IMF Executive Board Approves New US$46.3 Million Extended Credit Facility Arrangement and US$9.3 Million Disbursement for MaliPress Release No. 11/487
December 27, 2011
The Executive Board of the International Monetary Fund (IMF) today approved a new three-year, SDR 30 million (about US$46.3 million) arrangement for Mali under the Extended Credit Facility (ECF) in support of the country’s strategy to increase growth and reduce poverty. The amount approved under the new arrangement represents 32 percent of Mali’s quota in the IMF. The Board’s decision enables the immediate disbursement under the new arrangement of an amount equivalent to SDR 6 million (about US$9.3 million).
A previous ECF arrangement for Mali expired on December 22, 2011, following the Board’s completion on December 12, 2011 of the seventh and final review which allowed the disbursement of SDR 6 million (about US$9.3 million), bringing total disbursements under that arrangement to SDR 52.99 million (about US$81.73 million – see Press Release No. 11/464).
Mali’s medium-term macroeconomic outlook is favorable, but subject to downside risks.
Real gross domestic product (GDP) growth is projected to hover above 5 percent, driven by the agricultural and gold sectors. Gold output will be boosted by the coming on stream of new mines in 2012-13, but will start declining in 2014.
Average inflation is projected to stay below the West African Economic and Monetary Union’s convergence target of 3 percent, provided that rainfall remains favorable. The overall balance of payments is projected to move to a surplus during 2012-14 as gold production increases. The fiscal position should improve as the fiscal stimulus financed by the privatization revenue of the telecom company SOTELMA is phased out.
However, this outlook is subject to downside risks, as the agricultural sector remains highly vulnerable to adverse weather conditions. Also, the external position could weaken substantially in the event of a sharp reversal of the terms of trade improvements observed since 2008.
Under the new ECF arrangement, the authorities plan to implement an ambitious program of economic and financial policies that builds on the lessons learned from the Ex-Post Assessment of Mali’s long-term program engagement (see Country Report No. 11/153) and the inclusive conference on Mali’s challenges and opportunities organized in Bamako in March 2011 (see Press Release No. 11/94). In this context, they will:
• implement sustainable fiscal policies that will avoid crowding out of the private sector while maintaining debt sustainability;
• create fiscal space for infrastructure spending by increasing tax revenue, allocating an envelope of non-concessional borrowing equivalent to 1 percent of GDP to infrastructure investment projects with a high rate of return, improving public investment selection and implementation, and eliminating the deficits of the public and private sector pension funds;
• consolidate progress in public financial management through measures enhancing budget preparation, monitoring, execution, and audit, and improving cash management; and
• improve the business environment, with reforms sustaining the stability, and increasing the access to, the financial sector, strengthening the cotton and electricity sectors, and enhancing governance.