## NIGER: FIRST REVIEW UNDER THE EXTENDED CREDIT FACILITY ARRANGEMENT (cr17394)

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### Overview and program objectives
- Program focus under the ECF:
  - preserving macroeconomic stability by pursuing prudent fiscal and debt policies;
  - broadening the revenue base;
  - prioritizing public spending and improving expenditure control;
  - diversifying the economy and confronting the demographic challenge, with strong emphasis on private and financial sector development.
- Staff supports conclusion of the first review under the ECF, which will result in a disbursement of SDR 14.1 million.
- 2018 budget aims:
  - reduce the basic fiscal deficit to 3.9 percent of GDP from 4.6 percent in 2017;
  - secure tax revenue gains of 0.5 percent of GDP through measures including reductions in VAT exemption, tighter control of investment incentives, and minimum taxes.

### Recent developments and macro outlook
- Growth and drivers:
  - Real GDP growth: 2017 = 5.2 percent (on track); 2018 = 5.2 percent (projected); expected to rise to around 5.5 percent thereafter.
  - 2017 growth drivers: rising exports of oil products, a rebound in uranium exports, a strengthening hydrocarbon sector, parts of the service sector, and a favorable crop season.
  - Bank credit to the private sector grew at over 10 percent in 2017.
- External sector, reserves, and inflation:
  - Current account deficit expected to decline to 13.4 percent of GDP in 2017.
  - WAEMU international reserves projected at 3.9 months of imports for 2017.
  - With continued high donor support, the overall balance of payments should turn positive in 2017.
  - Annual average inflation: 1.3 percent (October 2017); CPI annual average 2.0 percent (2017 projection); CPI end-of-period 2.2 percent (2017).
- Macro framework:
  - Framework envisages continuation of policies to keep inflation moderate and fiscal policy aligned with meeting WAEMU convergence criteria by 2021.

### Fiscal performance and 2017 execution
- 2016 and 2017 outturns:
  - 2016: revenues underperformed by 0.7 percent of GDP; basic and overall fiscal balances were -4.2 and -6.1 percent of GDP, respectively.
  - Through first three quarters of 2017, fiscal deficits smaller than programmed due to expenditure under-execution exceeding revenue shortfalls.
  - Arrears clearance program slipped into H1 2017 but reduction target for the year surpassed by September 2017.
- Key fiscal figures (Jan.–Sep. 2017; Prog / Actual / Deviation / % of GDP):
  - Total revenue: 555 / 496 / -58 / -1.2
  - Tax revenue: 519 / 459 / -60 / -1.3
    - Customs department: 146 / 123 / -24 / -0.5
    - Tax department: 373 / 337 / -36 / -0.8
  - Nontax and other revenues: 35 / 37 / 2 / 0.0
  - Total expenditure: 953 / 838 / -115 / -2.4
    - Current expenditure: 522 / 480 / -42 / -0.9
    - Capital expenditure: 431 / 358 / -73 / -1.5
      - Domestically financed: 219 / 173 / -46 / -1.0
      - Externally financed: 212 / 185 / -26 / -0.6
  - Overall balance (commitment): -398 / -342 / 57 / 1.2
  - Change in domestic arrears and float: 33 / -35 / -67 / -1.4
  - Overall balance (cash): -366 / -376 / -11 / -0.2
  - Financing: 366 / 376 / 10 / 0.2
    - External financing: 168 / 219 / 51 / 1.1
    - Domestic financing (incl. IMF): 198 / 157 / -41 / -0.9
  - Memorandum item: Basic budget balance: -187 / -156 / 30 / 0.6

### 2018 fiscal measures and financing
- 2018 budget specifics:
  - Basic fiscal deficit targeted: 3.9 percent of GDP (from 4.6 percent in 2017).
  - Tax revenue gains targeted: 0.5 percent of GDP from policy and administrative measures.
  - Emphasis on expenditure restraint and prioritization; general wage and hiring freeze with limited exceptions.
- Financing needs and sources (exact amounts):
  - Basic budget deficit: CFAF 200 billion
  - Clearance of remaining domestic payment arrears: CFAF 65 billion
  - Amortization of external debt: CFAF 49 billion
  - Total to be financed through:
    - Budget support: CFAF 130 billion
    - Net domestic financing: CFAF 184 billion
      - Including financing from the Fund: CFAF 19 billion
      - Including PPPs: CFAF 85 billion
- Niger: Fiscal Measures, 2018 (In billions of CFAF; 2018 Proj.):
  - Shift to transactional valuation of imports: 29.5
  - VAT taxation at 5% of previously exempted products: 6.3
  - Removal of investment code exemptions: 2.0
  - Housing tax: 2.0
  - Other tax measures (Minimum taxes, real estate taxes, fees, etc.): 10.0
  - Tax admin measures (TIN requirements, computerization, recruitment of auditors, etc.): 5.0
  - Cuts in telecom taxes: -24.0
  - Total: 30.8
  - in percent of GDP: 0.6

### Structural reforms, public financial management, and institutional progress
- Structural benchmarks and achievements:
  - All performance criteria were met; all but one indicative target (government revenue generation) were observed.
  - Extended coverage and functions of the Large Taxpayer Unit implemented.
  - Medium-term fiscal framework (DPBEP) and ministerial outcome-oriented expenditure plans (DPPD) prepared and discussed in the National Assembly in June 2017.
  - Updated the National Gender Policy (August 2017).
- Implementation constraints and delays:
  - Establishing a Treasury Single Account (TSA) largely stalled; sequencing needs revisiting.
  - Electronic interconnection of customs administration with offices in Togo and Benin expected operational only at end-2017.
  - Adoption of a full-fledged VAT refund system ran into capacity constraints; stop-gap: mining companies allowed to self-deduct refund claims from VAT collected from local suppliers.
  - Planned broad-based audits of state-owned enterprises stalled due to prohibitive costs and unavailable donor financing.
- PFM and procurement reforms:
  - 2018 budget prepared in program format.
  - AE/CP double commitment system to be fully operationalized and applied in the 2019 budget.
  - Independent inspection teams to check delivery of goods and services.
  - Comprehensive biometric census and integrated pay-civil service database planned; audit of ANAB initiated.
- TSA sequencing and benchmarks:
  - By end-March 2018 (proposed structural benchmark): assess banking impact, operationally ready TSA interface, close dormant accounts covered by TSA.
  - Proposed structural benchmark for end-March 2018: require all payments to/from Large Taxpayer Unit to be made through the financial system; finalize bankification action plan.

### Financial sector, business climate, and mining governance
- Financial sector measures:
  - New leasing framework, recapitalization of BIA via sale of government shares to BCP of Morocco, restructuring of BAGRI, and mandatory reporting to the credit bureau expected to ease credit access.
  - Banks’ lending capacity to be strengthened via arrears clearance and increased channeling of fiscal payments through the financial system.
- Business climate:
  - Simplified company establishment at a Niamey one-stop shop, improved construction permit processing, installment payments for electricity connections helped Niger move up 6 notches to rank 144 in the World Bank’s Doing Business indicators.
  - Commercial court operational since April 2016 increasingly settles disputes within a few weeks.
- Mining and governance:
  - Amendments to the mining code to reorganize small-scale mining.
  - Government decision to quit the Extractive Industry Transparency Initiative (EITI) assessed as jeopardizing results and should be reconsidered.

### Social and demographic issues
- Population and gender challenges:
  - Niger faces the world’s highest population growth rate: 3.9 percent annually, with an average of 7.5 children per woman.
  - Minimum legal marriage ages (as of November 2017): 18 for boys and 15 for girls.
  - UNICEF (2016): 28 percent of girls marry before 15; by 18 years of age, 75 percent of girls are already married and 60 percent have had at least one pregnancy.
  - Maternal mortality: 6 deaths per 1,000 live births.
- Government response and programs:
  - 2016 launch of a National Committee to End Child Marriage.
  - Population issues featured in PDES 2017-21; proposals to bar marriages before age 17 and draft legislation to keep girls in school longer.
  - Update of National Gender Policy; plan to prepare a five-year gender action plan by March 2018.
  - SWEDD project implementation began in 2017.
  - As of mid-2017 there were 160 safe spaces nationwide, each accommodating about 100 girls.

### Risks, constraints, and upside possibilities
- Major downside risks:
  - Adverse external developments, deteriorating security conditions, adverse commodity price shocks, and climatic shocks (drought risk).
  - High population growth (3.9 percent) dilutes investment and poses job-creation challenges.
  - Limited implementation capacity and entrenched customs slowing reform delivery.
- Upside possibility:
  - Reform momentum combined with strong donor support could trigger a virtuous circle of private sector development.

### Key statistics and projections (selected exact values from source)
- Real GDP growth: 2016 = 5.0 percent (Est.), 2017 = 5.2 percent (Proj.), 2018 = 5.2 percent (Prog.), 2019 = 5.5 percent (Rev. Prog.), 2020 = 5.2 percent (Proj.), 2021 = 5.4 percent (Proj.), 2022 = 5.6 percent (Proj.)
- Non-resources GDP growth: 2016 = 5.1 percent (Est.), 2017 = 5.0 percent (Proj.)
- Oil production (thousand barrels per day): 2015 = 15, 2016 = 17, 2017 = 18, 2018 = 18, 2019 = 19, 2020 = 19, 2021 = 20, 2022 = 20, later projections show 40 and 50
- Current account deficit excluding grants: 2017 = -19.5 percent of GDP (Proj.), 2018 = -16.5 percent of GDP (Prog.)
- Current account deficit including grants: 2017 = -18.0 percent of GDP (Proj.), 2018 = -13.4 percent of GDP (Prog.)
- Basic balance (excluding grants): 2017 = -4.9 percent of GDP (Proj.), 2018 = -4.6 percent of GDP (Prog.), 2019 = -4.0 percent of GDP (Rev. Prog.)
- Overall balance (commitment basis, including grants): 2017 = -7.4 percent of GDP (Proj.), 2018 = -6.1 percent of GDP (Prog.)
- WAEMU international reserves projection: 3.9 months of imports for 2017
- Annual average inflation (October 2017): 1.3 percent
- Per-capita GDP: US$412 (level cited)
- Population growth: 3.9 percent
- Selected fiscal ratios (2017 projections, percent of GDP):
  - Total revenue: 16.1 percent
  - Total expenditure and net lending: 28.1 percent
  - Current expenditure: 14.6 percent
  - Capital expenditure: 13.5 percent
  - Gross investment: 42.0 percent
  - Gross national savings: 24.0 percent
  - Total public and publicly guaranteed debt: 51.1 percent
  - Public and publicly guaranteed external debt: 35.8 percent
  - NPV of external debt: 25.4 percent
- GDP at current market prices (billions of CFA francs): 2017 = 4,773; 2018 = 4,778; 2019 = 5,146; 2020 = 5,143; 2021 = 5,523; 2022 = 5,942

### Program implementation, monitoring, and adjustments
- Performance and reviews:
  - All performance criteria for end-June 2017 were met; net domestic financing and domestic payment arrears reduction overperformed with large margins.
  - All indicative targets for end-March, end-June 2017, and end-September were respected except government revenue targets (revenue shortfall through September = 1.2 percent of annual GDP).
  - Program performance to be assessed semiannually; second and third reviews expected after end-April and end-October 2018.
- Proposed adjustments for 2018:
  - (i) double the cap on the external-budget-support adjuster to CFAF 30 billion;
  - (ii) adjust the target for net domestic financing for overachievement (underachievement) in clearance of domestic payment arrears;
  - (iii) relax (tighten) 2018 targets for domestic arrears clearance for overachievement (underachievement) in 2017 arrears clearance.
- Monitoring instruments and reporting:
  - Technical Memorandum of Understanding defines performance criteria and indicative targets for Q1-2017 to Q1-2020, and specifies reporting requirements and definitions.
  - Monthly and quarterly reporting deadlines specified (e.g., monthly government finance data within six weeks after month end; monetary data within eight weeks; disaggregated CPI within two weeks).

### Selected program quantitative targets (exact values preserved)
- Net domestic financing of the government (program projections, Table 2; in billions of CFAF):
  - End-March 2018 IT: 46.1
  - End-June 2018 IT: 70.6
  - End-September 2018 IT: 115.5
  - End-December 2018 Prog./Proj.: 166.0
- Change in domestic payment arrears of government obligations (indicative targets, in billions of CFAF):
  - End-March 2018: -15.0
  - End-June 2018: -30.0
  - End-September 2018: -45.0
  - End-December 2018: -65.4
- External budgetary assistance — Budget support (memorandum item, in billions of CFAF):
  - End-March 2018: 0.0
  - End-June 2018: 23.0
  - End-September 2018: 36.7
  - End-December 2018: 130.0
- New external debt contracted or guaranteed by the government on concessional terms (ceiling): 350.0 at each reporting date (End-March, End-June, End-September, End-December 2018)
- Indicative targets — Basic budget balance (commitment basis, excl. grants; in billions of CFAF):
  - End-March 2018: -61.2
  - End-June 2018: -123.5
  - End-September 2018: -160.4
  - End-December 2018: -200.3
- Indicative targets — Total revenue (in billions of CFAF):
  - End-March 2018: 172.7
  - End-June 2018: 369.5
  - End-September 2018: 582.4
  - End-December 2018: 803.3

### Debt policy, donor support, and sustainability assessment
- Debt policy:
  - Authorities to refrain from contracting or guaranteeing new short-term or non-concessional external debt to keep Niger in the category of countries with moderate risk of external debt distress.
  - Fund staff noted most such projects are available on better terms from donors or are commercial in nature.
- Donor support and implications:
  - IDA18 resources doubled to US$1.2 billion.
  - MCC funds of some US$450 million during 2018-20.
  - Strong EU, French, AfDB, Italy, and other donor support noted.
  - Strong donor-supported capital spending implies WAEMU convergence criterion of an overall fiscal balance of -3 percent of GDP likely met only with a one-year delay in 2021.
- Sustainability:
  - Public debt dynamics little changed from the DSA carried out for the ECF-supported program; public debt remains sustainable.
  - Niger should have sufficient capacity to repay the Fund, including when repayments peak at 1.2 percent of export earnings in 2023-24.

*Source: IMF staff report "NIGER: FIRST REVIEW UNDER THE EXTENDED CREDIT FACILITY ARRANGEMENT" (November 30, 2017) — cr17394.*

### 13.4 percent of GDP, reflecting rising exports of oil products, a rebound in uranium exports,

### cr17394 - 13.4 percent of GDP, reflecting rising exports of oil products, a rebound in uranium exports,

### Overview and program objectives
- The ECF-supported program focuses on:
  - preserving macroeconomic stability by pursuing prudent fiscal and debt policies;
  - broadening the revenue base;
  - prioritizing public spending and improving expenditure control;
  - diversifying the economy and confronting the demographic challenge, with strong emphasis on private and financial sector development.
- Staff supports conclusion of the first review under the ECF, which will result in a disbursement of SDR 14.1 million.
- The 2018 budget aims to reduce the basic fiscal deficit to 3.9 percent of GDP from 4.6 percent in 2017 and to secure tax revenue gains of 0.5 percent of GDP through measures including reductions in VAT exemption, tighter control of investment incentives, and minimum taxes.

### Recent developments and outlook
- Economic growth and drivers:
  - Real GDP growth is on track at 5.2 percent for 2017 and projected 5.2 percent for 2018; growth is expected to rise to around 5.5 percent thereafter.
  - Growth drivers in 2017 include rising exports of oil products, a rebound in uranium exports, a strengthening hydrocarbon sector, parts of the service sector, and a favorable crop season.
  - Bank credit to the private sector grew at over 10 percent in 2017.
- External sector and reserves:
  - The current account deficit is expected to decline to 13.4 percent of GDP in 2017.
  - WAEMU international reserves are projected at 3.9 months of imports for 2017.
  - With continued high donor support, the overall balance of payments should turn positive in 2017, with Niger starting to contribute to WAEMU’s international reserves.
- Inflation:
  - Annual average inflation ran at a moderate pace of 1.3 percent in October 2017.
  - Consumer price index: annual average 2.0 percent (2017 projection in table) and end-of-period 2.2 percent (2017).
- Macro framework:
  - The program is underpinned by a realistically ambitious macroeconomic framework that envisages the continuation of policies to keep inflation moderate and fiscal policy aligned with meeting WAEMU convergence criteria by 2021.

### Fiscal performance and policies
- 2016 fiscal outcome and 2017 execution:
  - In 2016 revenues underperformed by 0.7 percent of GDP, mainly due to weak customs collections; basic and overall fiscal balances were -4.2 and -6.1 percent of GDP, respectively.
  - Through the first three quarters of 2017, fiscal deficits were somewhat smaller than programmed due to expenditure under-execution exceeding revenue shortfalls.
  - The Inter-ministerial Budget Regulation Committee, established mid-2016, helped hold back expenditure allocations and protect deficit and domestic financing targets in H1 2017.
  - The arrears clearance program slipped from late 2016 into H1 2017 but by September 2017 the reduction target for the year had been surpassed.
- 2018 budget specifics:
  - Basic fiscal deficit reduction: to 3.9 percent of GDP from 4.6 percent in 2017.
  - Tax revenue gains targeted: 0.5 percent of GDP supported by concrete measures (reductions in VAT exemption, tighter control of investment incentives, minimum taxes).
  - Emphasis on expenditure restraint and prioritization.
- Fiscal structural reform agenda:
  - Includes tax administration measures, improvements in public financial management, efforts to raise quality of public spending.
  - Extensive technical assistance from donors, including the Fund, to support reforms.

### Structural reforms, private sector, and social policy
- Structural reform progress:
  - All quantitative performance criteria and all but one indicative target (government revenue generation) have been met.
  - Limited implementation capacity has led to some delays, notably in establishing a Treasury Single Account.
- Private sector and financial sector measures:
  - Improving the business environment will continue.
  - Banks’ lending capacity to be strengthened via: swift completion of government’s arrears clearance program; increasing channeling of fiscal payments through the financial system; implementing the new legal framework for leasing.
- Mining sector governance:
  - The recent decision to quit the Extractive Industry Transparency Initiative (EITI) is assessed as jeopardizing results from other commendable reforms in the mining sector and should be reconsidered.
- Demographic and gender policy:
  - Authorities put demographic and gender issues high on the political agenda.
  - Plans include the formulation of a five-year gender action plan building on the updated National Gender Policy and draft legislation to keep girls in school longer and delay marriage and child-bearing.

### Risks and capacity constraints
- Major downside risks:
  - Adverse external developments, including deteriorating security conditions and adverse commodity price shocks.
  - High population growth dilutes investment and poses the challenge of job creation for the bulging labor force; population growth recorded at 3.9 percent.
  - Limited implementation capacity and entrenched customs that slow reform delivery.
- Upside possibility:
  - Reform momentum combined with strong donor support could trigger a virtuous circle of private sector development.

### Key statistics and projections (selected from the source)
- Real GDP growth: 2016 = 5.0 percent (Est.), 2017 = 5.2 percent (Proj.), 2018 = 5.2 percent (Prog.), 2019 = 5.5 percent (Rev. Prog.), 2020 = 5.2 percent (Proj.), 2021 = 5.4 percent (Proj.), 2022 = 5.6 percent (Proj.)
- Non-resources GDP growth: 2016 = 5.1 percent (Est.), 2017 = 5.0 percent (Proj.)
- Oil production (thousand barrels per day): 2015 = 15, 2016 = 17, 2017 = 18, 2018 = 18, 2019 = 19, 2020 = 19, 2021 = 20, 2022 = 20, later projections show 40 and 50
- Current account deficit excluding grants: 2017 = -19.5 percent of GDP (Proj.), 2018 = -16.5 percent of GDP (Prog.)
- Current account deficit including grants: 2017 = -18.0 percent of GDP (Proj.), 2018 = -13.4 percent of GDP (Prog.)
- Basic balance (excluding grants): 2017 = -4.9 percent of GDP (Proj.), 2018 = -4.6 percent of GDP (Prog.), 2019 = -4.0 percent of GDP (Rev. Prog.)
- Overall balance (commitment basis, including grants): 2017 = -7.4 percent of GDP (Proj.), 2018 = -6.1 percent of GDP (Prog.)
- WAEMU international reserves projection: 3.9 months of imports for 2017
- Annual average inflation (October 2017): 1.3 percent
- Per-capita GDP: US$412 (level cited in context)
- Population growth: 3.9 percent (world record cited)
- Selected fiscal ratios (percent of GDP, 2017 projections):
  - Total revenue: 16.1 percent
  - Total expenditure and net lending: 28.1 percent
  - Current expenditure: 14.6 percent
  - Capital expenditure: 13.5 percent
  - Gross investment: 42.0 percent
  - Gross national savings: 24.0 percent
  - Total public and publicly guaranteed debt: 51.1 percent
  - Public and publicly guaranteed external debt: 35.8 percent
  - NPV of external debt: 25.4 percent
- GDP at current market prices (billions of CFA francs): 2017 = 4,773; 2018 = 4,778; 2019 = 5,146; 2020 = 5,143; 2021 = 5,523; 2022 = 5,942
- GDP at current prices (annual percent change): 2017 = 7.7 percent; 2018 = 7.0 percent; 2019 = 7.8 percent

*Source: IMF staff report "NIGER: FIRST REVIEW UNDER THE EXTENDED CREDIT FACILITY ARRANGEMENT" (November 30, 2017).*

### 6.      Program implementation was broadly satisfactory. All performance criteria were met, all

### 6.      Program implementation was broadly satisfactory. All performance criteria were met, all

### Program implementation and fiscal outturns
- All performance criteria were met, all but one indicative targets were observed (MEFP Tables 1, 3, and 4).
- Compliance:
  - Domestic budget financing and domestic payment arrears reduction complied with performance criteria.
  - Avoidance of external payment arrears and the non-contracting of short-term and long-term non-concessional external debt complied with performance criteria.
  - The basic fiscal balance, minimum spending on poverty reduction, and the cap on “exceptional” expenditure conformed with their indicative targets.
- Revenue shortfall:
  - Fiscal revenues through September came in 1.2 percent of annual GDP short.
- Key fiscal figures (2017 Jan.-Sep., Prog / Actual / Deviation / % of GDP):
  - Total revenue: 555 / 496 / -58 / -1.2
  - Tax revenue: 519 / 459 / -60 / -1.3
    - Customs department: 146 / 123 / -24 / -0.5
    - Tax department: 373 / 337 / -36 / -0.8
  - Nontax and other revenues: 35 / 37 / 2 / 0.0
  - Total expenditure: 953 / 838 / -115 / -2.4
    - Current expenditure: 522 / 480 / -42 / -0.9
    - Capital expenditure: 431 / 358 / -73 / -1.5
      - Domestically financed: 219 / 173 / -46 / -1.0
      - Externally financed: 212 / 185 / -26 / -0.6
  - Overall balance (commitment): -398 / -342 / 57 / 1.2
  - Change in domestic arrears and float: 33 / -35 / -67 / -1.4
  - Overall balance (cash): -366 / -376 / -11 / -0.2
  - Financing: 366 / 376 / 10 / 0.2
    - External financing: 168 / 219 / 51 / 1.1
    - Domestic financing (incl. IMF): 198 / 157 / -41 / -0.9
  - Memorandum item: Basic budget balance: -187 / -156 / 30 / 0.6
  - Sources: Nigerien authorities; and IMF staff calculations.

### Structural reform implementation — progress and setbacks
- Met structural benchmarks:
  - Extended coverage and functions of the Large Taxpayer Unit.
  - Prepared and discussed a medium-term fiscal framework (DPBEP) and ministerial outcome-oriented expenditure plans (DPPD) in the National Assembly in June 2017, setting the stage for the 2018 budget on a program basis.
  - Updated the National Gender Policy.
  - Authorities formally prepared an action plan to audit state-owned enterprises (SoEs) and public entities; however, planned broad-based audits stalled because of prohibitive costs and unavailable donor financing.
- Benchmarks not progressed as planned:
  - Electronic linkup of customs administration with offices in Togo and Benin expected operational only at end-2017.
  - Establishing a Treasury Single Account (TSA) largely stalled; sequencing of reform steps needs revisiting.
  - Adoption of a full-fledged VAT refund system ran into capacity constraints; stop-gap: mining companies allowed to self-deduct refund claims from VAT collected from local suppliers.
  - Submission of new legislation on public-private companies by end-2017 drifted out of reach.
- Recurrent structural benchmarks mostly observed:
  - Quarterly release of budget allocations per regulation.
  - Consistent quarterly commitment and cash management plans prepared.
  - Quarterly debt management reports furnished, though the Q2 2017 report was behind schedule.
  - Revision of the borrowing plan pushed from end-June 2017 into early 2018 to incorporate PDES 2017-2021.
  - Quarterly reports on VAT reimbursements could not be produced due to absence of a refund system.

### Additional structural reforms and institutional advances (outside conditionality)
- Tax administration:
  - Increased use of the Administrative Tax Recourse Committee and reinvigoration of the Government Office of Legal Affairs (now under the Ministry of Finance) should aid arrears collection and dispute settlement.
  - Opening of two new tax offices in Niamey.
- Customs administration:
  - Introduced transaction-price valuation of imports for border tax purposes in July 2017, backed by ASYCUDA world software and a dedicated valuation unit; valuations substantially higher than previously applied administrative list prices.
- Financial sector:
  - Anticipated easing of credit access following a new leasing framework, recapitalization of BIA via sale of government shares to BCP of Morocco, ongoing restructuring of BAGRI, and mandatory reporting to the credit bureau.
- Business climate:
  - Simplified company establishment at a Niamey one-stop shop, improved processing of construction permits, and installment payments for electricity connections contributed to Niger moving up 6 notches to rank 144 in the World Bank’s Doing Business indicators.
  - Commercial court (operational since April 2016) increasingly settles disputes typically within a few weeks.
- Electricity reform:
  - Decreed new tariff structure for 2018-22 aimed to put NIGELEC finances on a sustainable footing and provide resources for better grid upkeep and supply availability.
- Mining:
  - Amendments to the mining code to reorganize small-scale mining and create growth/diversification opportunities for artisan mining.

### Outlook and risks
- Macroeconomic framework agreement:
  - Economic growth rising to 5.6 percent in 2020.
  - Inflation remaining low.
  - Overall external balance turning positive.
- Staff assessment and constraints:
  - Growth projections at the lower end of authorities’ expectations given population growth of nearly 4 percent, reforms, donor-financed investment, and agricultural productivity gains under the “3N Initiative.”
  - Constraining factors identified:
    - Poor prospects for the uranium sector due to a global trend away from nuclear energy.
    - Hydrocarbon sector limited by refinery capacity until a crude oil export pipeline becomes operational in 2021 at the earliest.
    - Population growth will not translate into economic growth without sufficient job creation or arable land.
    - Record rains in 2017 unlikely to be repeated year after year.
  - Few inflation risks with continued prudent fiscal policy.
- External balance dynamics:
  - Current account balance likely to deteriorate through 2020 due to high imports related to donor projects and pipeline construction.
  - Overall balance of payments expected to be positive throughout on high financing from donor support and FDI.
  - Current account likely to improve sharply in 2021 as crude oil exports commence and project-related imports subside.
- Main risks to outlook:
  - Security situation, potential for droughts, and commodity prices.

### Fiscal consolidation, donor support, and debt stance
- Fiscal consolidation, domestic revenue mobilization, and expenditure streamlining judged achievable.
- Donor and external support noted:
  - IDA18 resources doubled to US$1.2 billion.
  - MCC funds of some US$450 million during 2018-20.
  - Manifold increase of French project financing in recent years and strong EU support.
  - Stepped up budget support from AfDB, Italy, and France.
- Implications:
  - Strong donor-supported capital spending is an opportunity but implies WAEMU convergence criterion of an overall fiscal balance of -3 percent of GDP likely met only with a one-year delay in 2021.
  - Program budgeting, subsidy reviews, and establishment of a biometric database for civil servants should improve spending quality.
- Debt policy:
  - Authorities to refrain from contracting or guaranteeing new short-term or non-concessional external debt to keep Niger in the category of countries with moderate risk of external debt distress.
  - Fund staff argued most such projects are available on better terms from donors or are commercial in nature.
  - Public debt dynamics little changed from the DSA carried out for the ECF-supported program; public debt remains sustainable.

### Policies for the rest of 2017 and 2018 — objectives and main measures
- Program objectives:
  - (i) preserving macroeconomic stability;
  - (ii) broadening the revenue base;
  - (iii) prioritizing public spending and improving expenditure control;
  - (iv) diversifying the economy and confronting the demographic challenge.

A. Preserving Macroeconomic Stability
- For 2017:
  - Aim to keep deficits smaller than programmed, with a basic fiscal deficit of 4.6 percent of GDP.
  - Revenues likely to remain below programmed levels; shortfalls partly offset by unexpected nontax revenue boosts from telecom regulator transfers and telecom license sales/renewals.
  - Supplementary budget adopted in November 2017 reduces domestic spending allocations to economize on domestic borrowing.
  - Foreign-financed capital spending stepped up to support domestic demand and medium-term growth.
- For 2018:
  - 2018 budget passed by the National Assembly enshrines further fiscal consolidation via expenditure containment, a general wage and hiring freeze, and projected revenue surges from new tax measures and administrative reforms.
  - Authorities and Fund staff agreed to use more conservative revenue estimates for program purposes and prepare a consistent borrowing plan.
  - 2018 program reduces the basic fiscal deficit to 3.9 percent of GDP.
  - Domestic demand and medium-term growth boosted by increased foreign-financed capital spending.
  - Government to establish a framework agreement with the donor community to harmonize conditions for budget support and ensure consistency with the IMF-supported program.

B. Broadening the Revenue Base
- Program target: increase the tax ratio by 0.5 percent of GDP through tax policy changes in the 2018 budget, administrative measures, and yields from already-implemented measures.
- Tax policy measures (from 2018 onward):
  - Harmonize VAT exemptions with WAEMU standards, removing exemptions for goods/services including produce, road transportation services, and computer equipment in education.
  - Tighten fiscal incentives in the investment code.
  - Introduce a housing tax.
  - Introduce a higher proxy tax for small businesses.
  - Introduce minimum taxes for capital gains and real estate transactions.
  - Levy on cable network subscriptions.
  - Cut an international telecommunication tax considered highly distortionary.
- Ongoing administrative reforms expected to contribute:
  - Transaction valuation of imports at the border to yield the largest gains.
  - Effective implementation of the one-stop-shop for car imports.
  - Connection with customs offices in Togo and Benin.
  - New benchmarks for checking plausibility of tax returns by retailers.
  - Work of the tax arbitration court and the Government Office of Legal Affairs.
- New administrative reforms:
  - Mandatory requirement for all entities with fiscal liabilities to obtain a tax identification number (TIN).
  - Stepped up enforcement for importers.
  - From early 2018 the Ministry of Finance to establish performance plans for tax and customs administration that set collection targets and structural goals to be cascaded through the directorates (proposed structural benchmark for end-January 2018).
- Preparatory steps beyond 2018:
  - Legislative amendments to consolidate all tax and customs exemption provisions into the tax and customs codes for streamlining (proposed structural benchmark for end-September 2018).
  - Scrutiny of subsidies to SOEs, improved transparency and governance of SOEs/public entities via publication of inventories, financial statements, and audit reports, and review of oversight.

- Niger: Fiscal Measures, 2018 (In billions of CFAF unless otherwise indicated; 2018 Proj.)
  - Shift to transactional valuation of imports: 29.5
  - VAT taxation at 5% of previously exempted products: 6.3
  - Removal of investment code exemptions: 2.0
  - Housing tax: 2.0
  - Other tax measures (Minimum taxes, real estate taxes, fees, etc.): 10.0
  - Tax admin measures (TIN requirements, computerization, recruitment of auditors, etc.): 5.0
  - Cuts in telecom taxes: -24.0
  - Total: 30.8
  - in percent of GDP: 0.6
  - Sources: Nigerien authorities; and IMF staff calculations.

C. Prioritizing Spending and Improving Expenditure Control
- Key commitments:
  - Continue quarterly release of budget allocations as per the Inter-ministerial Budget Regulation Committee decision, while safeguarding poverty-reduction spending and strictly limiting “exceptional spending.”
  - Push ahead with a revised, realistic, ambitious, and well-sequenced TSA work program:
    - First assess the impact on the banking system and operationally ready the TSA.
    - Gradually close accounts in commercial banks and transfer balances to the TSA, starting with dormant accounts (proposed structural benchmark of end-March 2018).
  - An FAD technical resident advisor in place to assist TSA efforts.

### Social and demographic challenges — Box 1 highlights
- Niger faces the world’s highest population growth rate: 3.9 percent annually, with an average of 7.5 children per woman.
- Childhood marriage and early motherhood:
  - Minimum legal marriage ages (as of November 2017): 18 for boys and 15 for girls.
  - UNICEF (2016): 28 percent of girls marry before 15; some as young as 10.
  - By 18 years of age, 75 percent of Nigerien girls are already married and 60 percent have had at least one pregnancy.
  - Maternal mortality: still 6 deaths per 1,000 live births.
- Government response:
  - 2016 launch of a National Committee to End Child Marriage.
  - Population issues featured in PDES 2017-21, including efforts on family planning, girls’ education, and proposals to bar marriages before age 17.
  - Update of Niger’s National Gender Policy in August 2017.
  - Several mostly donor-financed programs underway (e.g., “Schools for Husbands,” women empowerment, help for girls who dropped out of school, safe spaces for teenage girls); as of mid-2017 there were 160 safe spaces nationwide, each accommodating about 100 girls.
  - Legislative push to raise girls’ minimum school-leaving age to 18 and the marriage age; two preliminary versions have been discussed at committee and pre-Cabinet level with a plan to submit to Parliament later this year or in 2018.

*Source: IMF staff report on Niger (2017), based on Nigerien authorities and IMF staff calculations.*

### 15.      Regarding the quality of spending, the government has prepared the 2018 budget in

### cr17394 - 15.      Regarding the quality of spending, the government has prepared the 2018 budget in

### Quality of spending and public financial management reforms
- The 2018 budget was prepared in program format, raising transparency of spending programs’ performance.
- The double commitment system AE/CP will be fully operationalized and applied in the 2019 budget preparation.
- Public procurement management: independent inspection teams will check delivery of goods and services in accordance with specification.
- Management of government wages and scholarships: a new integrated biometric database and an audit of the public entity charged with scholarship administration (ANAB) will be implemented.
- A new PPP law in line with good international practices, fully integrating PPPs into the budget cycle and rigorously scrutinizing value-for-money, is planned to be submitted to the National Assembly in March 2018 (proposed structural benchmark for end-March 2018).

### Diversifying the economy and financial sector deepening
- The government plans to clear all its remaining domestic payment arrears as soon as possible and no later than end-2018, increasing banks’ lending capacity and reducing non-performing loans.
- From March 2018, all payments to and from the Large Taxpayer Unit will be made exclusively through the financial system; the Ministry of Finance will finalize its bankification strategy as a basis for next steps (structural benchmark for end-March 2018).
- Operationalizing the new law on leasing is expected to improve credit access; extension to cover warrantage is recommended by Fund staff.

### Business environment, mining sector, and governance
- Authorities plan to put in place a proper VAT refund system and to leverage the new ASYCUDA world customs system to accelerate customs clearance.
- Government efforts to seek donor funding for mining-sector infrastructure and baseline research are commendable.
- The government decision to end Niger’s membership in the Extractive Industry Transparency Initiative (EITI) is described as a regrettable step backward for governance and development prospects in the sector.
- Thematic groups under the auspice of the Prime Minister and the President continue to work toward improving Doing Business indicators, with emphasis on expanding e-services and rolling out reforms proven effective in Niamey to other parts of the country.
- Remaining constraints: it still takes close to one hundred days to obtain construction permits and to get connected to electricity; power blackouts remain common.

### Population and gender policies
- Building on the updated National Gender Policy, the government is preparing a 5-year action plan by March 2018.
- Implementation of the regional Sahel Women Empowerment and Demographic Dividend (SWEDD) project began in 2017.
- Various mostly donor-financed projects aim to raise awareness about population issues, empower women, and provide safe spaces for teenage girls, but their reach remains rather limited and would need significant scaling up for impact.
- Legislation under consideration to keep girls in school longer and delay marriage and child-bearing could make a real difference if adopted and fully implemented.

### Program modalities, performance assessment, and adjustments
- Program performance will continue to be assessed semiannually.
- For the second review, performance will be assessed against the end-December 2017 performance criteria and indicative targets, continuous performance criteria, and structural benchmarks.
- For the third review, performance will be assessed against the proposed performance criteria and proposed indicative targets end-June 2018, proposed continuous performance criteria, and proposed structural benchmarks.
- Proposed adjustments for 2018:
  - (i) the cap on the external-budget-support adjuster to the domestic financing target be doubled to CFAF 30 billion;
  - (ii) the target for net domestic financing of the government be increased (decreased) for overachievement (underachievement) in the clearance of domestic payment arrears;
  - (iii) 2018 targets for domestic arrears clearance be relaxed (tightened) for any overachievement (underachievement) in 2017 arears clearance, to avoid dis-incentivizing frontloading arrears clearance into 2017.

### Debt repayment capacity, safeguards, and risks
- Niger should have sufficient capacity to repay the Fund, including when repayments peak at 1.2 percent of export earnings in 2023-24.
- Key risks: security developments, climatic shocks, and implementation capacity.
- Safeguard assessments are conducted at the level of the regional central bank (BCEAO); the most recent assessment was completed in December 2013 and found a continuing strong control environment. All recommendations from the assessment have been implemented. An updated safeguards assessment is planned to take place in the coming months, in line with a four-year cycle for regional central banks.

### Staff appraisal: achievements and remaining challenges
- Implementation status: the authorities have been implementing their ECF-supported program in a broadly satisfactory manner; all quantitative performance criteria and all but one indicative target have been met.
- Fiscal performance: fiscal policy has been prudent thanks to strict expenditure control, while fiscal revenue mobilization remained lower than programmed.
- Structural reforms: the agenda is progressing but limited implementation capacity has led to some delays, notably in establishing a Treasury Single Account.
- Recent fiscal steps: a supplementary budget cut the 2017 spending allocations to protect deficit and domestic budget financing targets; measures to strengthen revenues are showing first results, such as the valuation of imports with transaction prices for border tax purposes.
- Macroeconomic framework: GDP growth is set to rise to around 5.5 percent; fiscal policy is headed toward meeting WAEMU convergence criteria by 2021; strong donor support helps turn the overall balance of payments positive.
- The 2018 budget aims to reduce the basic fiscal deficit to 3.9 percent of GDP from 4.6 percent in 2017, and deliver tax revenue gains of 0.5 percent of GDP underpinned by measures such as reductions in VAT exemption, tighter control of investment incentives, and minimum taxes, alongside expenditure restraint.
- The authorities’ comprehensive fiscal structural reform agenda includes tax administration measures, improvements in public financial management, and efforts to raise the quality of public spending, supported by extensive technical assistance from donors, including the Fund.
- Private sector development: efforts to improve the business environment will continue; banks’ lending capacity will be strengthened by arrears clearance, bankification of fiscal payments, and the new leasing framework.
- The decision to quit EITI jeopardizes results in the mining sector and should be reconsidered.
- Demographic and gender initiatives are welcome; implementation for results on the ground will be key to avoid rapid population growth undermining development objectives. The envisaged formulation of a five-year gender action plan building on the updated National Gender Policy and draft legislation to keep girls in school longer and delay marriage and child-bearing are welcome.

*cr17394 - 15.*

### 29.      Staff supports the authorities’ request for conclusion of the first ECF review and

### 29.      Staff supports the authorities’ request for conclusion of the first ECF review and 

### Program conclusion and disbursement
- Staff supports the authorities’ request for conclusion of the first ECF review and disbursement of the second tranche thereunder in an amount of SDR 14.1 million.
- The attached Letter of Intent (LOI) and Memorandum of Economic and Financial Policies (MEFP) set out appropriate policies to achieve the 2018 program objectives.

### Recent economic developments and outlook (high-level)
- The share of the extractive industries to GDP remains low and has further declined in response to the lower international prices.
- The share of agriculture and livestock continues to dominate.
- As a consequence, GDP growth is highly volatile and it is driven by the impact of climatic shocks on agriculture.
- Per capita GDP growth is also highly volatile and, due to high population growth, it is on average very low.

### Selected indicators and projections (highlights from tables and figures)
- Oil production (thousand barrels per day): 15; 17; 18; 18; 19; 19; 20; 20; 40; 50.
- GDP deflator (annual percent change): 0.5; -0.4; 2.4; 1.8; 2.1; 2.3; 1.9; 1.9; 1.7; 2.0.
- Consumer price index, Annual average: 1.0; 0.2; 2.0; 2.0; 2.1; 2.5; 2.0; 2.0; 2.0; 2.0.
- Exports, f.o.b. (CFA francs): -10.1; -4.9; 13.7; 9.7; 12.3; 8.2; 10.4; 7.3; 31.2; 5.8.
- Imports, f.o.b. (CFA francs): 9.6; -13.0; 19.5; 5.4; 11.2; 14.3; 10.4; 9.7; -3.8; 6.5.
- Total revenue (percent of GDP): 18.0; 14.4; 16.1; 15.3; 16.8; 15.6; 16.0; 17.4; 18.5; 19.0.
- Total expenditure and net lending (percent of GDP): 32.5; 26.6; 28.1; 28.6; 27.3; 28.8; 29.4; 29.0; 26.6; 26.3.
- Basic balance (excluding grants, percent of GDP): -7.4; -4.2; -4.9; -4.6; -4.0; -3.9; -3.4; -1.0; 0.6; 1.3.
- Overall balance (commitment basis, including grants, percent of GDP): -9.1; -6.1; -7.4; -6.1; -6.0; -6.2; -5.7; -4.1; -2.3; -1.5.
- Total public and publicly guaranteed debt (percent of GDP): 41.6; 46.7; 51.1; 49.7; 53.0; 51.9; 53.4; 54.2; 53.7; 53.3.
- Public and publicly guaranteed external debt (percent of GDP): 30.3; 33.0; 35.8; 35.2; 37.1; 37.0; 38.8; 41.4; 42.3; 43.3.
- NPV of external debt (percent of GDP): 22.0; 21.3; 25.4; 22.4; 26.2; 23.4; 24.4; 26.1; 26.7; 27.3.
- Gross investment (percent of GDP): 42.5; 37.0; 42.0; 36.0; 42.8; 38.0; 38.7; 39.9; 33.4; 33.3.
- Gross national savings (percent of GDP): 22.0; 21.6; 24.0; 22.6; 24.3; 22.1; 22.3; 22.2; 22.1; 22.2.
- External current account balance excluding official grants (percent of GDP): -22.7; -17.3; -19.5; -16.5; -20.0; -18.1; -18.4; -19.4; -12.7; -12.6.

### Fiscal operations (selected numbers from central government tables)
- Total revenue (billions of CFA francs, selected years): 768.7; 643.8; 770.8; 729.0; 866.0; 803.3; 882.2; 1,035.9; 1,197.3; 1,335.3.
- Total expenditure and net lending (billions of CFA francs, selected years): 1,387.7; 1,187.9; 1,341.4; 1,368.2; 1,404.5; 1,481.6; 1,625.2; 1,726.0; 1,725.7; 1,841.5.
- Capital expenditure and net lending (billions of CFA francs, selected years): 726.8; 556.6; 645.4; 686.8; 672.6; 758.7; 859.8; 937.1; 903.6; 964.4.
- Overall balance (commitment including grants, WAEMU anchor, billions of CFA francs): -386.4; -273.9; -351.8; -289.7; -311.2; -317.1; -316.0; -246.5; -151.3; -106.8.
- Overall balance (cash, billions of CFA francs): -632.0; -525.1; -614.0; -682.6; -548.4; -743.7; -743.0; -690.1; -528.3; -506.2.
- External financing (billions of CFA francs, selected years): 416.3; 441.2; 387.2; 536.7; 398.8; 559.3; 652.0; 717.4; 622.5; 650.9.
- Grants (billions of CFA francs): 232.6; 270.3; 218.9; 349.5; 227.3; 361.2; 427.0; 443.6; 377.0; 399.3.
- Loans (billions of CFA francs): 209.6; 203.4; 208.3; 233.2; 206.8; 246.8; 260.7; 308.6; 293.1; 310.7.
- Domestic financing (billions of CFA francs): 215.8; 84.0; 226.8; 145.9; 149.6; 184.4; 91.0; -27.3; -94.2; -144.7.

### Policy implications and priorities signaled in the material
- Continue implementation of the LOI and MEFP policies to achieve 2018 program objectives (as reflected in staff support for review conclusion and SDR 14.1 million disbursement).
- Manage macroeconomic volatility driven by agriculture and climatic shocks, recognizing agriculture and livestock dominance in GDP composition.
- Fiscal stance reflected in projected improvements in the basic balance toward positive territory by 2022 (basic balance: 0.6; 1.3 percent of GDP in 2021–22).
- Monitor public debt dynamics: total public and publicly guaranteed debt projected around the low- to mid-50s percent of GDP across projections.

*Sources: Nigerien authorities; and IMF staff calculations.*

### 0.6 percent of GDP of exceptional revenues from the telecom sector.

### 0.6 percent of GDP of exceptional revenues from the telecom sector.

### Exceptional and special revenues
- Exceptional revenues from the telecom sector: 0.6 percent of GDP.
- The special accounts include the financing on the National Retirement Fund, Priority Investments Fund, and Fund for Continuous Professional Development.
- Note on PPPs and nonbanking domestic financing: For the period 2017-22, nonbanking sector domestic financing includes PPP contracts for building infrastructure. In 2017, those contracts represent 0.9 percent of GDP.
- Revenues minus expenditure net of externally-financed capital expenditure (definition note).

### Monetary and financial aggregates (selected)
- Money and quasi-money (Billions of CFA francs):  
  - 2015: 1,113.3  
  - 2016: 1,210.7  
  - 2017: 1,424.2  
  - 2018: 1,360.7  
  - 2019: 1,579.8  
  - 2020: 1,507.6  
  - 2021: 1,643.0  
  - 2022: 1,778.4  
  - 2023: 1,933.2  
  - 2024: 2,061.7
- Currency outside banks (Billions of CFA francs): 537.1 (2015) rising to 1,019.5 (2024).
- Deposits with banks (Billions of CFA francs): 576.2 (2015) rising to 1,042.2 (2024).
- Broad money growth (annual change, percent): 4.6 (2015), 8.7 (2016), 11.1 (2017), 12.4 (2018), 10.9 (2019), 10.8 (2020), 9.0 (2021), 8.2 (2022), 8.7 (2023), 6.6 (2024).
- Velocity of broad money (Ratio): 3.7 (2015), 3.7 (2016), 3.4 (2017), 3.5 (2018), 3.3 (2019), 3.4 (2020), 3.4 (2021), 3.3 (2022), 3.4 (2023), 3.4 (2024).

### Credit and banking sector indicators
- Domestic credit (Billions of CFA francs): 701.7 (2015); 819.9 (2016); 960.4 (2017); projected 1,294.6 (2024).
- Credit to other sectors (Billions of CFA francs): 690.1 (2015) to projected 1,315.6 (2024).
- Credit to the private sector (Billions of CFA francs): 594.5 (2015); 670.0 (2016); 790.8 (2017); projected 1,232.4 (2024).
- Credit to the private sector (Change, in percent): 12.9 (2015), 12.8 (2016), 9.1 (2017), 7.9 (2018), 9.1 (2019), 12.1 (2020), 10.6 (2021), 10.5 (2022), 11.6 (2023), 11.9 (2024).
- Net bank claims on government (Billions of CFA francs): 11.6 (2015); 82.2 (2016); 169.7 (2017); projected -21.0 (2024).
- Statutory advances (BCEAO): 15.2 (2015) declining to 0.0 (2023 onward).

### Macroeconomic projections and external sector (selected)
- GDP at current prices (CFAF billions): 4,269 (2015); 4,464 (2016); 4,773 (2017); 4,778 (2018); 5,146 (2019); 5,143 (2020); 5,523 (2021); 5,942 (2022); 6,479 (2023); 7,013 (2024).
- GDP at current prices (annual percent change): 4.9 (2015), 4.6 (2016), 7.7 (2017), 7.0 (2018), 7.8 (2019), 7.6 (2020), 7.4 (2021), 7.6 (2022), 9.0 (2023), 8.2 (2024).
- Current account balance (Billions of CFA francs, selected years): -875.7 (2015); -691.1 (2016); -857.9 (2017); projected -781.2 (2024).
- Current account (in percent of GDP): -20.5 (2015); -15.5 (2016); -18.0 (2017); -13.4 (2018); -18.5 (2019); -15.9 (2020); -16.4 (2021); -17.7 (2022); -11.3 (2023); -11.1 (2024).
- Exports, f.o.b (Billions of CFA francs): 643.2 (2015); 611.8 (2016); 653.3 (2017); 670.9 (2018); 734.0 (2019); 726.2 (2020); 801.4 (2021); 859.8 (2022); 1,128.5 (2023); 1,194.4 (2024).
- Imports, f.o.b (Billions of CFA francs): 1,168.6 (2015); 1,017.2 (2016); 1,232.5 (2017); 1,072.1 (2018); 1,370.6 (2019); 1,225.0 (2020); 1,351.8 (2021); 1,483.1 (2022); 1,427.2 (2023); 1,519.4 (2024).
- Balance on goods (Billions of CFA francs): -525.4 (2015); -405.4 (2016); -579.2 (2017); projected -324.9 (2024).
- Unrequited current transfers (net) (Billions of CFA francs): 175.6 (2015); 164.9 (2016); 190.8 (2017); 233.9 (2018); projected 203.1 (2024).
- Of which: grants for budgetary assistance (Billions of CFA francs): 76.6 (2015); 66.2 (2016); 54.6 (2017); 129.0 (2018); projected 79.8 (2024).
- Gross Official Reserves (in months of next year's imports of goods and services): 5.4 (2015); 5.6 (2016); 4.3 (2017); 5.7 (2018); 4.3 (2019); 5.4 (2020); 5.2 (2021); 5.7 (2022); 5.8 (2023); 5.3 (2024).
- Overall balance (in percent of GDP): -1.9 (2015); -0.6 (2016); -0.2 (2017); 1.4 (2018); 1.1 (2019); 0.3 (2020); 0.7 (2021); 1.0 (2022); 1.5 (2023); 1.1 (2024).

### Fiscal and program implementation highlights
- In 2016, the basic and overall fiscal balances reached -4.3 and -6.2 percent of GDP, respectively.
- Revenue underperformance of 0.7 percent of GDP in 2016 was offset through effective expenditure control by the Inter-Ministerial Budget Regulation Committee.
- In the first half of 2017, basic and overall fiscal balances substantially outperformed targets, allowing clearance of more outstanding domestic payment arrears than planned, while observing the envelope for domestic financing.
- Revenue shortfalls continued in 2017, partly due to depressed trade with Nigeria and delays in implementing customs reforms (interconnections with Benin and Togo and the geo-tracking system).
- The single customs clearance window for vehicles (GUAN) established in November 2016 has yet to generate expected revenue gains; valuation system of cars is being gradually put in place.
- Program commitments: expand the revenue base, improve public financial management, better control public expenditures, strengthen cash management, improve debt management, increase transparency in mining and oil sectors, and support development of private and financial sectors to diversify the economy and address demographic challenges.
- Government request (November 30, 2017): completion of the first review and disbursement of the second tranche of SDR 14.1 million under the ECF arrangement.

### Financial soundness (selected indicators, Dec. 2012–Jun. 2017)
- Regulatory capital to risk-weighted assets: 16.7 (2012), 15.5 (2013), 14.6 (2014), 15.0 (2015), 17.5 (2016), 14.9 (2017 Dec.), 14.3 (2017 Jun.).
- Gross NPLs to total loans: 17.1 (2012), 16.5 (2013), 15.5 (2014), 17.5 (2015), 19.8 (2016), 21.9 (2017 Mar.), 21.8 (2017 Jun.).
- Provisioning rate: 54.6 (2012), 67.3 (2013), 61.5 (2014), 71.4 (2015), 66.6 (2016), 68.8 (2017 Mar.), 69.7 (2017 Jun.).
- Total loans to total deposits: 104.7 (2012), 93.7 (2013), 85.3 (2014), 92.4 (2015), 96.5 (2016), 94.8 (2017 Mar.), 95.0 (2017 Jun.).

*Source: IMF staff estimates and projections.*

### 4.      All performance criteria for end-June 2017 were met. Net domestic financing of the

### cr17394 - 4.      All performance criteria for end-June 2017 were met. Net domestic financing of the

### Summary of program performance and fiscal indicators
- All performance criteria for end-June 2017 were met.
- Net domestic financing of the government and the reduction in domestic payment arrears of the government overperformed with large margins.
- Continuous performance criteria on the avoidance of external payments arrears and the contracting of short-term and long-term non-concessional external debt were observed.
- All indicative targets for end-March, end-June 2017, and end-September were respected, except government revenue targets.
  - The basic fiscal balance outperformed its indicative target by 0.6 percent of GDP.
  - At end-September 2017, government revenue remained 1.2 percent of GDP below target.

### Structural benchmarks and institutional reforms (observed and delayed)
- Observed progress
  - Large taxpayer unit (DGE) strengthened by expanding coverage to an additional 125 large companies and acquiring all functions, including audit and enforcement.
  - Schedule prepared for audit of ten state-owned enterprises and public entities; terms of reference drafted.
  - Medium-term fiscal framework (DPBEP) and ministerial outcome-oriented expenditure plans (DPPD) prepared; DPBEP supported National Assembly discussions in June 2017 and presentation of the 2018 budget on a program basis.
  - Updated National Gender Policy adopted in August 2017 (ahead of end-2017 target).
- Partially met or delayed benchmarks
  - Legal framework for the treasury single account (TSA) in place after signing agreements with the BCEAO in December 2016, but only a handful of public accounts covered by the TSA had been closed by end-June 2017.
  - All main customs offices connected to ASYCUDA world central server on time; interconnection with customs offices in Benin and Togo delayed because the contract for the second phase of migration to ASYCUDA was signed only in September 2017.
  - A reimbursement mechanism for VAT refunds was not established by end-June 2017 due to limited capacity to properly ascertain VAT refund claims; as a stop-gap, mining companies were allowed to net their credits against VAT collected from local suppliers.
- Recurrent benchmarks
  - Quarterly spending allocations released within the first month as committed; quarterly commitment plans with cash plans being prepared.
  - Quarterly debt management plans prepared and validated; plans for first and third quarters furnished on time, but the one for the third quarter was provided with a delay.
  - Revision of the borrowing plan postponed from end-June 2017 to March 2018 to accommodate the donor round table for PDES 2017-21 scheduled for December 2017.
  - In absence of an operational VAT refund system, envisaged quarterly VAT refund reports were not produced.

### Tax and customs administration reforms
- Tax Administration Directorate (DGI)
  - Two new tax offices established in June 2017 in Niamey and are operational.
  - Full computerization advancing: development of the tax block under SISIC is in the test phase, with a view to becoming operational in January 2018.
  - Restructured tax audit operations, establishing presumptive profit margins for key economic activities.
  - Joint customs and tax administration team revived; audited 40 files so far in 2017.
  - Strengthening tax arrears collection via operationalization of CARFI and moving the Government Office of Legal Affairs to the Ministry of Finance in April 2017.
  - DGI provided staff training on management, leadership, ethics, communication, transfer prices, accounting, IT, and risk management.
- Customs Administration Directorate (DGD)
  - Introduced transaction valuation of imports for tax purposes; valuation database applied since July 2017 with minimum prices substantially higher than previous administrative valuations.
  - Valuation team established to maintain the database.
  - Efforts to reduce physical contact between importers and customs officials to improve governance.

### State-owned enterprises, electricity, oil/mining, business climate, and financial sector
- SOEs
  - Performance contracts signed in September with OPVN and CAIMA to reduce subsidies and waste in food security programs.
  - Preliminary report on subsidies for state-owned enterprises prepared.
- Electricity sector
  - New tariff schedule for 2018-22 adopted in October 2017 to enable NIGELEC to cope with rising generation costs and investment needs.
  - New Electricity Law and newly established electricity regulator made operational; revamped electricity strategy in place.
- Oil and mining
  - New oil code adopted consolidating the legal framework for refining, distribution, transport, importation and exportation; strengthens government control and local authority roles.
  - Mining Code amended to boost production through reorganization of artisan mining activity.
- Business climate
  - Prime Minister oversees improvements; working groups set up for Doing Business indicators.
  - Enterprise House in Niamey expanded as a one-stop shop; construction permit processing simplified; costs for electricity and water can be spread over a three-month period.
  - Result: Niger moved up 6 positions in the World Bank’s 2018 Doing Business ranking.
- Financial sector
  - Banque Centrale Populaire du Maroc (BCP) recapitalized BIA after purchase of government shares in August 2017.
  - Recapitalization and restructuring of BAGRI underway.
  - New leasing law approved by Parliament in October 2017, aligned with WAEMU standards.
  - Since May 2017, reporting to the credit bureau no longer requires customer consent.

### Demography, gender, and social programs
- Population growth and gender inequality addressed in PDES 2017-21.
- National Gender Policy updated.
- Partners support projects for women’s empowerment, re‑enrolling girls who dropped out, teenage girl awareness, and spouse sensitization on population issues.
- Sahel Women’s Empowerment and Demographic Dividend (SWEDD) project implementation began from early 2017 after delays.

### Economic outlook and risks (remainder of 2017 and 2018)
- 2017 projections
  - Real GDP growth expected at 5.2 percent, driven by hydrocarbons and parts of services; uranium production stagnant.
  - Inflation expected to remain well contained.
  - Current account deficit likely to improve in 2017.
- Medium run and 2018
  - Growth expected at just over 5 percent for 2018.
  - Inflation targeted to remain below WAEMU’s convergence criterion of 3 percent.
  - Overall balance of payments expected to turn positive from 2017.
- Risks
  - Fragile regional security situation, global commodity price developments, and weather conditions.

### Fiscal policy stance for the remainder of 2017
- Programmed targets reaffirmed: basic and overall fiscal balances of -4.9 and -7.4 percent of GDP.
- Considering revenue underperformance in H1 and reductions in distortionary telecommunication taxes, a revenue shortfall of 0.8 percent of GDP for the full year seems likely despite improved collections in H2 driven by DGD, DGI, and non-tax revenue boosts from ARTP and renewal/sale of telecommunication licenses.
- Expenditure underexecution in H1 more than sufficient to offset basic balance impact; supplementary budget passed by National Assembly in November 2017 cut spending appropriations to avoid year-end spending surge.
- Additional grants from foreign donors could improve the overall fiscal balance.

### Fiscal structural reforms and sequencing (benchmarks to end-March 2018 and end-2018)
- PPPs
  - New PPP legislation submission delayed from December 2017 to March 2018 (structural benchmark for March 2018).
  - Legislation will be consistent with the 2012 budget law, the investment code, and 2017 IMF TA recommendations; from 2019 all PPPs to be integrated into the budget cycle.
- TSA implementation (phased to protect financial stability)
  - By end-March 2018 the following will be completed (structural benchmark for end-March 2018):
    - Complete a study on the impact on the banking system with BCEAO assistance.
    - Make operational an interface between BCEAO and DGTCP IT systems.
    - Establish a clear account and subaccount structure for the TSA.
    - Close all dormant accounts covered by the TSA and transfer their balances.
  - Plan with sequencing of account closures to be prepared by end-2018.

### Fiscal policy for 2018 (targets, measures, and expenditure control)
- Retain programmed overall and basic fiscal balance targets and pursue consolidation to reach WAEMU convergence criterion for overall fiscal balance of -3 percent of GDP by 2021.
- Consolidation relies on roughly equal measures of tax revenue augmentation and expenditure restraint.
- Tax revenue programmed to rise by 0.5 percent of GDP compared to estimated 2017 outturn.
- Program caps current and domestically-financed capital expenditure under CFAF 1,005 billion (which is 1.6 percentage points of GDP below the programmed 2017 outturn).
- Basic and overall fiscal balances projected at -3.9 and -6.2 percent of GDP, consistent with January 2017 program targets.
- Borrowing plan prepared and shared with IMF staff; 2018 budget approved by the National Assembly in November 2017 is consistent with domestically-financed expenditure and more ambitious on revenue mobilization and deficit reduction.
- Mid-2018 fiscal review planned with possible supplementary borrowing authority subject to program ceilings.

### Tax policy, administration, and revenue measures for 2018
- Tax policy measures
  - Harmonize VAT exemptions with WAEMU standards and cut exemptions under the investment code to compensate loss from abolition of distortionary telecommunication taxes.
  - Introduce a housing tax.
  - Raise the proxy tax for activities of small enterprises.
  - Institute a minimum tax for capital gains in real estate transactions.
  - Start taxing cable network subscriptions.
- Expected yields from reforms and administration
  - Additional revenue expected from basing border taxes on transactional values; strengthen DGD valuation unit and monitor valuations.
  - Benefits expected from effective GUAN implementation and interconnection with customs offices in Benin and Togo.
  - DGI measures: better VAT taxation of retail activities using profit-margin studies, exploitation of audit of 40 files, and higher tax arrears collection via CARFI and Government Office of Legal Affairs.
- Administrative measures and performance management
  - Full roll-out of SISIC expected to boost DGI effectiveness.
  - 2018 budget requires all individual and legal entities with fiscal liabilities to obtain tax identification numbers (TINs); DGD enforcing for importers.
  - Establish performance plans for revenue collection agencies to be cascaded through directorates; plans to set revenue targets and benchmarks for operational indicators (structural benchmark for end-January 2018), including:
    - Number of filers with the DGE.
    - Number of zero-liability VAT filers.
    - Number of NIFs.
  - Consideration of color coding to address tax evasion on petroleum products.

### Expenditure management and public financial management improvements
- Domestically-financed expenditure tightly contained for 2018 via general hiring and wage freeze with limited exceptions for strategic and security personnel; domestically-financed capital spending held constant as a share of GDP relative to projected 2017 outturn.
- Measures to improve spending quality and control
  - DGTCP to continue TSA reforms and increase channeling of payments through the banking system; transition to full TSA per ¶20 schedule.
    - By March 2018, all payments to and from the Large Taxpayer Unit (DGE) will be made through the financial system.
    - An action plan for the bankification of fiscal payments to be finalized before end-March (structural benchmark for end-March 2018).
  - Program-based 2018 budget to prioritize spending and link to outcomes; procurement plan for 2018 to be prepared timely; commitment and cash plans to be prepared quarterly.
  - AE/CP procedures for budgeting and execution to be in place by mid-2018 and fully operational for the 2019 budget cycle.
  - Civil service management reforms: comprehensive biometric census of civil servants and establishment of an integrated pay-civil service database; audit of ANAB (scholarships agency) initiated.
  - Public procurement: set up independent inspection teams to verify delivery of goods and services; produce quarterly reports for the Minister of Finance.
  - PPPs to follow the timeline in ¶20.
  - Move toward a fully integrated information system interconnecting financial agencies, including:
    - SISIC for DGI;
    - ASYCUDA World at DGD;
    - SIGMAP for public procurement;
    - SIGIB for interconnection between DGTCP and DGB;
    - CS-DRMF+ for debt management;
    - Connection of DGTCP to SICA and STAR.

*International Monetary Fund — cr17394 (excerpt).*

### 25.      The fiscal framework for 2018 is fully financed and includes our firm commitment

### 25.      The fiscal framework for 2018 is fully financed and includes our firm commitment

### Fiscal framework and financing for 2018
- The government commits to clear all outstanding domestic payment arrears by end 2018, while not accumulating any new ones.
- Financing needs and sources (exact amounts as presented):
  - Basic budget deficit: CFAF 200 billion
  - Clearance of remaining domestic payment arrears: CFAF 65 billion
  - Amortization of external debt: CFAF 49 billion
  - Total to be financed through:
    - Budget support: CFAF 130 billion
    - Net domestic financing: CFAF 184 billion
      - Including financing from the Fund: CFAF 19 billion
      - Including PPPs: CFAF 85 billion

### Reforms of state-owned enterprises (SOEs) and public entities
- Original broad-audit approach changed due to high cost, limited donor financing, and coverage of only ten out of over 150 SOEs/public entities.
- New actions to be undertaken:
  - Finalize and transmit to the Fund the government study on subsidies for state-owned enterprises.
  - Conduct and publish an inventory of all public entities and state-owned enterprises, including their size by sales.
  - Publish the financial statements, audit reports, and management letters for the twenty largest state-owned enterprises and public entities.
  - Conduct, with the help of the World Bank, a study on oversight and corporate governance of state-owned enterprises.

### Tax and customs exemptions reform
- Despite recent streamlining under the investment code, further reform is planned:
  - Consolidate the legal basis of all exemptions in the tax and customs codes.
  - Reduce discretion in granting exemptions.
  - Scale back exemptions.
- Legislative timetable:
  - Legislation to overhaul tax and customs exemptions to be submitted to the National Assembly no later than September 2018 (structural benchmark for end-September 2018).

### Donor support and absorption capacity
- Government commitment to maximize rising donor support; reference to donor round table scheduled for December 13-14, 2017 in Paris.
- 2018 budget envisages an ambitious increase of foreign-financed investment.
- Measures to improve absorption capacity:
  - Introduction of performance budgeting.
  - Putting in place a partnership framework agreement between the Government of Niger and technical and financial partners to harmonize conditions for releasing budget support and ensure consistency with the IMF-supported economic and financial program.

### Structural reforms to diversify the economy and address demographic challenges
- Priority areas highlighted: business climate, financial deepening, mining diversification, demographic and gender policies.

#### Business climate reforms (Doing Business indicators)
- Actions for 2017-18 emphasized:
  - Clearance of domestic payments arrears.
  - Establish an adequate VAT reimbursement mechanism.
  - Leverage ASYCUDA world to expedite customs procedures.
  - Make it easier to get electricity and ensure reliable supply.
  - Facilitate issuance of construction permits, including implementing regulations for the law on land tenure.
- Roll-out and implementation notes:
  - Reforms successful in Niamey to be rolled out elsewhere.
  - Efforts to computerize procedures.
  - Reforms to benefit from the World Bank Project to Support Competitiveness and Growth (PRAAC).

#### Financial deepening and access to finance
- Ongoing measures:
  - Review the functioning of the credit bureau established in 2016.
  - Review the new Niamey Commercial Court and the Niamey Mediation and Arbitration Center to improve lending environment.
  - Rapidly implement the new law on leasing and expand legal framework to cover warrantage.
  - Ensure BAGRI shifts lending activity firmly to the agricultural sector and supports smaller-scale operations.
  - Bankification of government payments to grow the banking system and strengthen lending capacity.

#### Mining sector diversification
- Given difficulties in uranium, government seeks to diversify mining activity toward copper, tin ore, gold, and lithium.
- Plan to establish better public infrastructure for exploration and exploitation of natural resources and seek donor support.

#### Demographic and gender policies
- Building on PDES 2017-21 and updated National Gender Policy:
  - Finalize a five-year action plan on gender equality in the first part of the year and increase reach of existing small-scale projects.
  - Roll out the SWEDD project to contain population growth.
  - Consider legislation aimed at keeping girls in school to increase marriage age and reduce fertility; upon adoption, proceed with implementation.

### Program monitoring, reviews, and disbursement request
- Government requests approval of the first review under the arrangement and disbursement of SDR 14.1 million (¶33).
- Program monitoring instruments:
  - Based on performance criteria and structural benchmarks (Tables 2, 4 and 6 referenced).
  - Authorities to provide IMF staff with statistical data and information identified in the Technical Memorandum of Understanding and any other requested information (¶34).
- Review schedule:
  - Program monitored through semiannual reviews.
  - The second and third program reviews are expected to take place after end-April and end-October 2018, respectively (¶35).

### Selected quantitative targets and indicators (exact values preserved)
- From Table 2 (Mar. – Dec. 2018; in billions of CFAF):
  - Net domestic financing of the government (program projections):
    - End-March 2018 IT: 46.1
    - End-June 2018 IT: 70.6
    - End-September 2018 IT: 115.5
    - End-December 2018 Prog./Proj.: 166.0
  - Change in domestic payment arrears of government obligations (indicative targets / projections):
    - End-March 2018: -15.0
    - End-June 2018: -30.0
    - End-September 2018: -45.0
    - End-December 2018: -65.4
  - External budgetary assistance — Budget support (memorandum item):
    - End-March 2018: 0.0
    - End-June 2018: 23.0
    - End-September 2018: 36.7
    - End-December 2018: 130.0
  - New external debt contracted or guaranteed by the government on concessional terms (ceiling):
    - 350.0 at each reporting date (End-March, End-June, End-September, End-December 2018)
  - Continuous quantitative performance criteria (selected):
    - Accumulation of external payments arrears: 0.0 at all reporting dates
    - New external debt contracted or guaranteed with maturities < 1 year: 0.0 at all reporting dates
    - New non concessional external debt contracted or guaranteed with maturities ≥ 1 year: 0.0 at all reporting dates
  - Indicative targets — Basic budget balance (commitment basis, excl. grants):
    - End-March 2018: -61.2
    - End-June 2018: -123.5
    - End-September 2018: -160.4
    - End-December 2018: -200.3
  - Indicative targets — Basic budget balance (commitment basis, incl. budget grants):
    - End-March 2018: -61.2
    - End-June 2018: -100.5
    - End-September 2018: -132.4
    - End-December 2018: -109.0
  - Indicative targets — Total revenue:
    - End-March 2018: 172.7
    - End-June 2018: 369.5
    - End-September 2018: 582.4
    - End-December 2018: 803.3
  - Indicative targets — Spending on poverty reduction:
    - End-March 2018: 108.0
    - End-June 2018: 237.9
    - End-September 2018: 345.9
    - End-December 2018: 538.4
  - Ratio of exceptional expenditures on authorized spending (percent) targeted at 5.0 for all reporting dates in 2018.

### Structural benchmarks and recurrent measures (high-level)
- Recurrent structural benchmarks for 2018 (Table 4) include quarterly release of budget allocations, quarterly commitment plans consistent with cash plans, quarterly debt management reports validated by the National Public Debt Management Committee, and preparation of a revised borrowing plan (each year at end-June, but end-March for 2018).
- Proposed structural benchmarks for 2018 (Table 6) include:
  - Formulate and share with Fund staff performance plans for revenue collection agencies (End-January).
  - Send legislation overhauling tax and customs exemptions to the National Assembly (End-September) (¶26).
  - TSA implementation tasks to be completed and shared with Fund staff with BCEAO help (End-March) (¶20).
  - Send to the National Assembly a new law on public private partnership (PPP) consistent with the investment code and the 2012 budget law (End-March).
  - Put in place legal requirements that all payments to and from the Large Taxpayer Unit (DGE) are made through the financial system; finalize and share an action plan for bankification of fiscal payments (End-March).

*Source: IMF staff report (Niamey, November 30, 2017).*

### 1.      This technical memorandum of understanding defines the performance criteria and

### cr17394 - 1.      This technical memorandum of understanding defines the performance criteria and

### Scope and period
- Defines the performance criteria and indicative targets of Niger’s program under the Extended Credit Facility (ECF) arrangement for the period Q1-2017 to Q1-2020.
- Performance criteria and indicative targets for 2017 and the first half of 2018 are set out in Tables 1 and 2 of the Memorandum of Economic and Financial Policies (MEFP) attached to the Letter of Intent of November 30, 2017.
- Structural benchmarks appear in Tables 3 to 6.
- Sets out data-reporting requirements for program monitoring.

### Definitions (selected)
- Government: the central government of the Republic of Niger; excludes political subdivisions, public entities, or central bank with separate legal personality.
- Debt: current (not contingent) liability created under a contractual arrangement requiring one or more payments in assets or services according to a specific schedule (see paragraph 8 of the Guidelines on Public Debt Conditionality in Fund Arrangements, Decision No. 15688-(14/107) of December 5, 2014).
  - Primary forms listed: (i) loans (including deposits, bonds, debentures, commercial loans, buyers’ credits, repurchase agreements, official swap arrangements); (ii) suppliers’ credits; (iii) leases (debt equals present value at inception of lease payments expected, excluding operation/repair/maintenance payments).
  - Arrears, penalties, and judicially awarded damages from failure to pay contractual debt are debt.
- Domestic payments arrears: domestic payments owed by the government but not paid; include committed and authorized fiscal year expenditures not paid within 90 days.
- External payments arrears: payments due but not paid.
- Government obligation: any financial obligation of the government accepted as such by the government (including any government debt).

### A. Quantitative Performance Criteria — Net Domestic Financing of the Government
- Definition of net domestic financing of the government: sum of (i) net bank credit to the government; (ii) net nonbank domestic financing of the government, including government securities issued in CFAF on the WAEMU regional financial market and not held by resident commercial banks, proceeds from the sale of government assets, and privatization receipts.
- Net bank credit to the government: balance of government claims and debts vis-à-vis national banking institutions. Government claims include cash holdings of the Nigerien Treasury, secured obligations, deposits with the central bank, and deposits of the Treasury (including regional offices) with commercial banks.
  - Government deposits with commercial banks are excluded from government claims insofar as they are used solely to finance externally financed capital expenditure.
- Government debt to the banking system includes assistance from the central bank (excluding net IMF financing under the ECF), the CFAF counterpart of the 2009 General SDR Allocation, assistance from commercial banks (including government securities held by the central bank and commercial banks) and deposits with the CCP (postal checking system).
- Scope and calculation:
  - Net bank credit to the government, as defined by the BCEAO, includes all central government administrations.
  - Net bank credit to the government and the amount of Treasury bills and bonds issued in CFAF on the WAEMU regional financial market are calculated by the BCEAO.
- Net nonbank domestic financing includes:
  - (i) the change in the stock of government securities (Treasury bills and bonds) issued in CFAF on the WAEMU regional financial market and not held by resident commercial banks;
  - (ii) the change in the balance of Treasury correspondents’ deposit accounts;
  - (iii) the change in the balance of various deposit accounts at the Treasury; and
  - (iv) the change in the stock of claims on the government forgiven by the private sector.
  - Net nonbank financing is calculated by the Nigerien Treasury.
- Quarterly targets basis:
  - The 2017 quarterly targets are based on the change between the end-December 2016 level and the date selected for the performance criterion or indicative target.
- Adjustment rules:
  - The ceiling on net domestic financing of the government will be subject to adjustment if disbursements of external budgetary support net of external debt service and external arrears payments, including disbursements under the ECF, fall short of program projections.
  - If, at the end of each quarter of 2017, disbursements of external budgetary support fall short of the projected amounts at the end of each quarter, the corresponding quarterly ceilings will be raised pro tanto, up to a maximum of CFAF 15 billion in 2017 and CFAF 30 from 2018 onward.
  - From 2018 onward, the ceiling on net domestic financing will also be adjusted for deviations from programmed domestic payment arrears clearance: the ceiling on domestic financing will be adjusted up (down) one-for-one for arrears clearance in excess (in deficit) of programmed levels.
- Reporting requirement:
  - Detailed data on domestic financing of the government will be provided monthly, within six weeks after the end of each month.

### A. Quantitative Performance Criteria — Reduction of Domestic Payments Arrears
- Definition:
  - Reduction of domestic payments arrears = difference between the stock of arrears at end-2016 and the stock of arrears on the reference date.
- Responsibilities:
  - The Centre d’amortissement de la dette intérieure de l’Etat (CAADIE) and the Treasury are responsible for calculating the stock of domestic payments arrears on government obligations and recording their repayment.
- Reporting requirement:
  - Data on the stock, accumulation (including the change in Treasury balances outstanding), and repayment of domestic arrears on government obligations will be provided monthly, within six weeks after the end of each month.
- Adjustment:
  - Programmed arrears clearance in 2018 will be adjusted up (down) one-for-one for any shortfall (excess) relative to programmed arrears clearance programmed for end-2017.
  - Arrears clearance shall not be negative.

### A. Quantitative Performance Criteria — External Payments Arrears
- Definition and commitment:
  - Government undertakes not to accumulate external payments arrears on its debt (including Treasury bills and bonds issued in CFAF on the WAEMU regional financial market), except arrears arising from debt being renegotiated with external creditors, including Paris Club creditors.
- Reporting requirement:
  - Data on the stock, accumulation, and repayment of external payments arrears will be provided monthly, within six weeks after the end of each month.

### A. Quantitative Performance Criteria — External Nonconcessional Loans Contracted or Guaranteed by the Government
- Definition and rule:
  - The government and the public enterprises listed in paragraph 21 undertake not to contract or guarantee external debt with an original maturity of one year or more and having a grant element of less than 35 percent.
  - For program purposes, a debt is concessional if it includes a grant element of at least 35 percent, calculated as: grant element = (PV of debt subtracted from nominal value) expressed as a percentage of the nominal value of the debt.
  - The PV of debt at contracting is calculated by discounting the future stream of payments of debt service due on this debt using a discount rate of 5 percent.
  - Note: On October 11, 2013, the Executive Boards of the IMF and of the World Bank adopted a new methodology setting a single, unified rate to calculate the grant element of individual loans; the unified rate is set at 5 percent.
- Scope:
  - Applies to debt as defined in paragraph 8 of the Guidelines on Public Debt Conditionality in Fund Arrangements and to any obligation contracted or guaranteed for which no value has been received.
  - Does not apply to financing provided by the IMF and to debt rescheduling in the form of new loans.
- Guarantee definition:
  - The guarantee of a debt arises from any explicit legal obligation of the government to service a debt in the event of nonpayment by the debtor (involving payments in cash or kind).
- External debt currency definition:
  - External debt = debt denominated, or requiring repayment, in a currency other than the CFA franc. This also applies to debt contracted among WAEMU member countries and with WAEMU financial institutions.
- Public sector coverage:
  - Public sector includes government and the following public enterprises: (i) Société Nigérienne d’Electricité (Nigelec); (ii) Société de Construction et de Gestion des Marchés (Socogem); (iii) Société Nigérienne des Produits Pétroliers (Sonidep); (iv) Société Nigérienne des Télécommunications (Sonitel); (v) Société de Patrimoine des Mines du Niger (Sopamin); and (vi) Société propriétaire et exploitante de l’Hotel Gaweye (SPEG).
- Reporting requirement:
  - Details on all external public sector debt will be provided monthly, within six weeks after the end of each month.
  - The same requirement applies to guarantees granted by the central government.
  - The Ministry of Finance will regularly forward to Fund staff a list of loans in process of negotiation and semiannual reports on any external debt contracted or in process of negotiation and the terms thereof, and on the borrowing program for the next six months including the terms thereof.

### A. Quantitative Performance Criteria — Short-Term External Debt of the Central Government
- Definition:
  - The government will not accumulate or guarantee new external debt with an original maturity of less than one year.
  - Applies to debt as defined in paragraph 8 of the Guidelines and to any obligation contracted or guaranteed for which no value has been received.
  - Exclusions: short-term loans related to imports and short-term securities issued in CFAF on the regional financial market.
- Reporting requirement:
  - Details on all external government debt will be provided monthly, within six weeks after the end of each month; same requirement applies to guarantees granted by the government.

### B. Quantitative Targets — Definitions and Limits
- Total revenue: indicative target; includes tax, nontax, and special accounts revenue; excludes proceeds from the settlement of reciprocal debts between the government and enterprises.
- Basic fiscal deficit: difference between (i) total tax revenue and (ii) total fiscal expenditure excluding externally financed investment expenditure but including HIPC-financed expenditure.
- WAEMU definition: basic fiscal deficit = basic balance described above plus budgetary grants.
- Floor on poverty-reducing expenditure: indicative target; comprises all budget lines included in the Unified Priority List (UPL) of poverty-reducing and HIPC-financed expenditures.
- Limit on expenditures paid through exceptional procedures (without prior commitment), excluding debt service payments and expenditures linked to tax exemptions: 5 percent of total authorized expenditures during the quarter for which the target is assessed.
- Reporting requirements:
  - Information on basic budget revenue and expenditures: monthly, within six weeks after the end of each month.
  - Information on UPL expenditures: quarterly, within six weeks after the end of each quarter.
  - Information on exceptional expenditure: quarterly, after six weeks after the end of the quarter.

### Additional information for program monitoring — A. Government Finance (reporting commitments)
- Authorities will forward to IMF staff:
  - Detailed monthly estimates of revenue and expenditure, including priority expenditure, the payment of domestic and external arrears, and a breakdown of customs, DGI, and Treasury revenue.
  - The Table of Government Financial Operations with comprehensive monthly data on domestic and external financing of the budget, and changes in arrears and Treasury balances outstanding (monthly, within six weeks after the end of each month).
  - Comprehensive monthly data on net nonbank domestic financing: (i) change in the stock of government securities (Treasury bills and bonds) issued in CFAF on the WAEMU regional financial market and not held by resident commercial banks; (ii) change in the balance of various deposit accounts at the Treasury; (iii) change in the stock of claims on the government forgiven by the private sector.
  - Quarterly data on expenditure for UPL lines (statement of appropriations approved, disbursed, and used).
  - Quarterly reports on budget execution, including the rate of execution of poverty-reducing expenditure and use of appropriations by line ministries (National Education, Public Health, Equipment, Agriculture, Livestock).
  - Monthly data on Treasury balances outstanding, by reference fiscal year, with a breakdown of maturities of more than and less than 90 days.
  - Monthly data on effective debt service (principal and interest) compared with programmed maturities provided within four weeks after the end of each month.
  - List of external loans contracted in process of negotiation and projected borrowing in the next six months, including financial terms and conditions.

### Additional information for program monitoring — B. Monetary Sector (reporting commitments)
- Monthly, within eight weeks following the end of each month:
  - Consolidated balance sheet of monetary institutions and, where applicable, consolidated balance sheets of individual banks.
  - Monetary survey (provisional data).
  - Borrowing and lending interest rates.
  - Customary banking supervision indicators for banks and nonbank financial institutions (and, where applicable, these indicators for individual institutions).

### Additional information for program monitoring — C. Balance of Payments
- Authorities will provide:
  - Any revision of balance of payments data (including services, private transfers, official transfers, and capital transactions) whenever they occur.
  - Preliminary annual balance of payments data, within six months after the end of the reference year.

### Additional information for program monitoring — D. Real Sector
- Authorities will provide:
  - Disaggregated monthly consumer price indexes, within two weeks following the end of each month.
  - The national accounts, within six months after the end of the year.
  - Any revision of the national accounts.

### Additional information for program monitoring — E. Structural Reforms and Other Data
- Authorities will provide:
  - Any study or official report on Niger’s economy, within two weeks after its publication.
  - Any decision, order, law, decree, ordinance, or circular with economic or financial implications, upon its publication or, at the latest, when it enters into force.
  - Any draft contract in the mining and petroleum sectors, including production and sales volumes, prices, and foreign investment.
  - Any agreement with private sector stakeholders having economic or financial repercussions for the government, including in the natural resources sector.

### Summary of Data to be Reported (selected items and deadlines)
- Real sector:
  - National accounts: Annual — End-year + 6 months.
  - Revisions of the national accounts: Variable — 8 weeks after the revision.
  - Disaggregated consumer price indexes: Monthly — End-month + 2 weeks.
- Government finance (examples):
  - Net government position vis-à-vis the banking system: Monthly — End-month + 6 weeks.
  - Complete monthly data on net nonbank domestic financing: Monthly — End-month + 6 weeks.
  - Provisional TOFE, including a breakdown of revenue (DGI, Monthly DGD and DGTCP) and expenditure, including repayment of domestic wage and nonwage arrears, as at end-1999, and the change in Treasury balances outstanding: Monthly — End-month + 6 weeks.
  - Data on Treasury balances outstanding (RAP), by reference fiscal year (total and RAP at more than 90 days): Monthly — End-month + 6 weeks.
  - Execution of the investment budget: Quarterly — End-quarter + 6 weeks.
  - Table of fiscal expenditure execution, unified list expenditure, and HIPC-financed expenditure: Monthly — End-month + 6 weeks.
  - Monthly statement of the balances of accounts of the Treasury and of other public accounts at the BCEAO: Monthly — End-month + 6 weeks (provisional); End-month + 10 weeks (final).
  - Petroleum products pricing formula, petroleum products tax receipts, and pricing differentials: Monthly — End-month + 6 weeks.
- Monetary and financial data:
  - Consolidated balance sheet of monetary institutions and, where applicable, consolidated balance sheets of individual banks: Monthly — End-month + 8 weeks.
  - Borrowing and lending interest rates: Monthly — End-month + 8 weeks.
  - Banking supervision prudential indicators: Quarterly — End-quarter + 8 weeks.
- Balance of payments:
  - Balance of payments: Annual — End-year + 6 months.
  - Balance of payments revisions: Variable — At the time of the revision.
- External debt:
  - Stock and repayment of external arrears: Monthly — End-month + 6 weeks.
  - Breakdown of all new external loans signed and projected borrowing, including the financial terms and conditions: End-month + 6 weeks.
  - Table on the monthly effective service of external debt (principal and interests), compared with the programmed maturities: Monthly — End-month + 4 weeks.

*Source: cr17394 - Technical memorandum of understanding*

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_Source: https://www.imf.org/-/media/files/publications/cr/2017/cr17394.pdf_