Public Information Notices

Niger and the IMF

Free Email Notification

Receive emails when we post new items of interest to you.

Subscribe or Modify your profile




Public Information Notice (PIN) No. 02/19
March 1, 2002
International Monetary Fund
700 19th Street, NW
Washington, D.C. 20431 USA

IMF Concludes 2001 Article IV Consultation with Niger

Public Information Notices (PINs) are issued, (i) at the request of a member country, following the conclusion of the Article IV consultation for countries seeking to make known the views of the IMF to the public. This action is intended to strengthen IMF surveillance over the economic policies of member countries by increasing the transparency of the IMF's assessment of these policies; and (ii) following policy discussions in the Executive Board at the decision of the Board. The Staff Report for the 2001 Article IV Consultation with Niger is also available (use the free Adobe Acrobat Reader to view this PDF file).

On February 8, 2002, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Niger.1

Background

With a per capita income of about US$200, Niger is one of the poorest countries in Africa and is ranked very low on all social indicators. It is highly vulnerable to external and weather-related shocks. Its main economic activities, agriculture and livestock, account approximately for 40 percent of output, while the export base is limited to uranium, cattle and a few agricultural products. Furthermore, Niger has suffered a series of social and political upheavals over the last decade that hindered the implementation of reforms and economic recovery measures. Since their election at end-1999, the authorities have been able to reestablish economic, social, and political stability in the country. From negative 1.4 percent in 2000, the real GDP growth is estimated to reach 5.1 percent in 2001 as a result of good climatic conditions. Inflation slowed to under 4 percent on average, and the external current account deficit (excluding official transfers) is estimated to have widened slightly to around 8.5 percent of GDP due to deterioration in the terms of trade. The basic fiscal deficit (i.e., the budget revenue minus expenditure, excluding foreign financed investment projects) narrowed from 4.8 percent in 1999 to 2.9 percent in 2000, and is expected to have improved slightly in 2001 because of a better control of budgetary spending and an improved revenue collection.

Niger also made progress in implementing structural reforms. Progress in the reform of the budgetary expenditure process, including the strengthening of budget execution and monitoring, was supported by a new public expenditure credit of the World Bank. Concurrently with the budgetary reforms, the authorities implemented in August 2001 a new pricing system for petroleum products that is transparent, automatic, and flexible, and privatized in November 2001 the communications company, SONITEL. The authorities are committed to strengthening external debt management and to keeping the momentum of the privatization program, in particular, through divestiture from the energy and petroleum companies.

Niger is eligible for assistance under the enhanced HIPC Initiative and reached the decision point in December 2000. Although the bulk of the debt relief will be delivered after reaching the completion point under the Initiative, creditors (including Paris Club creditors, the World Bank, and the International Monetary Fund, and the African Development Bank) provided interim assistance under the HIPC Initiative of CFAF 8.8 billion in 2001 (SDR 9.5 million, or 0.6 percent of GDP). The resources freed under the HIPC Initiative were fully used for the financing of a poverty reduction program that was launched at the initiative of the President of Niger in 2001. The government has also prepared, through a large participatory process, a full poverty reduction strategy paper (PRSP) approved by a national workshop held in Niamey on November 26-27, 2001.

Executive Board Assessment

Executive Directors welcomed the satisfactory macroeconomic outcome for 2001, including a rebound of economic growth to about 5 percent, and a reduction of year-on-year inflation to less than 4 percent. Program slippages identified in early 2001 had been rectified and the program had been brought back on track at end-September 2001. Directors were encouraged by the additional measures taken to ensure the achievement of the program objectives at end-2001, despite delays in budgetary assistance disbursements.

Directors regretted the temporary resurgence of external payment arrears at end-September 2001 and the suspension of the petroleum product pricing system in October 2001. They welcomed the authorities' commitments to reinforce debt management and ensure the continuous implementation of the petroleum product pricing system, which resumed in November 2001. They urged the authorities to avoid stop-and-go policies, stay the course on structural reforms, and strengthen Niger's institutional capacity.

Directors endorsed the authorities's economic and financial program for 2002, which aims to consolidate further the fiscal stance through higher revenue, while stepping up implementation of the poverty reduction strategy. They urged the authorities to reduce domestic payments arrears in 2002 with a view to revitalizing the private sector and strengthening confidence in the public sector. They welcomed the authorities' intention to strengthen treasury management further and to establish an appropriate level of precautionary cash balances, in order to limit the vulnerability of government spending to the timing of foreign aid disbursements. At the same time, Directors urged Niger's development partners to make timely, better coordinated, and full delivery of external project and budgetary assistance pledges, to avoid treasury cash-flow problems and program curtailments.

Directors observed that Niger's balance of payments should remain sustainable over the medium term if adequate international support were provided. They urged the authorities to implement a prudent external debt management policy and to continue seeking the participation and contribution of non-Paris Club bilateral creditors under the enhanced HIPC Initiative.

Directors noted that Niger's competitiveness has been maintained in the context of the institutional arrangement of the Franc zone. They welcomed the prudent monetary policy conducted at the regional level by the Central Bank of the West African States. Directors encouraged the authorities to continue their efforts to comply with the convergence criteria set under the pact of the West African Economic and Monetary Union.

Directors urged the authorities to maintain their structural reform agenda, particularly the privatization program, and to implement without delay the reforms to strengthen the financial system, in collaboration with the World Bank. The ongoing reforms of the budgetary expenditure process and the treasury operations should be deepened to improve governance and strengthen management of public finances, and to ensure satisfactory expenditure monitoring and tracking in the context of the poverty reduction strategy. The authorities are encouraged to enhance their efforts to combat money laundering and the financing of terrorism.

Directors welcomed the finalization of the PRSP, which has been based on an intensive participatory process, and agreed with the thrust of the joint staff assessment of the PRSP. The strategy provided a credible framework for poverty reduction.

Directors stressed the need to address the serious weaknesses in Niger's statistical database, notably with respect to national accounts, balance of payments and external debt statistics. They welcomed the authorities' decision to follow the guidance provided for compiling and disseminating macroeconomic and socio-demographic data under the Fund's General Data Dissemination Standard.

Directors commended the authorities for the vigorous measures taken to bring the Poverty Reduction and Growth Facility-supported program back on track during the second half of 2001. All of the program targets were met at end-September 2001, except for a small accumulation of external payments arrears that was corrected by end-2001. Directors also welcomed the measures taken by the authorities to ensure satisfactory program implementation at end-2001, despite delays in budgetary aid disbursements.

Directors endorsed the economic and financial program for 2002, and noted that the 2002 budget is consistent with the newly established poverty reduction strategy. They encouraged the authorities to focus on improving the business environment and private sector development. Progress in these areas, as well as the reform of the financial sector, would complement sound financial and external debt policies, and help to create the necessary conditions for achieving higher levels of economic growth and an effective reduction of poverty in Niger.



Niger: Selected Economic and Financial Indicators, 1998-2001


   

1998

 

1999

 

2000

 

2001

               

Est.


Domestic economy

 

(Annual Percentage change)

Real GDP

 

10.4

 

-0.6

 

-1.4

 

5.1

GDP deflator

 

3.0

 

2.0

 

4.5

 

4.0

Consumer prices (annual average)

 

4.5

 

-2.3

 

2.9

 

3.9

                 

Gross investment

 

11.4

 

10.2

 

10.8

 

11.7

Gross domestic savings

 

2.4

 

2.6

 

3.2

 

3.5

                 

External economy

 

(In millions of U.S. unless otherwise specified)

Exports of goods, f.o.b.

 

333.9

 

287.2

 

283.3

 

274.0

Imports of goods, f.o.b.

 

403.8

 

335.8

 

324.5

 

334.9

Current account balance (excl. current official transfers)

 

-197.7

 

-157.3

 

-139.8

 

-160.9

Overall balance

 

-70.9

 

-75.9

 

-30.6

 

-51.9

Current account deficit (excl. current official transfers, in percent of GDP)

 

-9.5

 

-7.8

 

-7.8

 

-8.4

External debt (in percent of GDP)1/

 

76.2

 

83.8

 

90.3

 

86.0

Real effective exchange rate (percent change)

 

2.4

 

-6.3

 

-2.6

 

2.1

                 

Financial variables

 

(In percent of GDP)

Government revenue (excl. grants)

 

9.1

 

8.8

 

8.6

 

9.5

Total expenditure

 

17.3

 

17.9

 

16.2

 

16.7

Overall fiscal balance (on a commitment basis and excl. grants)

 

-8.2

 

-9.0

 

-7.6

 

-7.2

Basic fiscal balance

 

-3.3

 

-4.8

 

-3.0

 

-2.9

Change in broad money (in percent)

 

0.7

 

-5.5

 

8.9

 

...

Change in credit to the economy (in percent)

 

28.5

 

-3.0

 

43.8

 

...


1/ Before debt relief

1 Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities.



IMF EXTERNAL RELATIONS DEPARTMENT

Public Affairs    Media Relations
E-mail: publicaffairs@imf.org E-mail: media@imf.org
Fax: 202-623-6278 Phone: 202-623-7100