Press Release: IMF Completes Fifth Review Under Niger's PRGF Arrangement
November 26, 2003
The Executive Board of the International Monetary Fund (IMF) has completed the fifth review of Niger's performance under a three-year, SDR 59.2 million (about US$85 million) Poverty Reduction and Growth Facility (PRGF) arrangement (see Press Release No. 00/69). This decision enables Niger to receive a further SDR 5.08 million (about US$7.3 million), which will bring total disbursements under the arrangement to SDR 50.76 million (about US$73 million).
In completing the review, the Executive Board granted an extension of the current PRGF arrangement to June 30, 2004.
The Poverty Reduction and Growth Facility is the IMF's concessional facility for low-income countries. PRGF-supported programs are 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 ½-year grace period on principal payments.
Following the Executive Board's discussion of Niger's economic program on November 24, 2003, Agustín Carstens, Deputy Managing Director and Acting Chairman, made the following statement:
"Niger's recent economic performance has been characterized by buoyant economic activity, a prudent fiscal policy, and progress in structural reform. Despite domestic social tensions and adverse external conditions, the authorities have successfully maintained the momentum of their program and implementation of their poverty reduction strategy, supported by the Poverty Reduction and Growth Facility.
"The revised program for 2003 maintains the main objectives of the original program, particularly with respect to fiscal adjustment and poverty reduction. The authorities are encouraged to continue closely monitoring implementation of the program and avoid budgetary slippages. Monetary and credit policies at the regional level will continue to focus on containing inflationary pressures, while facilitating a high level of investment and ensuring an appropriate level of foreign exchange reserves.
"To support their achievements so far in avoiding fiscal slippages in the face of significant shortfalls in external financing and in revenue transfers from the West African Economic and Monetary Union, the authorities have taken sensible measures to freeze nonpriority spending and to borrow domestically, while protecting spending on the social sectors. A continuation of fiscal reforms in expenditure management and tax policy and administration should keep Niger on a path toward the observance of the convergence criteria of the West African Economic and Monetary Union.
"To support structural efforts, the authorities have undertaken to increase the momentum of these reforms from mid-2003 onward, and in this regard, the authorities are encouraged to develop a technical assistance program aimed at helping them address limited institutional capacity. Of particular importance will be the effective implementation of the public procurement code, the establishment of an operational multisector regulatory agency, the privatization of the petroleum importing company, SONIDEP, and further strengthening of the financial sector. The authorities also intend to move forward with other structural reforms, including the privatization of NIGELEC, in close collaboration with the World Bank.
"The authorities remain committed to pursuing a prudent external debt-management policy, and have recently undertaken initiatives to strengthen external debt management and transfer all debt-management responsibilities to the Nigerien Treasury. These initiatives are accompanied by measures to enhance monitoring of debt obligations and avoid the recurrence of temporary external payments arrears.
"With the completion of their first progress report on the implementation of the poverty reduction strategy, the authorities have confirmed their intention to further reduce poverty, and provide improved social services with resources made available under the enhanced Initiative for Heavily Indebted Countries. In view of the critical importance of the strategy to Niger, the authorities need to improve poverty analysis, strengthen the monitoring and evaluation system, and revise the medium-term expenditure framework and macroeconomic projections beyond 2005.
"Niger has been making significant progress toward meeting the completion point under the enhanced Initiative for Heavily Indebted Poor Countries since the decision point was approved in December 2000, and the completion point should be met very soon," Mr. Carstens stated.