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Press Release No. 99/39
August 6, 1999
International Monetary Fund
700 19th Street, NW
Washington, D.C. 20431 USA

IMF Approves ESAF Loan for Mali

The Executive Board of the International Monetary Fund (IMF) today approved a three-year loan for Mali under the Enhanced Structural Adjustment Facility (ESAF),1 equivalent to
SDR 46.65 million (about US$63.06 million) to support the government's economic reform program. The first annual loan will be disbursed in two equal installments, the first of which, equivalent to SDR 6.75 million (about US$9.12 million), will be available in mid-August.

In commenting on the Executive Board's discussion of Mali's request, Shigemitsu Sugisaki, Deputy Managing Director of the International Monetary Fund (IMF), made the following statement:

"Directors welcomed the significant progress that was made in reducing macroeconomic imbalances and economic distortions under Mali's previous ESAF-supported programs. Economic and financial developments in 1998 were on the whole encouraging, despite lower-than-expected real GDP growth and a temporary rise in food prices associated with the weather-related decline in cereals production. Directors agreed that the outlook for 1999 is for a rebound of economic growth, low inflation, and a narrowing of the external current account deficit.

"Directors also welcomed the focus of Mali's new ESAF-supported program on consolidating the gains achieved thus far and implementing the next phase of its reform agenda, so as to encourage private investment, attain higher and sustained economic growth, improve social indicators, and reduce poverty.

"Directors noted that the fiscal policy stance aimed at increasing revenue and curtailing nonessential spending, which would help to raise government saving and make additional room for priority expenditure, particularly on the social sectors and infrastructure. They welcomed the introduction of a single rate value-added tax and encouraged the authorities to fully implement the Common External Tariff of the West African Economic and Monetary Union (WAEMU) on January 1, 2000.

"Directors underscored the need to implement the planned structural reforms fully. Strong actions on this front would help to improve the environment for private sector activity. In their view, the authorities should proceed with efforts to rehabilitate the judicial system, accelerate regulatory reform, deepen financial intermediation, upgrade the soundness of the banking system, restructure the energy and telecommunications sectors, and execute the ambitious development programs in the health and education sectors. Directors urged the authorities to press ahead with the implementation of the action plans for the cotton sector and for the public enterprise sector."

ANNEX
Program Summary

Mali has successfully implemented economic programs supported by a second three-year arrangement under the Enhanced Structural Adjustment Facility (ESAF), approved on April 10, 1996. Considerable progress was made in reducing macroeconomic imbalances, alleviating economic distortions, and fostering growth. The economic and financial situation is still fragile however, poverty is widespread, and a substantial unfinished structural and social reform agenda remains.

The medium-term strategy is to consolidate the gains achieved to date and implement the next phase of the reform agenda, so as to better develop private sector activities and investment, achieve higher and more robust economic growth, and reduce poverty, given that important structural rigidities continue to hinder economic performance despite the progress made. The program2 seeks to raise domestic investment to 22% of GDP by 2000 from 21% in 1998, with domestic savings rising to almost 14% of GDP by 2002 from 10¼% in 1998. Real GDP growth under the 1999 program, is projected at a rate of 6½% on the basis of a weather-related rebound in cereal production to about 8½% of GDP. Inflation is projected at around 2-3%, and the external current account deficit (excluding official transfers) is expected to narrow by 1 percentage point to about 8½% of GDP.

Consistent with the medium-term policy objective of strengthening revenue mobilization and raising public sector savings, and considering the potential revenue losses associated with trade liberalization, the program aims at increasing tax revenue from 14% in 1998 to 14¼% of GDP in 1999 and at reducing the overall budget deficit (on a commitment basis and excluding grants) to 7½% of GDP in 1999 from the revised level of 8% in 1998.

In order to attain the revenue targets, the authorities are determined to push ahead with domestic tax reform and further improve tax and customs administration.

Structural reforms will focus on rehabilitating the judicial system and accelerating regulatory reform to reduce obstacles that confront potential investors, completing the reform of the public enterprise sector, strengthening the banking sector, privatizing the electricity and telecommunications companies, and implementing a comprehensive reform of the cotton sector aimed at enhancing its competitiveness, increasing private sector participation, and preparing the sector for open competition.

In the social sector, the ten-year development program of education (PRODEC) aims at raising the primary education enrollment rate to at least 61% in 2002 from 50% in 1998. The objective of the health and social development program (PRODESS) for 1998-2002 is to raise the infant immunization rate to 76% in 2002 from 45% in 1998, and to increase the share of the population receiving primary health care to 60% in 2000 from 40% in 1998.

Mali joined the IMF on September 27, 1963, and its quota3 is SDR 93.30 million (about US$126.13 million). Its outstanding use of IMF financing currently totals SDR 139.22 million (about US$188.20 million).


Mali: Selected Economic and Financial Indicators, 1996-2002

                     
                     
 

1996

1997

 

1998

 

1999

2000

2001

2002

       

Rev.

Prel.

 

Program

       

prog.

           
                     
 

(Annual percentage change, unless otherwise specified)

Income and prices

                   

GDP at constant prices

4.0

6.7

 

4.6

3.6

 

6.4

5.0

5.0

5.0

GDP deflator

6.3

1.1

 

4.2

4.8

 

2.2

2.5

2.5

2.5

Consumer price index

                   

Annual average

6.5

-0.7

 

4.2

4.1

 

1.0

1.4

2.5

2.5

End of period

2.8

0.9

 

4.5

3.0

 

2.5

2.5

2.5

2.5

                     

External sector

                   

Exports, f.o.b.

0.4

48.0

 

2.6

0.1

 

5.3

3.8

6.3

7.5

Imports, c.i.f.

5.4

11.2

 

2.3

3.8

 

2.2

4.6

4.8

5.5

Export volume

2.2

49.4

 

2.6

-1.8

 

11.3

1.6

3.8

3.8

Import volume

6.0

11.2

 

3.1

5.9

 

4.5

2.9

3.5

3.8

Terms of trade (deterioration -)

- 1.3

-0.9

 

0.8

4.0

 

-3.3

0.5

1.2

1.9

Nominal effective exchange rate1

- 0.3

-3.8

 

1.4

1.7

 

...

...

...

...

Real effective exchange rate1

3.6

-6.0

 

3.6

4.4

 

...

...

...

...

                     

Consolidated government operations

                   

Revenue

31.1

11.6

 

6.9

10.9

 

8.9

9.2

9.6

9.9

Expenditure and net lending2

9.3

9.9

 

5.8

11.1

 

6.9

5.5

4.6

5.7

                     

Money and credit

                   

Net domestic assets3

- 10.4

10.6

 

5.7

14.4

 

-0.1

3.5

5.9

5.4

Credit to the government3 4

- 14.2

-0.1

 

-0.1

-0.6

 

0.0

-1.2

0.0

-0.5

Credit to the economy

29.0

14.5

 

5.5

28.1

 

-1.5

7.5

9.5

9.4

Money and quasi money (M2)

12.1

8.6

 

4.8

4.3

 

9.0

8.3

7.6

7.6

Velocity (GDP/M2)

4.3

4.3

 

4.5

4.4

 

4.4

4.4

4.4

4.4

Interest rate5

5.0

3.8

 

4.7

4.8

 

...

...

...

...

                     

(In percent of GDP, unless otherwise specified)

Overall fiscal deficit

                   

(commitment basis)2 6

                   

Excluding grants

- 8.0

-7.9

 

-7.5

-8.1

 

-7.6

-6.9

-6.0

-5.2

Including grants

- 0.9

-2.1

 

-2.8

-2.4

 

-3.6

-3.2

-2.5

-2.0

                   

Gross domestic investment

22.9

20.6

 

24.0

20.9

 

21.2

21.9

21.9

21.9

Government

9.0

8.1

 

11.3

9.2

 

8.6

8.5

8.0

7.8

Nongovernment

13.9

12.5

 

12.7

11.7

 

12.6

13.4

13.9

14.1

Gross domestic savings

7.4

10.3

 

14.7

10.3

 

11.7

12.7

13.3

13.9

Government

4.4

3.7

 

4.6

4.9

 

4.8

5.3

5.6

6.0

Nongovernment

3.1

6.5

 

10.1

5.4

 

6.9

7.4

7.7

7.9

Gross national savings

                   

(excluding official transfers)

8.9

11.1

 

15.2

11.3

 

12.7

13.5

14.1

14.9

                     

External current account balance

                   

(deficit -)2

                   

Excluding official transfers

- 14.0

-9.5

 

-8.8

-9.6

 

-8.5

-8.4

-7.8

-7.0

Including official transfers

- 4.9

-3.0

 

-2.8

-3.3

 

-3.0

-3.2

-3.1

-2.6

                     

External public debt

111.3

117.7

 

114.1

114.6

 

110.0

106.3

101.9

96.1

Domestic public debt

6.2

5.5

 

...

4.1

 

2.7

2.7

2.7

2.7

                     
                     
 

(In percent of exports of goods and nonfactor services)

Debt-service ratio

                   

Before debt relief

29.4

15.0

 

12.2

11.6

 

12.3

13.4

14.3

14.8

After debt relief (including HIPC Initiative )

14.1

11.0

 

8.2

7.4

 

12.3

11.6

12.7

13.3

                   

(In billions of CFA francs)

                   
                     

GDP at current market prices

1,360.7

1,467.6

 

1,599.2

1,593.1

 

1,732.8

1,865.1

2,007.1

2,159.3

                     

Sources: Malian authorities; and IMF staff estimates and projections.

                     

1Period average; depreciation (-).

             

2Including interest due to the People's Republic of China and the Russian Federation.

3Annual change in percent of beginning-of-period money stock.

4Including the securitized consolidated debit balances of the Banque de Développement du Mali and the Cotton Sector Stabilization Fund.

5End-of-period interest rate on the West African Economic and Monetary Union money market.

6Before debt rescheduling; after debt cancellation obtained through 1996.


1 The ESAF is a concessionnal IMF facility for assisting eligible members that are undertaking economic reform programs to strengthen their balance of payments and improve their growth prospects. ESAF loans carry an interest rate of 0.5% and are repayable over 10 years with a 5½-year grace period.
2Details of the program will be available on the IMF's website: http://www.imf.org.external/np/loi/mempub.asp.
3 A member's quota in the IMF determines, in particular, the amount of its subscription, its voting weight, its access to IMF financing, and its share in the allocation of SDRs.


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