Ivorian crisis causes $146 million budget shortfall

The civil war in Cote d'Ivoire has hit the economy of neighbouring Burkina Faso severely, leading to a 77 billion CFA (US$146 million) shortfall in revenues needed to execute the government's current budget, Christophe Dabire, a member of parliament's finance and budget commission said. This was equivalent to more than 11 percent of planned government spending, he told reporters on Wednesday. Dabire blamed a decline in customs and excise revenue on trade with Cote d'Ivoire, which usually acts as a conduit for 70 percent of the imports and exports of landlocked Burkina Faso, a reduction in remittances from Burkinabe immigrants in Cote d'Ivoire, and reduced sales of Burkinabe goods to the Ivorian market. Trade through the rebel-held north of Cote d'Ivoire to the government-controlled port of Abidjan officially resumed in August, but Dabire said it had been slow to pick up. "As far as customs duties are concerned, even though we have re-routed our imports, there will be difficulties in generating revenue because the hoped for resumption of traffic from Cote d'Ivoire has yet to materialise and we don't see the prospects improving much in the near future," he said. Dabire noted that Burkina Faso's economy had also suffered from the increased cost of routing trade via the ports of Ghana, Togo and Benin instead. In order to make up for the revenue shortfall the government was trying to tighten up tax collection and launch a crackdown on fraud and evasion, Dabire said. Letters had gone out to tax officials asking them to redouble their efforts to collect money owed to the government, he noted. "Efforts are being made to improve the collection of resources within the country," Dabire said. "If we can improve and coordinate the fight agaainst fraud in our country, if large companies are placed under better control and if people adopt a civic atttitude towards the payment of tax, we should be able to bring in sufficient additional revenue without having to raise tax rates." According to official estimates, the state loses about 20 billion CFA (US$38 million) of tax each year through fraud, evasion and the bribery of civil servants and members of the security forces. But independent anti-corruption organisations say the annual loss is over 30 billion CFA (US$57 million). Dabire noted that Burkinabe immigrants to Cote d'Ivoire used to send home about 70 billion CFA ($130 million) in remittances each year, but this had shrunk drastically as about 350,000 had fled the country following the outbreak of civil war in September last year. He also noted that it was costing the parastatal trading company Sofitex 2 billion CFA (US$4 million) more to truck cotton to ports in Ghana and Togo than it used to pay for shipping fibre by rail to Abidjan. Cotton is Burkina Faso's main export. One of Burkina Faso' leading textile companies urged the government not to clamp down too hard on businesses that were already suffering an accute loss of business as a result of the crisis in Cote d'Ivoire Abdoulaye Nabole, the acting managing director of Filsah, a cotton-spinning firm in the country's second city Bobo Dioulasso, said his firm had been forced to cut its workforce from 250 to 80 after losing markets in Cote d'Ivoire that used to absorb 70 percent of the factory's productiont. The company was now seeking new export markets in Europe, but it cost 65 percent more to ship a container of cotton thread by road to the Togolese port of Lome than it did to send it by rail to Abidjan, he noted. Filsah and several other companies in Bobo Dioulasso have pleaded with the government to give them tax relief to prevent them from being forced out of business by the economic downturn and reduce their high electricity costs. "We are ready to taxes in full, but when we are also facing difficulties caused by the crisis in Cote d'Ivoire the government needs to help us by waiving or lowering some of our production costs," Nabole said. He argued that the cost of electricity in Bobo Dioulasso, 85 CFA (16 US cents) per kilowatt, was one of the highest in the region.