* Cocoa futures hit multi-year lows
* Ivory Coast is world's top cocoa exporter
* Budget squeeze worsened by army mutinies, social unrest
* Ivory Coast has been Africa's stand-out economy
(Adds quotes, details)
By Loucoumane Coulibaly and Joe Bavier
ABIDJAN, April 20 Ivory Coast has slashed its
2017 budget due to plummeting cocoa prices, its president said
on Thursday, shoring up state coffers also depleted by wage
demands from civil servants and discontented soldiers.
Ivory Coast, the world's top cocoa exporter, has emerged as
one of the fastest growing developing economies in the aftermath
of a 2011 civil war, drawing the interest of international
But President Alassane Ouattara said the sharp drop in cocoa
prices, which is also the West African country's main export,
meant spending plans for next year would have to be scaled back
by a tenth, according to comments reported by national
newspapers Le Patriote.
A wave of defaults by Ivory Coast cocoa exporters and higher
than expected production has left a glut. Those that remain are
now rejecting large volumes of beans because of poor quality as
farmers seek to blend leftover main-crop cocoa into new mid-crop
arrivals, exporters and merchants said on Thursday.
Ouattara, in a speech at the presidency, said the decision
to cut spending was taken during an International Monetary Fund
(IMF) visit this month, according to excerpts published by daily
"Excluding salaries, we were obliged to reduce spending by
10 percent. All the ministries will tell you their budgets have
been reduced by 5 to 10 percent," Ouattara said, adding that
infrastructure would also be hit.
Two other national newspapers, Le Nouveau Reveil and
Fraternite Matin, carried similar comments from the president.
Cocoa futures have plummeted since last year on the back of
bumper crops around the world and stagnant demand. They
continued their slide on Thursday, a day after New York cocoa
slumped to a 9-1/2-year low, while the London market
dropped to its lowest since 2013.
KEEPING THE IMF SWEET
On top of the fiscal impact of the drop in cocoa prices,
government employees went on strike for weeks earlier this year
to protest pension reforms, demanding back wages they said they
A wave of army mutinies, meanwhile, engulfed military camps
across the country, forcing the government to agree to pay
bonuses of 12 million CFA francs each to some 8,400 former rebel
fighters - a deal with a total price tag of around $160 million.
Ouattara said the investment budget was included in the 2017
cuts and would be reduced by 10 percent, or about 200 billion
CFA francs ($320 million).
"When we feel obliged to ... reduce essential spending in
this way, it is not pleasant," Le Patriote quoted him as saying.
"These are schools, health centres, dispensaries, cultural
centres, roads, drinking wells in some villages that will not be
Despite the cuts, the government is still expected to seek
an increase in lending under its programme with the IMF,
currently worth $659 million over three years.
It is also weighing the option of tapping the international
"(Ivory Coast) needs to keep the IMF on board at a time when
army mutinies have pressured the budget," said Charles
Robertson, Global Chief Economist for Renaissance Capital.
"The reality is that benefits of investment take time. And
the budget is under pressure today."
(Writing by Joe Bavier; Editing by Edward McAllister and John