Press Release: IMF Completes in Principle Fifth Review Under Mali's PRGF Arrangement and Approves US$9 million Disbursement
February 28, 2003The Executive Board of the International Monetary Fund (IMF) today completed in principle the fifth review of Mali's economic performance under a Poverty Reduction and Growth Facility (PRGF) arrangement. The IMF Board's decision will become effective after the World Bank's Executive Board review of Mali's Poverty Reduction Strategy Paper (PRSP), scheduled for March 6, 2003. Upon effectiveness of the IMF's Board decision, Mali will be able to draw SDR 6.750 million (about US$9 million) under the arrangement.
Mali's program is supported by an arrangement under the Poverty Reduction and Growth Facility (PRGF)1, approved on August 6, 1999 (see Press Release No. 99/39) for SDR 46.65 million (about US$64million). This amount was increased in July 2001 by SDR 4.665 million (about US$6 million). So far, Mali has drawn SDR 38.42 million (about US$53 million) under the arrangement.
The PRGF is the IMF's concessional facility for low-income countries. It is intended that 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 PRGF-supported programs are 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.
After the Executive Board's discussion on Mali, Mr. Eduardo Aninat, Deputy Managing Director and Acting Chairman, stated:
"The Malian authorities continue to make good progress in implementing their Fund-supported economic program under difficult conditions. All the program's quantitative performance criteria through June 2002 and all the structural performance criteria through December 2002 have been observed. Increases in cotton production, and gold mining output, resulted in a strong rebound of economic growth in 2002. However, the external environment is clouded. In particular, the crisis in Côte d'Ivoire has disrupted trade, increased transportation costs, and reduced government revenue, and will constitute a major challenge to fiscal consolidation. Nevertheless, the broad support in Mali for the economic program augurs well for continued satisfactory program implementation.
"Over the medium term, the authorities intend to continue to vigorously implement the ambitious economic framework underpinning the poverty reduction strategy that was adopted in May 2002. They are committed to pursuing prudent macroeconomic policies and implementing the structural reform agenda. The primary fiscal objective for 2003 is to strengthen the fiscal position while increasing social spending, by increasing tax revenue—in particular, by broadening the tax base and strengthening tax administration—and limiting nonproductive outlays.
"Structural reforms are crucial to achieve sustained broad-based economic growth and poverty reduction. The authorities attach high priority to private sector development, and to broadening the production and export bases to reduce the economy's vulnerability to weather and external shocks. Reforms will focus on further liberalizing the cotton sector, strengthening public resource management, completing the privatization program, promoting good governance, and enhancing competitiveness.
"The poverty reduction strategy was prepared through a broad consultative process and sets out a credible policy framework for reducing poverty. The authorities are encouraged to deepen their analysis of the poverty situation, pay adequate attention to the prioritization of reforms, and reinforce mechanisms to monitor implementation and evaluate outcomes.
"Mali's performance with respect to the conditions for reaching the completion point under the HIPC Initiative has been satisfactory. A decision on Mali's debt relief under the enhanced HIPC Initiative is pending action next week by the World Bank's Executive Board. A press release will be issued jointly with the World Bank following those deliberations," Mr. Aninat said.
1 Formerly the Enhanced Structural Adjustment Facility (ESAF)