News Brief: IMF Completes Third Review of Niger's PRGF Arrangement, Approves Modification and Waiver of Performance Criteria, and US$11 Million Disbursement
August 26, 2002
The Executive Board of the International Monetary Fund (IMF) today completed the third review of Niger's economic performance under the Poverty Reduction and Growth Facility (PRGF) arrangement and approved its request for modification and waiver of performance criteria.
The Executive Board also approved the disbursement of an amount equivalent to SDR 8.46 million (about US$11 million) under the arrangement.
Niger's three-year arrangement was approved on December 14, 2000 (see Press Release No. 00/69), for SDR 59.2 million (about US$78 million). So far, Niger has drawn SDR 25.38 million (about US$33 million).
The PRGF is the IMF's concessional facility for low-income countries. It is intended that 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 a 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.
PRGF loans carry an annual interest rate of 0.5 percent, and are repayable over 10 years with a 5 1/2-year grace period on principal payments.
After the Executive Board's discussion on Niger, Eduardo Aninat, Deputy Managing Director and Acting Chairman, said:
"After two years of recession, Niger's economic activity rebounded markedly in 2001 as a result of a record cereals crop favored by good climatic conditions. Economic growth reached 7.6 percent of GDP, and the external current account deficit (excluding grants for budgetary assistance) was contained at 7.5 percent of GDP. The rate of inflation declined to 3.2 percent, on a year-end basis, and the fiscal deficit, excluding grants and externally financed capital expenditure, was slightly lower than programmed, reaching 3.4 percent of GDP.
"Overall performance under the program was broadly satisfactory in 2001, and the authorities took strong actions to keep the program on track at end-March 2002 and to correct for a budgetary slippage that occurred in the last quarter of 2001. Most of the performance criteria and benchmarks were met. In those areas where there were small deviations from program conditions, the Board welcomed the corrective measures taken and granted waivers for their nonobservance.
"The authorities have achieved commendable success in implementing the special program for poverty reduction. The authorities intend to build on these achievements and fully integrate this program in their poverty reduction strategy articulated via a broad and participatory process.
"The authorities' revised economic and financial program for 2002 preserves the main objectives of the original program and continues to be based on the authorities' poverty reduction strategy, while taking into account a shortfall of external budgetary assistance and new expenditure pressures on the budget. The conduct of prudent financial policies and the implementation of a cautious external debt policy remain pillars of the program, together with the strengthening of Niger's institutional capacity and the setting up of an enabling environment for faster economic growth and development.
"The authorities have adopted a result-oriented approach in implementing their structural reform program, following some delays in early 2002. Before end-2002, the government intends to implement a new public accounting and budget nomenclature system, complete the preparation of the financial restructuring of the National Postal and Savings Office, establish an operational multisectoral regulatory agency, privatize the electricity company, and decide on the future of two banks under temporary management by the central bank," Mr. Aninat said.