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NigerLetter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding

TRANSLATED FROM FRENCH
Niamey, August 8, 2002


The following item is a Letter of Intent of the government of Niger, which describes the policies that Niger intends to implement in the context of its request for financial support from the IMF. The document, which is the property of Niger, is being made available on the IMF website by agreement with the member as a service to users of the IMF website.
 

Mr. Horst Köhler
Managing Director
International Monetary Fund
Washington, D.C. 20431


Dear Mr. Köhler:

1. On behalf of the government of Niger, I am pleased to send you the memorandum of economic and financial policies for 2002. This memorandum was prepared in the context of the third review of the government of Niger's three-year program covering 2000-03, which is supported by the International Monetary Fund under the Poverty Reduction and Growth Facility (PRGF). This memorandum updates my earlier memorandum of January 16, 2002 on the government's economic and financial policies for 2002. It describes the results of the program's implementation in 2001 and through March 31, 2002, presents the revised targets for 2002, and details the policies that will be pursued to achieve these targets.

2. Program implementation through December 31, 2001 was satisfactory overall. Six out of the eight quantitative benchmarks for the program at end-December 2001 were observed. The benchmark on the wage bill was slightly overshot, by about one percent, reflecting the smaller-than-anticipated impact of the early retirement program instituted in December 2000. Similarly, the end-December 2001 benchmark on the reduction in domestic payments arrears could not be achieved, owing to delayed disbursements of some external assistance. Regarding the structural benchmarks, the petroleum product pricing formula was implemented as envisaged, and the computerization of the central government's expenditure process was operational at end-December 2001. However, the benchmark on the transmittal of the 2000 budgetary accounts to the Audit Court and the preparation of the related final budget law to be submitted to the National Assembly was only observed in April 2002.

3. By implementing a rigorous policy of monitoring budgetary expenditure, the government was able to achieve a satisfactory performance under the program at end-March 2002. The ten quantitative performance criteria and program benchmarks covering the period October 2001-March 2002 were met, apart from the following four conditionalities which were missed by small margins and for which corrective actions have been taken: (i) the performance criterion on the reduction of domestic payments arrears, the CFAF 24.4 billion target of which was missed by CFAF 0.3 billion; (ii) the continuous performance criterion on the nonaccumulation of external payments arrears, owing to a slight delay in servicing a post-cutoff-date loan from Japan; (iii) the benchmark on the wage bill, which was exceeded by CFAF 300 million; and (iv) the structural benchmark regarding the transmittal of a report on the implementation of the President's special program for poverty reduction to the staff of the International Monetary Fund, as this report was forwarded with a delay of three weeks. Moreover, on May 22, 2002, the performance criterion on a 50-percent grant element requirement for new external financing was breached when the government signed a new loan agreement with the Organization of Petroleum Exporting Countries (OPEC) Fund that provided a grant element of only 45 percent. As soon as it was confirmed that this loan was not consistent with the conditionality of the program, the government decided not to draw on this loan until its terms are renegotiated to be brought in line with the program requirements. In light of the corrective actions it has taken, the government of Niger would like to be granted waivers by the Executive Board of the International Monetary Fund for the nonobservance of the three performance criteria mentioned above.

4. The main goals for 2002 described in the memorandum of January 16, 2002 remain the same. Nevertheless, the economic and financial program was revised to take account of recent national and international developments. The economic and financial outlook for 2002 remains favorable. While the economic growth rate has been revised downward to 2.7 percent, as against 4.1 percent in the initial program, this is simply a technical adjustment to compensate for the upward revision of GDP growth in 2001 generated by that year's substantial agricultural output. Inflation is expected to be close to 2 percent. The external current account deficit (excluding grants for budgetary assistance) is projected at around 8.5 percent of GDP. With respect to budgetary concerns, and in view of its external financing constraints, the government has adopted a package of budgetary measures, described in the attached memorandum, to ensure the attainment of the program objectives; accordingly, the basic budget deficit remains targeted at approximately 2 percent of GDP. A reduction in domestic payments arrears continues to be one of the government's priorities, even though the financing constraints have resulted in a slight downward revision of the target for 2002.

5. The government is counting on the International Monetary Fund's continued support in order to meet the objectives of this revised program, and it seeks completion of the third review under the PRGF. It is understood that the Fund will complete by February 15, 2003, the end of the second year of the PRGF-supported program, the next review under the PRGF arrangement to assess the progress achieved in the program's implementation. As it has done in the past, the government consents to the Fund's publication of this letter of intent, the memorandum of economic and financial policies for 2002, the technical memorandum of understanding, and the staff report.

6. The government considers that the reforms and measures described in the attached memorandum are such as to permit achievement of the objectives of the revised program for 2002; the government is prepared to take any additional measures required for this purpose. Moreover, the government of Niger will, on its own initiative or at the Managing Director's request, consult with the International Monetary Fund on the adoption of any measure that may prove necessary.

Sincerely yours,

/s/

Ali Badjo Gamatié
Minister of Finance and Economy
Ministry of Finance and Economy
Niamey, Niger

Attachments: memorandum of economic and financial policies, and technical memorandum of understanding


Memorandum of Economic and Financial Policies
August 8, 2002

I. Introduction

1. The discussions under the third review of Niger's economic and financial program, covering the period October 2000-September 2003, took place in Niamey during May 24-June 6, 2002. This program has been supported by the International Monetary Fund (IMF) since December 14, 2000, under the Poverty Reduction and Growth Facility (PRGF), in the amount of SDR 59.2 million. Three drawings have already been made under this PRGF arrangement for a total disbursement of SDR 25.38 million. The second review under the PRGF arrangement, completed by the IMF Executive Board on February 8, 2002, established the performance criteria and benchmarks for 2002.

2. The third program review constitutes a midterm assessment of the annual program presented in the memorandum of economic and financial policies (MEFP) dated January 16, 2002. This program is part of the poverty reduction strategy underpinning government policy. This strategy was prepared with the active participation of the civil society and presented in the poverty reduction strategy paper (PRSP) that was officially submitted to the IMF Executive Board in February 2002. The macroeconomic targets envisaged under the program for 2002 included a rate of real growth of 4.1 percent, an average annual inflation rate of 2.1 percent, and an external current account deficit (excluding grants for budgetary assistance) of 9.5 percent of GDP.

3. This MEFP, prepared in the context of the third review of the PRGF arrangement, reviews the results for 2001 and program implementation in the first quarter of 2002, and outlines a revised program for 2002. This revised program includes a lower level of external budgetary assistance, undertakes reallocations within budgetary expenditures, and attempts to give fresh impetus to structural reforms after the delays observed in recent months. Tables 1-4 cover the performance criteria and benchmarks of the program for 2001-02.

II. Recent Developments

A. 2001

4. During 2001, the government steadfastly adhered to its commitment to restore sound economic performance and focused on implementing the reforms necessary for Niger's economic development. While performance has been generally in line with objectives, this first year of the program was nonetheless also characterized by implementation difficulties, notably budgetary slippages in the first and last quarters of 2001. These difficulties are accounted for by, inter alia, (i) lingering institutional weaknesses, although considerable progress has been made in this area; (ii) persistent social constraints, as well as political and trade union pressures, which limit the government's room for maneuver; and (iii) the irregular and unpredictable behavior of external budgetary assistance, in a context of difficult liquidity constraints, which hinders the proper execution of budgetary expenditure and the optimal functioning of the government.

5. After two years of recession, the economic situation in Niger improved appreciably in 2001. Real growth reached 7.6 percent, or 2.5 points more than indicated by earlier estimates. The agriculture sector, which represents 23 percent of overall GDP, performed exceptionally well (at constant prices, the rate of agricultural sector growth was 25 percent), owing to satisfactory rainfall, which was well distributed both seasonally and regionally. Moreover, the rate of inflation (on a 12-month, end-of-period basis) declined, with the change in the consumer price index falling from 4.7 percent in December 2000 to 3.2 percent in December 2001. This fall is due mainly to the significant decrease in the cost of transportation, which, in turn, is attributable to the reduction in fuel prices. In spite of the good grain harvest, cereal prices remained quite high at the end of 2001, owing to (i) the rebuilding of stocks by producers after two years of poor harvests, which thereby limited the supply of grain brought to the market; and (ii) heightened demand from Nigeria, which had a poor crop of grain in 2001.

6. In view of the favorable performance of rural sector exports, the external current account deficit (excluding grants for budgetary assistance) was lower than anticipated in 2001, at 7.5 percent of GDP. The export volumes and prices of livestock and onions increased to meet the growing demand of the regional market. These increased exports, combined with a rise in public transfers, offset the upturn observed in imports resulting from strong economic growth and the revival in investment. Taking into account capital transactions and financial operations, the accumulation of the net foreign assets of the Central Bank of West African States (BCEAO) was substantial, reaching CFAF 16.1 billion at year's end.

7. The substantial increase in net foreign assets also affected commercial banks and accounted for the sizable growth in the money supply, which rose by approximately 32 percent in 2001. This upsurge in net foreign assets is attributable to (i) the advent of the euro and the concomitant disappearance of Europe's related national currencies, which led households holding European banknotes to exchange them for CFA francs; (ii) the disbursement at year's end of a substantial volume of external assistance; and (iii) the privatization of the telecommunications company, SONITEL, entailing its takeover by a foreign investor. The money supply thus returned to its 1995-96 level, that is, its level before the government assumed responsibility for the liquidation of a number of banks and before cumulative economic difficulties triggered a sizable money supply contraction. The level of net domestic assets at end-2001 was comparable to the level reached at end-2000, with an increase in net bank credit to the government offset by a decline in credit to the economy resulting from the debt-reduction operations of the petroleum and mining sectors. The worsening of the net government position results from an increase in liabilities of CFAF 13.0 billion, including CFAF 6.2 billion in BCEAO advances under Article 16 of the BCEAO charter and CFAF 7.2 billion in IMF resources; however, this decline was cushioned by a CFAF 8 billion increase in deposits, particularly at the BCEAO, following the receipt of external budgetary resources.

8. Fiscal policy in 2001 was conducted with greater adherence to the fundamental principles of fiscal discipline. In particular, the government prevented the accumulation of new domestic payments arrears and effected most of the work for the closing of the fiscal year 2000 accounts in 2001.

9. Throughout 2001, budgetary performance was broadly in line with program targets. The basic budget deficit reached CFAF 48.9 billion (3.4 percent of GDP), or CFAF 3 billion less than the target set in the program based on the supplementary budget adopted in July 2001. However, this deficit is higher than that suggested by the projections made at end-2001, owing to larger-than-anticipated outlays under the special accounts and for domestically financed investment.

10. Budgetary revenues reached CFAF 132.3 billion in 2001 (9.2 percent of GDP, a ratio not achieved since the early 1990s), that is, CFAF 4.5 billion higher than the program targets. Conversely, basic budgetary expenditures (total outlays, excluding externally financed capital expenditure) exceeded program targets by CFAF 1.7 billion, reaching CFAF 181.2 billion, in spite of the year-end decision to suspend CFAF 8 billion in expenditure in light of the reduction in external financing. This outcome is primarily attributable to two factors. First, the deficit in the special accounts and supplementary budgets was larger than anticipated, mainly as a result of the worsening financial position of the National Retirement Pension Fund (FNR), which is itself explained in part by the implementation of an early retirement scheme at end-2000. Second, sizable overruns in domestically financed capital expenditures occurred, indicative of a low level of control over such outlays. Moreover, the wage bill exceeded the program target by CFAF 0.3 billion, as the savings generated by retirements were less than anticipated. Capital expenditure amounted to 5.7 percent of GDP, or 0.9 percentage point of GDP below program projections, because of a lower-than-programmed implementation rate of externally financed investment projects.

11. During 2001, the stock of domestic payments arrears was reduced by CFAF 17 billion (1.2 percentage points of GDP), 53 percent of which went to settling civil service wage arrears. Only half of the programmed target could be achieved, chiefly because lower-than-anticipated levels of external assistance (by approximately 1 percentage point of GDP) resulted in liquidity constraints. In particular, the stock of domestic payments arrears was down by only CFAF 3.4 billion in the fourth quarter, as against the programmed CFAF 23.1 billion. The reduced level of external assistance was due (i) principally to the suspension, from June 2001 onwards, of disbursements from the European Commission (EC) following the audit of expenditure financed by the EC (and in anticipation of the signature of a memorandum of understanding between the government and the EC to resolve the problem of ineligible expenditures; see below); and (ii) to a lesser extent, to the postponement of a disbursement by the African Development Bank (AfDB) to the first half of 2002.

12. Net use of bank financing in 2001 amounted to a mere CFAF 5 billion, compared with the programmed CFAF 13.9 billion, largely as a result of (i) the freezing of EC budgetary assistance accounts, pending completion of the audit process; and (ii) the receipt in December 2001 of CFAF 5 billion, representing the proceeds from the privatization of SONITEL, which was deposited into an account at the BCEAO.

13. The government maintained its focus in the area of structural reforms during the last quarter of 2001. The privatization of SONITEL was completed in December 2001. The government also implemented the automatic formula for the retail pricing of petroleum products, thereby contributing to the success of this reform, which is now well accepted by consumers. The computerization of the expenditure process at the central government level has been operational henceforth. However, the draft of the 2000 final budget law to be submitted to the National Assembly and the closing of the related budgetary accounts could not be completed as scheduled at end-December 2001. This delay is primarily attributable to the fact that the treasury teams in charge of this project also had to work on the reconciliation process triggered by the audit of expenditure financed by the EC.

B. Performance at End-March 2002

14. In a context of persistent external financing problems, the results achieved at end-March 2002 were broadly satisfactory from the budgetary standpoint; however, some delays were recorded with respect to structural reforms.

15. The quantitative performance criteria for the program at end-March 2002 covered the period October 1, 2001-March 31, 2002 and took into account a freeze during the fourth quarter of 2001 of CFAF 8 billion in expenditure. While the two main performance criteria—dealing with the basic budget balance and the net government position in the banking system—were observed, the results point to two distinct developments:

  • During the last quarter of 2001, there was a degree of fiscal slippage, in the course of which the basic budgetary deficit reached CFAF 13.7 billion over the quarter and exceeded the program target by CFAF 8.9 billion. While budgetary revenues were in line with the program's objectives, the measures taken in November 2001 to freeze a number of current expenditure allocations were not sufficient. Moreover, they were accompanied by the above-mentioned slippages which occurred in the special accounts and supplementary budgets, as well as by the slippages in domestically financed capital expenditure that were largely clustered in the fourth quarter.

  • During the first quarter of 2002, the authorities reacted forcefully to offset the fiscal slippage observed in the last quarter of 2001. Over the first quarter of 2002, the government generated a basic budgetary surplus of CFAF 5.7 billion, compared with a programmed deficit of CFAF 4.4 billion. This result simultaneously reflects (i) the better-than-anticipated budgetary revenue performance; and (ii) a lower level of current expenditure. The favorable budgetary revenue performance is due mainly to the generation of revenues in the amount of CFAF 8.3 billion by offsetting fiscal crossdebts. To clear up the relationships between the government and the various public enterprises, the government pushed ahead with an operation for offsetting cross-debts. Nonetheless, tax receipts fell below target by CFAF 2.6 billion because of a delay in the payment of corporate income taxes (BIC) and a shortfall in oil tax receipts. The oil tax revenue shortfall can be explained by a 30 percent drop in the official marketing of petroleum products, in comparison with the first quarter of 2001, an outcome that points to the rapid rise of illegal imports of these products. Following the expenditure restrictions adopted to offset the budgetary slippage recorded in the last quarter of 2001, current expenditure in the first quarter of 2002 fell CFAF 4.7 billion short of program levels. The decision, effective since January 2002, to account for the reinstatement of suspended promotions has had the expected financial effect. However, the wage bill once again overshot the program target by CFAF 0.3 billion, partly because the overruns observed at end-2001 were carried forward.

16. The stock of domestic payments arrears was reduced by CFAF 20.8 billion during the first quarter of 2002. This outcome was achieved thanks to arrangements for offsetting crossdebts with public enterprises and determined action to settle all outstanding items payable under fiscal year 2001. During the first quarter of 2002, the government paid one month's wage arrears, as planned, and continued to implement the operation for offsetting wage arrears through transfers of plots of land, started in 2001. The performance criterion for the reduction of domestic payments arrears, which covered the period October 2001-March 2002, was nonetheless missed by a very narrow margin (CFAF 0.3 billion).

17. During the first quarter of 2002, the money supply remained high, falling by only 4 percent to stabilize at CFAF 130.9 billion. This outcome reflects mainly a reversal of the trend in net foreign assets, which, after registering a very sharp increase at end-December 2001, fell back to a more modest level by end-March 2002. This decline in net foreign assets was partially compensated by a deterioration in the net government position with the banking system, which is explained, despite the basic fiscal surplus, by the significant reduction of domestic payments arrears.

18. The implementation of the structural reform program was somewhat delayed during the first quarter of 2002. In particular, in the context of the financial sector reforms, the two market studies that should have enabled the authorities to make their final decision on the Crédit du Niger (CDN) and the Caisse de Prêts aux Collectivités Territoriales (CPCT), which have been put under temporary management by the BCEAO, were started only in the second quarter of 2002; as a result, no decision could be reached in April, as initially intended.

19. The program of regulatory and privatization reforms and the work involved in the privatization of SONITEL continued, leading to the finalization of the social plan for voluntary resignations and early retirement. The departure of 354 employees will result in a total cost of CFAF 4.273 billion, of which CFAF 3 billion have been covered by the privatization receipts and CFAF 313 million by the new owner. The World Bank will also provide CFAF 960 million in financing for the legal and statutory separation allowances. In the case of the urban water supply program, the authorities have fulfilled the commitments they assumed when a management contract was signed for the former National Water Company; accordingly, they made a 10 percent rate adjustment in March 2002, pursuant to the program, which aims to restore the financial equilibrium of this sector by 2006. In the electricity sector, a bill on the electricity code is being completed and will be submitted to the National Assembly for approval by end-2002. The call for expressions of interest in the concession for the electricity company (NIGELEC) was launched on April 16, 2002. The process of selecting a consulting firm in charge of the establishment of the multisectoral regulatory authority (ARM) is ongoing.

20. The administrative reform program, intended to improve the efficiency and transparency of government spending, continued through the first quarter. Apart from the effective introduction of the integrated computerization of the expenditure process referred to above, the technical work of finalizing the new government budgetary nomenclature and public accounts charter was completed. However, the process of administrative endorsement for the nomenclature and public accounts charter was delayed. Therefore, a number of corrective measures have been taken to ensure that the target of implementing the nomenclature and the public accounts charter by January 1, 2003 is reached. Moreover, a government contract reform program also got under way with the revival of the Central Contracts Commission, the introduction of a consultation and reporting process on the redrafting of the public procurement code, and the completion of the preliminary draft of the new code. Finally, despite delays, the final budget law for fiscal year 2000 was prepared by end-March 2002, and the related budgetary accounts submitted to the Audit Court in April 2002.

III. Policies and Measures for Implementation in 2002

21. While the basic objectives of the 2002 program were maintained, the 2002 macroeconomic framework was revised to incorporate the 2001 economic and financial results and to take into account recent international developments. As a result of the record-breaking agricultural production in 2001, the projected growth of the primary sector in 2002 has been revised downward, so that the real growth rate of the Nigerien economy is currently projected within a range of 2.5-3 percent (a 2.7 percent rate was adopted in the macroeconomic framework), against the initially projected rate of 4.1 percent. Inflation, as measured by the Niamey consumer price index, should, according to a prudent estimate, settle around 2.3 percent on a year-to-year basis. This rate is, however, most likely to be lower if there is a second consecutive bumper grain harvest. Given higher-than-envisaged public transfers that are not related to budgetary assistance and the increase in imports of capital goods that is anticipated because of the resumption of investment, the current account deficit (excluding grants for budgetary assistance) should reach 8.6 percent of GDP in 2002, compared with the initial projection of 9.5 percent and the 7.5 percent recorded in 2001. With the inclusion of capital account and financial account transactions, the accumulation of net foreign assets at the central bank is projected to reach CFAF 16.5 billion.

22. The government stands by the objectives of its economic and financial program and will implement all the policies necessary for its success. The updating of the 2002 program thus takes into account the government's decision to cancel or freeze some nonpriority spending to compensate for additional expenditures and an envisaged reduction in foreign financing. This update also takes into account delays in the implementation of structural reforms and aims to refocus the strategy in this area with a view to achieving very specific objectives by year's end. As with the initial program, the revised 2002 program is based on the government's poverty reduction strategy, as described in the poverty reduction strategy paper. The revised program maintains the government program's fiscal priorities, namely, (i) to improve medium-term fiscal sustainability and progressively move toward meeting the West African Economic and Monetary Union (WAEMU) convergence criteria; (ii) to contribute to the real success of the poverty reduction strategy by ensuring the quality of expenditure and by giving priority to spending in the social sectors; (iii) to reduce liquidity constraints; and (iv) to maintain the policy of reducing domestic payments arrears.

A. Fiscal Policy

23. The revised 2002 fiscal program aims mainly to cover CFAF 8.9 billion in supplementary spending and takes account of the fact that identified external financing ought to be CFAF 7 billion less than initially projected. The new external financing projections mainly reflect the financial implications of the agreement that was signed by the government and the European Commission (EC) in February 2002 and completed the process, started in June 2001, of auditing EC-financed expenditure. The revised program thus projects a slight reduction in the basic deficit of 0.2 percentage point from the initial program figure to 1.9 percent of GDP.

24. The budgetary revenue targets for fiscal year 2002 have been maintained, except for the target on receipts of the special accounts, which has been slightly lowered to take account of performance in 2001. To offset the shortfalls in tax revenue in the first quarter of 2002, surveillance operations of the tax and customs administrations have been stepped up. In particular, a vast operation that was launched to combat illegal imports of petroleum products will make it possible to reach the targets set for petroleum product taxation in 2002. Furthermore, after a wave of challenges from the private sector, the government, with the agreement of the economic operators, decided to revise the corporate income tax (BIC) withholding rate that is levied at customs and within the country, while maintaining the thresholds of CFAF 300 million in turnover for buying and selling activities and of CFAF 100 million for the provision of services. Thus, for imports, exports, reexports, and transits, the rate is set at 3 percent. Within the country, the rate is set at 2 percent on purchases from manufacturers, wholesalers, and semiwholesalers, and on services supplied to the government, its subdivisions, and public and private enterprises. The government will ensure that these measures are implemented beginning of August 2002.

25. Since the adoption of the 2002 budget law, several new factors have arisen that require supplementary spending by the government: (i) payroll expenditure will have to be revised upward to cover both the CFAF 0.3 billion overrun detected at end-December 2001, which will have an impact on 2002, and spending on cash vouchers (such as death payments and retirement-related benefits) in the amount of CFAF 1.4 billion, which has not hitherto been included in the budget (even though the vouchers involved expenditure for the government); (ii) all the measures to be adopted to reinforce fiscal transparency and to finance the studies included in the agreement with the EC involve expenditure of about CFAF 1.6 billion; (iii) the financial difficulties of the National Postal and Savings Office (ONPE) following the elimination of the implicit subsidy from SONITEL necessitate a subsidy of CFAF 750 million to balance its budget; (iv) the revision of projections for the special accounts, justified by the large deficit reported in 2001, have led to additional expenditure of CFAF 0.9 billion; (v) as mentioned above, the government has also undertaken to cover the cost of SONITEL's social plan in the amount of CFAF 3 billion, which it will finance from the receipts obtained from the privatization; and (vi) adjustments to be made under the sectoral program for basic education (PROSEF), financed by the World Bank, following ineligible expenditure and payment delays to a number of suppliers, are expected to cost CFAF 1 billion.

26. In the context of lower external budgetary assistance, the revised program provides for the absorption of the resource deficit generated by these additional expenditures in three ways: the freezing and canceling of nonessential spending; a smaller reduction of domestic payments arrears; and greater use of bank financing. The government, taking advantage of a broad spirit of cooperation among its ministries, has identified (i) CFAF 2 billion in spending deemed as nonessential that is now definitively cancelled, and (ii) CFAF 6.8 billion, temporarily frozen and to be released only if supplementary financing is found by year's end. The freeze on nonpriority expenditure comprises CFAF 2.7 billion in goods and services, CFAF 3.1 billion in subsidies and CFAF 1 billion in domestically financed capital expenditure. The objective set for 2002 under the updated strategy for domestic payments arrears has been scaled down by CFAF 3.3 billion because the level set in the initial program required substantial external support that has not materialized. Finally, excluding the impact of financing provided by the Organization of Petroleum Exporting Countries (OPEC) Fund for the settlement of external payment arrears and the delivery of Heavily Indebted Poor Countries (HIPC) Initiative assistance, the original objective for the end-2002 net government position with the banking system was preserved, thus allowing for an increased use of bank financing in 2002, in light of the lower than programmed position at end-December 2001. The objective of reducing the statutory advances of the central bank by CFAF 10 billion by year's end has been maintained.

B. Monetary Policy and Financial System

27. The expansion of the money supply in 2002 is projected at about 8 percent, slightly above the nominal GDP growth, and pursuant to the BCEAO's monetary policy targets of consolidating the external reserves of the Union and keeping inflation consistent with that of the anchor currency. Consistent with developments in the balance of payments, net foreign assets should continue to increase, attaining CFAF 43.4 billion by end-December 2002, an increase of 8 percent. Most of this increase will result from the mobilization of BCEAO external resources. Net domestic credit should rise by 2 percent, basically reflecting the fiscal policy envisaged for 2002. Credit to the economy is expected to increase by about 10 percent.

C. Structural Reforms

28. The strengthening of the financial sector, supported by the World Bank, is a key element of the government's development and poverty reduction strategy. To offset the delays incurred during the first quarter of 2002, the authorities will focus on a series of specific reforms, the concrete results of which are expected by year's end. These reforms will mainly focus on (i) accelerating the reconstruction of the banking and insurance sector; (ii) strengthening the sound development of microfinance; (iii) promoting a climate of trust and stable financial foundations for a sustainable restructuring of the ONPE; and (iv) initiating studies for the restructuring of the welfare sector.

29. The reinforcement of the banking system will continue with the close monitoring of the Banque Islamique du Niger pour le Commerce et l'Investissement (BINCI) and the three institutions currently under temporary management by the BCEAO and being restructured: the Banque Commerciale du Niger (BCN), the Crédit du Niger (CDN), and the Caisse de Prêts aux Collectivités Territoriales (CPCT). The underlying problem with the BINCI relates to its earlier losses, estimated at CFAF 1.824 billion, which brought the actual capital of the bank down to CFAF 165 million, compared with the required minimum of CFAF 1 billion. Confronted with this situation, the main shareholders, who include the Dar Al Maal al Islami (DMI) and the Islamic Development Bank (IsDB), have agreed to offset the losses sustained. The Nigerien state, in contrast, does not intend to provide any direct or indirect financial support for a recapitalization of the bank. The Ministry of Finance and Economy is closely monitoring this institution's recovery, and the government stands ready to enforce any decision by the Banking Commission in this matter. Concerning the temporary management of the BCN, the government will implement the decisions of the Banking Commission, based on a new restructuring plan submitted by the bank's temporary administrator. With regard to the restructuring of the CDN and the CPCT, the authorities have sought to identify the factors that are holding up the growth of real estate and local government financing before determining the future of these two institutions. The government has, therefore, decided to conduct two studies, one on real estate financing and the other on local government financing. However, delays have occurred in preparing the two studies and the final studies were only transmitted to the government at end-July 2002. In view of these delays, the government has asked for an extension, through September 2002, of the mandate of the temporary administrator of the CDN and the CPCT, which expired on April 30, 2002. This extension would allow the authorities to look at the conclusions of these studies and consult with the Bretton Woods institutions before coming to any decision regarding the future of these two banks.

30 The insurance sector has been partially rehabilitated with the recapitalization, by the private sector, of Société Nigerienne d'Assurance et de Réassurance (SNAR)-Leyma. The restructuring plan for SNAR-Leyma was approved by the Interafrican Conference on Insurance Markets (CIMA) in March 2002 and is currently being implemented. The long-term health of the company will depend on its ability to effectively implement a number of wide-ranging measures defined in the restructuring plan. To ensure the oversight of developments in this sector and to be in a position to make timely recommendations, the government plans to enhance the capacities of the Insurance Directorate within the Ministry of Finance and Economy.

31. The microfinance sector is currently in a very precarious position, mainly because of serious shortcomings in the internal financial management of the microfinance institutions and their supervision. Consequently, a financial and organizational audit of the main microfinance institutions is planned for early September 2002. This audit will analyze the vulnerabilities of these institutions, particularly with respect to their internal controls, liquidity, loan quality, and provisioning. The results of this audit, which are expected by October 30, 2002 at the latest, will allow the authorities to identify the weaknesses in the microfinance sector and to monitor the most fragile institutions in order to avoid a further weakening of the sector. Furthermore, the government will (i) enhance the capacity of the unit in the Ministry of Finance and Economy that is responsible for oversight of the microfinance institutions; (ii) introduce a training program for professionals in the unit; and (iii) improve the production and reliability of the microfinance institutions' financial data.

32. The government plans to step up the restructuring of the ONPE. In this connection, the authorities approved a new 2002 budget that is intended to balance the ONPE's accounts by end-2002. This budget, which is supported by a government subsidy, does not include the reduction in the wage bill that was envisaged to result from the implementation of a staff retrenchment program originally scheduled for June 2002. This downsizing will not take place until the restructuring has been completed and the human resources needs for the new ONPE have been identified. The government and the ONPE will also implement a series of complementary measures:

  • The government will introduce a monthly system to track the actual outturn of ONPE's operating account for submission to the Ministry of Finance and Economy and the Ministry of Transportation and Telecommunications.

  • The ONPE will begin an analysis of postal and financial flows in the 66 post offices, to better understand the traffic in each office and determine the scope of the need for universal postal service.

  • The government will establish the legal and financial frameworks for the new ONPE and its financial subsidiary. These financial and legal frameworks are the backbone for the separation and the restructuring of the ONPE into two branches that will be set up with the support of technical assistance, that is, the postal services and the financial savings services. The financial framework will involve, in particular, the preparation of financial statements and the production of an opening balance sheet for each entity as of December 31, 2002.

33. Moreover, an actuarial audit of the National Social Security Fund (CNSS) will be conducted in 2002, with a view to restructuring this institution and defining a reform strategy for the social security sector. Regarding the National Retirement Pension Fund (FNR), the government will develop, in cooperation with the World Bank, the terms of reference for a study on the medium-term financial projections for the institution and choose, before end-2002, a consultant to complete this study. This represents a structural benchmark of the program.

34. The government finance reform program will give priority to the actual implementation, within the original time frame, of the new government budgetary nomenclature and public accounts charter. Following the delays incurred in the administrative validation process for these documents, the authorities have identified a way forward that will make it possible to achieve the objective of implementation by January 1, 2003. A significant effort will have to be made in at least three areas: (i) preparation and adoption of implementation instructions; (ii) mobilization of information technology expertise to update the software monitoring the budgetary expenditure process and to develop a software for the new public accounts system; and (iii) training of officials in the new budgetary and accounting frameworks. Furthermore, the statistical consolidation work done in the context of the third review of the program showed that the unified database on the civil service should be updated more regularly, particularly the administrative data collected by the Ministry of Civil Service and the sectoral ministries. To this end, the government has decided to immediately update the database and introduce appropriate procedures for its regular maintenance. The reorganization of the Treasury into directorates with a view to increasing efficiency will also be completed by end-2002. In addition, the new public procurement code is to be approved by the government and submitted to the National Assembly for discussion before the end of the year. Finally, the Audit Court will submit its first budget execution report on fiscal year 1997 by end-December 2002. The 2001 budgetary accounts will be closed and transmitted to the Audit Court in order for this institution to complete by end-December 2002, the certificate of conformity of the related 2001 draft final budget law by year's end.

35. The key objectives of the privatization and regulatory reform program for 2002 involve the establishment of the multisectoral regulatory authority (ARM) and the finalization of a concession contract for NIGELEC. With respect to the ARM, the necessary measures will be taken to secure financing for its operating budget, in accordance with the applicable laws and regulations (financing by means of royalties on the utilities subject to regulation). In addition, senior management of the ARM and its technical directorates will be established in consultation with the World Bank, so that the ARM can begin operation before the end of the year. A transitional regulatory committee for the water and telecommunications sectors was created by Decree 13/MP/RE/CCPP of October 26, 2001. The purpose of this committee is to assume the ARM's responsibilities, pending its creation. The committee has already reviewed and issued its opinion on the agreement on the interconnection between SONITEL and CELTEL-NIGER. Regarding the concession for NIGELEC, the investors selected for consideration will be invited to submit financial bids by September, and a provisional successful bidder will be identified by the end of the year.

36. The implementation of an automatic and transparent mechanism for the adjustment of retail petroleum product prices will be continued on a monthly basis. Supported by the experience gained in the first year of its operation and in the context of the current legislation that allows for periodic modifications of the values of the various items used in the pricing formula, the items of the pricing formula will be adjusted on September 1, 2002 as follows: (i) the average of the relevant international prices of petroleum products and of the exchange rate over the two preceding months will henceforth be used (rather than that of the last month alone), in order to smooth out fluctuations in the international market; and (ii) the petroleum product import and storage company (SONIDEP) will be compensated for the financing costs it bears on the customer credit it grants to distributors at a rate of 1.25 percent of the cost price at the exit of customs warehouses. Furthermore, the Ministry of Commerce and Promotion of the Private Sector will contract with an independent consulting firm to study the remunerations of the petroleum sector operators in order to determine if these payments ensure the medium-term profitability of these operators. The outcome of this study will be available at end-December 2002, a structural benchmark in the program, and taken into consideration for a new revision of the pricing formula, if necessary, at the time of the fourth review of the PRGF arrangement.

D. Poverty Reduction Strategy and HIPC Initiative

37. Designed during the initial months following the restoration of democracy, the poverty reduction program initiated by the Office of the President of the Republic led the way for the government's poverty reduction strategy, which was then being prepared. This special program has been fully financed with interim assistance under the Initiative for Heavily Indebted Poor Countries (HIPC Initiative). The achievements of the first phase of the program have been noteworthy. By end-April 2002, 467 school classrooms, 406 village health units, 11 mini-dams, 47 weirs, 64 pastureland wells, and 38 village wells had been constructed, at a cost of CFAF 9.8 billion. This represented an execution rate of close to 70 percent for the first phase of the program, which covers fiscal-years 2001 and 2002. The remainder will be constructed during the second half of 2002. The positive impact of the program on living conditions is already tangible: the construction of classrooms has made it possible to increase the enrollment ratio by 3 points in one year, health coverage has increased, and the program has revitalized local governments as well as the many small local companies that performed the constructions. A study will be undertaken to analyze the practical impact of the construction of wells, mini-dams, and weirs on the agricultural sector.

38. The special program is continuing in 2002 and is being extended to include new projects. Among the projects to be given priority are the improvement of rural roads, the creation of agricultural extension centers, and enhancements in animal husbandry. For implementation purposes, the special program projects will be integrated within the poverty reduction strategy in 2003. The government intends to take the key factors behind the success of the first phase of the special program initiated by the President and broadly apply them to the entire poverty reduction strategy. These key factors include (i) the active participation of the program beneficiaries in all stages of the program (i.e., identification, construction, and monitoring); (ii) an excellent price-quality ratio for the completion of the projects; (iii) the close tracking of results by local and regional governments, which are accountable when difficulties arise; and (iv) the involvement of the country's highest authorities.

39. The government will be organizing a meeting of donors during the last quarter of 2002 in cooperation with the World Bank and the United Nations Development Program (UNDP). Using the PRSP as a basis for the discussions, the meeting has four aims: (i) to allow the donors to indicate the level of their financial commitments to Niger in the coming years; (ii) to improve coordination among the various donors; (iii) to finalize a program of technical assistance for the implementation of the strategy and development of institutional capacities in Niger; and (iv) to establish a system for tracking and assessing implementation of the strategy.

IV. External Debt

40. During the first half of 2002, two continuous performance criteria on debt conditionality were breached. A slight delay in servicing a post-cutoff-date loan from Japan led to the nonobservance of the continuous performance criterion on the nonaccumulation of external payments arrears; and, on May 22, 2002, the performance criterion on a 50 percent grant element requirement for new external financing was not observed when the government signed with the OPEC Fund a new loan agreement providing a grant element of only 45 percent. A miscalculation of the grant element (by excluding the loan administrative fee in the calculation of the grant element) was at the origin of this instance of nonobservance of the performance criterion. As soon as it was confirmed that this loan was not consistent with the conditionality of the program, the government decided not to draw on it until its terms are renegotiated and brought in line with the program requirements. The end-June 2002 structural benchmark on the improvement of the external debt unit, through the implementation of a new debt-management software and staff training, could not also be observed owing to delays in obtaining the latest version—in French—of the software selected by Niger (the Commonwealth Secretariat's Debt Recording and Management System). Given the critical nature of this function under the HIPC Initiative and the above mentioned problems encountered in recent months, the Ministry of Finance has decided to make it a key priority for end-2002. To this effect, the government has contacted the Agence de la Francophonie (ACCT), which has been selected by the Commonwealth Secretariat for the distribution of this software, to speed up the process of acquiring the software. The latest version of the software, which is being translated in French, will be presented in the Fall of 2002 in the context of a regional workshop that will be attended by Nigerien representatives. Measures have been taken to ensure the purchase and installation of this software by end-2002, and to make it operational in early 2003.

41. The government will continue to follow a highly cautious external borrowing policy and avoid any accumulation of payments arrears. The government has continued its discussions with its creditors. France remains the only Paris Club creditor with which a bilateral agreement has not yet been signed, following the multilateral Paris Club agreement of January 25, 2001. This multilateral agreement granted Niger Cologne terms for the treatment of flows and Naples terms for the treatment of arrears. A bilateral agreement should be signed between France and Niger by the end of the third quarter of 2002. The government has also actively maintained its contacts and continued negotiations with bilateral creditors who are not members of the Paris Club to obtain debt relief under the HIPC Initiative. An agreement has been signed to remove the liens on Nigerien farmlands associated with a post-cutoff-date loan by Libya; this should make it possible to resume negotiations for debt relief from Libya. Finally, to avoid legal proceedings, the government has signed an agreement to reduce the external payments arrears on a commercial loan with a maturity of less than one year granted by a private bank in 1999; as a result total debt service of CFAF 2.5 billion will be paid in 2002 to clear this loan. Regarding debt relief under the HIPC Initiative, the OPEC Fund and the Islamic Development Bank (IsDB) granted assistance to Niger in February 2002 and July 2002, respectively, while understandings were reached with the Kuwait Fund for Arab Economic Development. Negotiations are continuing with the other creditors.

V. Program Monitoring

42. The program will be monitored through end-June 2002 using the quantitative and structural performance criteria and benchmarks defined in the MEFP of January 16, 2002 (Tables 3 and 4) and its technical memorandum of understanding.

43. Monitoring of the revised 2002 program will be based on quarterly quantitative performance criteria and benchmarks (evaluated from December 31, 2001, onwards), a structural performance criterion and structural benchmarks for the 2002 calendar year, and a review. The quantitative performance criteria and benchmarks are set out in Table 2 and defined in the attached technical memorandum of understanding; the structural performance criterion and the structural benchmarks are defined in Table 4. The quantitative performance criteria and benchmarks include (i) a ceiling on net bank credit to the government; (ii) a ceiling on the basic budget deficit (on a commitments basis, excluding grants and excluding revenue resulting from the settlement of crossdebts); (iii) a reduction of the stock of the government's domestic payments arrears and the nonaccumulation of new domestic payments arrears; (iv) the nonaccumulation of new external payments arrears by the government; (v) a limitation on new nonconcessional loans contracted or guaranteed by the government with maturities exceeding one year; and (vi) a limitation on new short-term external borrowing. The above variables (i) through (iii) constitute performance criteria under the program for end-September 2002 and indicators for program monitoring purposes for end-December 2002; the variables (iv) through (vi) are continuous performance criteria. In addition, quarterly quantitative benchmarks are set for tax receipts and the wage bill. The quarterly ceilings on net bank credit to the government and on the basic fiscal deficit will be adjusted on the basis of the gap between projected net amounts of exceptional external assistance and the amounts actually received, within the limits set out in Table 2.

44. The revised program for 2002 also includes a structural performance criterion on the continuous implementation of the pricing formula for petroleum products. This formula which was adopted on August 1, 2001, will be slightly modified in September 2002 as specified in the paragraph 36. The revised program also contains the following structural benchmarks, as indicated in Table 4: (i) submission of the budgetary accounts for fiscal year 2001 to the Audit Court and transmission of the 2001 draft final budget law to the IMF accompanied with the certificate of conformity established by the Audit Court; (ii) introduction of the new budgetary nomenclature and the new public accounts charter, and their use in preparing the 2003 budget; (iii) a strengthening of the external debt unit through the introduction of a new debt-management software and training of staff; (iv) the selection of a consultant to prepare a study on the medium-term financial projections of the National Retirement Pension Fund; and (v) the submission to the government of a study on the remunerations of the petroleum sector operators included in the petroleum product pricing formula.

45. The authorities will continue to comply with the statistical reporting requirements set out in the technical memorandum of understanding

Technical Memorandum of Understanding

Niamey, August 8, 2002

1. This technical memorandum of understanding provides the definitions of the revised quantitative performance criteria and quantitative benchmarks for the second year of Niger's program supported under the Poverty Reduction and Growth Facility (PRGF). The targets for these quantitative performance criteria and benchmarks for September and December 2002 are set out in Table 2 attached to the government's memorandum of economic and financial policies (MEFP) dated August 8, 2002. This technical memorandum also sets out the data-reporting requirements for monitoring the program.

VI. Definition of Terms

2. For the purpose of this technical memorandum, the following definitions of "debt," "government," "payments arrears," and "government obligations" will be used:

    (a) As specified in point 9 of the Guidelines on Performance Criteria with Respect to Foreign Debt adopted by the Executive Board of the IMF on August 24, 2000, debt will be understood to mean a current, that is, not contingent, liability, created under a contractual arrangement through the provision of value in the form of assets (including currency) or services, and which requires the obligor to make one or more payments in the form of assets (including currency) or services, at some future point (s) in time; these payments will discharge the principal and/or interest liabilities incurred under the contract. Debts can take a number of forms, the primary ones being as follows: (i) loans, that is, advances of money to the obligor by the lender made on the basis of an undertaking that the obligor will repay the funds in the future (including deposits, bonds, debentures, commercial loans, and buyers' credits) and temporary exchanges of assets that are equivalent to fully collateralized loans, under which the obligor is required to repay the funds, and usually pay interest, by repurchasing the collateral from the buyer in the future (such as repurchase agreements and official swap arrangements); (ii) suppliers' credits, that is, contracts where the supplier permits the obligor to defer payments until some time after the date on which the goods are delivered or services are provided; and (iii) leases, that is, arrangements under which property is provided that the lessee has the right to use for one or more specified period(s) of time that are usually shorter than the total expected service life of the property, while the lessor retains the title to the property. For the purpose of the guideline, the debt is the present value (at the inception of the lease) of all lease payments expected to be made during the period of the agreement, excluding those payments that cover the operation, repair, or maintenance of the property. Under the definition of debt set out above, arrears, penalties, and judicially awarded damages arising from the failure to make payment under a contractual obligation that constitutes debt are debt. Failure to make payment on an obligation that is not considered debt under this definition (e.g., payment on delivery) will not give rise to debt. The external debt excludes treasury bills and bonds issued in CFA francs on the regional financial market of the West African Economic and Monetary Union (WAEMU).

    (b) Government refers to the central government of the Republic of Niger; it does not include any political subdivision, the central bank, or any government-owned entity with a separate legal personality.

    (c) External payments arrears are external payments due but not paid. Domestic payments arrears are domestic payments due (following the expiration of a 60-day grace period, excluding obligations with a specific grace period and for which this grace period applies) but not paid.

    (d) Government obligation is any financial obligation of the government verified as such by the government (including any government debt).

VII. Quantitative Performance Criteria

A. Net Bank Credit to Government

Definition of the performance criterion

3. Net bank credit to the government is defined as the balance of the government's claims and debts vis-à-vis national banking institutions. Government claims include the cash holdings of the Nigerien Treasury, deposits with the central bank, deposits with commercial banks, and secured obligations. Government debt to the banking system includes funding from the central bank (essentially IMF assistance and refinancing of secured obligations), government securities held by the central bank, funding from commercial banks (including government securities held by commercial banks), and deposits with the postal checking system.

4. Government securities held outside the Nigerien banking system are not included in the net bank credit to government.

5. The net bank credit to government is calculated by the Central Bank of West African States (BCEAO), whose figures are those deemed valid within the context of the program. The scope of the net bank credit to government as defined by the BCEAO includes all central government administrations. The end-September 2002 performance criterion and the end-December 2002 benchmark are based on the variation of stock in net bank credit to the government from December 31, 2001 to the date considered for the benchmark.

Adjustment

6. The ceiling on net bank credit to the government will be subject to adjustment if disbursements of external budgetary assistance (excluding IMF financing and the assistance to be provided under the Initiative for Heavily Indebted Poor Countries, but including traditional debt relief), net of debt-service obligations (excluding IMF repayment obligations) and payments of external arrears, exceed or fall short of program forecasts. In the event of disbursements in excess by more than CFAF 6.8 billion at end-September 2002 and end-December 2002, the ceiling will be adjusted downward pro tanto by the amount of the excess disbursements beyond these CFAF 6.8 billion, unless they are used to absorb domestic payments arrears. In contrast, if at the end of each quarter disbursements are less than the programmed amounts, the ceiling will be raised pro tanto by the amount of the shortfalls up to the limit (on a noncumulative basis) of CFAF 5 billion at end-September and CFAF 6 billion at end-December 2002. For the end-September 2002 performance criterion and the end-December 2002 benchmark, the amount of external assistance provided is calculated from end-December 2001 onward.

7. If HIPC Initiative assistance is granted to Niger, the debt-service savings will be transferred to a central bank account and used to finance new poverty reduction programs that have been approved in the budget law and are in line with the poverty reduction strategy paper (PRSP).

Reporting requirement

8. Detailed data on net bank credit to government will be provided monthly within six weeks following the end of each month.

B. Basic Budget Balance

9. The basic budget balance is defined as the difference between total budgetary revenue, excluding grants and compensation revenue, and total expenditure, excluding externally financed capital expenditures (including investment expenditures financed by resources freed up as a result of the HIPC Initiative assistance). The end-September 2002 performance criterion and the end-December 2002 benchmark are based on the cumulative basic budget balance since end-December 2001.

Reporting requirement

10. This information will be provided to the IMF monthly within six weeks following the end of each month.

Adjustment

11. If the amount of external assistance is higher than scheduled in the revised program, the end-September 2002 performance criterion and the end-December 2002 benchmark will be adjusted pro tanto, thereby allowing a higher level of expenditure, up to CFAF 6.8 billion.

C. Reduction of Domestic Payments Arrears on Government Obligations

Definition of the performance criterion

12. Domestic payments arrears on government obligations are reduced through the payment of these obligations as defined under 2c and 2d above. The government undertakes not to accumulate any new domestic payments arrears on government obligations, except for arrears on obligations other than government debt, in which case the government undertakes not to accumulate beyond six months. The Centre d'Amortissement de la Dette Intérieure de l'Etat (CADIE — the government domestic debt amortization center) keeps and updates the inventory of domestic payments arrears on government obligations and maintains records of their repayments.

Reporting requirement

13. Data on the outstanding balance, accumulation, and repayment of domestic payments arrears on government obligations will be provided monthly within six weeks following the end of each month.

D. Nonaccumulation of External Payments Arrears

Definition of the performance criterion

14. Government debt is outstanding debt owed or guaranteed by the government. Under the program, the government undertakes not to accumulate external payments arrears on government debt (including treasury bills and bonds issued in CFA francs on the WAEMU regional financial market), with the exception of external payments arrears arising from government debt being renegotiated with creditors, including Paris Club creditors.

15. In addition, the government undertakes to attempt in good faith and without delay to sign agreements that would confirm the preliminary understandings reached on the settlement of its external payments arrears before the consideration by the Executive Board of the IMF, on December 14, 2000, of the authorities' request for a new three-year arrangement under the Poverty Reduction and Growth Facility.

Reporting requirement

16. Data on the outstanding balance, accumulation, and repayment of external payments arrears will be provided monthly within four weeks following the end of each month.

E. External Nonconcessional Loans Contracted or Guaranteed
by the Government of Niger

Definition of the performance criterion

17. The government will not contract or guarantee external debt with original maturity of one year or more with a grant element of less than 50 percent. Nonconcessional external debt is defined as all debt with a concessionality level of less than 50 percent. To calculate the level of concessionality for loans with a maturity of at least 15 years, the discount rate to be used is the ten-year average commercial interest reference rate (CIRR), calculated by the IMF on the basis of the rates published by the OECD; for loans of less than 15 years, the six-month average CIRR is to be used.

18. This performance criterion applies not only to debt as defined in Point 9 of the Guidelines on Performance Criteria with Respect to Foreign Dept adopted on August 24, 2000, but also to commitments contracted or guaranteed for which value has not been received. However, this performance criterion does not apply to financing provided by the Fund, to debt rescheduling in the form of new loans and to treasury notes and bonds issued in CFA francs on the WAEMU regional financial market.

Reporting requirement

19. Details on any external government debt will be provided monthly within four weeks following the end of each month. The same requirement applies to guarantees extended by the central government.

F. Short-Term External Debt of the Central Government

Definition of the performance criterion

20. The government will not contract or guarantee external debt with original maturity of less than one year. This performance criterion applies not only to debt as defined in Point 9 of the Guidelines on Performance Criteria with Respect to Foreign Debt adopted on August 24, 2000, but also to commitments contracted or guaranteed for which value has not been received. Excluded from this performance criterion are short-term import-related trade credits and short-term treasury notes issued in CFA francs on the regional financial market.

Reporting requirement

21. Details on any external government debt will be provided monthly within four weeks following the end of each month. The same requirement applies to guarantees extended by the central government.

VIII. Quantitative Benchmarks

A. Definitions

22. Budgetary revenue is a quantitative benchmark for the program. It includes tax, nontax, compensation and special accounts revenue.

23. The civil service wage bill is another benchmark of the program. For the benchmarks at end-September 2002 and end-December 2002, the wage bill data are provided by the budgetary accounts and exclude the salaries paid for the reinstatement of former rebellion members, the medical and training indemnities, the contributions from the budget to the national retirement fund (line 390-1-34 of the budget), and the wage refunds. The wage bill includes cash vouchers.

B. Reporting Requirement

24. This information will be provided to the IMF monthly within six weeks following the end of each month.

IX. Additional Information for Program-Monitoring Purposes

A. Public Finances

25. The government will report to IMF staff the following:

  • detailed monthly estimates of revenue and expenditure, including social expenditure and the payment of domestic and external arrears;
  • complete monthly data on domestic budgetary financing, to be provided monthly within six weeks following the end of each month;
  • quarterly data on implementation of the public investment program, including details on financing sources, to be provided quarterly within eight weeks following the end of each quarter; and
  • monthly data on debt service, to be provided within four weeks following the end of each month.

B. Monetary Sector

26. The government will provide the following information within eight weeks following the end of each month:

  • consolidated balance sheet of monetary institutions and, as appropriate, the balance sheets of selected individual banks;
  • the monetary survey, eight weeks after the end of each month, for provisional data;
  • borrowing and lending interest rates; and
  • customary banking supervision indicators for bank and nonbank financial institutions. As needed, indicators for individual institutions may also be provided.

C. Balance of Payments

27. The government will provide the following information:

  • any revision to balance of payments data (including services, private transfers, official transfers, and capital transactions) whenever they occur; and
  • preliminary annual balance of payments data, within six months following the end of the year concerned.

D. Real Sector

28. The government will provide the following information:

  • disaggregated monthly consumer price indices, monthly within two weeks following the end of each month;
  • preliminary national accounts, no later than six months after the end of the year; and
  • any revision in the national accounts.

E. Structural Reforms and Other Data

29. The government will provide the following information:

  • any study or official report on Niger's economy, within two weeks following its publication; and
  • any decision, order, law, decree, ordinance, or circular with economic or financial implications, upon its publication or, at the latest, when it enters into force.

F. Summary of Main Data Requirements


Type of Data

Tables

Frequency

Reporting Lag


Real sector

National accounts

Annual

Six months

 

Revisions of national accounts

Irregular

Eight weeks following revision

 

Consumer price indexes, disaggregated

Monthly

End of month + two weeks

Public finances

Net government position

Monthly

End of month + six weeks

 

Table of indicators, including breakdown of revenue, expenditure, and repayment of domestic wage and nonwage arrears

Monthly

End of month + six weeks

 

Provisional table of government operations (TOFE)

Monthly

End of month + six weeks

 

Investment budget execution

Quarterly

End of quarter + eight weeks

 

Petroleum products pricing formula, tax receipts, and pricing differentials

Monthly

End of month + four weeks

Monetary and financial data

Monetary survey

Monthly

End of month + six weeks (provisional)
End of month + ten weeks (final)

 

Consolidated balance sheet of monetary institutions and, as appropriate, balance sheets of certain individual banks

Monthly

End of month + eight weeks

 

Borrowing and lending interest rates

Monthly

End of month + eight weeks

 

Banking supervision ratios

Quarterly

End of quarter + eight weeks

Balance of payments

Balance of payments

Annual

Six months

 

Revised balance of payments data

Irregular

When revisions occur

External debt

Outstanding external payments arrears and repayments

Monthly

End of month + four weeks

 

Terms of new external loans

 

End of month + four weeks

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