Djibouti's economy to grow by 6.5% in 2016 - IMF

Nairobi - Djibouti's economy will expand by 6.5% in 2016, the same as this year and up from 6% in 2014, driven by increased investments especially in infrastructure, the International Monetary Fund (IMF) said.

The Horn of African nation, home to a regional port as well as US and French military bases, however faces risks from high public debt levels and increasing non-performing loans in its banking sector, the IMF said late on Monday.

Total investments are expected to peak at 57% of the annual economic output in 2015 and 2016 as the country ramps up spending on infrastructure and port facilities.

"High public investment spending is exerting considerable fiscal and external debt pressures," the IMF said in a statement.

The fiscal deficit is projected to rise to 16.5% of GDP this year from 12.2% last year. Total public debt is expected to peak at 80% of GDP in 2017 from 60.5% last year, the IMF said.

The Washington-based fund called on the country to monitor the infrastructure investment programme more closely and expressed concerns about a recent spike in bad debts in the banking sector.

"Strengthening banking supervision and adopting the measures needed to address the problems of banks in difficulty is a priority," the IMF said.