Press Release: IMF Executive Board Completes First Review under PRGF Arrangement for Mali and Approves US$7.5 Million Disbursement
December 11, 2008Press Release No. 08/317
The Executive Board of the International Monetary Fund (IMF) has completed the first review of Mali's performance under a program supported by a three-year Poverty Reduction and Growth Facility (PRGF) arrangement. The completion of the review allows for the disbursement of SDR 5 million (about US$7.5 million), which would bring total disbursements under the arrangement to SDR 17.99 million (about US$26.8 million).
The Executive Board also approved the authorities' request for waivers of nonobservance of two structural performance criteria concerning taxation of oil products and the call for tenders for the sale of the state telecommunications company.
The PRGF arrangement with Mali was approved on May 28, 2008 (see Press Release No. 08/126) for an amount of SDR 27.99 million (about US$41.7 million).
Following the Executive Board's discussion, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, said:
"Economic developments in Mali in the first half of 2008 were dominated by an inflationary surge, now abating, from rising food and fuel prices. Against this difficult backdrop, the Malian authorities are to be commended for implementing sound macroeconomic policies and structural reforms.
"With the likelihood of an increasingly difficult international environment in the coming period, it will be especially important that Mali be able to respond to shocks. Continued reliance on grants, highly concessional financing, and privatization receipts limits the risk of debt distress. A continuing challenge will be to design carefully-targeted schemes to protect the most vulnerable and difficult-to-reach population groups from external shocks.
"With elevated downside risks, added caution and flexibility may be needed in fiscal policy implementation. While the fiscal program has been adjusted to make room for additional growth-enhancing public investment in agriculture and regional infrastructure, fiscal consolidation will continue to be pursued. This will be achieved through increasing government revenue through an improvement in tax administration and policy and a strengthening of public expenditure management.
"The international financial turmoil and the risk of a global recession pose a substantial challenge to maintaining Mali's macroeconomic stability and growth over the medium term, underlining the need for the authorities to pursue their structural reform agenda. In particular, the government should continue to disengage from commercial activities, including in the cotton, banking, and telecommunications sectors, thereby reducing the fiscal burden of money-losing state enterprises in those sectors. In this context, the Fund welcomes the authorities' renewed resolve to restructure the housing bank, strengthen the financial operations and expansion prospects of the cotton ginning and energy companies, and complete the privatization of the national telecommunications provider," Mr. Portugal said.