IMF Completes Fifth Review Under the Poverty Reduction and Growth Facility with Niger and Approves US$1.5 Million DisbursementPress Release No. 07/273
November 21, 2007
The Executive Board of the International Monetary Fund (IMF) today completed the fifth 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 an amount equivalent to SDR 940,000 (about US$1.5 million), bringing total disbursements under the arrangement to SDR 25.38 million (about US$40.4 million).
In completing the review, the Executive Board approved Niger's request for a waiver for the nonobservance of a continuous structural performance criterion on the application of the flexible pricing mechanism for petroleum products. The Board also approved Niger's requests for the modification of the quantitative performance criterion for end-December on domestic financing of the government, the modification of the structural performance criterion on the application of a flexible mechanism for petroleum pricing, and the elimination of the structural performance criterion for end-December on the adoption of a decree defining the modalities for reimbursing the frozen postal savings accounts of the former National Postal Savings Office over a two-year period.
The Executive Board also extended Niger's PRGF arrangement by four months to May 31, 2008.
Niger's PRGF arrangement was originally approved on January 31, 2005 in an amount equivalent to SDR 6.58 million (see Press Release No. 05/20) and augmented to SDR 26.32 million (about US$41.9 million) on November 14, 2005 (see Press Release No. 05/251).
The PRGF is the IMF's concessional facility for low-income countries. PRGF-supported programs are based on country-owned poverty reduction strategies that are adopted in a participatory process involving civil society and development partners and articulated in the country's Poverty Reduction Strategy Paper. 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.
Following the IMF Executive Board discussion on Niger, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, stated:
"The Nigerien authorities are to be commended for the overall satisfactory performance under the PRGF-supported program. Economic growth in 2007 is being sustained for the third year in a row, inflation is close to zero, reflecting a good harvest, and the national cereal security stocks have been replenished. Fiscal performance to September has been stronger than programmed, due both to higher revenue and lower expenditure than projected.
"The fiscal program through end-December 2007 has been modestly revised to take into account lower external budget support than previously expected, but also higher projected revenue, boosted by exceptional revenue from mining, and somewhat higher expenditure. On the basis of these revised projections, the basic fiscal deficit target has been reduced. The fiscal program for 2007 and the proposed budget and projected expenditures for 2008 are consistent with the medium-term expenditure frameworks for increased investment in key sectors that underpin Niger's new Poverty Reduction Strategy for 2008-2012.
"The program continues to emphasize improvements in tax and customs administration through simpler procedures, as well as a widening of the tax base. Reforms in public expenditure management are ongoing, including measures to strengthen procurement, financial control, and budgetary execution. Steadfast implementation of these reforms will be essential for enhancing the effectiveness of pro-growth and pro-poor programs, advancing toward the Millennium Development Goals, and mobilizing additional resources form external donors.
"Given that Niger's external debt position remains vulnerable to adverse shocks, it will be important that the authorities sustain their efforts to preserve debt sustainability by seeking financial assistance mainly in the form of grants and on highly concessional terms.
"Continued efforts to enhance further the business and investment climate will be key to achieving a higher rate of economic growth. It will also be important that the authorities continue with the steadfast implementation of their action plan for the settlement of domestic arrears. Steps taken to restructure ailing microfinance institutions and privatize a financial institution should promote access to credit and deepen financial intermediation," Mr. Portugal said.