Côte d’Ivoire fiscal and legal discipline enhances outlook

The Republic of Côte d’Ivoire is actively deploying governance reforms and legal accountability measures to compress sovereign borrowing costs, positioning the West African economy for favourable market access. This strategy is concurrent with the formulation of the 2026 national budget and a planned international debt issuance, underscoring a commitment to institutional credibility that directly impacts the sovereign risk premium.

The country's strong macroeconomic foundation, with real GDP growth projected by the International Monetary Fund (IMF) at 6.3% for calendar year 2025, provides a solid platform for this consolidation push, significantly outpacing the regional average. This performance is largely underpinned by dynamic services, expanding hydrocarbon extraction, and strong private consumption.

The government’s public response to high-profile legal matters, specifically involving a former state-owned enterprise (SOE) executive, serves as a critical signal of improved governance. This mechanism functions to reduce perceived political and institutional risk, which is a measurable factor in sovereign credit pricing. By reinforcing transparency and the rule of law, Abidjan aims to tighten the spread on its foreign currency bonds, distinguishing its profile from regional peers with higher governance-related risk premia.

For reference, the IMF forecasts Côte d’Ivoire’s general government gross debt to stabilise at 55.6% of GDP by the end of 2025, which remains in the "moderate" risk category and well below the West African Economic and Monetary Union (WAEMU) ceiling of 70%. This compares favourably with certain Sub-Saharan African economies facing debt-to-GDP ratios exceeding 70%.

The core of the policy transmission channel links governance reform to fiscal and financial stability. Enhanced transparency reduces the cost of borrowing by lowering the perceived probability of default and improving the recovery rate for creditors, thereby compressing sovereign spreads. Current market data indicate the benchmark 10-year Eurobond yield trades near 7.24% as of November 2025; therefore, a corresponding spread compression relative to the risk-free US 10-year Treasury note (US10YT) is the immediate market objective.

A successful governance narrative and fiscal execution could drive this spread to narrow by 25 to 50 basis points (bps) over the following two quarters, attracting increased foreign participation in both US Dollar and local currency-denominated debt.

Fiscal policy tightens towards the regional WAEMU convergence criteria, with the fiscal deficit projected to narrow sharply to 3.0% of GDP in 2025, down from 4.0% in 2024. This trajectory is essential for maintaining investor confidence ahead of the anticipated 2026 debt issuance, which market sources suggest could target a volume of less than $1.2 billion USD—a moderate size given its recent market activity. Investors should rigorously monitor the primary fiscal balance, which the IMF projects will move from -1.3% of GDP in 2024 to -0.3% in 2025, signalling substantial commitment to revenue mobilization and expenditure control.

Forward-looking metrics centre on execution discipline. Key indicators to track include the external debt-service coverage ratio (expected to remain above 300% due to strong foreign reserves), the effective yield on the new Eurobond issue, and the pace of revenue mobilization, targeting a tax-to-GDP ratio increase towards the regional average.

A significant risk remains the external exposure through the CFA franc-Euro peg and potential slowdowns in commodity export revenues, particularly cocoa. If the 2026 budget execution lapses, causing the fiscal deficit to unexpectedly widen back above 3.5% of GDP in the first half of 2026, or if the sovereign’s secondary market spread widens by more than 50 bps against the US10YT, the current positive credit momentum will decelerate, potentially triggering negative outlook revisions by major rating agencies.