Jean-Philippe Prosper said the International Finance
Corporation (IFC) would make new investments of between $4.5 and
$5 billion for the fiscal year ending in June, up from $4
billion the previous year.

The least developed continent is experiencing an economic
growth surge, outpacing global averages. The World Bank sees
Sub-Saharan Africa’s GDP accelerating to more than 5 percent
over three years, driven by investment and commodity prices.

Prosper said projects to upgrade infrastructure for the
region’s 1 billion people were attracting yield-hungry
investors, while governments were keen to share the costs to
free budget resources for poverty relief.

“In the past, nobody wanted to talk about Africa … Now
more people are coming,” Prosper told Reuters. “We would not be
able do this level of financing without private sector projects.
We did not invent these projects ourselves.”

Roughly half the IFC’s annual lending in the region goes to
financial markets and institutions to help improve the flow of
credit to small businesses, which employ most of Africa’s
workers.

Another third goes to infrastructure projects – mostly
transport and electricity – and natural resources investments.

The IFC holds a 5 percent stake in the giant Simandou south
iron ore project in Guinea, managed by Rio Tinto, which
was due to start production in 2015 but has been hit by lower
iron prices and political and regulatory concerns.

Prosper, who met Guinean officials last week, voiced
confidence the $15-$20 billion project would go ahead. There
have been doubts the government can finance its 51 percent stake
in a 700 km (430 mile) railway and offshore loading berth.

“Our discussions were extremely positive. There was interest
from government officials to go ahead with the project,” he
said. “Simandou is a good test. If it works, you will be amazed
by the level of investment which will follow in Guinea.”

POWER PROJECTS

Post-conflict recovery in Ivory Coast, the economic
powerhouse of francophone West Africa, was helping to revive
investor appetite for the region, Prosper said. The economy of
the world’s largest cocoa producer grew 9.8 percent last year as
it recovered from a civil war after disputed 2010 elections.

The IFC provided $135 million for the 139 megawatt expansion
of the Azito power station, near commercial capital Abidjan, and
organised the remaining $277 million of funding for the project.

In Senegal, it is now assessing an investment in the 70
megawatt Tobene power plant, with a cost of $150 million. “Power
is the main constraint to investment in Africa,” said Prosper.

To help deepen financial markets, the IFC has made shelf
listings for local currency bonds in a number of countries
including Tanzania, Kenya, Zambia and Rwanda. It recently issued
a five-year naira bond in Nigeria, worth some $50 million.

“Zambia and Rwanda are probably quite close to the point
where we might do something. But we don’t want to issue bonds
just to issue bonds. We want to make sure we are going to do
something with them,” Prosper said.

(Reporting by Daniel Flynn; Editing by Catherine Evans)

The success of Chad’s 2,000 battle-hardened troops in a French-led mission to hunt down al Qaeda fighters in the deserts of northern Mali has marked it out as the only African nation to quickly deploy an effective fighting force.

In March, Chadian peacekeepers then played a decisive role in allowing rebels to seize power in Central African Republic, cementing 60-year-old Deby, who seized power in a 1990 coup, as a regional kingmaker.

Some trouble now appears to have arrived closer to home: last week Deby headed off what Chadian officials described as a coup plot. Two senior generals were arrested and four people were killed, although the details remain murky, with opponents calling it a government move to crush dissent.

Whatever the circumstances of last week’s incident, expressions of alarm from Paris showed Deby’s importance to the former colonial power as France seeks to row back from its role as “Africa’s policeman”.

“France wants stability in Chad,” said a senior French diplomat. “Chad is an important partner for France in Africa. It is participating in the fight against terrorism in Mali and plays a stabilizing role in the region.”

Chad’s military success has handed Deby status among his West African counterparts, who thanked him at a February summit for his decisive intervention in Mali. He seems set to win Chad’s first seat on the U.N. Security Council in 2014.

It is a remarkable turnaround for Deby, a taciturn French-trained ex-fighter pilot who only survived a rebel attack on his presidential palace in 2008 thanks to support from Paris.

Long one of the poorest countries in the world, Chad has started earning hundreds of millions of dollars a year since ExxonMobil began pumping oil in 2003.

That has allowed Deby to rearm and slowly position himself as a central African strongman, filling a gap left by traditional regional powers.

To the north, the 2011 civil war in neighboring Libya removed an influential if mercurial player, Muammar Gaddafi, while flooding the Sahara with weapons. In a bid to fill Gaddafi’s shoes, Deby revived the overthrown Libyan leader’s Community of Sahel Saharan African Countries in January.

To the West, Nigeria, West Africa’s richest and most populous country, has pulled back from the region as its sparsely-equipped military has been stretched combating the Boko Haram Islamist insurgency at home, which has killed thousands since it flared again in 2009.

Nigeria sent 1,200 troops to Mali, but unlike the Chadians they played no part in frontline battles against the Islamists. The Nigerians form the core of an African force playing a policing role well behind the French and Chadian offensive.

Chad, by contrast, burnished its reputation in March by announcing the death of the elusive and feared al Qaeda commander, Abdelhamid Abou Zeid. Its claim to have killed Mokhtar Belmokhtar, mastermind of January’s mass hostage-taking at the In Amenas gas plant in Algeria, has not been confirmed.

“Who would have thought six months ago that we would be paying so much attention to Chad?” said John Campbell, senior fellow for Africa Policy Studies at the Council on Foreign Relations and a former U.S. Ambassador to Nigeria. “Chad has found space because of Nigeria’s withdrawal.”

CHAD THE KING MAKER

In Central African Republic, Chad’s decisive role in the change of government exposed South Africa’s pretension of acting as a continental superpower. Pretoria had sent a contingent of some 400 troops to prop up President Francois Bozize.

Deby, who had helped Bozize seize power in a 2003 coup, had tired of Bozize’s refusal to share power with the opposition which was stirring up a revolt along Chad’s southern border.

The final straw came when Bozize disbanded his Chadian bodyguard and turned to South Africa for military aid. Deby ordered Chad’s peacekeepers to step aside and Seleka rebel forces stormed the capital, as France made good on its promise not to intervene militarily.

South Africa’s involvement ended with 13 of its soldiers killed, showing Pretoria lacked the regional knowledge and military resources to play a decisive role in Deby’s backyard.

“Deby wanted more recognition for what he had done for Bozize,” said one close aide to the ousted president. “But Bozize turned to others for help and Deby did not like that.”

Chad appears set to play a key role in the transition. Two summits in the Chadian capital N’Djamena, attended by a stony-faced South African President Jacob Zuma, confirmed rebel leader Michel Djotodia as CAR’s transitional president.

Djotodia, who spoke with Deby before the coup, is backed by rebel generals with close ties to Chad: his head of military operations is a former member of Deby’s presidential guard.

“That the French did not help Bozize contributed to his downfall, but the kingmaker was clearly Chad,” said Alex Vines, head of the Africa program at Britain’s Chatham House international affairs think tank.

NO FRENCH PROXY

In Paris, Deby is regarded as a useful ally as a cash-strapped France reassesses its priorities. Paris is shifting attention towards Asia and ending the post-colonial system of ‘francafrique’ under which it intervened more than 40 times to prop up African leaders who backed its business interests.

President Francois Hollande sent French troops to Mali saying al Qaeda-linked rebels could use a northern enclave to threaten global security. But he has vowed to promote democracy in Africa and end French meddling in purely domestic politics.

Deby remains an unpredictable ally. With tax from 120,000 barrels a day of oil production supplying state coffers and investment interest from China, he does not need France for cash. Economic growth hit 7 percent last year, though Chad still ranks near the bottom on indexes of economic development.

Vines said Chad cooperated with France in Mali because their goals were aligned but Deby is no “proxy” for French interests: “In Central African Republic, I can’t imagine France would want the Seleka rebels in power … It’s highly destabilizing.”

Since seizing power in a 1990 coup, Deby has won a series of elections disputed by international observers and faces allegations of graft and rights abuses. He has weathered at least seven rebellions, mostly from the lawless east.

Officials in Paris insist that were Deby to be in trouble again, France would not get involved this time. But they acknowledged that Deby’s usefulness is forcing Hollande’s government to turn a blind eye to his domestic dealings.

“When Deby came to Paris before Mali, we raised the difficult internal questions, but now we have to find the right balance,” said one French diplomatic source.

THREAT FROM WITHIN

The circumstances of what Chadian officials described last week as a bid to “destabilize the Republic” in N’Djamena remain unclear, with opponents accusing Deby of preemptively crushing dissent.

With many of his best fighting troops 1,500 miles away, Deby is more exposed that he has been for years. Timan Erdimi, Deby’s nephew, vowed last month to revive the UFR rebel movement in eastern Chad, which almost toppled Deby in 2008.

Opposition leaders have publicly questioned the wisdom of lavishing money on the mission in Mali – estimated at some 100 million euros – given shortages at home.

Despite its oil, landlocked Chad has been rocked by humanitarian crises over the last decade including conflicts in the east and south, drought in the arid Sahel, and flooding. Two journalists who have criticized the government have been jailed in recent weeks.

Opposition leaders say many in the military are demoralized by the failure to pay bonuses and the loss of some 36 soldiers – the heaviest of any foreign army – battling Islamists in Mali.

“If we tried to destabilize him, we would be categorized as trouble makers, Islamists even,” said opposition leader Acheikh ibn Oumar, exiled in Paris. “An attempt to destabilize him is more likely to come from within his own circles in the capital.”

(Additional reporting by Pascal Fletcher in Johannesburg and Ange Aboa in Bangui; Editing by Peter Graff)

Karim Wade, the most powerful figure in his father Abdoulaye Wade’s 2000-2012 government, was arrested last week on suspicion of amassing up to $1.4 billion (918.4 million pounds) in assets via a network of shady holding companies.

Prosecutors are investigating graft allegations against at least four other former ministers.

The opposition alleges that the inquiry was little more than a political witch-hunt.

But Toure disagreed and said President Macky Sall was making good on promises to tackle widespread corruption in the poor West African country after he won power a year ago.

“There’s an element of setting an example in all this. People must understand that the time when one could pillage public funds is gone,” Toure told Reuters in an interview.

“From now that’s how it is. Even members of this government will be held accountable.”

The aim was to change the culture of public life and prevent bribe-taking throughout the administration, Toure said.

Senegal, a former French colony, is the only country in West Africa not to have suffered a military coup since independence, but its political stability was tested by Wade’s efforts to win a third term last year.

It ranked as one of the cleanest countries in West Africa in graft watchdog Transparency International’s Corruptions Perceptions index for 2012, coming 95th out of 174 countries surveyed, behind only Ghana in the region.

On Tuesday, hundreds of Wade’s supporters marched in central Dakar to protest his detention. “Down with the fascist government,” read one sign.

“It’s normal in a democracy that there are differences of opinion and people have the right to protest … but I have also received many long letters of support,” Toure said.

Karim Wade dominated his father’s government, simultaneously occupying four key ministries with a total budget equivalent to one-third of state expenditure.

Prosecutors accuse him of taking stakes in large sectors of the economy via a web of offshore companies, notably firms involved in managing Dakar port and providing airport services.

“The fight against corruption should be good for economic growth,” Toure said. “It will reassure investors it is no longer the survival of the fittest.”

Wade’s arrest comes amid a flurry of judicial activity in Senegal, led by Toure, as the country also presses ahead with the long-delayed trial of former Chadian dictator Hissene Habre, accused of crimes against humanity during his 1982-1990 rule.

Habre has lived in Senegal for the last 22 years but plans for his prosecution stalled under Wade’s government.

“If we can serve as an example to the rest of Africa, we would be happy,” she said.

(editing by Mike Collett-White)

Speaking as part of a Reuters Africa Investment Summit,
Tiemoko Meyliet Kone said strong commodities demand from
emerging economies such as China and India would help the
currency bloc shrug off the effects of an economic slowdown in
Europe, traditionally its main trading partner.

The currency bloc’s $80 billion economy grew by 5.8 percent
last year as Ivory Coast – the world’s largest cocoa producer -
bounced back from a brief civil war, growing by 9.8 percent.
Ivory Coast’s economy makes up over one-third of the bloc.

“Faced with the current slowdown in global growth, Africa is
an important region for both emerging and developed economies,”
Kone said in an interview. “In 2013, the West African Monetary
Union expects growth of 6.5 percent despite the current
difficulties in Mali and Guinea Bissau.”

Gold- and cotton-producer Mali is mired in conflict as a
French-led coalition battles to eliminate Islamist rebels which
captured the country’s north last year. Tiny Guinea-Bissau,
meanwhile, is struggling to organise elections after a military
coup last year, which froze crucial aid payments.

Kone appealed for regional governments to press ahead with
reforms to trim deficits, improve transparency, invest in
infrastructure and diversify their economies away from reliance
on commodities such as cocoa, gold and iron.

Kone said the central bank, which cut its base lending rate
to 2.75 percent last month, also was pursuing schemes to
encourage private-sector lenders to lower their own interest
rates and increase the scant supply of credit, which the IMF has
cited as a drag on West Africa’s growth potential.

With regional governments having reduced their debt and
deficits, thanks partly to the IMF and World Bank’s Heavily
Indebted Poor Countries’ initiative (HIPC), Kone said their
economies would continue to pick up speed.

“In 2014, growth should reach 7 percent for the first time,”
he said. “But despite this potential and the promising outlook,
African economies are confronted by important challenges.”

The central bank, which has its headquarters in Dakar,
serves Benin, Burkina Faso, Ivory Coast, Mali, Niger, Senegal,
Togo and Guinea-Bissau.

NEED TO IMPROVE GOVERNANCE, INFRASTRUCTURE

Kone said governments should take steps to secure regional
peace, warning that conflicts had proven the main obstacle to
Africa’s economic development. He also called for an improvement
in governance to ensure resources were dedicated to fighting
poverty, and improving education and healthcare.

“We need to prioritise economic sectors with high
value-added, like manufacturing and new technologies,” he said.
“This would reduce our economic dependence on exporting
commodities.”

Member states must improve infrastructure – particularly
roads, energy and ports – to lower production costs and improve
regional economic competitiveness, Kone said.

Whereas member countries had previously invested using their
own budgetary resources, Kone said they must seek private
partners to ease the burden on public finances. The region also
needed to accelerate economic integration, he said.

“Integration allows increasing economies of scale and trade.
Not all countries produce the same things nor have the same
production potential,” Kone said. “The political will is there
for these reforms, it just remains to put them into action.”

Kone said the bank was pursuing schemes to encourage more
lending and lower interest rates by banks, which were often
deterred by the risk of lending to individuals and small
businesses amid scarce information over their creditworthiness.

As a result, interest rates often reach 7 to 8 percent in
the region, hindering businesses. The IMF noted in a report on
the bloc last year that only 5 percent of its population had
bank accounts and lending to the private sector was less than 18
percent of GDP, one of the lowest levels in sub-Saharan Africa.

“We must make banks rethink their arguments for not lowering
rates,” Kone said. “We’re establishing mechanisms to better
coordinate credit distribution and lower interest rates little
by little.”

He said the central bank was in talks with private sector
lenders to establish credit bureaux, which would amass
information on borrowers’ creditworthiness, giving banks more
visibility on who they were lending to.

The central bank was also considering compiling a database
of all the guarantees offered by borrowers, to make these
legally binding, thereby offering lenders more security.

A report by a panel of experts, approved by regional leaders
last year, contained 43 proposals for increasing credit. Some of
these have already been adopted, such as increasing the
percentage of short-term deposits which banks can convert into
long-term loans from 25 percent to 50 percent.

“It is quite possible that there are understandings between
the banks and this contributes to keeping rates at a certain
level,” Kone said. “We’ve explained that high interest rates
actually make it less likely loans will be paid back.”

Follow Reuters Summits on Twitter @Reuters_Summits

(Editing by Richard Valdmanis; Editing by Michael Roddy)

Tiemoko Meyliet Kone said strong commodities demand from emerging economies such as China and India would help the currency bloc shrug off the effects of an economic slowdown in Europe, traditionally its main trading partner.

The currency bloc’s $80 billion economy grew by 5.8 percent last year as Ivory Coast – the world’s largest cocoa producer – bounced back from a brief civil war, growing by 9.8 percent. Ivory Coast’s economy makes up over one-third of the bloc.

“Faced with the current slowdown in global growth, Africa is an important region for both emerging and developed economies,” Kone said in an interview. “In 2013, the West African Monetary Union expects growth of 6.5 percent despite the current difficulties in Mali and Guinea Bissau.”

Gold- and cotton-producer Mali is racked by war as a French-led coalition battles to eliminate Islamist rebels which captured the country’s north last year. Tiny Guinea-Bissau, meanwhile, is struggling to organize elections after a military coup last year, which froze crucial aid payments.

Speaking as part of a Reuters Africa Investment Summit, Kone appealed for regional governments to press ahead with reforms to trim deficits, improve transparency, invest in infrastructure and diversify their economies away from reliance on commodities such as cocoa, gold and iron.

Kone said the central bank, which cut its base lending rate to 2.75 percent last month, was also pursuing schemes to encourage private sector lenders to lower their own interest rates and increase the scant supply of credit, which the IMF has cited as a drag on West Africa’s growth potential.

With regional governments having reduced their debt and deficits, thanks partly to the IMF and World Bank’s Heavily Indebted Poor Countries’ initiative (HIPC), Kone said their economies would continue to pick up speed.

“In 2014, growth should reach 7 percent for the first time,” he said. “But despite this potential and the promising outlook, African economies are confronted by important challenges.”

The central bank, which has its headquarters in Dakar, serves Benin, Burkina Faso, Ivory Coast, Mali, Niger, Senegal, Togo and Guinea-Bissau.

Follow Reuters Summits on Twitter @Reuters_Summits

(Editing by Richard Valdmanis)

Agence France Tresor (AFT) said it had trimmed its issuance
plans for 2013 by 1 billion euros from a September forecast
thanks to debt buybacks, which allowed it to lower the cost of
debt redemptions next year.

AFT chief Philippe Mills said the agency had repurchased
23.5 billion euros of debt this year. That reduced the
redemptions of debt maturing in 2013 by 18 billion euros and by
more than 5 billion euros in 2014, he said.

Mills said the cost of financing in 2012 had fallen to a
record low, thanks in part to the action of the ECB in holding
down benchmark rates as well as investors’ confidence in France,
particularly relative to euro zone neighbours like Italy and
Spain regarded by markets as more fragile.

The average cost for medium- and long-term financing was
1.86 percent, beating the previous low of 2.53 in 2010. For
short-term bills, or BTFs, the cost fell to a mere 8 basis
points on average in 2012, he said.

“The financing conditions in 2012 have been historically
low,” Mills said. “In 2013, the most likely scenario from market
analysts for interest rates is one of a continued normalisation
of the situation in Europe.”

“The rates of countries regarded as fragile are going to
decrease and the rates for core countries will, in the case of
Germany increase, and in the case of France probably remain
stable or increase slightly,” he said.

The average maturity of French debt remained stable at
around 7 years, Mills said.

France saved 2.4 billion euros in 2012 compared to budgeted
debt servicing costs as interest rates were lower than expected.
The actual cost of 10-year bonds was 2.7 percent, versus a
budgeted figure of 3.7 percent, Mills said.

Mills said the AFT would drop the name BTAN used for
medium-term debt and instead create new 2- and 5-year OAT
benchmark bonds – the same name currently used for long-term
debt issuance. Existing BTAN lines would still be tapped to
maintain liquidity.

All new bonds issued from Jan. 1 would include Collective
Action Clauses (CACs), in line with the treaty to create a
permanent eurozone bailout fund, the European Stability
Mechanism (ESM).

The repayment dates for the new OATs will be set to May or
November – instead of the current dates of February, April,
September and October – to make it easier to strip and
reconstitute the newly issued securities with CACs.

The bid-to-cover ratio for medium- and long-term debt stood
at 2.42 this year, and at 2.85 percent for BTFs, suggesting
strong demand throughout the yield curve, Mills said.

AFT said it had reduced short-term debt, or BTFs, to 166.6
billion euros, equivalent to 12 percent of the total debt stock,
versus 13.5 percent at the end of 2011 and well below the highs
reached in 2009 during the financial crisis.

Duncan, a former foreign minister, said that calls from
Washington and elsewhere for a delay in introducing a force of
3,300 African troops were misguided as this would increase the
risk of militant attacks in West Africa and beyond.

The U.N. Security Council tasked West African states in
October with preparing a plan for military intervention to wrest
control of north Mali from Islamist groups, which seized control
of the vast desert region following a military coup in April.

In recent weeks, however, Washington has pressed for
political negotiations and said any military action would
require time. The head of U.N. peacekeeping, Herve Ladsous, said
on Wednesday no intervention could take place before September
due to weather conditions and the need to train Malian troops
and pursue peace talks.

“Some allies are asking if we need to intervene right now.
Our position is yes, we do, because the longer we wait the more
these groups will put down roots. It will be more difficult
afterwards and more expensive,” Duncan told Reuters in Paris,
where he attended a conference with international donors.

Duncan said al Qaeda militants from Afghanistan and Pakistan
had travelled to Mali to reinforce the group’s north African
wing, al Qaeda in the Islamic Maghreb (AQIM), one of several
groups controlling northern Mali.

Delaying intervention would make it much harder to dislodge
these foreign fighters, who were training militants from across
the region, particularly members of the Nigerian Islamist sect
Boko Haram, he said.

“There is a destabilisation of the region taking place in
Mali,” Duncan said. “We have to get rid of these groups. Nor can
we tolerate the traffic of drugs and the taking of hostages.”

Seven French nationals are being held in the Sahel region,
which has also increasingly become a haven for international
organised crime groups. France is the most outspoken Western
advocate of military intervention.

WELCOMED NEGOTIATIONS

Duncan welcomed negotiations with two rebel groups which
opened on Tuesday in neighbouring Burkina Faso, while
maintaining that military intervention was unavoidable.

The Tuareg separatist MNLA, which launched the northern
uprising, and Ansar Dine, a local Islamist group which quickly
usurped control of the movement, have agreed to work towards a
negotiated solution with Malian officials.

Duncan said the threat of military force played an important
role in bringing these groups to the negotiating table and
keeping them there.

“These groups only said they were ready to negotiate when
African states showed they were ready to intervene. If we don’t
continue to pressure them, tomorrow they will simply walk away.”

Ivory Coast has its own security concerns following a brief
but brutal civil war sparked by former President Laurent
Gbagbo’s refusal to recognise Alassane Ouattara’s 2010 election
victory. Ouattara was finally sworn in as president in May 2011
with French military backing.

The United Nations has postponed until next year downsizing
its 11,000-strong peacekeeping mission to Ivory Coast, deployed
in the wake of a 2002-2003 conflict, because of unrest near the
country’s eastern and western borders and in Abidjan.

Duncan said the government was stepping up efforts to
reintegrate ex-combatants and working with neighbouring Liberia
and Ghana to prevent exiled pro-Gbagbo groups from crossing the
border to carry out attacks.

He said Ivory Coast had won funding from donors at this
week’s Paris conference for a $250 million programme to
decommission arms and reinsert ex-combatants into society. The
conference produced total pledges of $8.6 billion, twice the
level the government sought.

“No African state has ever bounced back so fast from a
crisis,” he said. “There will be a stabilisation in Ivory
Coast.”

(Editing by Sonya Hepinstall)

With the international community anxious to contain an al
Qaeda enclave in neighbouring Mali, Ouattara urged a conference
of wealthy nations and multilateral organisations in Paris to
treat Ivory Coast as an anchor of stability in West Africa.

Ouattara and many in the international community have voiced
hope his arrival in power last year has drawn a line under a
decade of instability and conflict in the regional powerhouse.

He took office with French military backing in May 2011
following a brief but brutal civil war after ex-President
Laurent Gbagbo rejected his election win.

“Ivory Coast is rediscovering its place at the heart of the
region,” Ouattara said, inaugurating the donor conference which
concludes on Wednesday. “Investing in Ivory Coast is investing
in the region and reducing poverty beyond our borders.”

Economic growth in the world’s largest cocoa exporter is
forecast at 8.6 percent of gross domestic product (GDP) this
year as it bounces back from a decade of economic decline.

Ouattara said a $20 billion 2013-2015 national development
plan would push economic growth into double-digits by 2014 but
the government needed help to plug a $4 billion funding gap.

While he acknowledged many wealthy Western nations were
facing budgetary constraints, Ouattara said supporting Ivory
Coast would help to prevent the spread of Islamic militancy and
international crime in turbulent West Africa.

Rebels dominated by Islamists linked to al Qaeda seized the
desert north of Mali this year, sparking fears of attacks by
militants in the region or in Europe. African nations are
seeking a U.N. mandate for military intervention.

“We must be united to fight terrorism, the traffic of arms
and drugs, women and children, with all our force,” he said.
“The best way of facing these dangers is supporting Ivory Coast
in its efforts toward development.”

The development plan was decisively boosted by the IMF,
World Bank and Paris Club’s decision this year to cancel $10
billion of Ivory Coast’s $12.5 billion external debt, freeing up
some 40 percent of the budget earmarked for debt service.

The government is seeking some 5.3 trillion CFA francs
($10.56 billion) of private sector investment for the plan in
agriculture, transport infrastructure and energy production.

The state has earmarked some 2.1 trillion CFA of its own
resources but that leaves a funding gap for donors of some 2.0
trillion CFA francs, Ouattara said.

Patrick Achi, minister of economic infrastructure, said the
government was focused on boosting regional transport links to
increase trade in the Economic Community of West African States
(ECOWAS). He cited a planned $160 million railway from Ouangolo
in northern Ivory Coast to Sikasso in southern Mali.

“We are saying to investors, Ivory Coast is not just a
market of 23 million people: it gives you access to a regional
market of 300 million people,” he said.
($1 = 501.8220 CFA francs)

(Reporting By Daniel Flynn; editing by Ron Askew)

Underlining the bloc’s woes, data showed both German retail sales and French consumer spending falling faster than expected as well as stubborn Spanish inflation that will likely lift the cost of state pension rises for an already hard-pressed budget.

Euro zone wide numbers showed another 173,000 people joining record jobless queues in October, while a dive in consumer price inflation offered only limited relief to households struggling with the recession.

Speaking in Paris, where the government is trying to dispel concerns raised by the IMF that France could be left behind as Italy and Spain reform at a faster pace, ECB President Mario Draghi said the euro zone’s three-year-old crisis was likely to stretch deep into next year.

“We have not yet emerged from the crisis,” Draghi told Europe 1 radio. “The recovery for most of the euro zone will certainly begin in the second half of 2013.”

“It’s true that budgetary consolidation entails a short-term contraction of economic activity, but this budgetary consolidation is inevitable,” Draghi said, speaking through a translator.

ECB policymakers hold their regular monthly policy meeting next week and are widely expected to leave interest rates on hold at a record low of 0.75 percent. Economists are divided on whether the central bank will cut next year.

Draghi has stressed the ECB is ready to help tackle the crisis by buying potentially unlimited amounts of sovereign debt under its new bond-buy plan but until Spain applies for aid, a prerequisite for the ECB to intervene, it cannot use the tool.

Resisting fresh ECB action, Bundesbank chief Jens Weidmann said on Thursday central bankers had done more than enough to fight the crisis and it was now up to governments to act by reforming their economies and making the banking sector solid.

BANKING UNION

Draghi, in Paris for a conference with top financial officials, said euro zone governments should push ahead quickly with implementing a banking union which must apply to all banks to avoid fragmenting the sector.

His position puts the ECB, which would take on the role of pan-European banking sector, at odds with Germany. Berlin has said that unified banking supervision under the aegis of the ECB should apply only to the bloc’s largest banks.

Joerg Asmussen, one of the ECB’s key negotiators for a closer integration of the euro zone and a former deputy German finance minister, said late on Thursday a new European banking supervisory body would not be ready to operate fully before 2014.

But International Monetary Fund head Christine Lagarde pressed for swift implementation of a banking union that would have powers to supervise all banks in the euro zone.

“Banking union seems to us to be the first priority,” Lagarde said during the meeting with top financial officials in Paris, adding that closer budgetary consolidation should be the next priority.

The economic situation in the euro zone remained fragile and governments should maintain a “reasonable” pace of budgetary consolidation to avoid crimping growth, she added.

(Writing by Paul Carrel; editing by Patrick Graham)

Dietmar Hornung, Moody’s lead analyst for France’s sovereign rating and author of the downgrade statement, said a sustained loss of competitiveness in Europe’s second biggest economy and its failure to tackle structural problems prompted the decision to cut France by one notch to Aa1 with a negative outlook.

France has one of the world’s highest levels of public spending at 56 percent of gross domestic product (GDP). Moody’s said it was worried about the country’s fiscal situation and its exposure to the euro crisis.

“We would downgrade the rating further in the event of an additional material deterioration in France’s economic prospects or in a scenario in which there were difficulties in implementing the announced reforms,” Hornung said on Tuesday.

He cited a plan to enable companies to hire and fire more easily – which is currently bogged down in talks between unions and employers – as a key factor for France’s creditworthiness.

French debt markets on Tuesday shrugged off the widely-expected downgrade, even though it is the second after Standard & Poor’s removed France’s AAA in January. Some investors require their best assets to have top ratings from two of the three major rating agencies.

The yield on French bonds crept up slightly to 2.1 percent, from around 2.08 percent on Monday.

Hornung said France remained vulnerable to shocks from the euro zone crisis, particularly given its disproportionately large exposure to some of the euro zone’s most troubled debtors via trade and its banks.

“If there are substantial economic and financial shocks from the euro area debt crisis, that would also exert downward pressure on France’s rating,” he said in a telephone interview.

Hornung welcomed France’s 2013 budget, which included 30 billion euros ($38 billion) in deficit-cutting measures, and a competitiveness pact unveiled this month aimed at reducing companies labor costs as “significant steps”.

“These announcements are credit supportive and led to our decision to limit the downgrade to one notch,” he said. “But we still think the 2013 budget and the medium-term budget plan is based on too optimistic growth assumptions.”

France’s growth forecast of 0.8 percent for next year, which underpins its plan to meet a public deficit target of 3 percent of GDP, has been widely questioned by economists given that the euro zone’s economy has slipped back into recession.

FRANCE FIGHTS BACK

Finance Minister Pierre Moscovici, leading the government’s response to the downgrade, said Moody’s had failed to recognize the boldness of recent decisions. The cut strengthened the Socialists’ resolve to press ahead with reforms, Moscovici said.

Hornung, however, said Moody’s believed the scope of the structural challenges facing France – from its rigid labor, goods and services markets to high levels of public spending – required a comprehensive package of policy measures.

“The track record of France in implementing structural reforms and fiscal consolidation is somewhat mixed. That is why we are on the cautious side,” he said. “Some of these structural challenges here have been built up over a long period of time.”

Hornung acknowledged that France remained a large, wealthy and well-diversified economy and said Hollande’s efforts could ease the strain on public finances. Public debt is forecast to top 90 percent of GDP this year.

“There is certainly a chance over the medium term that, if properly implemented, these measures could address some of the structural rigidities and could also have a beneficial effect on the debt dynamics of France,” he said. ($1 = 0.7803 euros)

(Reporting By Daniel Flynn; editing by Mark John/Ruth Pitchford)