibouti en 2025. conjoncture de la Banque mondiale pour Djibouti Le gap de financement estimé résultant de la crise envisage deux scénarios pour les perspectives à éthiopienne serait de 70,7 millions de dollars US en moyen terme : (1) un scénario de référence, dans 2022 et de 52,1 millions de dollars US en 2023 dans le lequel le conflit en Éthiopie devrait trouver une scénario de référence. Dans le scénario pessimiste, le solution pacifique au cours des six premiers mois de gap budgétaire devrait être de 91,3 millions de dollars 2022 ; et (2) un scénario pessimiste, qui suppose que US en 2022 et de 72.4 millions de dollars US en 2023. le conflit s’intensifie et dure jusqu’en décembre 2022. Dans un tel contexte, le gouvernement devrait engager L’activité économique devrait rebondir en 2023 avec des négociations avec ses créanciers bilatéraux pour la fin du conflit. de nouvelles restructurations de dette et explorer Sur la base de nos deux scénarios du conflit des mesures supplémentaires pour renforcer la en Éthiopie, la croissance du PIB réel à Djibouti mobilisation des recettes intérieures, notamment en pourrait osciller entre 4,3 et 2,7 pour cent en rationalisant les exonérations fiscales et en négociant 2022 (respectivement scénarios de référence et des accords bilatéraux plus favorables sur les loyers pessimiste). Dans le scénario de référence, le déficit payés par les bases militaires. budgétaire global se creuserait pour atteindre 2,7 % du La pandémie de Covid-19 a gravement PIB en 2022 et 2,1 % du PIB en 2023, principalement affecté les ménages dans l’ensemble, bien que en raison de la baisse des recettes fiscales et des certains indicateurs de bien-être aient tendance dividendes des entreprises publiques liées aux ports. à s’améliorer — voir chapitre spécial (chapitre Dans le scénario pessimiste, l’effet négatif du conflit 3). Le chapitre spécial détaille les tendances de prolongé en Éthiopie sur le commerce bilatéral, les l’emploi et du bien-être des ménages urbains pendant dépenses de sécurité pour sécuriser les frontières et la crise et la reprise à Djibouti. L’analyse est basée l’augmentation des dépenses sociales pour soutenir sur des données à haute fréquence que la Banque les flux de réfugiés, creuseraient le déficit budgétaire mondiale et l’Institut National de la Statistique de global à 3,2 % du PIB en 2022 et à 2,6 % du PIB en Djibouti (INSTAD) ont produites en juin, septembre 2023. et décembre 2020 et mars 2021. Elle révèle que du Djibouti dispose de marges budgétaires point de vue du marché du travail et du bien-être, la très limitées pour faire face à une crise prolongée pandémie de COVID-19 a fait des ravages dans les en Éthiopie. Le pays court déjà un risque élevé de ménages à Djibouti. Bien que les indicateurs de bien- surendettement et dispose d’une assiette fiscale être, y compris le bien-être subjectif et la sécurité étroite. Les recettes fiscales sont inférieures au alimentaire, soient sur une tendance positive, les potentiel et sont passées de 14 % du PIB en 2015 à populations vulnérables et marginalisées devraient 10,7 % du PIB en 2020, principalement en raison de faire l’objet d’une attention politique particulière. xii DJIBOUTI ECONOMIC MONITOR – NAVIGATING THROUGH THE PANDEMIC AND REGIONAL TENSIONS ‫الموجز التنفيذي‬ ‫الحساب الجاري سوف يتأرجح إىل العجز‪ .‬من املتوقع أن يتحول فائض‬ ‫الحساب الجاري من نسبة إيجابية تبلغ ‪ 11.6‬يف املائة من إجاميل الناتج‬ ‫املحيل يف عام ‪ 2020‬إىل نسبة سالبة تبلغ ‪ 1‬يف املائة من إجاميل الناتج‬ ‫أثرت جيبويت بشدة بجائحة كوفيد‪ -19‬يف عام ‪ ،2020‬وتعاىف‬ ‫النشاط االقتصادي يف جيبويت يف عام ‪ .2021‬إذ انخفض معدل‬ ‫منو الناتج املحيل اإلجاميل يف عام ‪ 2020‬إىل أدىن مستوياته خالل‬ ‫ت‬ ‫املحيل يف عام ‪ ،2021‬حيث من املتوقع أن يتجاوز منو واردات السلع‬ ‫عقد من الزمن بنحو ‪ ،0.5٪‬لكنه انتعش بشدة يف عام ‪ 2021‬ليبلغ نسبة‬ ‫والخدمات (معظمها خاصة مبشاريع البنية التحتية) منو الصادرات‪ .‬وتشري‬ ‫‪ 5.1٪‬املتوقعة‪ .‬ويرجع االنتعاش أساساً إىل إلغاء إجراءات اإلغالق املتعلقة‬ ‫التقديرات إىل أن الحساب املايل قد سجل تدفقات خارجة صافية بعد‬ ‫بـالكوفيد يف أواخر عام ‪ ،2020‬مام سهل انتعاش االستثامر والبناء‪ .‬وقد‬ ‫إصدار سندات بقيمة ‪ 200‬مليون دوالر أمرييك من قبل فرع محيل‬ ‫أدى االحتواء واسع النطاق للفريوس والدعم الحكومي املستمر إىل تعزيز‬ ‫لبنك الصني لدعم مرشوع تعدين يف وسط إفريقيا‪ .‬ومع ذلك‪ ،‬وبفضل‬ ‫استهالك األرس املعيشية‪ .‬وتجدر اإلشارة إىل أن االنتعاش االقتصادي قد‬ ‫التخصيص األخري من صندوق النقد الدويل الخاص بحقوق السحب‬ ‫تضاءل بسبب انخفاض الطلب اإلثيويب عىل الخدمات اللوجستية خالل‬ ‫الخاصة (ما يعادل ‪ 40‬مليون دوالر أمرييك تم تحويلهم إىل جيبويت يف‬ ‫النصف الثاين من عام ‪.2021‬‬ ‫أغسطس ‪ ،)2021‬مل يعاين مجلس العملة من أي الضغوط‪.‬‬ ‫ارتفع التضخم مع ارتفاع أسعار السلع األساسية‪ .‬ارتفع معدل التضخم‬ ‫ويف خضم االنتعاش الكبري املرتبط بفريوس كورونا‪ ،‬أدى التصعيد املفاجئ‬ ‫العام بنسبة ‪ 2.6٪‬يف أكتوبر ‪( 2021‬عىل أساس سنوي)‪ ،‬وارتفع التضخم‬ ‫للرصاع يف إثيوبيا إىل زيادة املخاطر السلبية للتوقعات االقتصادية‬ ‫األسايس بنسبة ‪ 3.2٪‬بسبب عدة عوامل‪ .‬وتشمل تلك العوامل تأثر األسعار‬ ‫لجيبويت‪ .‬كام أدى إعالن حالة الطوارئ ملدة ستة أشهر يف نوفمرب ‪ 2021‬من‬ ‫املحلية الرتفاعات أسعار النفط والغذاء العاملية‪ ،‬باإلضافة إىل عوامل أخرى‬ ‫قبل الحكومة الفيدرالية اإلثيوبية إىل تأخري فرص التوصل ايل حل سلمي‬ ‫مثل الضغوط القوية من جانب الطلب يف أعقاب انتعاش القطاع الحقيقي‬ ‫عىل املدى القصري‪ .‬وسيؤثر النزاع املطول يف إثيوبيا عىل السكك الحديدية‬ ‫يف عام ‪ ،2021‬والنقص الدوري يف واردات املنتجات الطازجة من إثيوبيا‪.‬‬ ‫وممرات الطرق التي تتم من خاللها معظم التجارة بني جيبويت وإثيوبيا‪.‬‬ ‫وسيؤدي ذلك إىل مزيد من التدهور يف تجارة إثيوبيا ومنوها عىل املديني‬ ‫املالية العامة تعاين من ضغوط‪ .‬من املتوقع أن يظل العجز اإلجاميل‬ ‫القصري واملتوسط‪ ،‬كام سيكون له تأثري كبري عىل اقتصاد جيبويت‪ .‬ويف ضوء‬ ‫للحكومة املركزية منخفضاً عند ‪ 1.6‬يف املائة من الناتج املحيل اإلجاميل يف‬ ‫حالة عدم اليقني الشديدة فيام يتعلق بالرصاع يف الدولة املجاورة‪ ،‬تتناول‬ ‫عام ‪ .2021‬ويرجع ذلك إىل تدابري مثل ترشيد األجور والرواتب‪ ،‬والتحويالت‬ ‫هذه النسخة األوىل من املرصد االقتصادي لجيبويت سيناريوين للتوقعات‬ ‫إىل الرشكات اململوكة للدولة‪ ،‬وتوقع أن تتمكن الجهات الحكومية من‬ ‫متوسطة األجل‪ )1( :‬سيناريو األساس‪ ،‬حيث من املتوقع أن يجد الرصاع‬ ‫تعويض االنخفاض يف اإليرادات الرضيبية الناتجة عن االعفاءات الجديدة‬ ‫يف إثيوبيا حالً سلمياً يف غضون ستة أشهر؛ و (‪ )2‬سيناريو سلبي‪ ،‬يفرتض‬ ‫السخية التي تم إدراجها يف مرشوع قانون املالية لعام ‪ .2021‬ومع ذلك‪،‬‬ ‫أن الرصاع يشتد ويستمر حتى ديسمرب ‪ ،2022‬ومن املتوقع أن ينتعش‬ ‫ال يزال الدين العام‪ ،‬والدين املكفول‪ ،‬للقطاع العام مرتفعاً‪ ،‬وارتفع مرة‬ ‫النشاط االقتصادي يف عام ‪ 2023‬بنهاية الرصاع‪.‬‬ ‫أخرى فوق ‪ 70‬يف املائة من الناتج املحيل اإلجاميل بعد انخفاض طفيف‬ ‫يف الفرتة ‪ ،2019–2018‬األمر الذي جعل من قدرة جيبويت عىل تحمل‬ ‫استنادًا إىل هذين السيناريوهني الخاصني بالرصاع يف إثيوبيا‪ ،‬ميكن أن‬ ‫ديون جديدة ضعيفة‪ .‬وقد وفرت مبادرة تعليق خدمة الدين لعام ‪،2020‬‬ ‫يرتاوح منو إجاميل الناتج املحيل الحقيقي يف جيبويت بني ‪ 4.3‬و‪ 2.7‬يف‬ ‫التي تم مبوجبها تأجيل مدفوعات سعر الفائدة الخاصة بجيبويت للدائنني‬ ‫املائة يف عام ‪( 2022‬سيناريوهان األساس والسلبي‪ ،‬عىل التوايل)‪ .‬ووفقًا‬ ‫الرسميني‪ ،‬بعض السيولة واملوازنات الوقائية لعامي ‪ 2020‬و‪.2021‬‬ ‫‪xiii‬‬ ‫من القرض الخاص بخط أنابيب املياه الذي يربط جيبويت وإثيوبيا يف عام‬ ‫للسيناريو األساس‪ ،‬ستزداد نسبة العجز املايل الكيل إىل ‪ 2.7٪‬من إجاميل‬ ‫‪ ،2022‬وقرض السكك الحديدية بني أديس أبابا وجيبويت يف عام ‪.2025‬‬ ‫الناتج املحيل يف عام ‪ 2022‬و‪ 2.8٪‬من إجاميل الناتج املحيل يف عام ‪2023‬‬ ‫وستبلغ فجوة التمويل املقدرة الناتجة عن األزمة اإلثيوبية ‪ 70.7‬مليون‬ ‫بسبب انخفاض اإليرادات الرضيبية والعائدات من الرشكات اململوكة‬ ‫دوالر أمرييك يف عام ‪ 2022‬و‪ 52.1‬مليون دوالر أمرييك يف عام ‪2023‬‬ ‫للدولة ذات الصلة باملوانئ‪ .‬ويف ظل سيناريو السلبي‪ ،‬فإن التأثري السلبي‬ ‫وفقًا لسيناريو األساس‪ .‬أما يف ظل السيناريو السلبي‪ ،‬فإنه من املتوقع أن‬ ‫للنزاع طويل األمد يف إثيوبيا عىل التجارة الثنائية‪ ،‬واإلنفاق األمني​​لتأمني‬ ‫تبلغ فجوة التمويل ‪ 91.3‬مليون دوالر أمرييك عام ‪ 2022‬و‪ 72.4‬مليون‬ ‫الحدود‪ ،‬وزيادة اإلنفاق االجتامعي لدعم تدفقات الالجئني‪ ،‬من شأنه أن‬ ‫دوالر أمرييك يف عام ‪.2023‬‬ ‫يزيد من العجز املايل الكيل ليبلغ ‪ 3.7‬يف املائة من الناتج املحيل اإلجاميل‬ ‫يف عام ‪ 2022‬و‪ 3.6‬يف املائة من الناتج املحيل اإلجاميل يف عام ‪.2023‬‬ ‫أثرت الجائحة بشدة وبصورة سلبية عىل معيشة األرس بشكل عام‪ ،‬عىل‬ ‫الرغم من بدء ارتفاع مؤرشات الرفاهية — انظر اىل الفصل الخاص يف‬ ‫جيبويت لديها هوامش أمان مايل محدودة للغاية ملواجهة أزمة طويلة‬ ‫التقرير (الفصل ‪ .)3‬ويركز الفصل الخاص عىل تفاصيل اتجاهات العاملة‬ ‫األمد يف إثيوبيا‪ ،‬حيث أن البالد معرضة بالفعل لخطر كبري من ضائقة‬ ‫والرفاهية بني األرس الحرضية خالل فرتيت أزمة جائحة كورونا واالنتعاش‬ ‫الديون ولديها قاعدة رضيبية ضيقة‪ .‬فقد انخفضت اإليرادات املحلية‬ ‫يف جيبويت‪ .‬ويعتمد التحليل عىل البيانات كثرية التواتر التي أصدرها البنك‬ ‫بنسبة ‪ 3‬يف املائة من إجاميل الناتج املحيل إىل حوايل ‪ 18.7‬يف املائة من‬ ‫الدويل ومعهد اإلحصاء يف جيبويت يف شهر يونيو وسبتمرب وديسمرب ‪2020‬‬ ‫إجاميل الناتج املحيل يف عام ‪ ،2020‬ويرجع ذلك يف الغالب إىل ارتفاع‬ ‫ومارس ‪ .2021‬ويكشف أنه من منظور سوق العمل والرفاهية‪ ،‬فإن‬ ‫النفقات الرضيبية (متثل هذه النفقات ‪ 127‬يف املائة عىل األقل من‬ ‫جائحة كوفيد‪ -19‬أثرت عىل األرس املعيشية يف جيبويت‪ .‬وعىل الرغم من‬ ‫اإليرادات الرضيبية أو ‪ 15‬يف املائة من إجاميل الناتج املحيل)‪ ،‬وسلوك‬ ‫أن مؤرشات الرفاهية‪ ،‬مبا يف ذلك الرفاهية الذاتية واألمن الغذايئ‪ ،‬متيل‬ ‫عدم االمتثال الرضيبي‪ ،‬وكرب حجم القطاع غري الرسمي‪ .‬ومن املرجح أنه‬ ‫إىل االتجاه اإليجايب‪ ،‬يجب أن يتلقى السكان الضعفاء واملهمشني اهتامماً‬ ‫فيام يتعلق بالديون قد تنشأ مشكالت خاصة بالسيولة بسبب تأجيل‬ ‫خاصاً يف السياسات إلعادة البناء بشكل أفضل‪.‬‬ ‫سداد خدمة الديون املرتبطة مببادرة تعليق خدمة الدين‪ ،‬واستحقاق كل‬ ‫‪xiv‬‬ ‫‪DJIBOUTI ECONOMIC MONITOR – NAVIGATING THROUGH THE PANDEMIC AND REGIONAL TENSIONS‬‬ INTRODUCTION This first edition of the Djibouti Economic and deep-water port to serve as a key regional refuel- Monitor (DEM) launches a program of reports ing, trade and transshipment center. Nonetheless, this with semi-annual frequency that analyze the development strategy has come at the cost of rising trends and constraints to Djibouti’s development. debt vulnerabilities. Djibouti’s public and publicly guar- Each issue will provide an update of recent economic anteed debt rose sharply from 37.5 percent of GDP in developments (Chapter 1) and present the outlook as 2010 to 72 percent in 2017. The repayment burden of forecast by World Bank Staff together with key risks its fast-maturing debts has constrained the fiscal space surrounding the outlook (Chapter 2). In addition, the for much needed spending in social sectors. DEM will also include a Special Focus section where Public finances remain under pressure. The we will delve in more depth on a topic of interest to the overall fiscal deficit widened to 1.6 percent of GDP in public. The Special Focus of the first issue of the DEM 2021 up from 0.5 percent in 2019. The participation in discusses the impact of the COVID-19 on the labor the G-20 debt service suspension initiative (DSSI) has market and household welfare (Chapter 3). provided Djibouti invaluable fiscal space to absorb the The DEM aims to share information and fiscal impact of COVID-19 in 2020 and 20211. However, stimulate debate among those interested in with the payment of the deferred debt service, the improving the economic management of Djibouti. beginning of the amortization of the Djibouti-Ethiopia It aims to do so in a way that is accessible to non- water pipeline, and railway loans in 2022 and 2025, specialists to be helpful to a wide range of stakeholders. respectively, the country will be confronted with It offers another voice on economic issues in Djibouti substantial fiscal pressures from 2022 onwards. A and an additional platform for engagement, learning, protraction of the conflict in Ethiopia represents one and exchange. of the major risks to Djibouti’s medium-term outlook. In the decade before the COVID-19 pan- demic, Djibouti’s economy was growing rapidly by over 6 percent per year on average, driven by exter- 1 The authorities have reported that they have realized nally financed, large-scale investment in transport about US$40 million (1.2 percent of GDP) of fiscal and port infrastructure. These investments aimed to savings in 2020 and US$23 million (0.7 percent of GDP) make the most out of the country’s strategic location from January to March 2021. xv 1 RECENT ECONOMIC DEVELOPMENTS Real Sector electricity consumption grew by 15 percent and 8 percent, respectively, over the first half of 2021. The Djibouti’s economic activity recovered in 2021 hotel sector occupation rate increased by 18 percent after having been disrupted in 2020 by the over the same period. In the agriculture sector, the COVID-19 pandemic. GDP growth is estimated to number of exported cattle increased by 70 percent have grown by about 5 percent in 2021 compared to after having contracted by 44 percent in 2020, 0.5 percent in 2020. High frequency data available at following the easing of COVID-19 restrictions in Gulf the end of September 2021 show that the recovery Cooperation Council countries, the main destination is driven by a withdrawal of Covid-related lockdown of Djibouti’s cattle. measures in late 2020, which has facilitated a rebound The economic rebound was dampened by in investment and construction and triggered a broad- a fall in the Ethiopian demand for logistics during based growth in the domestically oriented sector. the second half of 2021. The cumulative throughput Construction output, in particular, is estimated to have volume of merchandise processed at the entrance to expanded by 22 percent year-on-year at the end of Djibouti’s ports for the Ethiopian demand (80 percent September 2021. This performance is attributable to of the total volume) that had been rebounding from the resumption of major public works, including key the fourth quarter of 2020 to the second quarter of structuring projects of the Djibouti Ports and Free 2021 declined precipitously in the third quarter of Zones Authority (APZF). These projects include the 2021, reflecting the spillover of the Ethiopian conflict. transformation of the old port into a shopping center, As shown in figures 1.2 and 1.3, the decline preparatory works for the construction of the shipyard in Ethiopian demand is particularly noticeable repair factory, and the development of Damerjog through the drop in the volumes of containers and Industrial Development Free Trade Zone (DDID FTZ). hydrocarbon bulk cargo handled by Djibouti’s ports, The telecommunication and the electricity sectors which is estimated to have fallen by 19 percent and rebounded as the number of GSM subscribers and 12 percent in 2021 compared to 2020, respectively. 1 FIGURE 1.1 • The Volume of Merchandise On the demand side (figure 1.4), private Handled by Djibouti’s Ports for consumption became the largest contributor to the Ethiopian Demand Fell in the GDP after a plunge in 2020, thanks to Government Second Half of 2021 stimulus measures in the second half of the 4,000 year and throughout 2021 (figure 1.4). Additional 3,500 COVID-19 recovery measures under the 2021 budget 3,000 2,500 also supported the rebound of private consumption. 2,000 These include cash transfers and food distributions, 1,500 and financial support granted to micro-small and 1,000 medium-sized enterprises and the informal sector. 500 0 Q1-2019 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Total volume of merchandise handled in Djibouti's ports Inflation (in thousands of metric tons) Of which volume of merchandise handled in the ports (in thousands of metric tons) for Ethiopian demand Inflation has risen pushed by international Of which volume of merchandise handled commodity prices and supply chain disruptions. (in thousands of metric tons) for domestic demand Year-on-year headline inflation rose by 2.6 percent Source: Djibouti Ports and free zones authority (DPFZ) and World bank staff in October 2021 with a 3.2 percent increase in core calculations. inflation while fresh food (+0.5 percent) and energy (+0.8 percent) prices grew moderately over the same period. The uptick in headline inflation observed Overall, the services sector is estimated to from June to October 2021, after a continuous remain the largest contributor to GDP in 2021 with 3.8 decrease between the end of 2019 and June 2021, percentage points (figure 1.3). Industry contributed resulted from a combination of several factors: (i) the 0.9 percentage points from a rebound in construction, passthrough of higher global oil and food prices (oil up from 0.3 recorded in 2020. The agriculture sector’s and food represent 40 percent of Djibouti’s imports in (less than 2 percent of GDP) contribution to GDP value; (ii) higher demand-side pressure following real remained stable at 0.04 percentage points. sector recovery; and (iii) periodic shortages in imports FIGURE 1.2 • The Volume of Containers FIGURE 1.3 • …as Well as the Volume of Bulk Processed by Djibouti’s Ports Fell Hydrocarbon by 19 Percent in 2021… 7,000,000 1,000,000 6,000,000 900,000 5,000,000 800,000 –19% 4,000,000 700,000 3,000,000 600,000 2,000,000 500,000 1,000,000 400,000 0 300,000 2018 2019 2020 2021 200,000 Volume of non hydrocarbon bulk cargo handled by 100,000 Djibouti's ports (in millions of tons) Volume of hydrocarbon handled by Djibouti's ports 0 (in millions of tons) 2018 2019 2020 2021 Source: Djibouti Ports and Free Zones authority (DPFZ) and World bank staff Source: Djibouti Ports and Free Zones authority (DPFZ) and World bank staff calculations. calculations. 2 DJIBOUTI ECONOMIC MONITOR – NAVIGATING THROUGH THE PANDEMIC AND REGIONAL TENSIONS FIGURE 1.4 • Domestic Services Sector Drove FIGURE 1.5 • Private Consumption Became the the Recovery Largest Contributor to Growth in 2021 9.0 8.0 15.0 7.0 10.0 6.0 5.0 5.0 4.0 0.0 3.0 2.0 –5.0 1.0 –10.0 0.0 2017 2018 2019 2020 2021 –15.0 Agriculture Industry Services Private consumption Government consumption Net taxes GDP growth Gross fixed investment Net exports GDP Source: Authors’ calculation and projections based on data from National authorities. Source: Authors’ calculation and projections based on data from National authorities. of fresh products from Ethiopia. The volatility of fresh FIGURE 1.6 • Year-on-Year Headline Inflation food prices, mostly imported from Ethiopia, reflects Is Driven by Domestic and Global Recovery structural constraints to trade along the Djibouti- Ethiopia corridors and inherent to the Ethiopian 10.0 agriculture value chain (e.g., lack of availability and 8.0 6.0 accessibility of storage and packaging infrastructure, 4.0 climatic hazards, plant diseases, price volatility, and 2.0 0.0 lack of guarantees for farmers). –2.0 –4.0 –6.0 Fiscal Developments –8.0 –10.0 –12.0 Oct-19 Dec-19 March-20 June 20 Sep-20 Oct-20 Dec 20 March-21 June 21 Sept 21 Oct-21 Revenues are under pressure. As of July 31, 2021, total nominal revenue including grants increased by only 0.2 percentage points compared to the same Fresh products prices Energy prices period last year, as higher dividends from companies Core Inflation Headline CPI operating in Ports and Free zones, transferred to Source: INSTAD and WB staff calculations. the central government’s budget, partially offset the drop in grants. These declined by 50 percent in nominal terms, reflecting some reduction in the funds made available by the international community declined by 0.5 percentage points by the end of in response to COVID-19. Tax revenue remained 2021. sluggish at 5.9 percent of GDP during the same Authorities have put forward an encourag- period, mainly due to the introduction of additional ing set of measures to rationalize public expen- tax expenditure measures related to PPP projects ditures. Despite increases in nominal terms for both and some reductions in the surtaxes on Khat and current and capital expenditures, the ratio of total petroleum products introduced in the 2021 Finance expenditure to GDP is estimated to have declined in Act. Overall, total revenue is estimated to have 2021 driven by the launch of government’s measures RECENT ECONOMIC DEVELOPMENTS 3 Summary Government Fiscal Situation in 2020–2021 (in % of GDP) TABLE 1.1 •  2020 2021 Budget July–2020a July–2021a 2021b Proj. Overall Balance –1.7 –1.3 –2.0 –1.1 –1.6 Primary Balance –1.2 –0.8 –1.5 –1.1 –0.7 Total Revenues and Grants 21.4 20.7 10.4 10.6 18.7 Tax Revenues 10.7 11.5 5.9 5.9 11.0 Non-Tax revenues 6.7 6.3 4.1 4.2 6.0 Grants 3.9 2.8 0.7 0.5 1.7 Expenditures 23.1 22.0 12.2 11.8 20.3 Current Expenditures 14.6 14.3 9.2 9.1 13.7 Wages and 6.1 6.0 3.5 3.5 5.5 Compensation Goods and Services 4.8 4.6 3.5 3.7 4.4 Interest Payments 0.6 0.5 0.5 0.1 0.9 Current Transfers 3.1 3.1 1.8 1.8 3.0 Capital Expenditures 5.8 7.0 2.2 2.3 5.9 Government Financing 2.1 1.6 1.5 0.5 1.8 External (Net) 4.6 2.0 2.2 0.7 2.2 Domestic (Net) –2.5 –0.5 –0.7 –0.3 –0.4 Source: INSTAD and WB staff calculations. a Cumulative budget performance from January to July each year. b World Bank staff projections. to reduce fiscal subsidies to Public agencies, cur- cations to the health sector increased to 8 percent in rently estimated at 2 percent of GDP, as well as to the 2021 budget (6 percent in 2020) mainly due to the merge some key public agencies (Etablissements purchase of equipment for the COVID-19 pandemic Publics Administratifs – EPA) and transfer some oth- response. The increase in Health allocations over the er’s administrative functions to the central govern- past six years has mainly focused on construction, ment. These measures are expected to be comple- equipment, and human resources. There is a need in mented by the revision of special civil servants’ status the future to improve access to care of the poorest and harmonization of the salary indexes. populations, equity in the allocation of resources and As part of the pandemic response reprioriti- good governance of the health system. zation efforts, public expenditure was redirected On balance, the fiscal deficit remains from infrastructure to health. Capital and operating modest. The overall deficit is estimated to remain costs for public infrastructure remain the largest com- low at 1.6 percent of GDP in 2021. The fiscal gap ponent of expenditure at 41percent of the total budget is projected to be covered by external financing in 2021, but this is significantly less than the 52 per- from bilateral and multilateral donors. Fiscal savings cent recorded in the 2020 budget. The education sec- resulting from the G20’s Debt Service Suspension tor (including basic education, vocational training, Initiative (DSSI – estimated at US$57.7 million or 1.6 higher education, and research), accounts for 15 per- percent of GDP in 2021) has substantially contributed cent of budget allocations, while defense and general to reduce the financing need thus making it easier to public services each represent about 13 percent. Allo- finance the deficit. 4 DJIBOUTI ECONOMIC MONITOR – NAVIGATING THROUGH THE PANDEMIC AND REGIONAL TENSIONS FIGURE 1.7 • Public Infrastructure Remained the 2020–2024. The high stock of public debt is mainly Largest Budget Component in 2021 a result of previously contracted non-concessional loans by SOEs (port, railway, and water companies). Social protection While the external debt-to-GDP ratio was on a Education downward trend from 71.5 percent of GDP in 2017 to Recreation, culture 64.4 percent in 2019, it rebounded to 71 percent in and religion 2020, mostly due to external financing to support the Health COVID-19 response and the contraction of GDP. The Housing and composition of Djibouti’s public debt has remained community amenities relatively stable with external debt representing over Public infrastructure 70 percent of total public debt. Bilateral public debt Public order represents 72 percent of total outstanding public debt and safety while multilateral debt is at 26 percent. Defense Djibouti is assessed as at high risk of debt General public services distress with unsustainable outlook because of 0% 10% 20% 30% 40% 50% 60% its continued high level of SOE debt, projected narrow tax base and weak GDP growth. Prompt 2019 2020 2021 and strong measures are required to improve debt Source: 2021 Finance Bill and WB staff calculations. sustainability, including reducing the pace of SOE borrowing, reforming SOE sector governance, prioritizing concessional financing, reducing the cost of electricity and telecommunications to attract more Public Debt foreign direct investments(FDI), and rationalizing the plethora of tax incentives. Public debt edges up again. Djibouti’s public and publicly guaranteed debt (PPG) is estimated to reach 71.4 percent of GDP at end-December 2021, mostly due to new financing from bilateral partners 2 The 2nd National Development Plan is articulated and international financial institutions to support around three pillars : (i) Inclusion, (ii) Connectivity and the 2nd National Development Plan “Djibouti ICI2” (iii) Institutions. FIGURE 1.8 • On-Lending to SOEs Is Driving Up FIGURE 1.9 • Two Thirds of Djibouti’s Public Public Debt Debt Is Owed to Bilateral Creditors 3,000 2,500 2,000 30% 1,500 1,000 68% 2% 500 0.0 2017 2018 2019 2020 2021 Central government State owned enterprises Multilateral Paris club Non Paris club Source: Department of Public Debt and WB staff calculations. Source: Department of Public Debt and WB staff calculations. RECENT ECONOMIC DEVELOPMENTS 5 Monetary Sector FIGURE 1.10 • The Currency Board Arrangement (CBA) Cover Rebounded in September 2021, Boosted by the Monetary policy is determined by a currency board IMF SDR Allocations arrangement (CBA) that was set up in 1949. Under the CBA, the national currency, the Djibouti franc, is 6.0 110 5.8 109 pegged to the US dollar through a fixed exchange 5.6 rate. Djibouti does not have a quantitative-based 108 5.4 nominal anchor of its monetary policy. In this context, 5.2 107 the role of the Central Bank is focused on ensuring 5.0 106 that its monetary supply is adequately backed up with 4.8 105 foreign currency reserves and monitoring of banks’ 4.6 104 4.4 liquidity risks and the strengthening of their liquidity 103 4.2 risk controls and management. 4.0 102 International support in response to the Dec 2019 June 2020 Sept 2020 Dec 2020 March 2021 June 2021 Sept 2021 pandemic has helped to maintain strong reserve coverage under the currency board arrangement (CBA). At the end of September 2021, Net foreign Currency cover (in percent) assets increased by 23 percent compared to Gross reserves in months of imports of Goods and Services September 2020. Net foreign Assets were boosted by Source: Central Bank of Djibouti and WB staff calculations. IMF Rapid Credit Facility and AfDB disbursing budget support in the second half of 2020 and by a US$40 million SDR allocation from the IMF to support the global recovery from the COVID-19 crisis in August FIGURE 1.11 • The External Current Account 2021. The IMF SDR allocation drove up the CBA (percent of GDP) Improved During the First Half of 2021, Driven by coverage of imports to 109 percent (5.4 months of Re-Exports to Ethiopia imports), the highest level reached since June 2017. Strong credit growth and sound banks. Other investments Private sector credit grew by about 3 percent between Portfolio investment December 2020 and July 2021, as household credit growth remained at a standstill and trade finance FDI remained weak. Credit to state-owned enterprises, Financial account balance however, grew by 24 percent over the same period, however, boosted by the rebound in the construction Capital transfers and commerce sectors. The banking sector remained Current account balance stable and sound with ample liquidity and a solvency –10.0 –5.0 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 ratio exceeding 15 percent in September 2021, nonperforming loans to gross loans down by more H1-2021 H1-2020 H1-2019 2020 2019 2018 than 2 percentage points compared to the previous year, and a provisioning rate of NPL of 78 percent. Source: Central bank of Djibouti and WB staff calculations. External Sector The current account surplus rose in the first Half trade balance to a surplus (3 percent of GDP) in the of June 2021, driven by robust re-exports to first half of June 2021 from a deficit in the same period Ethiopia that offset the compression of imports last year (–1.4 percent). Net revenues also rebounded of capital goods. The rebound of exports turned the with increased profits resulting from buoyant free zone 6 DJIBOUTI ECONOMIC MONITOR – NAVIGATING THROUGH THE PANDEMIC AND REGIONAL TENSIONS re-exports and exports of transportation activities.3 by 24 percent in nominal terms. A US$200 million While increasing by more than 3 percentage points bond emission by the local subsidiary of Bank of of GDP y-o-y4, the current account is estimated to China to support a mining project in the Central sign a deficit of 1 percent of GDP in 2021, as the African Republic also contributed to the shrinkage of growth of imports (mostly for infrastructure projects) the financial account. outpaced exports that have been contracting due to the escalation of the civil war in Ethiopia. The slump in Foreign Direct Investment resulting from the pandemic and local banking 3 China Merchants Ports-CMHI- holds 23.5% of PORT DE sector’s investment abroad contributed to a DJIBOUTI S.A., PDSA. contraction in the financial account. FDI dropped 4 Vis-à-vis the first half of 2020. RECENT ECONOMIC DEVELOPMENTS 7 2 MACROECONOMIC OUTLOOK AND RISKS Djibouti’s economic outlook is critically tied to While the immediate impacts of the developments in the political and economic unrest in Ethiopia have so far been limited, situation in Ethiopia as the economies are major economic challenges could arise if the closely integrated. Djibouti has provided the situation prolongs. While Ethiopia’s conflict has had principal maritime harbor for imports and exports a contained impact on Djibouti’s economy for much to and from Ethiopia since 1999. The bulk of of 2021 (see section on recent developments), high Djibouti’s port activities are driven by Ethiopia’s frequency data available at the end of September import and export transactions. Onward transit and 2021 (figure1.1 in Chapter 1) suggest that as the crisis re-exports to Ethiopia represent about 80 percent prolongs, the effects on trade, transport and logistics of the throughput volume of merchandise handled services become more consequential. in Djibouti’s ports and 40 percent of the volume The escalation of the unrest in Ethiopia in of Djibouti’s imports comes from Ethiopia (mainly November 2021 has increased downside risks electricity, water, and food). Therefore, disruptions in for Djibouti’s economic outlook. The declaration the Ethiopian trade have serious repercussions on of a six-month state of emergency by the federal Djibouti’s economy. Moreover, Djibouti’s two thermal government on November 2, 2021, has increased power plants produce on average only 20 percent of uncertainty. Furthermore, the loss of Ethiopia’s the country’s electricity needs. The remainder has preferential access to the US market, following been imported since 2011 from Ethiopia thanks to President’s Biden’s decision to revoke the AGOA the interconnection line connecting the countries privileges as of January 1, 2022, is expected to further which allows the transmission of 95 MW of electricity. limit Ethiopian’s trade access and growth in the short- Djibouti also imports about 10,000 m3 of water per and medium-terms which will have a substantial and day from Ethiopia. Food products (mostly vegetables negative spillover onto Djibouti’s economy. In 2020, and fruits) and Khat (an herbal stimulant widely Ethiopia exported about US$300 million of goods consumed in Djibouti) represent 18 percent and 47 (including apparel and leather) under the AGOA percent of imports in value form Ethiopia, respectively. framework. 9 Overall, the main transmission channels triggered by demand-pull inflation, as aggregate of a prolonged crisis in Ethiopia to Djibouti’s demand would largely outpace a suddenly- economy are expected to be the following: deflated supply of basic goods and services . • Humanitarian and security costs resulting • Growth slowdown, or even contraction, in from potential large migratory movements Ethiopia. This could take place on account of fleeing Ethiopia would further pressure declining confidence, clipped by the state of the fiscal accounts, adding to the already emergency and the US Government’s sanctions vulnerable situation created by the COVID-19 (which could potentially trigger a domino effect pandemic. According to the National Office of in other bilateral and multilateral partners, which would then lead to further contraction Assistance to Refugees (ONARS), as of July of the demand side of trade and transport 2021, the number of refugees from Ethiopia activities in the Free Zones). As was the case has increased by 8.4 percent over the last during the 1991 war, flows of humanitarian aid seven months and by 12.6 percent in the last that would transit by Djibouti’s Ports (Djibouti 13 months. The Government is working with hosts the regional World Food Program office) partners on a contingency plan. are expected to partially mitigate the drop in Ports and Free zones’ activities. While considerable uncertainty remains, • Prologued unrest could also adversely impact two scenarios are currently considered for the the traffic on the railways and road corridors short and medium terms outlook (2022–2023): between Ethiopia and Djibouti, with potentially In the baseline scenario, the conflict in Ethiopia would disruptive effects on food and water supplies, find a peaceful solution within the announcement as well as electricity. The gap in power supply of the six-month state emergency, that is by the first resulting from lower electricity imports from quarter of 2022. Under this scenario, socio-economic Ethiopia could be offset by increasing the thermal conditions would progressively move toward normalcy, production—albeit at a higher cost (due to high- and rebuilding would start in the second half of 2022. cost imported heavy fuel)—and the production The likelihood of this scenario is supported by the of wind power, as the 60MW onshore wind farm intensification of calls by the international community of Ghoubet is expected to become operational for a ceasefire and political dialogue. Under the in 2022. Similarly, to mitigate any potential downside scenario, international diplomacy would fail disturbances in the water supply from Ethiopia, in the short term and the conflict would worsen and the National Office for Water and Sanitation last until December 2022. (ONEAD) would need to accelerate its seawater The overall impact of a prolonged unrest in desalination program. The first desalination Ethiopia is expected to be considerable. External plant was inaugurated in May 2021 as part of the trade has already been disrupted by the extended desalination program’s Phase 1 that is reported conflict in Ethiopia and continued disruptions of to have increased Djibouti’s capacity to produce safe water by 22,500 m³ per day. The second global maritime transport and logistics services have phase is expected to double the capacity to induced higher container prices. Road transports, 45,000 m³. But this would still leave a deficit of Électricité de Djibouti (EDD), the electricity utility 18,000 m³ safe water per day in Djibouti. The and the National Office of Water and Sanitation country could also explore the possibility to (ONEAD) may experience financial challenges. import food other neighboring countries to offset Reduced Maritime and transport activities and re- an eventual drop in Ethiopia’s exports. exports to Ethiopia would slow down further growth, • Under a scenario of protracted disruptions in deteriorate the external current account, and worsen the railway and transports corridors and soaring fiscal pressures. FDI inflows would continue to be uncertainty, prices would also be on the rise, constrained by the rising risk premia for the region. 10 DJIBOUTI ECONOMIC MONITOR – NAVIGATING THROUGH THE PANDEMIC AND REGIONAL TENSIONS Construction and public works would remain FIGURE 2.1 • GDP Growth (in Percent) Could the main drivers of Djibouti’s growth, under both Hover between 4.3 and 2.7 Percent in 2022 scenarios. These intrinsically domestically-oriented sectors would be boosted by the ongoing and planned 10 redevelopment of the old port land into the new “Red Sea World” complex, the construction of a Ship Repair 8 Yard and the development of the Damerjog Oil Storage 6 Terminal , among others. Real sector productivity is also predicted to benefit from: i) the development 4 of the onshore wind farm in Ghoubet that should increase the supply of electricity, and ii) the delivery of 2 the third phase of the Ali Sabieh cement facility which 0 will contribute to reduce the price of cement. 2017 2018 2019e 2020e 2021e 2022p 2023p Specific macroeconomic and fiscal effects Baseline scenario Downside scenario are highlighted as follows: Source: Authors’ calculation based on data from National authorities and projections. Real Sector Under the baseline scenario, GDP growth is expenditures, non-tax compliance behavior and a projected to ease to 4.3 percent in 2022 from large informal sector. Also, debt service is expected 5.1 percent in 2021, mostly tracking Ethiopia’s to increase with the end of the DSSI and the starting slowdown that is expected to reduce demand for of the amortization of the Djibouti-Ethiopia water Djibouti’s transport and logistics. On the other hand, pipeline and railway loans, maturing in 2022 and Government’s measures to mitigate the crisis, coupled 2025. Additional financing needs resulting from the with the increased humanitarian flows transiting prolonged crisis in Ethiopian would cause a need by Djibouti’s ports and free zones, are expected to for supplemental assistance from bilateral and partially offset the drop in traditional Ethiopian demand. multilateral creditors. Construction and domestic oriented services sectors Under the baseline scenario, the adverse are expected to maintain their momentum. Against effects of the conflict in Ethiopia combined this background, GDP per capita growth is projected with border security pressures and rising social to soften to 2.8 percent, compared to 3.6 percent in expenditure5 would lead to a widening the overall 2021. Growth is expected to rebound in 2023, with fiscal deficit to 2.7 percent of GDP in 2022 from the resumption of reconstruction efforts in Ethiopia, 1.6 percent of GDP in 2021. The deficit is expected in the latter part of 2023 under the baseline scenario to be financed by bilateral and external borrowing. (conflict ending before the end of Q2 2022). Under The estimated gap resulting from the Ethiopian crisis the downside scenario, instead, Djibouti would grow would be equivalent to US$70.7 million in 2022 only by 2.7 percent in 2022, and still rebound in 2023. and US$52.1 million in 20236. Under the downside scenario, the deficit would balloon to 3.5 percent in 2022 and a fiscal gap would exceed US$91 million in Fiscal Sector 2022 and US$72 million in 2023. Should this scenario materialize, the government would need to engage Djibouti has very limited fiscal buffers to face with its bilateral creditors to negotiate further debt a prolonged crisis in Ethiopia, as the country restructurings, so as to ease debt service and reduce is already at high risk of debt distress and has a narrow tax base. Tax revenue is below potential and has declined from 14 percent of GDP in 2015 5 Prompted to support the inflows of refugees. to 10.7 percent in 2020 mostly because of rising tax 6 WB staff estimates. Macroeconomic Outlook and Risks 11 FIGURE 2.2 • The Overall Fiscal Deficit is FIGURE 2.3 • The External Current Account Expected Widen by 1 to 2 Balance Would Deteriorate Further Percentage in 2022 and 2023 in 2022 and 2023 Compared to 2021 35 0 30 –0.5 25 –1.0 20 –1.5 15 –2.0 10 –2.5 0 –3.0 –5 –3.5 –10 2017 2018 2019e 2020e 2021e 2022p 2023p 2017 2018 2019e 2020e 2021e 2022p 2023p Baseline scenario Downside scenario Baseline scenario Downside scenario Source: Authors’ calculation based on data from National authorities and projections. Source: Authors’ calculation based on data from National authorities and projections. liquidity pressures. Authorities would also need to 2022 from 1 percent in 2021 driven by lower than explore additional measures to strengthen domestic expected demand for logistics and transport services revenue mobilization, including by rationalizing tax from Ethiopia and continued disruptions of the Global exemptions and negotiating more favorable bilateral maritime transport logistics. Under a downside deals on rents paid by military bases. scenario with further contraction of Ethiopian demand, the current account deficit would widen to 7.1 percent of GDP in 2022 and 8.8 percent in 2023. Such a External Sector trend is a renewed call for decision-makers to urgently focus on structural reforms and supply side policies to Under the baseline scenario, the current account improve long-run competitiveness and support exports’ deficit is projected to deteriorate to 4.4 percent in attractiveness. 12 DJIBOUTI ECONOMIC MONITOR – NAVIGATING THROUGH THE PANDEMIC AND REGIONAL TENSIONS TABLE 1.2 • Djibouti Selected Economic Indicators Historical data Baseline scenario Downside scenario 2017 2018 2019e 2020e 2021e 2022p 2023p 2022p 2023p Real economy: annual percent change, unless indicated otherwise Real GDP g 5.4 8.4 7.8 0.5 5.1 4.3 5.5 2.7 4.6 GDP per capita (real LCU) g 3.7 6.7 6.1 –1.0 3.6 2.8 4.1 1.3 2.9 Private Consumption (growth) g 10.6 4.8 5.0 –5.0 5.5 4.7 4.9 4.1 4.3 Government Consumption g 3.5 1.9 –0.5 –2.1 –8.0 1.9 –1.4 1.6 –0.7 Gross Fixed Investment (growth) g 10.6 –30.8 26.4 –37.2 7.1 4.7 11.4 –6.6 5.5 Exports (growth) g 54.4 10.3 12.9 7.5 5.7 3.3 5.3 3.6 4.9 Imports (growth) g 55.5 –15.3 13.9 –0.5 5.0 3.5 5.3 3.5 4.7 Contributions to Real GDP Agriculture % gdp 1.2 1.3 1.2 1.2 1.2 1.2 1.2 1.2 1.2 Industry % gdp 12.4 16.6 16.9 17.1 17.1 17.2 17.6 17.3 17.5 Services % gdp 79.3 75.4 74.7 74.4 74.5 74.4 73.9 74.3 74.1 Unemployment Rate (ILO Definition) l 14.8 15.0 15.0 17.6 18.7 19.7 20.7 19.1 20.1 Consumer Price Index (year-average) g 0.6 –0.1 3.3 1.8 1.6 2.5 2 3.5 3.0 Fiscal Account, percent of GDP unless otherwise indicated Total Revenues and Grants % gdp 23.8 23.3 23.3 21.4 18.7 18.5 18.8 18.2 18.4 Tax Revenues % gdp 13.6 13.0 12.9 10.7 11.0 10.7 10.9 10.6 10.7 Non-Tax Revenues % gdp 8.4 7.0 6.6 6.7 6.0 5.8 5.9 5.6 5.7 Grants % gdp 1.8 3.4 4.0 3.9 1.7 2.0 2.0 2.0 2.0 Total Expenditures % gdp 24.0 25.1 23.6 23.1 20.3 21.1 20.9 21.5 21.0 Current Expenditures % gdp 17.7 17.0 15.2 14.6 13.7 15.3 15.0 15.8 15.2 Wages and Compensation % gdp 6.9 6.6 6.0 6.1 5.5 5.7 5.6 5.9 5.7 Goods and Services % gdp 6.4 5.9 4.9 4.8 4.4 4.7 4.7 4.9 4.6 Interest Payments % gdp 1.1 1.2 1.2 0.6 0.9 1.6 1.6 1.4 1.6 Current Transfers % gdp 3.4 3.3 3.1 3.1 3.0 3.3 3.1 3.6 3.3 Capital Expenditures % gdp 6.2 7.9 8.1 5.8 5.9 5.8 5.9 5.7 5.8 Overall Balance (comittment basis) % gdp –0.3 –1.8 –0.3 –1.7 –1.6 –2.7 –2.1 –3.2 –2.6 Primary Balance % gdp 0.8 –0.6 0.9 –1.2 –0.7 –1.1 –0.5 –1.9 –1.0 Change in arrears 0.0 –0.1 0.3 0.3 0.2 0.0 0.0 0.0 0.0 Overall Balance (cash basis) –0.3 –1.7 –0.6 –2.1 –1.8 –2.7 –2.1 –3.2 –2.6 Government Financing % gdp 0.3 1.7 0.6 2.1 1.8 0.7 0.8 0.6 0.7 External (Net) % gdp 0.8 1.6 1.9 4.6 2.2 –0.3 –0.2 –0.3 –0.4 Domestic (Net) % gdp –0.5 0.1 –1.3 –2.5 –0.4 1.0 1.0 0.9 1.1 Financing Gap % gdp 2.0 1.3 2.6 1.9 (continued on next page) Macroeconomic Outlook and Risks 13 TABLE 1.2 • Djibouti Selected Economic Indicators (continued) Historical data Baseline scenario Downside scenario 2017 2018 2019e 2020e 2021e 2022p 2023p 2022p 2023p Money and Prices Broad Money (% of GDP)² % gdp 75.8 65.3 64.4 75.5 87.3 Real Exchange Rate Index (2015=100) l 102.0 105.4 101.9 88.9 103.8 Domestic Credit to the Private Sector (% of GDP) % gdp 21.3 20.9 20.8 19.7 20.1 Consumer Price Index (year-average) g 0.6 –0.1 3.3 1.8 1.6 2.5 2.0 3.5 3.0 Balance of Payments, percent of GDP unless indicated otherwise Current Account Balance % gdp –4.8 14.2 28.9 11.6 –1.0 –4.4 –3.0 –7.1 –5.8 Imports, Goods and Services % gdp 156.5 139.0 143.3 98.7 118.1 139.8 147.3 136.3 147.3 Exports, Goods and Services % gdp 150.7 151.5 166.8 105.8 118.9 135.0 144.8 143.9 152.6 External Government Debt % gdp 71.5 68.4 64.9 71.0 74.1 70.8 64.9 74.8 72.7 Exchange Rate (per USD, average) l 177.7 177.7 177.7 177.7 177.7 Other memo items GDP nominal in US$ (millions) l 2751 3013 3325 3384 3518 3536 3889 3512 3812 Source: Government data and World Bank staff calculations. 14 DJIBOUTI ECONOMIC MONITOR – NAVIGATING THROUGH THE PANDEMIC AND REGIONAL TENSIONS 3 COVID-19 PANDEMIC IMPACT ON THE LABOR MARKET This special focus discusses the welfare and initial impact of the COVID-19 pandemic, poorer labor market effects of COVID-19 in Djibouti. households, those working in the informal sector, Djibouti recorded its first confirmed case of COVID-19 and refugees, face notable challenges in the labor on 18 March 2020. By March 27, the government had market, their income, resources, food security, suspended all international flights, closed schools and overall welfare. The analysis is based on high- and universities and ordered a general lockdown. The frequency data that the World Bank and the National government then eased the restrictions on movement Institute of Statistics (INSTAD) of Djibouti collected by mid-May 2020, as seen by the stringency index in June, September, and December 2020, and (figure 2.1) which had declined consistently between March 2021. The survey assesses the labor market June 2020 and March 2021. outcomes of the breadwinner only, identified by the Tragically, as much as for many other respondent as the principal economic support of countries, the pandemic generated profound the household. Therefore, these figures cannot be effects on the Djiboutian economy and welfare. interpreted as overall labor market indicators but are The COVID-19 pandemic tragically cost the world nevertheless indicative of labor market impacts and millions of lives. It wreaked havoc on the welfare of recovery path. uncountable households. And it reversed years of Employment had been severely affected hardly gained development outcomes across the by the lockdown and suspension of economic world. Djibouti is no exception to all this. As shown activities, but has since followed a positive in Chapter 1, the pandemic, and its associated recovery trend (figure 3.2). The lockdown measures lockdown measures, has caused a significant drop were eased by June 2020, when 22 percent of workers in GDP growth. Inevitably, this came along with a who had been employed before the pandemic were temporary drop in employment and worsening of still without a job. For most of them, the situation welfare indicators among households in the country. progressively improved in the following months, The poorest are the most affected. The and by April 2021, only 5 percent of these workers chapter shows that while overall, labor market and had not returned to work. By then, a large majority welfare indicators improved in Djibouti after the of households (85 percent) reported to be active on 15 the workforce, showing a continuously increasing While the overall trend signals a path trajectory since June 2020. towards recovery in employment, inequalities among different workers persist. In December 2020, only one in five urban Djiboutian breadwinners FIGURE 3.1 • Stringent Initial Government declared working less than before the pandemic Response to the Pandemic Eased and only half of those who worked less declared not Over Time receiving any pay. This proportion was noticeably higher among poor breadwinners—as identified by 100 their proxy-means test. Similarly, informal sector 90 breadwinners’ reported workload consistently trailed 80 Government Stingency Index that of the formal sector, which in turn trailed that 70 of the public sector employees. By March 2021, 60 16 percent of informal workers worked less than 50 usual. 62 percent of them reported receiving no pay 40 at all, and 25 percent receiving partial payment. In 30 comparison, 14 percent of formal workers declared 20 working less than usual. 44 percent of them declared 10 having received no pay and 31 percent a partial 0 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 payment. Among women who reported working less 2020 2021 than usual, an estimated 66 percent reported not Month/Year receiving any pay, compared to 50 percent of men. Source: Oxford COVID-19 Government Response Tracker, Blavatnik School of During the crisis, households relied on Government, University of Oxford – Last updated 20 October 2021, 12:50 (London time). OurWorldInData.org/coronavirus • CC BY. several income sources, including remittances and assistance from family or friends to mitigate the effects of the crisis. As of June 2020, only FIGURE 3.2 • Initial Drop in Breadwinners Work Status and a Subsequent Recovery Trend, June 2020–March 2021 FIGURE 3.3 • Reliance on Income from Family 100 10 6 5 6 Business and Wage-Work Increased 20 10 7 4 5 with the Economic Recovery 80 6 22 100 60 77 83 85 80 76 79 40 58 60 20 43 44 41 0 40 Jul 20 Sep 20 Dec 20 Mar 21 30 27 22 24 20 19 Worked in any previous wave but not the week before the survey 13 17 Not working before covid and before survey 10 10 7 7 9 7 2 4 5 4 4 2 Working before covid but not before survey 0 Worked the week before the survey Jul 20 Sep 20 Dec 20 Mar 21 Source: Authors’ calculation based on Djibouti COVID-19 phone survey, 1st, 2nd, 3rd, Family business and waged work Assistance from government and 4th waves. Pension Remittances and assistance from family/friends Notes: Statistics are based on cross-sectional proportions and not only the longitudinal Assistance from INGO Other sample. Breadwinners are divided into four categories: 1) those working in the week before the survey, 2) those working before COVID-19 but were not working in the week Source: Authors’ calculation based on Djibouti COVID-19 phone survey, 1st, 2nd, 3rd, before the survey, 3) those that were neither working before COVID-19 nor in the week and 4th waves. before the survey, 4) those who worked in any previous wave but were not working the Note: Statistics are based on cross-sectional proportions and not only the longitudinal week before the survey. sample. 16 DJIBOUTI ECONOMIC MONITOR – NAVIGATING THROUGH THE PANDEMIC AND REGIONAL TENSIONS BOX 1 DJIBOUTI HIGH-FREQUENCY PHONE SURVEYS The data used in this Economic Monitor is based on high-frequency data collected by the World Bank and the Institute of Statistics of Djibouti in June, September, and December 2020, and March 2021. This sample includes urban households and is drawn from the social register of the Ministry of Social Affairs and Solidarity, so it excludes representation of the richest 20 percent of the population. Data from the national social registry of the Ministry of Social Affairs, restricted to urban households having at least one phone number and interviewed after July 1, 2017 (to increase the response rates), serves as the sampling frame for the Djiboutian sample of this survey. The social registry is an official database of households in Djibouti that may benefit from poverty alleviation efforts including being the target of public transfers. This data has been collected since 2014 and consists of about 70,000 households, with most of the fieldwork conducted from 2017 onwards. Even though this database over-represents the poor, it provides an up-to-date sampling frame. The social registry collects a wealth of socioeconomic characteristics of households along with working phone numbers of household heads or spouses of household heads. The use of biometric information to record household level data avoids duplicate entries. TABLE A1 • Sample of Djibouti Nationals Broken Down by Survey Domain in 4th Wave Sample size Share of urban population (Household Panel Replacement Total Survey domain budget survey – EDAM, 2017) (%) (# households) (# households) (# households) Balbala 54.1 310 229 539 Rest of Djibouti City 35.5 327 200 527 Other urban areas 10.4 295 200 495 Total 100.0 932 629 1,561 Both cross-sectional and panel weights are designed to adjust for differences in selection probability due to either design or non-response. In addition, further adjustments in sampling weights were made to ensure that produced indicators are representative of the country’s population, by poverty status and by location. The sampling frame of the Djibouti nationals, the social registry of the Ministry of Social Affairs, over-represents the poor and has an incomplete coverage of the upper distribution of income. To correct for these biases, we rely on a post-calibration approach, using the household budget survey of 2017 (EDAM 2017) as the reference data source. This is because the EDAM 2017 survey was representative of the country’s population by poverty status and survey domains. However, the EDAM 2017 survey is restricted to the first four consumption quintiles to ensure sufficient overlap of the universes covered by both surveys. The poverty status variable in the social registry database is based on consumption per capita, which is imputed for each household by the Ministry of Social Affairs and Solidarity (MASS) based on observable characteristics and using the Proxy Means test formula based on the household budget survey of 2013. 20 percent of households declared having labor that the reason was price increases. 39 percent of income as an income source, and 30 percent the households declared not having access to wheat having assistance from government. By March 2021, flour, 36 percent to rice, and 34 percent to cooking assistance from the government had subsided while oil. Access to most goods improved substantially income from business and wage-work increased to over the subsequent months to near full access by 79 percent. all households. The slowest recovery observed was The pandemic’s disruptions were obviously for basic medicines, for which around 23, 36, 16, and not limited to the labor market effects and 8 percent of households declared lacking access included access to goods and services. At the respectively in June, September, December 2020, and onset of the pandemic, in Djibouti, access to goods, March 2021. A similar trend is observed in services. especially food items, was challenging. In June 2020, Access to healthcare among those who needed it was around 82 percent of households reported not having around 60 percent in June 2020 and then gradually access to vegetables. 87 percent of them reported increased to 96 percent in March 2021. COVID-19 PANDEMIC IMPACT ON THE LABOR MARKET 17 FIGURE 3.4 • Access to Basic Goods Was FIGURE 3.5 • More Households Declare Having Adversely Affected but Continues Enough Resources for the Next 30 to Recover Days with Notable Differences by Characteristics 10099 9898 100 95 9696 94 96 96 9696 98 94 92 100 96 96 94 96 90 87 90 84 90 85 80 76 77 83 80 70 66 64 64 70 61 60 60 60 50 50 40 40 30 30 20 20 18 10 10 0 Working Not Male Female Jul 20 Sep 20 Dec 20 Mar 21 0 working Jul 20 Sep 20 Dec 20 Mar 21 Wheat flour Rice Source: Authors’ calculation based on Djibouti COVID-19 phone survey, 1st, 2nd, 3rd, Cooking oil Vegetables and 4th waves. Hand soap Basic medicines Notes: Statistics are based on cross-sectional proportions and not only the longitudinal sample. The distinction by sectors of employment (public, formal, informal) concerns Source: Authors’ calculation based on Djibouti COVID-19 phone survey, 1st, 2nd, 3rd, all the households whose breadwinner was working before the survey. The category and 4th waves. “working” refers to households whose breadwinner was working the week before the Note: Statistics are based on cross-sectional proportions and not only the longitudinal survey while “not working” refers to the households whose breadwinners did not work sample. the week before the survey. As with the labor market effects of the the formal and informal sectors. For households with pandemic, welfare outcomes have been negatively a breadwinner who is currently working, 41 percent impacted both through employment channels can meet their basic needs compared to 28 percent as well as through changes and supply chain among those whose breadwinner is not working. disruptions. According to the national poverty line, Similarly, poorer households are less likely to meet poverty in Djibouti is estimated to be around 21.1 percent their basic needs than non-poor households. of the population, and 17 percent at the international Food security data also display an initial poverty line (1.90$ per person per day). While shock followed by some improvement. In consumption measures are difficult to gather through September 2020, 40 percent of the households rapid phone surveys, indicative data of household declared being worried about not having enough food welfare are collected, namely on their declared ability due to a lack of economic resources. Many households to afford their needs for the next month, and their food tended to skimp on food quality, as 42 percent of the security status. While in June 2020, around 70 percent households were unable to eat preferred food and of households declared not having enough resources ate fewer kinds of food. By December 2020, around to meet their basic needs for the next 30 days, in March 15 percent of households declared that their children 2021, this proportion fell to around 60 percent. ate less than three meals per day, 9 percent going to Notable differences in the ability to meet bed hungry or skipping a meal in the last 30 days. In basic needs exist depending on the sector of March 2021, 8 percent of the respondents declared work of the breadwinner, their work status, and themselves eating less than three meals per day in the initial poverty status of the household. For the last week or going to bed hungry, and 6 percent instance, in March 2021, it was observed that nearly skipping a meal in the last 30 days. double the proportion of households who work in the The refugees, particularly those based in public sector can meet their basic needs than those in refugee villages (settlements), have been severely 18 DJIBOUTI ECONOMIC MONITOR – NAVIGATING THROUGH THE PANDEMIC AND REGIONAL TENSIONS affected by the pandemic. The December 2020 more vulnerable activities as most of the refugees survey, which included a sample of refugees in Djibouti work in the informal sector (87 percent) while half to examine their welfare and economic outcomes, of the national breadwinners do. Overall, it appears reveals that economic activity has decreased among that refugee households face heightened economic refugees. Urban refugees only had 49 percent of their hardship, which reflects their already vulnerable breadwinners working during the week before the pre-COVID-19 condition. In particular, village-based survey (compared to 68 percent of urban refugees). refugees’ food security trails significantly behind The village-based refugee breadwinners were also urban refugees, as a larger proportion of those living more likely to report a decrease of workload (38 in settlements declared their children having skipped percent) than urban refugees (15 percent). In addition, at least a meal in the past 30 days, during the month refugee breadwinners appear to be engaged in of December 2020. COVID-19 PANDEMIC IMPACT ON THE LABOR MARKET 19 REFERENCES Gansey, Romeo Jacky; Mendiratta, Vibhuti; Duplantier, of COVID-19 on Djiboutian Households : Results Anne Marie; Konate, Sekou Tidani; Abdoulkader, from First Round of Survey (English). Monitor- Omar. 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Monitoring the Socio-Economic Impacts Édition 2021 21 ANNEX: DJIBOUTI HIGH FREQUENCY DATA 23 24 TABLEAU : PRINCIPAUX INDICATEURS DE L’ACTIVITÉ ÉCONOMIQUE Valeur Valeur Unité T1 2019 T2 2019 T3 2019 T4 2019 T1 20 T2 20 T3 20 T4 20 T1 21 T2 21 T3 21 T4 21 Secteur primaire Pêche Tonnes 460 555 592 665 453 592 725 564 757 ND ND Elevage Bétails (exportés) Par tête 187,742 122,601 361,206 78,915 43,176 129,669 129,550 28,625 113,186 181,388 ND Bétails (inspectés) Par tête 49,199 43,877 44,561 33,084 71,508 81,930 100,999 171,342 42,348 41,033 ND Secteur secondaire Energie Production MWH 107,234 167,436 197,592 132,888 115,642 173,411 203,079 134,979 109,994 176,636 211,389 Consommation MWH 94,508 116,822 155,589 135,325 95,079 116,945 161,636 143,375 100,115 128,509 160,003 Nombre d’abonnés 63,076 63,907 64,755 65,568 66,475 67,094 68,199 69,315 70,139 71,220 72,447 BTP Permis de construire 131 109 110 101 139 94 148 203 193 155 182 Secteur Tertiaire Transport Maritime TOTAL (DJIB +ETH+ transbordements) M. tonnes 3,792,969 3,953,735 3,675,575 3,773,790 3,926,490 3,554,051 3,050,121 3,323,384 3,578,735 3,678,520 3,338,118 Demande locale (Djibouti) M. Tonnes 527,836 454,439 529,048 487,741 625,803 806,947 704,318 820,206 628,257 599,169 666,526 Conteneur traités à l’entrée 299,021 310,541 273,626 248,237 369,446 629,631 461,252 547,273 430,260 504,157 469,204 DJIBOUTI ECONOMIC MONITOR – NAVIGATING THROUGH THE PANDEMIC AND REGIONAL TENSIONS (SGTD+DMP) Marchandises en vrac 78,354 37,225 95,218 133,317 109,922 76,999 77,937 165,406 71,723 21,974 86,363 à l’entrée (PDSA+ DMP+tadjourah) L’exportation des 14,291 7,064 5,508 12,025 7,852 4,635 8,174 3,273 442 1,839 183 marchandises (Djibouti) Hydrocarbures 136,170 99,609 154,696 94,162 138,583 95,682 156,955 104,254 125,833 71,199 110,777 (continued on next page) TABLEAU : PRINCIPAUX INDICATEURS DE L’ACTIVITÉ ÉCONOMIQUE (continued) Valeur Valeur Unité T1 2019 T2 2019 T3 2019 T4 2019 T1 20 T2 20 T3 20 T4 20 T1 21 T2 21 T3 21 T4 21 Demande éthiopienne M. Tonnes 3,054,010 3,262,154 2,906,170 3,205,278 3,132,152 2,627,396 2,193,736 2,378,528 2,881,362 3,038,465 2,648,470 Conteneurs traités à 592,146 562,557 635,301 587,908 603,671 263,455 441,357 466,426 631,454 473,611 828,199 l’entrée. (DCT+DMP) Marchandises en 1,158,991 1,485,940 1,109,035 1,382,634 1,356,998 1,263,478 653,292 730,698 1,256,504 1,583,432 784,468 vrac à l’entrée. (PDSA+DMP+tadjourah) Exportations des 41,269 52,565 42,432 15,628 14,336 8,887 15,508 21,903 22,535 25,877 26,194 marchandises éthiopie Hydrocarbures 1,261,604 1,161,092 1,119,402 1,219,108 1,157,147 1,091,576 1,083,579 1,159,501 970,870 955,545 1,009,608 Transbordement 211,046 236,114 238,553 80,486 158,433 119,128 151,635 123,122 68,487 40,517 21,995 (conteneurisé) Transbordement (vrac) 77 1,028 1,804 285 10,102 580 432 1,528 629 368 1,127 Transport Routier Agences Djiboutienne des Mvt de camion 99,459 97,896 98,912 101,175 105,515 92,853 92,754 96,466 100,950 102,085 97,570 routes (DPCR) Transport Aérien Nombre des passagers Nbre 85,239 83,105 94,229 83,101 69,147 3,978 33,317 43,489 49,899 51,680 67,146 Transport ferroviaire Nombre des passagers Nombre 27,155 3,111 38,762 24,561 21,357 0 0 0 16,168 45,760 38,716 Conteneurs Nombre 15,567 9136 19979 7898 20,542 18,385 25,204 34,244 30,956 26,977 19,466 Commerce extérieur Mise à la consommation locale CAF, K FD 32,769,356 38,431,133 38,769,069 36,187,562 31,551,552 31,264,883 31,388,160 39,035,963 41,578,366 36,159,867 41,012,869 Réexportations CAF, K FD 174,037,657 238,587,872 233,992,647 158,676,269 116,990,000 109,029,000 110,375,000 101,578,000 131,428,045 142,439,424 179,327,242 Télécommunications Abonnés Internet Nombre 33,778 32,902 33,391 33,488 23,490 23,577 25,368 25,402 22,827 15,160 15,889 Abonnés GSM ( telephone mobile) Nombre 405,791 407,289 411,639 414,809 422,238 416,020 423,034 434,035 463,341 501,391 490,063 (continued on next page) Annex: Djibouti High frequency data 25 26 TABLEAU : PRINCIPAUX INDICATEURS DE L’ACTIVITÉ ÉCONOMIQUE (continued) Valeur Valeur Unité T1 2019 T2 2019 T3 2019 T4 2019 T1 20 T2 20 T3 20 T4 20 T1 21 T2 21 T3 21 T4 21 Tourisme Nombre de nuitées Nombre 40,854 43,622 42,511 44,804 46,323 29,002 36,290 41,235 46,300 43,076 45,284 Finances publiques Recettes budgétaires Millions FDJ 26,650 55,091 76,908 109,283 25,360 54,230 82,933 112,575 29,898 52,981 Impôts directs Millions FDJ 6,397 13,809 20,339 30,470 7,345 13,370 21,031 28,381 6,810 13,356 Impôts indirects Millions FDJ 8,083 17,711 25,713 37,945 8,136 15,430 25,248 34,719 8,463 16,650 Dépenses courantes Millions FDJ 21,687 46,521 69,885 91,934 28,337 52,126 70,500 90,567 26,137 49,598 Solde budgétaire (base ordon.) Millions FDJ 11,184 10,388 –2,427 –5,037 –5,320 –7,298 –3,200 –15,380 –2,765 –8,534 Masse monétaire Masse monétaire Millions FDJ 328,673 357,083 357,415 380,601 384,696 374,127 372,242 454,359 475,804 465,306 Avoir extérieur net Millions FDJ 251,660 271,227 264,198 275,833 278,881 283,395 276,307 348,247 368,017 351,832 Crédit à l’Etat Millions FDJ –3,690 –2,513 3,123 7,016 7,105 6,152 23,078 39,452 11,481 11,816 Crédit à l’Economie Millions FDJ 134,316 132,890 137,414 140,036 143,545 139,810 125,485 149,013 160,935 162,585 Dette publique Arriérés sur la dette extérieur Millions FDJ 8,181 7,929 11,062 11,316 14,158 14,700 14,165 14,158 14,158 14,553 Intérêts sur dette extérieur Millions FDJ 2,605 2,898 6,193 8,031 10,664 10,721 10,671 10,664 10,664 10,721 * Juste parc de Balbala DJIBOUTI ECONOMIC MONITOR – NAVIGATING THROUGH THE PANDEMIC AND REGIONAL TENSIONS Source: République de Djibouti, Ministère de l’économie et des finances, chargé de l’industrie, Direction de l’Economie et du Plan. 1818 H Street, NW Washington, DC 20433