IMF Executive Board Completes the Third Review Under Niger's PRGF Arrangement
Press Release No. 06/296
and Approves US$8.9 Million Disbursement
December 21, 2006
The Executive Board of the International Monetary Fund (IMF) completed today the third review of Niger's economic performance under a three-year Poverty Reduction and Growth Facility (PRGF) arrangement. The completion of the review enables the release of a further SDR 5.9 million (about US$8.9 million), which will bring the total amount disbursed under the arrangement to SDR 23.5 million (about US$35.4 million). Niger's PRGF arrangement was approved on January 31, 2005 (see Press Release No. 05/20).
The Board waived Niger's non-observance of the quantitative performance criterion on the reduction in domestic payment arrears on government obligations and the continuous structural performance criterion on the application of the petroleum pricing mechanism.
Following the IMF Executive Board discussion, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, stated:
"The Nigerien authorities are to be commended for the satisfactory overall performance of the economy under the PRGF-supported program. Following the strong rebound of agricultural production in 2005, economic activity continued to expand in 2006, sustained by a good harvest and a strengthening of mining and service activities. During 2006, inflationary pressures have eased, as food prices declined. The improved food supply and strong donor support have allowed the reconstitution of the strategic grain reserves.
"The authorities are committed to persevering with their program of strong macroeconomic policies and economic reforms in 2007 and beyond. The 2007 fiscal program calls for shifting expenditure toward priority outlays. It also emphasizes continued improvements in the tax and customs administrations aimed at broadening the tax base by tightening exemptions and simplifying tax procedures. Steadfast implementation of reforms in public expenditure management will be critical for enhancing the effectiveness of Niger's pro-growth and pro-poor programs.
"The debt relief under the Multilateral Debt Relief Initiative (MDRI) has reduced Niger's external debt burden significantly. The authorities are committed to using the resources freed up by the MDRI effectively, so as to advance toward the Millennium Development Goals (MDGs). To preserve debt sustainability, it is important that the authorities strengthen debt management and rely only on highly concessional resources, preferably in the form of grants, to finance highly productive investment.
"The authorities plan to adopt in early 2007 a revised Poverty Reduction Strategy for 2007-2009. In the face of the significant challenges that lie ahead as Niger advances toward the MDGs, the strategy will outline policies and reforms to help sustain high economic growth and reduce poverty. Increased investment in human capital and infrastructure will be required, and government investment in key sectors will need to be accompanied by reforms to promote private sector development. Other priorities are to deepen financial intermediation, including through the development of a viable microfinance system; to reform the regulatory framework; and to enhance the efficiency of key public utilities," Mr. Portugal said.
The PRGF 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 the 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 5½-year grace period on principal payments.