• UTB’s restructuring delayed to end-2026 due to incomplete audits; reorganization plan expected by March.

• Despite a CFA 15.2B injection, the bank still violates key prudential rules and faces structural issues.

• IMF ties further aid to a stronger reform plan ensuring profitability and reduced fiscal risk.

The full restructuring of Union Togolaise de Banque (UTB), a key part of Togo's IMF-supported reform program, will not be completed before the end of 2026. The adoption of the public bank’s operational reorganization plan, initially expected this year, has been postponed to March 2026, with implementation now set for December. This delay stems from diagnostic reviews deemed incomplete.

The state-controlled institution, which holds nearly 9% of national banking assets, received a capital injection of 15.2 billion CFA francs ($27 million) in December 2024. This recapitalization aimed to bring its equity to the regulatory threshold of 20 billion CFA francs, as required by the West African Economic and Monetary Union (WAEMU) Banking Commission. While this capital boost temporarily stabilized the bank’s prudential position, the IMF believes that core structural imbalances remain unresolved.

“The initial audit revealed some weaknesses but does not yet provide a credible basis for an operational recovery plan,” indicates the latest report from the Bretton Woods institution. Three prudential standards are still being breached by the bank, including the solvency ratio and risk concentration. The stock of non-performing loans remains high, although it declined to 8.6% of assets by the end of 2024, from 13.2% a year earlier.

The IMF has made further disbursements under the Extended Credit Facility (ECF) program conditional on a more ambitious restructuring plan, underpinned by verifiable data. According to the Fund, the revised plan must ensure management independence, restore profitability, and reduce fiscal risks. It aligns with a broader agenda of banking and public governance reforms led by Togolese authorities, including efforts to clarify liabilities linked to previously privatized banks and improve the reporting of public enterprise debt.

“This timeline extension does not call into question the government’s commitment to clean up the sector,” a government source commented. Authorities have sought to reassure stakeholders, emphasizing that the funds injected into UTB have not been squandered but must now deliver sustainable results in terms of operational transformation.

The reform of UTB thus stands as a test of fiscal credibility, at a time when the country is striving to balance economic support, fiscal consolidation, and a reduction of public sector vulnerabilities.

Fiacre E. Kakpo