Ivory Coast Economy Facing `Catastrophic' Effect After Poll, Ouattara Says

Ivory Coast’s post-election crisis is having a “catastrophic” effect on the gross domestic product and may spark food shortages, President-elect Alassane Ouattara said, calling for “legitimate force” to oust his rival, Laurent Gbagbo.

“It’s clear that the GDP is going to decrease, exports are going to slow down, and imports as well,” Ouattara said yesterday in an interview in Abidjan, the commercial capital. “How about the local foodstuffs sector? If this continues we are going to have shortages.”

The Nov. 28 election was meant to boost economic growth and investment in the world’s biggest cocoa producer by unifying the West African nation, which was divided by a civil war in 2002 into a government-controlled south and rebel-held north. Instead, the country is gripped by a stalemate, with Ouattara, 69, recognized internationally as the victor, and Gbagbo, 65, refusing to cede power.

“The effects of the post-electoral stalemate will most likely come to the fore in the coming months,” said Standard Bank Plc analysts including Samir Gadio and Stephen Bailey-Smith in an e-mailed report yesterday.

Ivory Coast’s economy will contract 5 percent in the three months to March and 3.1 percent in the second quarter, after expanding 2.6 percent in 2010, according to the bank. Inflation in the first quarter may reach 12.1 percent, from 4.3 percent in the last three months of 2010.

No Breakthrough

Kenyan Prime Minister Raila Odinga, the African Union’s envoy in the crisis, said his meetings yesterday with Gbagbo and Ouattara failed to reach a settlement to the crisis. Ouattara offered to give 25 percent of the positions in the Cabinet to Gbagbo’s allies, he said.

“I regret to announce that the breakthrough that was needed did not materialize,” Odinga said in an e-mailed statement today in Nairobi, the Kenyan capital. “Time is running out for an amicably negotiated settlement.”

Odinga will leave Abidjan later today and visit Ghana and other neighboring countries, said Salim Lone, a spokesman for the Kenyan leader. The Economic Community of West African States, or Ecowas, supports Ouattara’s election victory and said on Dec. 24 that it would use force to oust Gbagbo if he refused to leave office.

‘Legitimate Force’

“After this mission I think that the AU and Ecowas will understand that we will have to rely on other measures, including legitimate force,” Ouattara said.

West African military leaders plan to tour Bouake, a town in northern Ivory Coast controlled by rebels who support Ouattara, as a possible site to launch an intervention.

While Nigeria and Senegal favor military intervention, Ghana, Ivory Coast’s neighbor, said it would not contribute troops to any mission in the country.

Ouattara, a former deputy director of the International Monetary Fund, is holed up in the Golf Hotel in Abidjan, surrounded by troops loyal to Gbagbo and protected by United Nations peacekeepers. Visits to the 300-room hotel are made by helicopter, and Ouattara’s Cabinet holds meetings in an air- conditioned tent on an adjacent soccer field.

Eurobond Payment

As the crisis continued, Ivory Coast’s $2.3 billion Eurobonds fell to the lowest since they were issued in April, amid concern over whether the country would make a missed $29 million interest payment by the end of a grace period Jan. 31. Ouattara cast doubt on whether Gbagbo would make the payment.

“We think that if they wanted to pay, they would have done so,” he said.

Gbagbo’s administration has withdrawn 80 billion CFA francs ($163 million) from the country’s account at the Dakar-based Central Bank of West African States “to pay salaries, to pay mercenaries and to take money out of the country instead of paying what they have to pay to the London Club, so clearly they have no intention of paying,” he said, referring to the group of creditors that hold Ivory Coast’s bonds.

The debt due 2032 fell 0.5 percent to 36.700 cents on the dollar before trading at 37.004, up 0.4 percent from yesterday’s close, the lowest on record, as of 9:21 a.m. in Abidjan, according to data compiled by Bloomberg. The yield dropped 3 basis points to 17.166 percent.

On Nov. 26, the last day of trading before the election, the bond’s price was 59.125 cents on the dollar, with a yield of 11.005 percent.

At least 247 people have been killed in violence that broke out after the vote, according to the UN, including 11 people who died last week in Abobo, an Abidjan suburb that supported Ouattara in the election.

To contact the reporters on this story: Pauline Bax and Olivier Monnier in Abidjan via Accra at ebowers1@bloomberg.net.

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.