The International Monetary Fund (IMF) has said Djibouti’s economy would expand by 6.5 per cent in 2016, the same as this year and up from 6 per cent in 2014.
The IMF said on Monday in Nairobi that the growth would be driven by increased investments especially in infrastructure.
The Horn of African nation, home to a regional port as well as U.S., and French military bases, however faces risks from high public debt levels and increasing non-performing loans in its banking sector.
Total investments are expected to peak at 57 per cent of the annual economic output in 2015 and 2016 as the country ramps up spending on infrastructure and port facilities.
“High public investment spending is exerting considerable fiscal and external debt pressures,’’ the IMF said in a statement.
The fiscal deficit is projected to rise to 16.5 per cent of GDP this year from 12.2 per cent last year.
Total public debt is expected to peak at 80 per cent of GDP in 2017 from 60.5 per cent last year, the IMF said.
The Washington-based fund called on the country to monitor the infrastructure investment programme more closely and expressed concerns about a recent spike in bad debts in the banking sector.
“Strengthening banking supervision and adopting the measures needed to address the problems of banks in difficulty is a priority,’’ the IMF said. (Reuters/NAN)