Press Release: IMF Completes Fourth Review Under Niger's PRGF Arrangement
April 21, 2003
The Executive Board of the International Monetary Fund (IMF) today completed the fourth review of Niger's performance under a three-year, SDR 59.2 million (about US$81 million ) Poverty Reduction and Growth Facility (PRGF) arrangement (see Press Release No. 00/69).This decision entitles Niger to receive a further SDR 11.84 million (about US$16 million), which will bring total disbursements thus far under the arrangement to SDR 45.68 million (about US$62 million).
In completing the review, the Executive Board granted waivers of Niger's nonobservances of the performance criterion pertaining to the non-accumulation of external payments arrears. The Executive Board also agreed to provide Niger additional interim assistance under the enhanced HIPC Initiative.
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, Eduardo Aninat, Deputy Managing director and Acting Chairman, made the following statement:
"Niger benefited in 2002 from good climatic conditions that led to a bumper crop for the second year in a row. Economic growth rebounded, inflation declined to less than one percent per annum, and the external current account deficit was contained. Improved policy implementation contributed to the generally good economic outturn.
"The program supported by the Poverty Reduction and Growth Facility was confronted in the second half of 2002 by a difficult sociopolitical environment, including labor strikes and a mutiny by part of the military. Nevertheless, program implementation remained broadly on track at end-September 2002. The authorities are encouraged to strengthen further their institutional capacity and reinforce their monitoring of program implementation.
"The authorities' economic and financial program for 2003 is broadly in line with the objectives of the three-year arrangement under the Poverty Reduction and Growth Facility and the poverty reduction strategy. The program's underlying macroeconomic objectives include sustaining the rate of economic growth, containing inflation, and limiting the external current account deficit. Achievement of program objectives will be helped by a lasting resolution of the crisis in Côte d'Ivoire.
"Fiscal policy in 2003 aims at achieving further adjustment while imparting greater momentum to implementing the poverty reduction strategy and protecting the social sectors. At the same time, it will be important that the planned large increase in capital outlays be supported by strengthened domestic spending implementation and monitoring capacity, and with attention paid to the ongoing current spending commitments that capital spending typically generates.
"The authorities will continue to pursue a prudent monetary and credit policy in the context of Niger's membership in the Central Bank of the West African States and the West African Economic and Monetary Union. Developments in the banking sector will be monitored closely, and surveillance activities stepped up. Central bank advances to the government are to be reduced in line with the agreed policy at the regional level. The government will begin auctioning treasury bills on the regional securities market.
"Structural reforms to be implemented in 2003 include the opening of an operational multisectoral regulatory agency, and the privatization of the electricity and petroleum product import companies. Tax and customs administration and treasury and budget management are to be reinforced. Efforts to strengthen institutional capacity and monitoring, including through Fund technical assistance, will support the structural reforms going forward.
"The government will need to continue to pursue a prudent external debt-management policy, and to make strong efforts to reach the floating completion point under the enhanced Initiative for Heavily Indebted Poor Countries (HIPC Initiative) in the third quarter of 2003. The HIPC Initiative debt relief secured by Niger to the end of 2002 amounts to 80 percent of the total relief required in net present value terms to put Niger's debt burden on a sustainable footing," Mr. Aninat said.