CORRECTED News Brief: IMF Completes First Review of Mali under PRGF-Supported Program and Approves US$9 Million Disbursement
September 8, 2000
The Executive Board of the International Monetary Fund (IMF) has completed the first review under the three-year Poverty Reduction and Growth Facility (PRGF)1 arrangement for Mali (see Press Release No. 99/39).
As a result of the Executive Board’s review, the second loan under the arrangement in an amount equivalent to SDR 6.75 million (about US$9 million) is available to Mali. This will bring total disbursements under the current program to SDR 13.5 million (about US$18 million).
After the Executive Board’s discussion of Mali’s economic and structural reform program, Shigemitsu Sugisaki, Deputy Managing Director and Acting Chairman, issued the following statement:
“Mali successfully completed the first review under the Poverty Reduction and Growth Facility with some delays due to slippages in implementing a number of key structural reforms. The Malian authorities are to be commended for the corrective measures taken to address the problems, and for their commitment to pursue the reform agenda.
“The Malian economy suffered from sizable terms of trade losses in 1999 and 2000. Despite these setbacks, real GDP growth was sustained, although at a somewhat lower rate than anticipated, and inflation declined. The fiscal position deteriorated in 1999 mainly on account of a weakening of government revenue performance. Corrective measures taken by the authorities for 2000 include the reduction in nonpriority spending, the increase in petroleum retail prices, and a prudent wage policy. These are positive steps and the authorities are encouraged to continue their efforts to consolidate the fiscal position.
“There have been slippages in the implementation of structural reform measures introduced in 1999. It would be important that the authorities adhere closely to the new timetables for reforms, especially in the cotton sector in view of its impact on the Malian economy and its role in poverty reduction strategies.
“Although the upward trend in poverty has been reversed in recent years through sustained economic growth, poverty remains widespread and social indicators are very low in Mali. To address this issue in a systematic manner, the authorities are committed to intensify their efforts to fight poverty. In this context, their preparation of an interim PRSP is welcome.
“The Fund concludes that the interim PRSP provides a sound basis for the development of a full participatory PRSP, for financial assistance under the HIPC Initiative, and for Fund concessional assistance,” Mr. Sugisaki said.
1 On November 22, 1999, the IMF’s concessional facility for low-income countries, the Enhanced Structural Adjustment Facility (ESAF), was renamed the Poverty Reduction and Growth Facility (PRGF), and its purposes were redefined. It is intended that the PRGF-supported programs will in time be based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners, and articulated in poverty reduction strategy paper (PRSP). This is intended to ensure that each PRGF-supported program is consistent with a comprehensive framework for macroeconomic, structural, and social policies to foster growth and reduce poverty. At this time for Mali, an interim PRSP sets out a preliminary framework in a statement by the government and the participatory process is underway. It is understood that all policy undertakings in the government’s statement beyond the first year are subject to reexamination and modification in line with the strategy that is to be elaborated in the PRSP. Once discussed by the Executive Boards of the IMF and the World Bank, the PRSP will provide the policy framework for future reviews under this PRGF arrangement. PRGF loans carry an interest rate of 0.5% a year, and are repayable over 10 years with a 5½-year grace period on principal payments.