## cr18141

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### CONTEXT: Fragility, Security, and Structural Constraints
- Mali characterized as a fragile state with a challenging security situation and an undiversified economy.
- Key structural constraints and vulnerabilities:
  - Landlocked position increasing production and trade costs.
  - High poverty rates and weak human capital from limited access to basic services.
  - Persistent insecurity increasing budgetary pressure and discouraging investment and growth.
  - Agriculture accounts for over 30 percent of GDP; cotton and gold account for over 80 percent of exports.
- Security and fiscal implications:
  - Military and security expenditures have more than doubled since 2012.
  - Military and security spending (percent of GDP): 2012: 1.7; 2013: 2.1; 2014: 2.5; 2015: 3.2; 2016 Rev.: 3.7; 2017 Est.: 3.8.
- Recent historical context:
  - 2012 crisis: real GDP contracted by 0.8 percent in 2012; over 420,000 displaced.
  - Peace agreement in June 2015 not fully resolved security challenges; attacks spread since 2015.
- Regional response:
  - G5 Sahel joint force reactivated in 2017 with international support.

### RECENT DEVELOPMENTS AND PROGRAM IMPLEMENTATION
- Growth and inflation:
  - Preliminary GDP growth for 2017: 5.3 percent.
  - Inflation in 2017: 1.1 percent.
- External sector:
  - Overall balance of payments in 2017: surplus of 0.7 percent of GDP (narrowed by 4.6 percentage points from 2016).
  - Capital and financial account surplus increased to 5.6 percent of GDP.
  - Current account deficit in 2017: 6 percent of GDP.
  - REER: depreciated by about 5 percent since 2014; staff view REER broadly consistent with fundamentals.
- Fiscal outcomes and financing:
  - 2017 fiscal deficit (preliminary): 2.9 percent of GDP (below program targets of 3.5 percent of GDP overall deficit and basic deficit of 1.1 percent of GDP).
  - Revenue-to-GDP (percent of GDP): 2012: 11.9; 2013: 12.3; 2014: 12.5; 2015: 14.0; 2016 Rev.: 14.9; 2016 Prog.: 15.3; 2017 Est.: 15.2.
  - Expenditure-to-GDP (percent of GDP): 2012: 14.0; 2013: 18.2; 2014: 18.4; 2015: 19.2; 2016 Rev.: 21.1; 2016 Prog.: 22.9; 2017 Est.: 21.2.
  - Capital expenditure: 2012: 2.7 percent of GDP; 2016 Rev.: 9.9 percent of GDP; 2017 Est.: 8.8 percent of GDP. Externally financed capital expenditures: 2015: 3.6 percent of GDP; 2017 Est.: 2.8 percent of GDP.
  - Authorities increased recourse to domestic debt in 2016 and 2017 to offset lower foreign loans and grants.
- Debt and risks:
  - Updated DSA: confirmed a moderate risk of debt distress.
  - Domestic public debt increased sharply in 2016 and 2017.
- Financial sector:
  - Banking sector capitalization ratio (regulatory required capital to risk-weighted assets): 14.2 percent end-2016; 13.6 percent June 2017; 13 percent end-December 2017.
  - Nonperforming loans (NPLs): 16.4 percent end-2016; 17.3 percent end-June 2017; 16.7 percent end-December 2017.
  - Microfinance sector growth rapid; liquidation of failing MFIs limited (2 MFIs liquidated out of 23 deemed not viable).

### EXTERNAL SECTOR ASSESSMENT (Box 2)
- Current account and trade:
  - Current account deficit (including grants) 2017: 6 percent of GDP (2016: 7.2 percent of GDP).
  - Trade balance 2017: deficit of 15.7 percent of GDP (improved by 1.2 percentage points).
- REER and external position:
  - CA model: current account gap about -0.5 percent of GDP relative to adjusted norm of -5.5 percent at end-2017.
  - Assuming current account elasticity of 24 percent, suggests REER overvaluation of 2.4 percent.
  - IREER panel regression indicates undervaluation of 14 percent.
  - Given margin of error, staff view CA and REER in line with fundamentals.
- Structural constraints to external performance:
  - Weak business environment, governance, electricity coverage, access to finance, investor protection, health and education.
  - Exports poorly diversified: gold and cotton concentration (about 65 percent and 15 percent of total exports, respectively).

### MACROECONOMIC OUTLOOK, PROJECTIONS, AND RISKS
- Baseline projections and assumptions:
  - Real GDP growth projected at 5 percent in 2018; medium-term around 4.7 percent.
  - Inflation: moderate at about 2 percent.
  - Current account deficit projected to deteriorate to about 6.5 percent of GDP in 2018.
- Key projection figures (selected):
  - Real GDP growth: 2014: 7.0; 2015: 6.0; 2018 (Prog., table variants): 5.8 (table) / baseline text: 5 percent; medium-term: 4.7.
  - Consumer price inflation (average): 2014: 0.9; 2015: 1.4; medium-term around 2.2.
  - Revenue 2014: 14.9 percent of GDP; 2015: 16.4; projected 20.4 by 2023.
  - Total public debt 2014: 27.3 percent of GDP; 2015: 30.7; projected 40.4 by 2023.
- Key risks:
  - Security risk: volatile security situation and spread of violent attacks.
  - Agricultural/weather risk.
  - Commodity concentration: high dependence on gold and cotton.
  - External risks: shifting terms of trade, reductions in donor funding, falling FDI.
- Staff and authorities:
  - Authorities broadly concurred with projections; noted scope to revise projections to reflect new gold mine and rising oil prices.

### FISCAL POLICY, 2018 BUDGET AND MEDIUM-TERM PRIORITIES
- 2018 budget (2018 PLF) key figures:
  - Total revenues and grants: CFAF 1,948.9 billion (20.6 percent of GDP).
  - Net tax revenue: CFAF 1,498.9 billion (15.9 percent of GDP).
  - Expected disbursements from grants: CFAF 114.6 billion (1.2 percent of GDP).
  - Total expenditure and net loans: CFAF 2,261.3 billion (23.9 percent of GDP).
  - Overall budget deficit (authorizations, including grants): CFAF 312.4 billion (3.3 percent of GDP).
  - Basic fiscal deficit: CFAF 124.4 billion (1.6 percent of GDP).
  - Targeted election spending: CFAF 45 billion (0.5 percent of GDP).
  - Development expenditures for northern regions and peace agreement implementation: CFAF 125.2 billion (1.3 percent of GDP).
  - Capital expenditure for transport, energy, agriculture, food security: CFAF 233.3 billion (2.5 percent of GDP).
- Financing strategy for 2018:
  - Rely more on domestic and regional sources; authorities project about 1.2 percent of GDP of external support in 2018 (0.4 budget support and 0.9 project grants).
  - Authorities intend to increase domestic financing to the equivalent of 2.6 percent of GDP in 2018.
- Staff advice and medium-term priorities:
  - Preserve macroeconomic stability in an election year.
  - Create fiscal space: broaden tax base and enhance spending efficiency.
  - Promote sustainable growth and competitiveness: diversify exports and improve business environment.
  - Strengthen financial sector: reduce NPLs, manage bank concentration, address microfinance weaknesses.
  - Enhance governance and fight corruption: implement law against illicit enrichment, improve asset declarations and public financial controls.

### REVENUE MOBILIZATION, TAX ADMINISTRATION, AND MINING SECTOR
- Revenue mobilization:
  - Tax revenue increased to an estimated 15.2 percent of GDP in 2017 (from 11.9 percent in 2012).
  - WAEMU Convergence Pact target: 20 percent of GDP in tax-to-GDP ratio.
  - Staff analysis: improve revenue collection at borders by 1½–2 percentage points of GDP via tax policy and customs reforms.
- Customs and tax administration reforms:
  - Drivers of revenue gains: higher tax rates, base expansion, compliance improvement, IMF TA support.
  - Authorities intend to reduce exemptions, broaden base, and reform incentive systems for tax and customs inspectors.
- Mining sector:
  - Mining sector represents about 6.5 percent of GDP; 65 percent of total exports; and 20 percent of total fiscal revenues.
  - Reserves estimated in 2017 at some 830 tons of gold; total output from ten large-scale mines: 50.9 tons in 2016; expected up to 60 tons by 2018 with two new projects.
  - Three mining codes coexist (1991, 1999, 2012); planned mining code review to ring-fence, streamline levies, reduce duration of stability clauses, and improve progressivity.
  - 1991 stability clauses remain in effect for seven out of ten mining companies (30-year clauses).

### PUBLIC INVESTMENT MANAGEMENT AND EFFICIENCY (Box 5)
- PIMA findings:
  - Public Investment Efficiency Index rating: 0.57 (scale 0–1) from June 2017 PIMA mission.
  - Sub-Saharan average: 0.64; emerging countries: 0.73.
  - Average efficiency gap: 27 percent; Mali gap: 43 percent.
  - About 43 percent of potential value of public investment is lost to inefficiencies (corruption/fraud, cost overruns, delays, inadequate maintenance, supplier capacity).
- Policy recommendations:
  - Implement PIMA recommendations: evaluate major projects prior to selection, strengthen project appraisal and selection, build staff capacity, develop results-oriented management, and preserve PIM framework while improving implementation.

### FINANCIAL SECTOR REFORMS, NPL STRATEGY, AND MICROFINANCE
- Financial sector actions:
  - Credit bureau operational since May 2015; BCEAO Banking Commission resolution powers enhanced.
  - Action plan (June 2016) to enhance regulatory framework for MFIs, build capacity, secure stable resources, and expedite liquidation of failing MFIs.
  - Strategy to reduce NPLs being developed with Fund assistance (structural benchmark June 30, 2018, reprogrammed where applicable).
- Banking sector indicators:
  - Capital adequacy: 14.2 percent end-2016; 13.6 percent June 2017; 13 percent end-December 2017.
  - Gross NPLs: 16.4 percent end-2016; 17.3 percent June 2017; 16.7 percent December 2017.
- Microfinance:
  - Activity regained momentum since 2012; limited liquidation of weak MFIs (2 out of 23 deemed not viable).

### GOVERNANCE, ANTI-CORRUPTION, AND ASSET DECLARATIONS
- Governance concerns:
  - Worldwide Governance Indicators declined; perceived public corruption score: 32 out of 100.
  - Office of the Auditor General uncovered large cases of corruption; prosecutions limited.
- Law against illicit enrichment:
  - Implementation stalled in late 2017; asset declaration resumed after consensus.
  - Achievement and targets:
    - Reached 20 percent declaration rate for 1,479 officials at end-February 2018.
    - Targets: 35 percent by June 30, 2018; 50 percent by end-October 2018.
  - Multi-stakeholder panel to finalize comprehensive list by end-August 2018.
- Program recommendations:
  - Expedite transmittal of declarations to Supreme Court; Central Office against Corruption to monitor declarations; strengthen AML/CFT framework.

### PROGRAM PERFORMANCE, CONDITIONALITY, AND MONITORING
- ECF program reviews and performance:
  - Seventh review completed July 7, 2017; eighth and ninth reviews completed subsequently.
  - All quantitative targets for eighth and ninth reviews and continuous performance criteria were met.
  - Structural benchmark implementation slower than expected; only half met as planned.
- 2017 shortfall in external support: about 0.8 percent of GDP (0.5 percent of GDP in budget support and 0.3 percent of GDP in project loans).
- 2017 fiscal performance:
  - Net tax revenue: CFAF 1358 billion (15.3 percent of GDP).
  - Grants disbursed: CFAF 144 billion (1.6 percent of GDP) vs. initial objective CFAF 202.7 billion (2.3 percent of GDP).
  - Protected appropriations: elections CFAF 18 billion; LPSI CFAF 20 billion.
- TMU and 2018 performance criteria (selected target levels, CFAF billions where applicable):
  - Ceiling on net domestic bank and market financing of the government: 389 (June); 467 (September, indicative).
  - New external debt contracted or guaranteed (PV, cumulative from June 2015): 426 (June); 426 (September, indicative).
  - Gross tax revenue (floor): 775 (June); 1,146 (September, indicative).
  - Indicative basic fiscal balance (floor): -155 (June); -208 (September, indicative).
  - Priority poverty-reducing expenditure (floor): 142 (June); 341 (September, indicative).
- Reporting requirements:
  - Extensive monthly and quarterly reporting timetables for TOFE, fiscal and monetary data, debt service, and sectoral indicators defined in TMU.

### DEBT SUSTAINABILITY ANALYSIS (DSA) — FINDINGS AND SENSITIVITIES
- DSA main findings:
  - Risk of debt distress: Moderate.
  - Public debt projected to grow from about 35.6 percent of GDP in 2017 to 51.1 percent in 2038.
  - PV of PPG debt-to-exports ratio shows strong uptrend and is a note of concern.
  - Inclusion of domestic debt worsens debt profile; PV public sector debt-to-GDP increases to between 26.8 and 36.1 percent during projection period.
  - PV public sector debt-to-revenue deteriorates to between 134 and 151 percent during projection period.
- Stress tests and vulnerabilities:
  - Export-market growth shock could cause PV debt-to-exports ratio to breach threshold in 2037.
  - Combined shocks to FDI and transfers could nearly breach threshold by 2038.
  - Most extreme scenarios can sustain breaches of PV PPG external debt-to-exports threshold.
- Policy implications:
  - Diversify exports, prioritize grants and concessional financing, strengthen debt management, expand fiscal space via revenue mobilization and spending efficiency.

### CAPACITY BUILDING FRAMEWORK (Annex I) — TA PRIORITIES AND RISKS
- Policy priorities for TA:
  - (i) prudent macroeconomic policies and fiscal discipline;
  - (ii) increase domestic revenue by enlarging tax base;
  - (iii) address banking sector weaknesses.
  - Strengthen real sector statistics.
- Past TA delivered across revenue administration, PFM, natural resource management, AML/CFT, statistics, cash and debt management.
- TA going forward (2016–18) priority sectors and objectives:
  - Revenue Administration: broaden tax base, improve audits, reform HR and incentive systems; target Tax-to-GDP 15.7 percent by 2018.
  - Public Finance Management: finalize TSA, strengthen budget processes, transition to program budgeting and GFSM 2001.
  - Financial Sector: strengthen merged bank, reduce NPLs to single digits (2016–18 target).
  - National Accounts and Prices: develop quarterly national accounts and PPI; implement SNA 2008.
- TA risks and mitigation:
  - Risk 1: Persistent security situation — Probability: High; Impact: Medium.
  - Risk 2: Weakening political commitment — Probability: Medium; Impact: High.
  - Risk 3: Implementation capacity constraints — Probability: Medium; Impact: High.
  - Risk 4: Financing risk — Probability: Medium; Impact: High.
  - Mitigants include donor support, government commitment, hands-on training, and inclusion of TA costs in budgets.

### STAFF APPRAISAL HIGHLIGHTS AND POLICY RECOMMENDATIONS
- Staff appraisal:
  - Economic recovery since 2012; outlook favorable if reform momentum maintained.
  - Need to emphasize effectiveness of pro-poor spending and strengthen local budget management.
  - Program performance satisfactory; capacity to repay the Fund adequate.
- Key fiscal recommendations:
  - Foster revenue mobilization to meet WAEMU 20 percent tax-to-GDP target.
  - Strengthen efficiency of public spending and public investment management.
  - Improve taxation of the mining sector and implement transfer pricing and thin-capitalization rules.
  - Contain tax expenditures and implement TSA and program budgeting.
- Financial sector and structural reforms:
  - Address bank credit concentration and reduce high NPL ratio.
  - Reform microfinance sector; promote financial inclusion and mobile banking.
  - Improve business environment: reduce corruption, improve power and transport infrastructure, increase access to affordable credit, address skills shortages.
- Monitoring and program continuity:
  - Staff recommends next Article IV consultation on 24-month cycle.
  - Tenth review based on end-June 2018 and continuous performance criteria; conclusion expected on or after November 1, 2018.

*International Monetary Fund. Mali staff report excerpts, May 7, 2018 (cr18141).*

### 63.3 million

### 63.3 million

### CONTEXT: Fragility and Security Challenges
- Mali is characterized as a fragile state with a challenging security situation and an undiversified economy (box 1).
- Key structural constraints:
  - Landlocked position increasing production and trade costs.
  - High poverty rates and weak human capital due to limited access to basic services.
  - Persistent insecurity that increases budgetary pressure and discourages investment and growth.
  - Agriculture accounts for over 30 percent of GDP; cotton and gold account for over 80 percent of exports, leaving the economy vulnerable to adverse weather and commodity price fluctuations.
- Security and fiscal implications:
  - The share of security spending in Mali’s budget has been increasing, complicating preservation of spending on social services and development (Text Figures 1 and 2).
  - Military and security expenditures have more than doubled since 2012.
- Recent historical context:
  - The 2012 crisis (rebellion, coup, Islamist control of northern areas) caused a sharp recession (real GDP contracted by 0.8 percent in 2012) and humanitarian impacts (over 420,000 displaced).
  - Peace agreement in June 2015 has not fully resolved security challenges; attacks have spread since 2015 to central and southern Mali and neighboring countries.
- Regional response:
  - G5 Sahel joint force reactivated in 2017 with international support to address cross-border jihadist threats.

### RECENT DEVELOPMENTS AND PROGRAM IMPLEMENTATION
- Growth and inflation:
  - Preliminary GDP growth for 2017: 5.3 percent.
  - Inflation in 2017: 1.1 percent.
  - Growth supported by good harvests, robust tertiary sector performance, and vigorous capital spending.
- External sector:
  - Overall balance of payments in 2017: surplus of 0.7 percent of GDP (narrowed by 4.6 percentage points from 2016).
  - Capital and financial account surplus increased by about 3 percentage points to 5.6 percent of GDP due to higher inflows of grants and multilateral loans (carry-over from delayed 2016 disbursements).
  - Current account deficit in 2017: 6 percent of GDP.
  - External sector assessment: real effective exchange rate broadly consistent with fundamentals, but structural competitiveness remains weak (Box 2).
- Fiscal outcomes and financing:
  - 2017 fiscal deficit (preliminary): 2.9 percent of GDP, below program targets of an overall fiscal deficit at 3.5 percent of GDP (payment-order basis) and a basic deficit of 1.1 percent of GDP.
  - Revenue-to-GDP evolution (selected years, percent of GDP): 2012: 11.9; 2013: 12.3; 2014: 12.5; 2015: 14.0; 2016 Rev.: 14.9; 2016 Prog.: 15.3; 2017 Est.: 15.2.
  - Expenditure-to-GDP (selected years, percent of GDP): 2012: 14.0; 2013: 18.2; 2014: 18.4; 2015: 19.2; 2016 Rev.: 21.1; 2016 Prog.: 22.9; 2017 Est.: 21.2.
  - Military and security spending (percent of GDP): 2012: 1.7; 2013: 2.1; 2014: 2.5; 2015: 3.2; 2016 Rev.: 3.7; 2016 Prog.: ...; 2017 Est.: 3.8.
  - Capital expenditure trends: capital expenditure rose from 2.7 percent of GDP in 2012 to 9.9 percent in 2016 Rev., then 8.8 percent in 2017 Est.; externally financed capital expenditures rose to 3.6 percent in 2015 and were 2.8 percent in 2017 Est.
  - Authorities planned additional recourse to domestic debt to offset an expected 2018 shortfall in external financing, increasing domestic public debt sharply in 2016 and 2017.
- Debt and risks:
  - Updated debt sustainability analysis: confirmed a moderate risk of debt distress (Annex I).
  - Domestic public debt increased sharply in 2016 and 2017 as the government used domestic financing to offset lower foreign loans and grants.
- Financial sector:
  - Banking sector capitalization increased, but nonperforming loans remained elevated: NPLs at 16.7 percent in December 2017 (Table 9).
  - High concentration of banks' loan portfolios remains a concern.
  - Microfinance sector growth rapid; liquidation of failing microfinance institutions remains limited.
- Program implementation and conditionality:
  - 2017 fiscal outturn at end-June and end-December broadly in line with the program.
  - Revenues came in slightly above target; capital and some current expenditures under-executed.
  - Shortfall in external support in 2017: about 0.8 percent of GDP (0.5 percent of GDP shortfall in budget support and 0.3 percent of GDP in project loans).

### POLICY DISCUSSIONS AND MEDIUM-TERM CHALLENGES (selected highlights)
- Near-term priority:
  - Preserve macroeconomic stability in an election year with security challenges and lower external financing (section A).
- Medium-term priorities:
  - Creating fiscal space (section B): need to optimize use of available fiscal space given tight tax-to-GDP ratio and rising security spending.
  - Promoting sustainable growth and competitiveness (section C): address weak structural competitiveness and undiversified export base.
  - Strengthening financial sector development and contribution to growth (section D): contain high NPLs, manage bank concentration, and address microfinance sector weaknesses.
  - Enhancing economic governance and fighting corruption (section E): implementation of anti-corruption measures and governance improvements remain a priority.

### IMPLEMENTATION OF KEY RECOMMENDATIONS FROM THE 2015 ARTICLE IV CONSULTATION (Text Table 2)
- Continue to strengthen public financial management: Work in progress. PFM reforms benefitted from intense Fund TA support (MEFP, ¶¶15,35-36,45,67).
- Gradually implement the decentralization process and resource transfers: Work in progress. Transfers to local government reached 22.9 percent of revenue in 2016, 24.4 percent in 2017 and expected to rise to 25.3 in 2018 (MEFP, ¶36).
- Strengthen basic infrastructure, education, and training to raise human capital: Work in progress. Efficiency gaps in public investment management hamper infrastructure agenda; implementation of PIMA recommendations is underway (MEFP, ¶¶38-39).
- Strengthen the business climate, including regulation, labor taxation, and AML/CFT framework: Work in progress.
- Improve governance to facilitate economic dividends: Work in progress. Authorities made headway implementing the 2014 law on fighting corruption and illicit enrichment (MEFP, ¶¶11, 52-54).
- Address rapid population growth challenges: Work in progress. Authorities expressed reservations to policy advice addressing high fertility and contraception gap for cultural reasons; efforts underway to boost inclusive growth.
- Address weaknesses in the financial sector:
  - Partly done. BHM merged with BMS (another public bank); the new bank is being reformed and its balance sheet strengthened to prepare for privatization.
  - Liquidation of weak MFIs limited: 2 MFIs liquidated out of 23 deemed not viable.
  - An overall strategy to reduce NPLs is being developed with Fund assistance (MEFP, ¶¶63-64x).

*International Monetary Fund. Mali staff report excerpts, May 7, 2018.*

### Box 2. External Sector Assessment

### Box 2. External Sector Assessment

### External position and REER assessment
- In 2017, the current account deficit (including grants) contracted to an estimated 6 percent of GDP, compared to 7.2 percent of GDP in 2016.
- The trade balance improved by 1.2 percentage point to a deficit of 15.7 percent of GDP, reflecting an increase in export of cotton.
- Mali’s real effective exchange rate (REER) has depreciated by about 5 percent since 2014, mainly driven by the US dollar appreciation.
- Mali’s external position is estimated to be broadly consistent with fundamentals based on the EBA-lite methodology.
  - The CA model estimates a current account gap of about -0.5 percent of GDP relative to its adjusted norm of -5.5 percent at end-2017.
  - Assuming a current account elasticity of 24 percent, the methodology suggests a REER overvaluation of 2.4 percent.
  - The IREER panel regression shows a larger undervaluation of 14 percent.
- Given the margin of error, staff is of the view that both the CA and the REER are in line with fundamentals.
- Structural constraints:
  - Weak business environment and slow progress in improving governance inhibit competitiveness and export diversification.
  - Mali lags regional comparators in expanding electricity coverage, enhancing access to finance, strengthening investor protection, and improving health and education standards.
  - Exports are poorly diversified across products and markets.

### Performance under the Program (ECF)
- On July 7, 2017, the Executive Board completed the seventh review under the Extended Credit Facility (ECF) program approved on December 18, 2013; subsequent discussions were delayed but consensus on governance reform against illicit enrichment allowed completion of the eighth and ninth reviews.
- All quantitative targets for the eighth review (end-June 2017 test date) and for the ninth review (end-December 2017 test date) and all continuous performance criteria were met.
  - Eighth review:
    - Ceiling on government bank and market financing met with a significant margin.
    - Gross tax revenue target met with a small margin.
    - Indicative targets on basic fiscal balance and poverty-reducing expenditure were observed.
  - Ninth review:
    - All quantitative targets were met.
    - Authorities strengthened results-based management in tax revenue collection agencies, bolstering revenues.
    - Measures to contain spending in line with available resources were implemented, including program-budgeting framework steps.
    - Expenditure management tools improved to ensure monitoring and evaluation of program-budgeting performance starting in December 2018 (structural benchmark for end-May 2018).
  - Continuous performance criteria on external payment arrears and contracting and guaranteeing of new external debt on non-concessional terms were met.
- Structural benchmarks progress slower than expected: only half of structural benchmarks met as planned.
  - Petroleum pricing:
    - Public information campaign in August 2017; a form of automatic fuel price adjustment mechanism implemented since September 2017 to ensure monthly changes in domestic retail fuel prices follow international price movements within a 3 percent margin.
    - Authorities working on a comprehensive strategy to enhance fiscal revenue from petroleum products as international fuel prices are expected to rise.
  - Integrated Debt Management System and TSA:
    - Second phase carried out in August 2017 with complementary modules; technical issues being resolved to ensure transfer of public entities’ deposits to the BCEAO, completing treasury single account (TSA) implementation.
    - Benchmark proposed to be reformulated to target the rate of transfer of government deposits in the TSA and reprogrammed to end-June 2018.
  - Law against illicit enrichment:
    - Implementation faced legal challenges, inhibiting achievement of targeted 20 percent transmittal rate of government officials’ financial disclosures (reached in February 2018).
    - Authorities target transmittal rates of 35 percent and 50 percent in June 2018 and October 2018, respectively.
  - Tax exemption threshold:
    - Measure on reducing the investment threshold for tax exemption to CFAF 100 million (from CFAF 12.5 billion) is proposed to be reprogrammed to end-July 2018.
  - Expenditure management systems:
    - Authorities made headway implementing recommendations of the 2017 report on compliance of PRED and AICE with new budgeting and accounting processes.

### Macroeconomic outlook and risks
- Baseline projections and assumptions:
  - Real GDP growth projected at 5 percent in 2018, slowing slightly thereafter to settle around 4.7 percent in the medium term (Mali’s long-run estimated potential).
  - Baseline assumes implementation of structural reforms conducive to private sector-led growth and more efficient public investment.
  - Inflation would remain moderate at about 2 percent.
  - Current account deficit projected to deteriorate to about 6.5 percent of GDP in 2018 due to rising oil prices and worsening terms of trade, but stabilize over the medium term as investment and import growth remain constant.
  - Current account deficit will be fully covered by capital inflows as investment and import growth remain constant.
- Key risks (selected from Risk Assessment Matrix):
  - Security risk:
    - Volatile security situation is the most immediate risk; spread of violent attacks could dampen private sector confidence and affect growth and public finances.
  - Agricultural/weather risk:
    - Agricultural output vulnerable to adverse weather conditions.
  - Commodity concentration:
    - High dependence on gold and cotton exports (about 65 percent and 15 percent of total exports, respectively) makes balance of payments vulnerable to international commodity price fluctuations.
  - External risks:
    - Shifting terms of trade, reductions in donor funding, and falling FDI.
- Authorities’ view:
  - Authorities broadly concurred with staff’s projections and risk assessment.
  - They noted scope to revise projections in the next review to reflect impact of a new gold mine coming on stream and rising oil prices.
  - Authorities agreed with staff projections of revenues and expenditures for the medium term and their role in strengthening the fiscal stance and improving the external position.

### Key economic projections and indicators (selected figures)
- Real GDP growth:
  - 2014: 7.0
  - 2015: 6.0
  - 2018 (Prog.): 5.8 (note table includes multiple columns; baseline text states 5 percent for 2018)
  - Medium-term: 4.7 (repeated across 2019–2023 as program projection)
- Consumer price inflation (average):
  - 2014: 0.9
  - 2015: 1.4
  - 2018 (Prog.): -1.8 (table entries include varied columns)
  - Medium-term: around 2.2 (2022–2023 entries)
- Revenue and grants (percent of GDP):
  - Revenue 2014: 14.9; 2015: 16.4; projected rising to 20.4 by 2023.
  - Tax revenue 2014: 12.5; 2015: 14.0; projected rising to 18.1 by 2023.
  - Grants 2014: 2.2; 2015: 2.7; projected around 1.8 by 2023.
- Fiscal balances (percent of GDP):
  - Total expenditure and net lending 2014: 20.0; 2015: 20.9; 2018 (Prog.): 23.0; rising to 25.2 by 2023.
  - Overall balance (payment orders) 2014: -2.9; 2015: -1.8; 2018 (Prog.): -2.9; program target around -3.0 in medium term.
  - Basic fiscal balance 2014: -1.2; 2015: 0.5; projected to improve gradually to -0.5 by 2023.
  - Total public debt 2014: 27.3; 2015: 30.7; projected 40.4 by 2023.
- Current external balance (including official transfers):
  - 2014: -4.7; 2015: -5.3; 2018 (Rev. Prog. entries vary); medium-term around -6.4 by 2023.
- Text Table 4—Impact of tax revenue measures (Billion of CFAF / Percent of GDP):
  - Implementation of the 2017 law on exemptions: 28 / 0.3
  - Improvements in tax administrations: 28 / 0.3
  - Customs revenues (VAT and other duties): 10 / 0.1
  - Domestic revenues (VAT and other revenues): 19 / 0.2
  - Total: 57 / 0.6

### Policy discussions and recommended responses
- Policy priorities anchored on the National development plan (CRED).
- Short-term fiscal strategy constrained by WAEMU regional rules, financing availability, and debt sustainability concerns.
- Near-term challenge: preserving macroeconomic stability in an election year with security challenges and lower external financing.
  - 2018 budget adopted in late December 2017 projects an overall deficit of 3.3 percent of GDP, consistent with reaching the WAEMU deficit criterion of 3 percent of GDP by 2019.
  - Tax revenues expected to increase by 0.6 percent of GDP through measures to reduce exemptions and improve tax administration; law to stop granting new discretionary tax exemptions and reducing other exemptions to be fully implemented in 2018.
  - Appropriations for current spending projected to increase by 0.8 percentage points of GDP; wages and salaries projected to increase by 0.5 percent of GDP; spending on goods and services projected to increase by 0.1 percent of GDP; election-related spending of 0.5 percentage point of GDP accommodated by reducing other spending.
  - Capital outlays projected to increase by 0.7 percentage points of GDP (domestically-financed outlays increase by 0.8 percentage point of GDP; externally-financed capital expenditure decline by 0.1 percentage point of GDP).
  - Budget financing in 2018 to rely more on domestic and regional sources given reduced donor support; authorities project about 1.2 percent of GDP of external support (0.4 budget support and 0.9 project grants) for 2018.
  - Staff advice:
    - Remain vigilant in executing the budget and resist relaxing fiscal stance in electoral context.
    - Temporary use of regional and domestic financing is appropriate but should be reversed to avoid higher borrowing costs and erosion of fiscal space.
    - Step up outreach to donors and accelerate structural reforms to secure more concessional external financing.
  - Authorities’ response:
    - Reiterated commitment to execute the budget as planned and to preserve medium-term fiscal sustainability.
    - If more spending becomes unavoidable, additional revenue will be sought or non-priority spending cut.
    - View the 2018 shortfall in external support as temporary and expect donor support to recover starting in 2019.
- Medium-term challenge 1: creating fiscal space by accelerating reforms to broaden the tax base and enhance the efficiency of public spending (revenue mobilization and public spending efficiency emphasized).

*Source: IMF Staff calculations.*

### 18.      The authorities and staff concurred that sustained revenue mobilization is key to financing

### 18.      The authorities and staff concurred that sustained revenue mobilization is key to financing

### Revenue mobilization: recent performance and targets
- Over 2012–16, tax revenues have increased on average by 0.8 percentage points of GDP in Mali, 0.5 percent of GDP above the WAEMU average.
- Tax revenue increased to an estimated 15.2 percent of GDP in 2017 (from 11.9 percent of GDP in 2012).
- Authorities and staff agree on the need to meet the revenue target set at 20 percent of GDP by the WAEMU Convergence Pact (MEFP, ¶¶16-21).
- Staff analysis indicates Mali could improve revenue collection at the borders by 1½–2 percentage points of GDP through tax policy and customs administration reforms (Text Figure 4).

### Customs and tax administration reforms
- Drivers of recent revenue gains: increasing tax rates, tax base expansion, improvements of taxpayers’ compliance, and stronger tax and customs administrations with IMF technical assistance.
- Authorities intend to:
  - Continue tax base broadening measures and a gradual reduction of exemptions.
  - Step up revenue collection and accelerate reform of incentive systems for tax and customs inspectors within a comprehensive human resource management strategy (MEFP, ¶30).
- Skill-based modernization of human resources is a key pillar in the Directorate of Customs modernization efforts.

### Mining sector management and corporate taxation
- The mining sector currently represents about 6.5 percent of GDP; 65 percent of total export; and 20 percent of total fiscal revenues.
- Mali is Africa’s third-largest gold producer; reserves estimated in 2017 at some 830 tons. Total output from the ten large-scale gold mines reached 50.9 tons in 2016. With two new projects, expected mining production could go up to 60 tons of gold by 2018.
- Three mining codes (1991, 1999 and 2012) coexist; mining codes are managed by four directorates in three different ministries, fragmenting administration and enforcement.
- Reforms in mineral taxation in 1999 and 2012 included:
  - introduction of a 10 percent free equity participation;
  - elimination of the five years CIT exemption applicable after production start;
  - elimination of the 45 percent CIT tax rate and application of the 30 percent General Tax Code rate;
  - introduction of a 25 percent reduced CIT rate for the first 15 years of production in the 2012 code;
  - increase in transparency by online publishing tax agreements and feasibility studies;
  - introduction of a 10 percent capital gains tax from the direct transfer of mining rights.
- 1991 fiscal stability clauses remain in effect for seven out of ten mining companies; characteristics of these clauses:
  - 30 years long stability clauses despite typical mine productive lives of about 10 to 15 years;
  - asymmetrical clauses allowing companies to opt for more favorable provisions;
  - short payback periods generally less than five years;
  - long stability clauses lead to coexistence of several tax regimes and special negotiated agreements for extensions.
- International comparison: Mali’s 2012 tax regime provides for a smaller share of mining rent going to government than in similar countries, and the regime is more regressive—government share relatively larger for less profitable projects.
- Planned mining code review aims to:
  - establish a ring-fencing principle;
  - streamline institutional organization of mandatory levies;
  - reduce duration of stability clauses;
  - improve progressivity of the mining taxation regime.

### International taxation, transfer pricing, and thin-capitalization risks
- In 2015, corporate income tax (CIT) reached 2.4 percent of GDP, with MNEs representing more than 80 percent of CIT revenues (excluding two simplified tax regimes for companies with turnover below FCFA 50 million).
- Mali is vulnerable to international tax optimization, including transfer pricing; in 2015, 60 percent of FDI flows in Mali may be estimated as transiting through low-tax offshore jurisdictions.
- In 2016, 29.5 percent of Malian MNEs accounted negative taxable results against 16 percent of all companies under the normal CIT regime, indicating potential CIT optimization schemes.
- Mali enacted transfer pricing regulation in 2016 to strengthen the arm’s length principle and implement a transfer pricing documentation requirement (Finance laws for 2016 and 2017).
- Staff recommendations to strengthen international taxation framework:
  - pursue implementation of efficient thin-capitalization rules;
  - maintain effectiveness of withholding tax system through adequate international tax treaties;
  - mitigate risks of abuses to special tax regimes.
- Authorities concur on the need to develop capabilities to implement transfer pricing legislation, including training dedicated specialists and creating operational tools (MEFP ¶22, Table 4).

### Efficiency of public spending and public investment management
- Although Mali’s overall level of public expenditure to GDP remains below the SSA average, spending has risen rapidly over the past decade and expenditure is generally less efficient than in peer countries.
- Health and education expenditures in percent of GDP are in line with SSA averages but outcomes are much lower, indicating scope for efficiency gains.
- Public investment levels recovered since the 2012 dip, but quality of infrastructure remains below peer countries.
- Mali’s infrastructure gap is large and constrains trade and growth; addressing needs will require sustained spending and better efficiency to attract private investment (procurement PPP framework introduced in 2016).
- June 2017 PIMA mission findings:
  - Public Investment Efficiency Index rating: 0.57 on a scale of 0 to 1.
  - This is below the average of sub-Saharan African countries (0.64) and emerging countries (0.73).
  - Average Efficiency Gap of 27%; Mali Gap of 43%.
  - Causes of low efficiency: governance gaps, ineffective oversight of infrastructure suppliers, inadequate appraisal and selection processes, poor cash management, and lack of maintenance for fixed assets.
- Staff encouraged implementation of PIMA recommendations, including evaluation of all major projects prior to selection (including cost-benefit analysis) to improve public financial management and public investment management systems (MEFP Table 4).

### Authorities’ commitments and planned actions
- Authorities committed to implementing a PIMA action plan to:
  - raise public investment managers’ accountability and stewardship;
  - strengthen socioeconomic impact of investment spending;
  - accrue and maintain existing infrastructure in the long term.
- Authorities aim to reduce the identified efficiency gap by reducing expenditures that do not directly contribute to fixed capital formation and improving project performance.
- Measures will build on efforts to implement program-based budgets and results-based management, in accordance with WAEMU harmonized public finance framework.

*Source: IMF staff and authorities assessment as presented in the provided chapter text.*

### Box 5. The Efficiency of Public Investment

### Box 5. The Efficiency of Public Investment

### Assessment of Public Investment Management (PIM)
- An IMF TA mission in June 2017 assessed Mali’s Public Investment Management (PIM); the PIMA report was published in April 2018.
- The PIMA report evaluates the efficiency of public investment and provides recommendations to guide future work to enhance it.
- Staff analysis shows Mali’s PIM framework is paradoxically strong compared with peer countries, yet the system fails to deliver durable and quality fixed capital formation.
- In 2015, despite years of strong, albeit volatile capital spending, Mali had one of the lowest capital stocks per capita ratios in the sub region.
- The quality of, and access to infrastructure was noticeably poor for health infrastructure.

### Efficiency gap and causes
- On average, about 43 percent of the potential value of public investment in Mali is lost to inefficiencies in the investment process.
- The efficiency gap is composed of:
  - additional costs related with corruption and fraud,
  - cost overruns,
  - time delays,
  - inadequate maintenance,
  - suppliers' lack of capacity to deliver quality infrastructure.
- Closing this efficiency gap could substantially increase the economic dividends from public investment.

### Implications and context
- Despite a strong PIM framework, capital spending yields limited fixed capital per capita and access to health infrastructure is limited.
- The gap between framework strength and delivery effectiveness implies implementation and operational weaknesses rather than formal design flaws.

### Policy recommendations and priorities
- Focus on making critical improvements while preserving the PIM framework.
- The most urgent tasks include:
  - raise PIM’s efficiency through better implementation,
  - build staff capacity,
  - develop a results-oriented culture of management.

*Source: Box 5. The Efficiency of Public Investment (Mali PIMA 2017, IMF staff analysis).*

### 29.      The authorities agreed to take actions to improve financial deepening and asset

### 29.      The authorities agreed to take actions to improve financial deepening and asset

### Financial sector reforms and asset quality
- Authorities supporting development and full operation of the credit bureau set up in May 2015 (MEFP, ¶63).
- Banking Commission’s new bank resolution powers expected to permit addressing effectively the situation of ailing banks.
- Authorities are developing a strategy to address NPLs (MEFP, ¶64).
- Action plan adopted in June 2016 to:
  - Enhance the regulatory framework for MFIs.
  - Build MFIs’ capacity.
  - Secure stable resources for MFIs.
  - Expedite liquidation of failing MFIs.

### Governance, anti-corruption, and public financial management
- Governance indicators have declined in recent years per Worldwide Governance Indicators; Mali’s perceived public corruption score as evaluated by Malian citizens is 32 out of 100 (with zero being the worst possible score).
- Office of the Auditor General (AG) uncovered several large cases of corruption; most have not resulted in prosecutions.
- Implementation of the 2014 law against illicit enrichment stalled in late 2017 due to disagreement with civil servant unions about the scope of asset declarations and the role of the newly created anti-corruption office; consensus was later brokered and asset declaration resumed.
- With Fund TA support, authorities are bolstering transparency and controls in budgeting and procurement as indicated in program benchmarks and commitments.
- Staff recommendations included:
  - Expedite transmittal to the Supreme Court of declaration of assets by government officials subject to such requirement.
  - Ensure the Central Office against Corruption starts monitoring the declaration process and analyzing declarations as received.
  - Further strengthen the framework for combating corruption, improve transparency, and proceed with coherent implementation of the legislative and regulatory framework for AML/CFT.

### Authorities’ commitments and targets on asset declarations and governance
- Authorities intend to expedite implementation of the law against corruption and illicit enrichment, including transmittal of asset declarations of senior government officials to the Supreme Court (MEFP, ¶¶11, 52-54).
- Agreed the law will be fully applied to the most senior officials explicitly mentioned therein.
- Achievement and targets:
  - Reached 20 percent declaration rate for those explicitly named by the law (some 1,479 civil servants) at end-February 2018.
  - Aim to reach 35 percent by June 30, 2018.
  - Aim to reach 50 percent at end-October 2018.
- Multi-stakeholders panel to finalize a more comprehensive list of those subject to asset declaration by end-August, 2018.
- Authorities committed to sanctioning corrupt public officials and implementing AG recommendations (MEFP, ¶55).
- General Control of Public Services will publish the last available report on implementation of recommendations on the Government website before June 30, 2018; report to be updated each year.
- Authorities will strengthen the framework for combating corruption, improve transparency, and implement the legislative and regulatory framework for AML/CFT (MEFP, ¶55).

### Program design, risks, and safeguards
- Structural conditionality for 2018 focuses on increasing tax revenue, improving spending efficiency, and strengthening governance; measures include strengthening tax and customs administration and progressively reducing tax exemptions (MEFP, ¶11 and Table 4), and measures to strengthen public procurement, budget practices and transparency (MEFP, ¶¶ 25, 31-32, 37–39).
- Key program risks:
  - (i) tighter liquidity conditions could reduce bank financing to the government;
  - (ii) implementation of the new pricing mechanism for fuel products could stall, negatively affecting tax revenue;
  - (iii) resistance to reducing tax exemptions could hurt revenue;
  - (iv) fiscal decentralization poses a risk, though gradual approach and safeguards will help limit it;
  - (v) political support for economic adjustment and reform could wane as the 2018 presidential elections approach.
- Authorities’ mitigants:
  - Scope to increase tax collection by improving revenue administration, broadening the tax base, reducing tax exemptions, and implementing the new fuel pricing mechanism.
  - Preparedness to lower non-priority spending if revenue shortfalls occur or higher security spending is needed.
- Program financing and repayment:
  - Program is fully financed; financing needs for 2018 expected to be met by a combination of external borrowing, donor support and Fund financing.
  - Capacity to repay the Fund is assessed to be adequate (Table 11).
- Safeguards assessment of the BCEAO (completed in April 2018):
  - Found central bank has maintained a strong control environment since 2013 assessment and governance arrangements are broadly appropriate.
  - Audit arrangements strengthened.
  - International Financial Reporting Standards (IFRS) adopted as the accounting framework beginning with the 2015 financial statements.
  - 2016 external quality review of internal audit function found broad conformity with international standards.
  - BCEAO’s risk management framework established in 2014 is progressing well with implementation across the bank.

### Other institutional and policy notes
- Exchange regime:
  - Mali, as a WAEMU member, accepted obligations under Article VIII, Sections 2, 3 and 4 of the Fund’s Articles of Agreement as of June 1, 1996, and maintains an exchange system free of restrictions on payments and transfers for current international transactions.
  - WAEMU’s exchange regime is a conventional peg to the euro.
- Capacity development and medium-term policy priorities (within the capacity development framework pilot project):
  - (i) conduct prudent macroeconomic policies and maintaining fiscal discipline to preserve debt sustainability and avoid payments arrears;
  - (ii) increase domestic revenue by enlarging the tax base to meet growing demand for public goods and services, accommodate security and peace consolidation needs, and over time substitute for declining donor support; improve efficiency of public spending;
  - (iii) enhance public financial management;
  - (iv) address weaknesses in the banking sector to reduce risks to financial stability;
  - (v) address data weaknesses and gaps, especially in real sector and short term economic indicators.

### Staff appraisal highlights
- Economic recovery since 2012 contraction; outlook broadly favorable, contingent on keeping reform momentum.
- Strong macroeconomic performance has not significantly reduced poverty and inequality; need to emphasize effectiveness of pro-poor spending and strengthen local budget management.
- 2018 budget aligns with program objectives and WAEMU targets while providing for security and election-related spending.
- Medium-term fiscal policy should continue focusing on consolidation given limited fiscal space and favorable growth outlook.
- Key fiscal recommendations:
  - Foster revenue mobilization and strengthen efficiency of public spending.
  - Broaden tax base, improve taxation of the mining sector, and strengthen tax administration to move toward WAEMU 20 percent tax-to-GDP target.
  - Contain tax expenditures and improve efficiency of public investment.
- Transfer pricing:
  - Recently adopted regulation could be strengthened by implementing clear and easy-to-apply methods; authorities encouraged to issue administrative guidelines and develop related tax administration capacities.
- Financial sector:
  - Need to address risks from concentration of bank credits, implement strategy to reduce high NPL ratio, preempt issues related to real estate assets in banks’ balance sheets.
  - Encourage financial inclusion: expedite consolidation/reform of microfinance sector and support development of mobile banking.
- Business environment:
  - Further improvements needed to attract FDI, boost competitiveness, and promote private sector: reduce corruption, improve power supply and transport infrastructure, increase access to affordable credit, and address skills shortages.
- Risks to outlook:
  - Political tensions around 2018 national elections, fragile security conditions, uncertain external environment, vulnerability to adverse weather and commodity price shocks due to dependence on agriculture and cotton and gold exports.
  - Authorities encouraged to reallocate budgetary resources while safeguarding priority social spending in response to contingencies.
- Conclusion:
  - Based on program performance and authorities’ reform efforts, staff supports the request for completion of the eighth and ninth reviews of the ECF-supported program.
  - Capacity to repay the Fund is adequate and program implementation risks are manageable.

*Source: IMF staff report text (excerpts provided).*

### 49.      Staff recommends that the next Article IV consultation for Mali be held on the 24-

### 49. Staff recommends that the next Article IV consultation for Mali be held on the 24-month cycle.

### Macroeconomic outlook and projections
- Real GDP growth:
  - 2013: 2.3
  - 2014: 7.0
  - 2015: 6.0
  - 2018 (Est.): 5.3
  - 2019 (Prog.): 5.3
  - 2020–2023 (Projections): 5.3, 5.0, 4.7, 4.7
  - Medium-term projection series: 4.7 (repeated)
- Inflation (GDP deflator and consumer price inflation):
  - GDP deflator (selected): 0.7 (2013), 1.6 (2014), 2.8 (2015), 1.5 (2018 Est.), 1.7 (2019 Prog.)
  - Consumer price inflation (average): -0.6 (2013), 0.9 (2014), 1.4 (2015), -1.8 (2018 Est.), 0.8 (2019 Prog.); projections 0.2, 1.8, 1.4, 1.7, 1.9, 2.1, 2.2, 2.2, 2.2 (as reported)
- Terms of trade and exchange:
  - Terms of trade (deterioration -): -16.6 (2013), 5.5 (2014), 18.6 (2015), 15.5 (2018 Est.), 4.5 (2019 Prog.); projection path includes negative and small positive movements (e.g., -6.4, 0.2, -2.6)
  - Real effective exchange rate changes listed (e.g., 0.5, 1.8, -3.6, -1.9) with gaps in some years.

### Fiscal developments and public finances
- Revenue, grants, and expenditure (percent of GDP; Table 1):
  - Revenue: 14.5 (2013), 14.9 (2014), 16.4 (2015), 16.7 (2018 Est.), 17.1 (2019 Prog.); projected to rise to 20.4
  - Grants: 2.8 (2013), 2.2 (2014), 2.7 (2015), 1.6 (2018 Est.), 2.0 (2019 Prog.); projected ~1.8
  - Total expenditure and net lending: 19.7 (2013), 20.0 (2014), 20.9 (2015), 22.2 (2018 Est.), 23.1 (2019 Prog.); projected up to 25.2
  - Overall balance (payment order basis, including grants): -2.4 (2013), -2.9 (2014), -1.8 (2015), -3.9 (2018 Est.), -4.1 (2019 Prog.); projected steady at -3.0 in later years
  - Basic fiscal balance (WAEMU definition): -0.7 (2013), -1.2 (2014), 0.5 (2015), -1.9 (2018 Est.), -1.6 (2019 Prog.); projected to -0.5
- Fiscal tables (selected levels in CFAF billions; Table 3 & 4):
  - Total revenue (CFAF billions): 951.2 (2013), 1,057.6 (2014), 1,273.4 (2015), 1,389.7 (2018 Est.), 1,540.8 (2019 Prog.)
  - Total expenditure and net lending (payment orders basis): 1,292.4 (2013), 1,419.9 (2014), 1,622.3 (2015), 1,850.1 (2018 Est.), 2,083.9 (2019 Prog.)
  - Capital expenditure (CFAF billions): 389.6 (2013), 460.3 (2014), 566.0 (2015), 740.0 (2018 Est.), 848.3 (2019 Prog.)
  - Net lending and arrears dynamics and cash adjustments are reported in detail across 2013–23.
- Public debt:
  - Public Debt (Percent of GDP): 26.4 (2013), 27.3 (2014), 30.7 (2015), 35.9 (2018 Est.), 30.0 (2019 Prog.); projected to rise to ~40.4 by 2023 (Table 1 memorandum).

### External sector and balance of payments
- Current external balance (percent of GDP, including official transfers): -2.9 (2013), -4.7 (2014), -5.3 (2015), -7.2 (2018 Est.), -6.8 (2019 Prog.); projected values around -6.0 to -6.5 in subsequent years.
- Trade and external flows (Table 7, CFAF billions):
  - Exports f.o.b.: 1,419.5 (2013), 1,374.4 (2014), 1,606.8 (2015), 1,675.9 (2018 Est.), 1,708.0 (2019 Prog.); disaggregated: Gold (964.5 in 2013; 1,004.1 in 2015; 1,156.5 in 2018 Est.), Cotton fiber and Other detailed.
  - Imports f.o.b.: -1,546.1 (2013), -1,625.4 (2014), -1,888.1 (2015), -2,018.0 (2018 Est.), -2,113.1 (2019 Prog.)
  - Trade balance: -126.5 (2013), -251.1 (2014), -281.3 (2015), -342.0 (2018 Est.), -405.0 (2019 Prog.)
- Capital and financial account (Table 7):
  - Capital and financial account: 120.1 (2013), 175.3 (2014), 322.2 (2015), 319.6 (2018 Est.), 505.9 (2019 Prog.)
  - Direct investment (net): 150.7 (2013), 70.9 (2014), 114.2 (2015), 153.8 (2018 Est.), 75.5 (2019 Prog.)
  - Official (net) financing and disbursements (selected): disbursements and project-related financing detailed across years; debt forgiveness and HIPC assistance noted (e.g., Debt forgiveness 25.5 in 2013; HIPC Initiative assistance figures included).
- Overall balance and financing:
  - Overall balance (CFAF billions) varies year-to-year (e.g., -86.2 in 2013; -324.7 in 2018 Est.); associated financing and foreign assets movements reported, including IMF (net) positions and WAEMU reserve coverage indicators.

### Monetary and financial sector
- Monetary aggregates (Table 8):
  - Money supply (M2) growth and levels: M2 in CFAF billions: 1,845 (2013), 1,977 (2014), 2,237 (2015), 2,400 (2018 Est.), 3,045 (2019 Prog.); contribution to broad money growth components shown.
  - Net foreign assets (BCEAO and commercial banks) and Net domestic assets reported (e.g., Net Foreign Assets total 758 in 2013; BCEAO reserves dynamics show negative values in projection years).
  - Credit to the economy (CFAF billions): 1,228 (2013), 1,458 (2014), 1,747 (2015), 2,054 (2018 Est.), 2,402 (2019 Prog.)
  - Base Money (M0) and money multipliers included (e.g., Base Money 742 in 2013; Money Multiplier values 2.5–3.4 across years).
- Financial soundness (Table 9):
  - Non-performing loans to total loans: 25.4 (2009), declining to 19.3 (2013) and mid-teens in subsequent series; provision coverage and other indicators provided (e.g., Provisions to gross NPLs 59.5–69.3 in earlier years).
  - Capital adequacy measures: Capital to risk-weighted assets around 12–15 in recent reported quarters; Tier 1 capital to risk-weighted assets similar levels.
  - Liquidity and loan-to-deposit ratios, sectoral credit distribution, ROA and ROE time series provided.

### Social and development indicators
- Per capita and poverty:
  - Real GDP per capita (Constant 2010 U.S. dollars) and levels plotted; note: "Per capita income has remained broadly unchanged over the last decades."
  - Percentage of population living below $1.90/day: Mali among countries with "almost half of the population live on US$1.90 or less per day" (chart context).
- Governance and human development:
  - Political stability and absence of violence/terrorism (Percentile Rank): Mali shown with deteriorating political stability relative to peers.
  - Government effectiveness (Percentile Rank): declining/deteriorating trend noted.
  - School enrollment (primary, secondary, tertiary): primary/secondary enrollment rates show decline; tertiary latest data note: 2012.
  - Access to improved sanitation facilities: large disparities between rural and urban; quintile distribution shown.

### Growth performance and risks
- Growth patterns and volatility:
  - Output growth per capita relatively weak over past two decades; per capita growth particularly weak in the 2000s.
  - Growth has been volatile and "more so than in other benchmark countries."
  - Security crisis of 2011–12 significantly impacted living standards.
- External and commodity exposures:
  - Gold sector significant in exports and fiscal revenue (tax and non-tax revenue from gold sector detailed, e.g., 143.6 CFAF billions in 2013; subsequent series).
  - Terms of trade and petroleum price movements noted (Gold and Petroleum price series provided).

### Policy implications and recommendations (from source)
- Timing of surveillance:
  - Staff recommends that the next Article IV consultation for Mali be held on the 24-month cycle.
- Fiscal policy priorities implied by data (based on fiscal and debt indicators):
  - Continue revenue mobilization to reach better regional performers (figure text: "More revenues can be mobilized...to reach the best performers in the region.").
  - Maintain management of capital spending supported by rising revenues and grants (figure text: "Since declining in 2012, both revenues and grants have increased...supporting an increase in capital spending...and contributing to a sustainable fiscal position.").
  - Leverage debt relief gains while monitoring public debt rising path in projections.
- External and financial sector priorities implied:
  - Monitor external balances and reserve positions given current account deficits (including and excluding official transfers) and BCEAO reserves dynamics.
  - Strengthen banking sector asset quality and capital/liquidity metrics given NPL levels and provisioning dynamics.

*Source: IMF staff estimates and projections (cr18141 — Mali country data and analysis).*

### Annex I. Capacity Building Framework Strategy

### Annex I. Capacity Building Framework Strategy

### A. Policy Priorities
- Overarching priorities given Mali’s fragile situation and security issues:
  - (i) conducting prudent macroeconomic policies and maintaining fiscal discipline so as to preserve debt sustainability and avoid accumulation of payments arrears;
  - (ii) increase domestic revenue by enlarging the tax base to meet growing demand for public goods and services, accommodate growing needs for security and peace consolidation, and over time substitute for declining donor support;
  - (iii) address weaknesses in the banking sector to reduce risks to financial stability.
- Additional priority: strengthen real sector statistics to better inform policy making and private sector decisions.

### B. Past Technical Assistance and Capacity Building
- Mali is a high recipient of Fund TA with an overall good implementation record; TA made a positive contribution to capacity building.
- Recent TA areas and outcomes:
  - (i) revenue administration;
  - (ii) public financial management;
  - (iii) improving fiscal accounting and reporting;
  - (iv) fiscal aspects of decentralization;
  - (v) management of natural resources;
  - (vi) anti-money laundering;
  - (vii) real sector statistics;
  - (viii) cash and debt management and financial markets.
- Notable points:
  - TA objectives were largely achieved in most cases.
  - TA on management of natural resources has been especially successful, reflecting strong commitment by the Ministry of Mines.
  - Progress has been more difficult in modernizing tax administration and improving its quality, hampered by issues related to human resource management and the system of incentives for tax and customs inspectors.

### C. TA Priorities Going Forward
- General emphasis:
  - Develop capacities in human resource management in all areas, especially revenue (tax and customs) administration, including revamping the employment framework (recruitment, promotion, and training), reforming salary structures, and reforming incentive systems.
  - Enhance capacity to address weaknesses in the financial sector.
  - Expand support to improve real sector statistics.
  - Donors are not providing TA in these various areas that the Fund plans to cover.
- Proposed strategy for IMF TA during FY2017 and beyond by sector:

  - Revenue Administration (2016–18)
    - Objective: Achieve more effective and efficient mobilization of domestic resources by: (i) increasing tax compliance and broadening the tax base; (ii) increasing the coverage and effectiveness of tax audits while reducing discretionary tax exemptions; (iii) improving HR management and reforming the system of incentives for tax and customs inspectors;
    - Outcomes: (i) Filing compliance is better enforced, and audits are risk-based and their coverage is extended; (ii) customs risk management is operational and valuation capacity is strengthened; (iii) tax exemptions are significantly reduced; (iv) reform of the system of incentives starts in 2017; (v) Tax-to-GDP ratio increases to 15.7 percent of GDP by 2018.
    - Milestones: (i) Further improve the effectiveness of tax audits and extend their coverage (2016–17); (ii) identification and costing of tax exemptions (2017); (ii) proposals to improve HR management and reform the system of incentives for tax and customs inspectors (2017).
    - Input: HQ-led mission in FY17 (August 2016) to look at HR management at DGI/DGD and conduct study of the system of incentives; AFRITAC West TA missions in tax administration.
    - Assumptions: (i) Improved customer services to facilitate taxpayer voluntary compliance; (ii) improved audit functions; (iii) strong commitment to implementing potentially difficult reforms (e.g., reform of the incentive system).

  - Public Finance Management (2016–18)
    - Objective: (i) improving cash management and finalizing the establishment of the Treasury Single Account (TSA); (ii) strengthening budget processes (encompassing budget preparation, monitoring, and medium-term budget frameworks); (iii) improving investment projects planning, budgeting and execution; (iv) improving transparency and fiscal reporting by independent public agencies (Établissements Publics et Administratifs-EPA); (v) strengthening data management and the capacity to make debt service projections and debt-sustainability analysis (DSA); (ii) training on DSA and on issuance of government securities; and (iv) assisting in the implementation of the decentralization in a way that protects fiscal stability and expenditure efficiency and quality.
    - Outcomes: Improved financial reporting and improved cash management (2016–18), fiscal decentralization starts (2016), full transition towards the TSA (2016), transition to program budgeting starts (2017–18), and transition to 2001 GFSM completed (2018).
    - Milestones: (i) Draft budget appropriated by programs, and budget carry-forward procedure introduced in the government draft budget (2017); (ii) accounting software rolled out to central ledger office (2016); (iii) TSA with Core Treasury System implemented.
    - Input: HQ-led TA mission (June 2016) to assist on program budgeting; HQ-led missions (2014–15) on decentralization; follow up TA from AFRITAC West on program budgeting; PIMA mission (Spring 2017); support from the long-term resident advisor on treasury operations; AFRITAC West support on 2001 GFSM implementation.
    - Assumptions: (i) continued political support to PFM reforms; (ii) further enhancement of governance practices.

  - Financial Sector (2016–18)
    - Objective: Improving financial sector stability, including through strengthening of the bank created through the merger of Mali Housing and Mali Solidarity banks, and reduction of overall NPLs in the banking system as a whole.
    - Outcomes: The new bank balance sheet is strengthened and its NPLs are reduced (2016–17), making it more attractive to private investors; NPLs for the overall banking system are reduced to single digits (2016–18).
    - Milestones: Recommendations to strengthen the new bank and to deal with high NPLs in the banking system (2016–17).
    - Input: HQ-led TA missions to propose options for dealing with legacy NPLs both at the new bank and other banking sector institutions (2016–17).
    - Assumption: Strong commitment toward strengthening the new bank and fostering financial stability.

  - National Accounts and Prices (2016–18)
    - Objective: Produce more frequent and timely indicators of economic activity, and more comprehensive price statistics.
    - Outcomes: Improve economic policy making and inform private sector decisions.
    - Milestones: Quarterly national accounts would be developed and SNA 2008 implemented (2017–18). Representative PPI index established (2016–17).
    - Input: AFRITAC mission to provide TA on developing quarterly national accounts and a producer price index.
    - Assumptions: (i) Human and financial resources are available; (ii) there is a good collaboration between national agencies involved in statistics.

### D. Risks and Mitigation Measures
- The TA implementation is subject to various risks; the document summarizes these risks with probability, impact, and mitigation measures.

  - Risk 1: Persistent delicate and fluid security situation
    - Probability: High
    - Impact: Medium
    - Mitigation Measures: These risks are well understood by the government. Improved domestic revenue mobilization will help the government better respond to the needs of its population. The ongoing support for stability and security in Mali through MINUSMA, UN agencies in Mali, as well as the Sahel Program, also help mitigate security risks. Also, the gradual implementation of decentralization will help consolidate the peace process and re-establish Mali’s national integrity. If security conditions deteriorate, TA missions and hands-on training could take place outside Mali.

  - Risk 2: Weakening political commitment to reforms
    - Probability: Medium
    - Impact: High
    - Mitigation Measures: The Mali government is aware of the need to raise additional revenue and has embarked on initiatives to improve the system of tax administration with the continued support of the Fund and other development partners. Fund to also provide TA geared toward improving human-resource management, a constraint that the authorities are interested in addressing.

  - Risk 3: Implementation capacity constraints
    - Probability: Medium
    - Impact: High
    - Mitigation Measures: While by regional standards Mali’s institutional and technical capacity may be considered adequate, the limited number of technical staff in several core ministries may hinder progress. Hands-on training and support from short/long term experts would help improve implementation capacity.

  - Risk 4: Financing risk
    - Probability: Medium
    - Impact: High
    - Mitigation Measures: The authorities are improving their capacity to assess TA-related costs, and are committed to include such costs in their annual budgets.

- Management note: The TA risk table will be a live TA management tool updated periodically as the TA program evolves. The authorities have committed to supply necessary human and budgetary resources to absorb future TA and follow up on TA recommendations.

### E. Authorities’ Commitments
- The Malian authorities are determined to continue to build capacity for successful implementation of the ECF-supported program and have reached understandings with the Fund on a comprehensive capacity building strategy in the context of the Capacity Building Framework (CBF) pilot project.
- Commitments include:
  - Successfully implement the CBF and complementary TA from other donors by securing necessary political support, staffing, and other resources.
  - Provide adequate financial and human resources to priority sectors identified in the capacity building program, and budget resources to implement TA recommendations with financial implications.
  - Strengthen units tasked with monitoring implementation of reforms by providing these units the resources to manage the overall capacity building program.
  - Make greater efforts to ensure sectoral capacity building plans are discussed with individuals and units responsible for implementation of the recommendations.

*Source: Annex I. Capacity Building Framework Strategy (cr18141)*

### 6.      In the banking sector, although the banks’ capitalization has increased, the quality of

### 6.      In the banking sector, although the banks’ capitalization has increased, the quality of

### Banking sector: capitalization and asset quality
- Ratio of regulatory required capital to risk-weighted assets:
  - 13 percent at end-December 2017
  - 13.6 percent in June 2017
  - 14.2 percent at the end of 2016
- Gross non-performing loans ratio:
  - 16.7 percent at end-December 2017
  - 17.3 percent at end-June 2017
  - 16.4 percent at the end of 2016
- Microfinance sector:
  - Activity has regained momentum since the 2012 crisis.
  - Non-performing loans are on a downward trend.

### Public finances: fiscal stance and 2017 outturn
- Government commitment: ensure overall balance of public finances (including grants) consistent with sustainability of public debt and achieving WAEMU convergence criterion on overall fiscal balance of 3 percent of GDP by 2019.
- 2017 budget implementation:
  - Revenues “reached” their target at end-June 2017.
  - Spending fell below levels programmed for the same period.
  - Budget implementation accelerated in second half, allowing achievement of program’s annual targets.
  - Preliminary estimate: fiscal deficit in 2017 contained at 2.9 percent of GDP (program objective: 3.5 percent of GDP).
  - Net tax revenue: CFAF 1358 billion (15.3 percent of GDP).
  - Grants disbursed: CFAF 144 billion (1.6 percent of GDP); initial objective CFAF 202.7 billion (2.3 percent of GDP).
  - Budgetary and project grants: 0.5 percent of GDP and 0.9 percent of GDP, respectively, below initial 2017 envisaged level.
- Response to lower grants disbursement:
  - Overall fiscal deficit (on a payment-order basis, including grants): CFAF 254.8 billion (2.9 percent of GDP).
  - Basic fiscal deficit: CFAF 79 billion (0.9 percent of GDP).
  - Protected appropriations: elections CFAF 18 billion; Internal Security Programming Law (LPSI) CFAF 20 billion; capital expenditure for projects safeguarded.

### 2018 budget (2018 PLF) key figures and priorities
- Total revenues and grants: CFAF 1,948.9 billion (20.6 percent of GDP).
- Net tax revenue: CFAF 1,498.9 billion (15.9 percent of GDP), including CFAF 29.6 billion associated with implementation of law eliminating granting of new discretionary exemptions (June 2017).
- Administrative measures expected to contribute:
  - Customs revenues: CFAF 10 billion (0.1 percent of GDP).
  - Domestic revenues: CFAF 20 billion (0.2 percent of GDP).
- Expected disbursements from grants: CFAF 114.6 billion (1.2 percent of GDP).
- Total expenditure and net loans projected: CFAF 2,261.3 billion (23.9 percent of GDP).
- Spending on domestic financing: CFAF 1,891.1 billion (20 percent of GDP).
- Resulting overall budget deficit (based on authorizations, including grants): CFAF 312.4 billion (3.3 percent of GDP).
- Basic fiscal deficit: CFAF 124.4 billion (1.6 percent of GDP).
- 2018 PLF targeted spending:
  - Election spending: CFAF 45 billion (0.5 percent of GDP).
  - Development expenditures for northern regions and implementation of peace and national reconciliation agreement: CFAF 125.2 billion (1.3 percent of GDP).
  - Capital expenditure for transport, energy, agriculture, and domestic food security: CFAF 233.3 billion (2.5 percent of GDP).
- Decentralization and devolved spending:
  - 2018 budget increases decentralized spending to 19.8 percent of budget revenues and 25.3 percent of budget revenues (taking into account central government spending for local governments).
  - Decentralization strategy actions for 2018:
    - Increase budgetary share and responsibility devolved to local governments.
    - Strengthen regionalization and deconcentration.
    - Implement State/regional and district performance contracts.
    - Improve contribution and mobilization of local taxation for financing local governments.

### Financing strategy for 2018
- Government intends to finance the deficit essentially by mobilizing domestic and regional resources.
- Principal donors’ multi-year support programs expired in 2017; renewals expected starting in 2019.
- Government intends to increase CFAF financing on national and regional market, bringing domestic financing total to the equivalent of 2.6 percent of GDP in 2018.

### Performance compared to ECF-supported policies (eighth review as of June 30, 2017)
- All performance benchmarks and indicators as of June 30, 2017 have been met.
- Net domestic financing from banks and financial market to government: CFAF 128 billion (program objective CFAF 182 billion after TMU adjustors), about CFAF 54 billion below program ceiling.
- Zero ceiling on cumulative increase in external payment arrears: observed.
- Government contracted fully concessional total: CFAF 130 billion; net present value of external debt: CFAF 309 billion (cumulative starting from June 2015), well below program ceiling of 426 million dollars.
- Floor on gross tax revenue: achieved; gross tax revenue CFAF 717 billion, or CFAF 19 billion above programmed level.
- Floor on underlying budget balance: achieved with a margin of CFAF 198 billion (2.2 percent of GDP) considering TMU adjusters.
- Floor on priority spending for poverty reduction: achieved (domestic financing of basic, secondary, higher education, scientific research, health, social development sectors, excluding transfer to Malian Social Security Fund).

### Performance compared to ECF-supported policies (ninth review as of December 31, 2017)
- All performance benchmarks and indicators as of December 31, 2017 have been met.
- Net domestic financing from banks and financial market to government: CFAF 135.5 billion (program objective CFAF 171 billion after TMU adjustors), about CFAF 35.5 billion below program ceiling.
- Zero ceiling on cumulative increase in external payment arrears: observed.
- Government contracted fully concessional total: CFAF 315 billion; net present value of external debt: CFAF 399 billion (cumulative starting from June 2015), well below program ceiling of 426 million dollars.
- Floor on gross tax revenue: achieved; gross tax revenue CFAF 1,443 billion, or CFAF 3 billion above programmed level.
- Floor on underlying budget balance: achieved with a margin of CFAF 54 billion (0.6 percent of GDP) considering TMU adjusters.
- Floor on priority spending for poverty reduction: achieved.

### Structural benchmarks and implementation (second half of 2017)
- Overall: slower than planned; three of five benchmarks for eighth review implemented (one with delay, one postponed to end-July 2018, one reformulated for end-June 2018). One previously unmet benchmark being reformulated for end-June 2018.
- Benchmarks reached in August:
  - Implementing second phase of integrated debt management system.
  - Conducting awareness campaign on new pricing mechanism for petroleum products (public information campaign benchmark for August 31, 2017: undertaken as programmed).
- Asset declarations to Supreme Court:
  - Legal challenges on defining government officials base and scope of assets.
  - Law explicitly designates certain categories estimated at 1,479 individuals.
  - At end-March 2018, about 25 percent (=365/1479) of those officials submitted declarations to the Supreme Court.
  - Government targets:
    - 35 percent reporting rate for officials defined by the law as of June 30, 2018 (structural benchmark).
    - 50 percent as of October 31, 2018 (structural benchmark).
- Raising eligibility threshold for tax-exempt investments:
  - Proposed increase from CFAF 12.5 million to CFAF 100 million delayed due to disagreement with Ministry of Investment and private sector organizations.
  - Discussions between Ministry of Finance and Ministry of Investment expected to finalize by end-June 2018 to reduce proposed threshold for small agricultural and artisanal enterprises.

### Petroleum pricing mechanism and fiscal implications
- Since September 2017, government implementing pricing mechanism to pass changes in prices for imported petroleum products to pump prices within a margin of 3 percent (continuous structural benchmark).
- Government to optimize fiscal policy on oil based on report to be finalized before end-May 2018 to ensure oil revenue targets can be met.
- Projected increase in international oil prices estimated at 25 percent; implementation of mechanism with 3 percent margin could reduce the TIPP by about CFAF 13 billion.
- Directorate of Customs initiated measures with estimated impact CFAF 28.5 billion to meet annual revenue target, including:
  - Imposing ten-day limit for customs duties’ payment by petroleum suppliers.
  - Strengthening control of exemptions granted to mines and EDM, particularly on petroleum products.
  - Intensification of special on-site operation to fight fraud and smuggling.
- Government requested international consultant; preliminary report being validated to evaluate petroleum price structure items.

### Treasury single account (TSA) and public entities (EPAs)
- Progress toward a single treasury account at the BCEAO:
  - June 2016: Ministry of Economy and Finance order established rules for opening, closing, managing government bank accounts.
  - Account census as of December 31, 2016 completed for 12 of 14 commercial banks.
  - Draft bipartite convention validated on February 27, 2017 between DNTCP and APBEF providing for automatic leveling of accounts.
  - Government committed to signing bipartite agreement on holding TSAs by end of the year and closing inactive government accounts by June 2018.
  - Next stages: sign bipartite convention on TSAs in primary banks with APBEF; launch STAR-UEMOA in DNTCP divisions; follow-up mission on deployment of SICA-UEMOA in accounting headings.
- Requirement to deposit funds of EPAs with the Treasury to be reinstated and honored, with exceptions:
  - Exceptions: public hospital facilities, Malian Social Security Fund (CMSS), National Institute of Social Welfare (INPS), National Health Insurance Fund (CANAM), joint bodies over which government has no direct control, and EPAs not subsidized by government.
- Circular Letter No. 00092/DNTCP-DN of August 22, 2017:
  - DNTCP informed 126 managers of national public institutions (central and deconcentrated) of requirement to deposit funds to treasury single account.
  - Reiterated:
    - Legislative and regulatory provisions on depositing PAI funds with the Treasury.
    - Preconditions for better handling of financial and accounting operations in government institutions.
    - Steps to open deposit accounts with Treasury and return of equity capital to Treasury.
    - Steps for appointment of statutory auditors to certify management accounts.
- Training and system rollout:
  - Training on cash management for DFMs, program managers, and 10 PAIs with significant own funds held August 24–30, 2017.
  - Parameters set for deposit accounts in AICE application of the ACCT.
  - DNTCP to proceed with gradual transfer of EPAs own funds into TSA.
  - DNTCP strengthening supervision of EPAs with training in 2017:
    - April 2017: 70 accounting officers trained in “Management accounting by public accountants of national public institutions.”
    - 96 accounting officers trained on budgetary and accounting nomenclature and use of accounting operations manual.
  - 2018 plans: purchase and deployment of software for general accounting interfaced with PRED 5 in 50 EPAs and training on the software for accounting staff.

### Tax policy and administration objectives and measures
- Government intends to increase tax revenues by 0.6 percent of GDP in 2018 (performance criteria, Table 2).
- Reforms to be intensified in DGI, DGD, DNDC focusing on:
  - Broadening tax base and reducing exemptions following implementation of law on eliminating discretionary exemptions.
  - Intensifying compilation and utilization of information; strict enforcement of Import Verification Program (PVI) to control import documents and combat fraud.
  - Transforming culture in tax base and collection entities through ethics and results-based management.
  - Undertaking project with economic operators to step up tax compliance; implement taxpayer compliance improvement plan being designed with Fund technical support (structural benchmark for October 31, 2018).

### Reduction of exemptions and legislative review
- Measures implemented:
  - Conclusion of all domestic procurement contracts financed with domestic resources inclusive of all taxes starting January 2017.
  - Continued consultations with development partners to conclude externally financed procurements inclusive of all taxes starting in 2017.
- Review process initiated for other instruments (Investment Code, General Tax Code, Customs Code, Law on Associations, and other tax laws) with plan to substantially limit scope, duration, taxes/duties involved, and rates of exemptions.
- Implementation of exemptions threshold increase from CFAF 12.5 million to CFAF 100 million intended by end-August 2017 (structural benchmark) delayed; discussions ongoing to finalize before end of July 2018 to roll back proposed threshold for small agricultural or artisanal enterprises.

*Source: IMF staff report content provided in the supplied document.*

### 20.      The government is pursuing the simplification of tax legislation to reduce as much as

### 20.      The government is pursuing the simplification of tax legislation to reduce as much as possible the administrative burden of filing tax returns for operators and tax collection by the DGI.

### Tax simplification and tax burden
- Government commitments and measures:
  - Simplify the real regime (normal, applied to large taxpayers or simplified applied to medium-sized taxpayers).
  - Improve collection of local taxes by clarifying roles, amending the law on local and regional development tax (TDRL), and intensifying census operations on taxable items, particularly for property taxes.
  - Simplify and streamline existing tax schedules and reduce mandatory levels starting in 2019; a study on measures and their impact will be conducted in 2018.
  - Reduce recording fees and other costs related to property title operations starting in January 2019 to promote access to property titles and facilitate real estate transactions.
- Key constraint:
  - The burden of mandatory levies on salaries (marginal rate of about 70%), taxes and social security contributions is very heavy for companies and does not foster the development of salaried employment and formalization of the economy.

### Tax administration modernization and compliance measures
- Agencies involved: DGI, DGD, DNDC, Directorate General of State Property Administration (DGABE).
- Planned actions and operational measures:
  - Broaden the tax base, increase tax yields, and improve collections by encouraging large taxpayers to use bank transfers and implementing remote processing and payment before the end of 2018.
  - Improve and strengthen management of tax disputes.
  - Reform DGI organization: create and operate Medium-Sized Taxpayers Centers (CMEs), verification brigades, and a dedicated tax investigation structure.
  - Put the computerized exemptions management module into operation.
  - Continue deployment of advanced brigades by the DGD to combat fraud as part of the DGD’s national anti-fraud plan (ongoing through 2017 and 2018).
  - DGD to create a one-stop shop within ASYCUDA World to simplify import/export/transit formalities; operational in September 2018.
  - Complete litigation automation projects: TAC (Automated Processing of Litigation) and litigation system integrated into ASYCUDA World.
  - AFRITAC West and UNCTAD missions: one in Bamako, another planned for May 7, 2018, to support litigation system launch and automatic selectivity project.
  - AFRITAC West achievements to date:
    - Define the architecture of the selectivity system.
    - Apply new procedures (Directive No. 05 of 12/07/10) on merchandise scanning and Memorandum No. 05 on processing litigation files.
    - Launch the transitory system on 11/28/2011 with criteria, guidance rules, and probabilities thresholds.
    - Organize professional conferences (2011, 2012, 2013, 2014) to raise awareness.
  - Automatic selectivity project plans:
    - Improve the database on litigation.
    - Deploy the TAC application in all offices.
    - Use econometrics to improve the risk analysis and management system.
    - Effectively implement the automatic system.
    - Launch of the automatic selectivity project planned for December 31, 2018.
  - Human resources modernization in Customs:
    - WCO experts conducted training in Bamako from November 21 to November 25, 2016 for a project team to design and implement skills-based modernization of human resources and create a jobs and skills template.

### Transfer pricing and base erosion
- Legislative actions:
  - Mali strengthened transfer pricing legislative framework in 2015 and 2017 to apply the arm’s length principle and create documentation requirements consistent with international standards.
  - Government committed to completing regulations in 2018 by adopting a specific rule on under-capitalization considering capital intensive activities (determination of debt to equity and financing costs to gross operating surplus ratios).
- Capacity and implementation:
  - Training sessions were provided to develop audit staff skills.
  - Creation over the medium term of a dedicated team in the DGI to implement transfer pricing legislation.
  - Authorities aim to complete an assessment of transfer pricing policy and implementation, with focus on the mining sector, and propose adequate transfer pricing rules (structural benchmark for September 30, 2018).

### Mining code update and mining taxation
- Objectives:
  - Update the mining code to balance attracting international investors and ensuring sufficient taxation of mining income.
  - Remedy co-existing codes (1991, 1999, 2012) and address problems in sector governance.
- Government commitments:
  - Strengthen ring-fencing by limiting the number of mining exploration and/or operation permits held by a single company to reduce tax offsetting and evasion.
  - Revise stability clauses relating to duration of operations based on feasibility studies; current stability clauses: duration of 30 years and asymmetric (changes in taxation can only be favorable to the investor).
  - Improve progressivity of the mining tax regime.
- Transparency measures already taken:
  - Dissemination of operating companies’ agreements and feasibility studies on-line.

### DNDC, land records, and DGABE modernization
- DNDC reforms and measures:
  - Implement recommendations of organizational audit: modernization and automation of tasks.
  - Reformed in early 2017 into two entities: (i) Land Registry Department; and (ii) State Property Directorate; operationalization to continue.
  - With PAMORI II support, DNDC set up land record management software Modonum.
  - 2016 outputs: 33,900 land titles were indexed against 134,336 titles that were dematerialized.
  - DNDC will continue dematerialization in 2018 and pursue measures to increase collection of capital gains taxes on sale of real estate by individuals and secure land records.
- DGABE modernization:
  - Ministry of Economy and Finance will modernize DGABE via Results-Based Management (RBM), increased IT use (stock accounting software in accounting units), and reforms to better monitor and value government portfolio through linkage between stock accounting and general government accounting.

### VAT performance and compliance actions
- Strategic importance:
  - VAT is the basis for about 40 percent of tax revenues.
- Priority reforms (implementing reforms started in 2011):
  - Intensify continuous targeted control of taxpayers who declare VAT credits or no turnover for a given period.
  - Utilize information related to deductible VAT from Annex 1.1 of VAT submitted by taxpayers.
  - Use management indicators to monitor declaration requirements and assessment of declared amounts and inaccuracies.
  - Ensure regular reimbursement of VAT credits.
- Compliance drives:
  - DGI stepping up selective audit of VAT credits, starting with companies whose activities should not generate permanent VAT credits (particularly commercial activities and service companies).
  - Continue training staff assigned to targeted VAT checks and audits of VAT credits.
- Notable statistic:
  - VAT is the basis for about 40 percent of tax revenues.
- Historical payment rates (footnote):
  - In 2014, 51 percent of large companies and 51 percent of medium-sized companies subject to the VAT actually paid the VAT compared, respectively, to 27 and 20 percent between January 2012 and May 2013, taking the high number of permanent VAT credits into account.

### Improving expenditure management and public finance reform
- Overall plan:
  - Implement Mali Public Finance Reform Plan (PREM) 2017-2021 to remedy weaknesses identified by 2016 PEFA assessment, PAGAM/GFP II evaluation, and IMF Fiscal Affairs Department TA.
- Regulatory and institutional measures:
  - Transposed WAEMU harmonized legislative framework and published regulatory instruments related to 2009 guidelines.
  - Transposed Directive 01/2011 on local governments’ financial regime into Law No. 2017-051 of October 2, 2017 (Local Governments Code) and Law No. 2011-036 of July 15, 2011 on tax resources of communes, circles and region.
  - Defined breakdown of jurisdictions in sixteen (16) areas; exhaustive census of government staff for local governments in progress (already done for four ministerial departments).
  - Signed six (06) State-Region Plan Contracts for Sikasso, Ségou, Tombouctou, Mopti, and Kidal and more recently Gao for implementation of twelve (12) projects amounting to about CFAF 20.6 billion.
  - Strengthen training via local governments’ training center.

### Budget preparation, program budgeting, and managerial accountability
- Program budgeting:
  - Implemented program budgets and results-based management in accordance with WAEMU framework.
  - Preliminary 2018 budget prepared and adopted in program mode.
  - August 2017 decree organizing budget management in program-budget mode to deconcentrate budget management and improve managers’ accountability.
- Delegation and accountability measures:
  - Adopt gradual delegation of program managers’ authorization powers based on financial management capacity; assessment criteria developed in March 2018.
  - Develop performance contracts between program managers and 50 EPAs by end of June 2018 and ministerial management charters in all departments by end of August 2018.
  - Implement recommendations to ensure PRED and AICE compliance with new budgeting and accounting processes; a status note to be prepared at end-May (structural benchmark for May 28, 2018).

### Public investment management and project performance
- Measures to reduce PIMA-identified efficiency gap:
  - Adopt performance contracts for investment projects to create a project performance incentive system; apply to new World Bank projects starting in June 2018.
  - In June 2018, National Directorate of Development Planning to update public investment preparation and monitoring/evaluation manual to introduce PPP-related regulatory developments and connect planning/statistics units to public investment database (SIGIP).
  - Prepare methodology for standard unit cost market price list for road infrastructures, buildings, hydro-agricultural development and hydraulic structures (Structural benchmark for August 31, 2018); seek World Bank technical assistance.

### Transparency, TOFE, and cash flow management
- TOFE improvements:
  - Improved TOFE in accordance with WAEMU directive; monitoring committee set up for transition to new TOFE.
  - 2016 TOFE finalized in April 2017; scope expanded to nine national public institutions (EPNs) monitored in cash flow plan; expansion to cover maximum number of EPNs by 2019.
  - Starting in 2018, DNTCP will produce TOFE according to 2009 nomenclature; transition table to translate data to old classification for comparability and IMF program monitoring; old classification used for tenth reviews.
- Cash flow management:
  - DNTCP continues to improve reliability of cash flow situations and forecasts and optimize management of public funds in the treasury single account (TSA).
  - Prepared monthly cash flow plan at fiscal year start and updates monthly to ensure regular execution and timely payments.
  - Continue efforts to improve mastery of Net Position of the Government (PNG) in banking system; BCEAO to provide PNG from monetary situation to prepare TOFE.
- PNG and related figures (as reported in text):
  - As of end-2016, the net position of the government vis-à-vis the banks (PNG) was negative at CFAF 199.7 billion (2.4% of GDP) for the State in the broad sense of the Directive in the WAEMU TOFE, with a Net Cash Flow Position “PNT” of a negative CFAF 432.5 billion (5.2% of GDP) and a net credit of other public entities of CFAF 232.8 billion (2.8% of GDP).
  - As of end-June 2017, based on provisional data issued by the FDS, the PNG ended at CFAF 276.8 billion (3.2% of GDP), with a PNT valued at CFAF 473.7 (5.4% of GDP) and a PNACP of minus 197.0 billion (2.2% of GDP).
  - As of end-2016 (alternative reporting), the net position of the government vis-à-vis the banks (PNG) was negative at CFAF 183 billion (2% of GDP) for the State in the broad sense of the Directive in the WAEMU TOFE, with a net cash flow position (PNT) of a negative CFAF 165 billion (1.8% of GDP) and a net positive position of other public entities of CFAF 18 billion (0.2% of GDP).

### Treasury single account (TSA) and EPAs
- TSA requirements and targets:
  - EPAs required to deposit funds in the TSA; DNTCP informed 126 managers of national public institutions about the requirement.
  - Circular does not cover EPAs not subsidized by government, public hospital facilities, and joint bodies not under direct government control (CMSS, INPS, CANAM).
  - Objective: reduce EPAs’ funds deposited in commercial banks by end of December 2017, transferring 50 percent to the BCEAO by late June 2018 (structural benchmark for June 30, 2018); a second transfer of 25 percent will be made in 2018, bringing total to 75 percent.
- Strengthening EPA supervision:
  - MEF will approve EPA budgets only after submission of budget execution statements for first half of preceding year; measure introduced in 2017 and to be continued.

### Strengthening internal and external control
- Ongoing work to strengthen internal and external control frameworks across tax, customs, DNDC, DGABE, and other public finance institutions as part of broader modernization and reform agenda.

*Source: cr18141 - 20.      The government is pursuing the simplification of tax legislation to reduce as much as possible the administrative burden of filing tax returns for operators and tax collection by the DGI.*

### 45.      Internal and external control bodies have uncovered many administrative weaknesses

### 45.      Internal and external control bodies have uncovered many administrative weaknesses

### Internal control: reforms, capacity, and performance monitoring
- A national internal control strategy was adopted in August 2011 and implemented during 2012-2016; activities not implemented were incorporated in the PREM.
- Restructuring of the National Directorate of Financial Control (DNCF) created:
  - a Results Evaluation and Program Performance Division, and
  - an Internal Audit and Advisory Board.
- DNCF plans in 2018 to conduct performance evaluation missions covering twenty (20) programs in ten (10) ministerial departments; reports on the first half of the year will be available before August 31, 2018.
- Under Decree No. 10-681/P-RM of December 30, 2010 and Order No. 2011-4795/MEF-SG of November 25, 2011, the DNCF exercises control regarding performance effectiveness for expenditures for supplies, works, or services up to the amount of CFAF 10 million (10,000,000).
- Annual rates of performance-effectiveness control (calculated on the basis of expenditures subject to this control):
  - 2013: 35.30 percent
  - 2014: 47.31 percent
  - 2015: 24.3 percent
  - 2016: 44.19 percent
  - 2017 (as of December 31, 2017): 34.27 percent
- Reports on performance-effectiveness control:
  - Summary reports centralized at the DNCF are produced regularly, four times per year, in the 45 to 90 days following the trimester.
  - The latest report related to the fourth trimester of 2017 was produced on April 23, 2018.
- With budget implementation in program mode effective as of January 2018, the government will conduct a study to adapt audit processes and tools to set up internal control, budgetary, and internal audit procedures to strengthen quality and effectiveness of control and program performance evaluation.

### External control, publication of findings, and follow-up
- The government is committed to publishing the supreme court reports and the general auditor’s annual reports and ensuring follow-up of findings, alerts, and recommendations.
- The Ministry of Justice will publish a summary of judicial actions taken pursuant to fraud alerts from the general auditor.
- The government has noted the Office of the Auditor General (BVG) report identifying inadequacies and cases of fraud and is committed to:
  - punishing dishonest public officials, and
  - implementing BVG recommendations and those of other control entities.
- The Government will publish, starting on August 31, 2018, on the websites of the Ministry of Justice and the Ministry of Labor and Public Service the judiciary actions to address the economic and financial offenses identified in BVG reports.

### Promoting good governance: unlawful enrichment law and implementation
- Law No. 2014-015 of May 27, 2014 on the prevention and repression of unlawful enrichment applies only to the future; initial declarations serve as benchmark and annual updates are processed to evaluate legitimate assets.
- The government is implementing the law initially for persons for whom no legal interpretation is needed, amounting to 1,479 individuals.
- The government requires completion of legal work to establish the full list of persons subject to the law; for those requiring interpretation, authorities established a commission per Decision 2018-355/MTFP SG of February 23, 2018 to identify and remedy gaps in Law 2014-015.
  - The Commission will propose amendments and submit a refined document to the Cabinet for approval by December 31, 2018.
  - The Government will provide a report on implementation of the law, including the number of declarations received by the end of December 2018.
- Obligation to declare assets: those clearly defined as subject to the law must declare prior to June 30, 2018; noncompliance after summons will trigger administrative actions as specified in the law.

### Anti–money laundering and combating financing of terrorism (AML/CFT)
- Progress under the national AML/CFT strategy 2013-2015 and subsequent actions:
  - Law No. 2016-008 of March 17, 2016 on the uniform AML/CFT law adopted to correct gaps; a request was sent to WAEMU authorities seeking reinterpretation to incorporate IMF observations.
  - Adoption of Law No. 039 of July 7, 2016 criminalizing corruption among foreign officials and officials of public international organizations.
  - Adoption of texts implementing the law on prevention and repression of illicit enrichment.
  - September 25, 2017 intervention: instructions from the Governor of the BCEAO establishing thresholds for declaring physical transborder transport of currency and bearer negotiable instruments, thresholds for paying a claim in currency or bearer negotiable instruments, and thresholds for declaring currency transactions to the CENTIF.
- FATF Recommendation 1: Mali’s national risk assessment is planned for January 2019; a draft decree to appoint the competent authority to coordinate the assessment was adopted and a request for technical and financial support was sent to the IMF and the World Bank.
- CENTIF and banking sector actions:
  - Following meetings under the aegis of the Ministries of the Economy and Justice, compliance units were set up at banks and PDG/local bank directors.
  - This led to a significant increase of suspicious transaction reports (STRs) sent to the CENTIF.
  - Enhanced cooperation with the judiciary accelerated processing of cases sent by CENTIF to prosecutors of the Specialized Judicial Division and produced convictions with prison terms, substantial fines, and additional penalties involving confiscation of funds for the benefit of the State.

### Social security and social protection reforms
- Measures to ensure financial equilibrium of:
  - the Malian Social Security Fund (CMSS), which manages the pension scheme for civil servants, and
  - the National Institute of Social Welfare (INPS), which manages the pension scheme, workers’ occupational safety and insurance, and family benefits for private sector employees.
- CMSS: recommendations of the CMSS study will be incorporated in a new code under discussion in the National Assembly, including increasing the State’s share to make the CMSS more autonomous.
- INPS: an actuarial study began on March 2, 2017, entrusted to the International Labor Office; the provisional report is expected by end-May 2018.

### Conducting a sustainable debt policy
- 2018 external borrowing plan:
  - The government plans to borrow CFAF 276 billion in new external loans for 2018, of which 119 billion would be non-concessional.
  - These planned borrowings represent the equivalent of CFAF 158 billion in present value terms (Table 5).
  - On this basis, the cumulative ceiling on external borrowing for 2015−18 remains CFAF 557 billion in present value terms (permanent performance criterion, Table 2).
- Domestic securities issuance for 2018:
  - The government plans to issue 547 billion FCFA of securities in 2018.
  - The government issued a SUKUK of 150 billion FCA in February 2018, of which about two-third was acquired by investors outside the WAEMU zone.
  - To reduce the cost of domestic debt and ensure sustainability, from 1 April 2018 the government undertakes to issue public securities through the regional agency “UMOA-Titres”.
- Debt management systems:
  - The government implemented the second phase (Analysis) of the Integrated Debt System development project by deploying complementary modules for calculation of net present values, production of debt statistics, and debt simulations (structural benchmark, Table 4).

### Strengthening management of domestic liabilities and supplier arrears
- DGDP prepared an inventory of government liabilities vis-à-vis banks and included maturities in budget laws.
  - A validated outstanding balance of CFAF 1.6 billion was paid in 2017.
  - An outstanding balance of CFAF 1.1 billion will be paid in 2018.
- Supplier debt processing:
  - In January 2017 the Ministry of Economy and Finance resumed processing supplier debt files via a committee.
  - Following the Commission’s recommendations, CFAF 3.6 billion was paid in 2017.

### Improving the business environment and PPP framework
- 2016: law adopted defining legal and regulatory framework for public-private partnerships (PPPs) with World Bank support; a PPP unit was created with African Development Bank assistance.
- IMF’s Fiscal Affairs Department provided comments to improve PPP contract management and minimize budgetary risks; government will take IMF comments into account while transposing the community directive on PPPs.

### Promoting financial sector stability and development
- Actions taken:
  - Ensured security for bank branches reopened in northern Mali since August 2013.
  - Strengthened the bank formed from the March 2016 merger of the Malian Housing Bank (BHM) with the Malian Solidarity Bank (BMS) and initiated process to bring a reference banking group into its shareholding.
  - Supported credibility of the credit bureau set up in May 2015.
  - Restored confidence in the microfinance sector via an action plan adopted in June 2016 to reform the sector.
- Nonperforming loans and portfolio quality:
  - Revision of rules and methods for accounting and provisioning for non-performing loans starting in January 2018 could significantly influence the aggregate under a new portfolio accounting classification adopted by the BCEAO.
  - A strategy to improve bank portfolio quality will be developed based on IMF technical assistance of June 2017 (structural benchmark for June 30, 2018), focusing on:
    - reduction of nonperforming loans,
    - reduction of non-operating fixed assets acquired by realization of guarantee, and
    - development of a plan to remove nonperforming loans managed on behalf of the State from the balance sheet of Malian Development Bank (BDM-SA).

### Reforming the electricity sector (EDM)
- EDM’s financial situation remains fragile due to management inadequacies and tariffs lower than production costs.
- Short-run measures (with World Bank support) include:
  - increase of the subsidy by CFAF 15 billion to reach a total of CFAF 42 billion in 2018,
  - increasing the billing rate,
  - reducing operational costs,
  - reducing technical and non-technical losses,
  - using pre-payment meters,
  - adopting accelerated monthly billing,
  - improving tracking of key customers to protect revenue,
  - where necessary, adjusting power pricing to reduce the gap between rates and costs.
- The government will identify costs related to subsidies and tax exemptions granted to EDM.
- Medium- and long-term investments (with World Bank support) include:
  - revision of the electricity sector investment plan to implement interconnection projects (Guinea / Mali and Mali / Burkina / Ghana),
  - strengthening existing power lines,
  - renewable energy projects including the floating solar park on the Manantali dam,
  - investments aimed at reversing the energy mix in favor of renewable sources to lower EDM's production costs and improve its overall financial position.

### Improving statistical data
- Through INSTAT, the government will accelerate finalization and dissemination of national accounts (annual and quarterly) and prepare the new national accounts.
- Introduction of new indicators for monitoring the current situation will be completed by June 2018, along with production of regional and national consumer price indices.

### Technical assistance and capacity building
- Mali confirms participation in the IMF’s Capacity Development Framework (CDC).
- IMF technical assistance (TA) has been substantial and positively contributed to capacity building and program implementation.
- Proposed IMF TA focus areas for 2017–2018:
  - human resources management,
  - revenue administration,
  - public finance management,
  - improved debt management,
  - real sector statistics.
- Mali agrees to a Memorandum of Understanding with IMF staff, commits to ensuring availability of sufficient human and financial resources, and to good cooperation among national institutions involved in TA.

*Source: cr18141 - 45.      Internal and external control bodies have uncovered many administrative weaknesses*

### 68.      The tenth review will be based on end-June 2018 and continuous performance criteria

### cr18141 - 68.      The tenth review will be based on end-June 2018 and continuous performance criteria

### Timing and scope of the tenth review
- The tenth review will be based on end-June 2018 and continuous performance criteria (Table 2) and structural benchmarks (Table 4).
- Indicative targets are set for end-September 2018 (Table 2).
- The performance criteria and indicative targets are defined in the Technical Memorandum of Understanding (TMU), which also specifies the nature and frequency of the information to be provided for program monitoring.
- The conclusion of the tenth review is expected on or after November 1, 2018.

### Key 2018 proposed performance criteria and indicative targets (Table 2)
- Performance criteria:
  - Ceiling on net domestic bank and market financing of the government: 389 (June); 467 (September, indicative).
  - Cumulative increase in external payments arrears (ceiling): 0 (June); 0 (September, indicative).
  - New external debt contracted or guaranteed by the government, in PV terms (cumulative ceiling from June 2015): 426 (June); 426 (September, indicative).
  - Gross tax revenue (floor): 775 (June); 1,146 (September, indicative).
- Indicative targets:
  - Basic fiscal balance (floor): -155 (June); -208 (September, indicative).
  - Priority poverty-reducing expenditure (floor): 142 (June); 341 (September, indicative).
- Memorandum items:
  - External budgetary support: 11 (June); 54 (September, indicative).
  - General budgetary grant: 7 (June); 26 (September, indicative).
  - Net change in budgetary float (– = reduction): -64 (June); -64 (September, indicative).
  - Tax refunds (–): -34 (June); -51 (September, indicative).
  - Net change in arrears (– = reduction): -5 (June); -13 (September, indicative).

### 2017 performance criteria and outcomes (selected from Table 1)
- Ceiling on net domestic bank and market financing of the government (cumulative through testing dates):
  - March target 66; Est. 81; Status: Met.
  - June target 197; Est. 162; Status: Met.
  - September target 210; Est. 165; Status: Met.
  - December target 156; Est. 171; Status: Met.
- Cumulative increase in external payments arrears (ceiling): targets 0 at all test dates; Est. 0; Status: Met for all dates.
- New external debt contracted or guaranteed by the government, in PV terms (cumulative ceiling from June 2015): target 426 at all test dates; Est. 265 (March, Met), 306 (June, Met), 357 (September, Met), 393 (December, Met).
- Gross tax revenue (floor) (cumulative):
  - March target 341; Est. 315; Status: Not met.
  - June target 698; Est. 717; Status: Met.
  - September target 1,077; Est. 1,045; Status: Not met.
  - December target 1,440; Est. 1,443; Status: Met.
- Indicative targets (basic fiscal balance and priority poverty-reducing expenditure) — selected:
  - Basic fiscal balance (floor) March target -85; Est. -39; Status: Met.
  - Priority poverty-reducing expenditure (floor) March target 62; Est. 60; Status: Not met; December target 443; Est. 444; Status: Met.
- Selected memorandum items (cumulative):
  - External budgetary support: March Est. 10; June Est. 17; September Est. 50; December Est. 98.
  - General budgetary grant: March Est. 10; June Est. 0; September Est. 0; December Est. 49.

### Structural benchmarks (implementation, deadlines, and macroeconomic justification)
- 2017 structural benchmarks (Table 3) — selected items and status:
  - Adopt and implement a law to stop granting new discretionary tax exemptions. Deadline January 1. Status: Not met. Implemented with delay (end-May). Justification: Increase tax revenue.
  - Implement use of the Public Procurement Management Integrated System (SIGMAP) by all ministerial departments. Deadline March 31. Status: Met. Justification: Improve public financial management and increase the efficiency of public spending.
  - Implement first phase (Administration or Management of Loans) of Integrated Debt Management System project. Deadline March 31. Status: Met. Justification: Strengthen debt management.
  - Design a strategy for reducing non-collateralized NPLs in the banking system (in consultation with Fund staff). Deadline June 30. Status: Not met. Reprogrammed for June 30, 2018. Justification: Strengthen the banking system.
  - Raise eligibility threshold for investments benefiting from tax exemptions from CFAF 12.5 million to CFAF 100 million. Deadline August 31. Status: Not met. Reprogrammed for July 31, 2018. Justification: Increase tax revenue.
  - Complete implementation of a treasury single account (TSA) at the BCEAO, including transferring EPA deposits to the TSA. Deadline August 31. Status: No met. Reformulated and reprogrammed for June 30, 2018. Justification: Strengthen public financial management.
  - Achieve a transmission rate of 20 percent of asset declarations to the Supreme Court for government officials subject to declaration by the law against illicit enrichment. Deadline August 31. Status: Not met. Implemented with delay (end February 2018). Justification: Promote good governance.
- 2018 proposed structural benchmarks (Table 4) — selected items and deadlines:
  - Assess implementation of recommendations of 2017 report on PRED and AICE compliance with new budgeting and accounting processes. Implementation deadline May 28. Status: In progress. Justification: Ensure monitoring and evaluation of program performance starting in December 2018.
  - Continue implementation of oil product pricing formula to reflect changes in import costs in pump prices within a margin of 3 percent per month. Implementation: Continuous. Justification: Adequately price oil products and protect revenue derived from their taxation.
  - Develop a strategy to reduce non-collateralized NPLs in the banking system. Implementation deadline June 30. Justification: Strengthen the banking system.
  - Achieve a transmission rate of 35 percent of asset declarations to the Supreme Court for government officials specified by the law against illicit enrichment. Implementation deadline June 30. Justification: Promote good governance.
  - Transfer 50 percent of EPA deposits in commercial banks to the BCEAO relative to end-2017 deposits. Implementation deadline June 30. Justification: Strengthen public financial management.
  - Raise eligibility threshold for tax-exempt investments from CFAF 12.5 million to CFAF 100 million (except for small agricultural and artisanal enterprises). Implementation deadline July 31. Justification: Increase tax revenue.
  - Prepare a methodology to establish a market cost list for road, building, hydroagricultural, and hydrolic infrastructures. Implementation deadline August 31. Justification: Improve capital spending execution.
  - Assess transfer pricing policy and its implementation, focusing on the mining sector, and propose adequate transfer pricing rules. Implementation deadline September 30. Justification: Improve government revenue and increase fiscal space.
  - Implement taxpayer compliance improvement plan being designed with Fund TA support. Implementation deadline October 31. Justification: Foster taxpayer compliance.
  - Achieve a transmission rate of 50 percent of asset declarations to the Supreme Court for government officials specified by the law against illicit enrichment. Implementation deadline October 31. Justification: Promote good governance.

### Technical Memorandum of Understanding (TMU) — definitions and monitoring rules (selected)
- Scope of government for TMU purposes:
  - Government defined as the central government of the Republic of Mali; excludes local authorities, the central bank, or other public entities with autonomous legal status not included in the Government Financial Operations Table (TOFE).
  - DNTCP reports scope of TOFE in accordance with BCEAO account classification and forwards it to BCEAO and IMF staff.
- Performance criteria application:
  - Except as noted, the financial targets serve as performance criteria at end-June 2018 and as indicative targets at end-September 2018.
  - Some performance criteria are monitored on a continuous basis.
- Ceiling on net domestic bank and financial market financing of government:
  - Net domestic bank and financial market financing = (i) net position of the government in the narrow sense; plus (ii) financing through issuance (net of redemptions) of securities to individuals or legal entities outside banking system or to nonresident banks domiciled in WAEMU.
  - Narrow and broad net government positions are defined; the BCEAO calculates these positions.
- Adjusters to the ceiling on net domestic bank and market financing:
  - Adjust upward if external budgetary support falls short of program projections. External budgetary support definition excludes project grants and loans, sectoral budgetary support, IMF resources, and HIPC debt relief, but includes general budgetary support.
  - Adjuster applied at a rate of 100 percent up to a threshold of CFAF 25 billion and at a rate of 0 percent for larger amounts.
  - Adjust upward (downward) if net reduction in budgetary float is higher (lower) than program amounts.
  - Adjust for payment of VAT credits, other tax refunds, external arrears, and audited arrears from previous fiscal years that exceed (fall short of) program amounts.
- Ceiling on accumulation of external government payments arrears:
  - External payments arrears defined as obligations from external debt service (principal and interest) payable or guaranteed by government not paid on due date (after any applicable grace period).
  - Arrears payable to official bilateral creditors excluded if government is attempting to renegotiate/reschedule and pays into an escrow account amounts coming due as specified in loan agreement.
  - Government undertakes not to accumulate external payments arrears (except on debts being renegotiated or rescheduled).
  - Performance criterion on non-accumulation of external payments arrears is applied on a continuous basis.
- Ceiling on non-concessional external debt contracted or guaranteed:
  - Debt defined following IMF Executive Board Decision No 15688: loans, suppliers’ credits, leases; arrears, penalties, judicially awarded damages that arise from failure to make payment under contractual obligation that constitutes debt.
  - Government guarantee understood as explicit legal obligation to ensure debt is serviced in event of borrower nonpayment.
  - Concessional debt defined as having grant element of at least 35 percent; present value discount rate used is five percent.
  - External debt defined as denominated, or requiring payment, in a currency other than the CFA franc; includes debts contracted between WAEMU member countries.
  - Debt-related performance criteria apply to new non-concessional debt contracted or guaranteed by the government and, where applicable, to EDM and CMDT insofar as government is majority shareholder. Criteria monitored continuously. No adjusters applied to these debt performance criteria.

*IMF staff; Attachment II. Technical Memorandum of Understanding (selected excerpts).*

### 17.      Special provisions. The performance criteria shall not apply to: (i) debt rescheduling

### cr18141 - 17.      Special provisions. The performance criteria shall not apply to: (i) debt rescheduling

### Special provisions
- The performance criteria shall not apply to:
  - (i) debt rescheduling operations in existence at the time the arrangement is approved;
  - (ii) import-related, short-term external loans (with maturities of less than one year);
  - (iii) external loans contracted by the Malian Textile Company (CMDT) and guaranteed with cotton export revenue; and
  - (iv) short-term external loans (at maturities of less than one year) contracted by the EDM to finance the purchase of petroleum products.

### Reporting requirement
- The government shall immediately report to the IMF staff any new external loans it contracts or guarantees, stating the conditions of these loans.

### Floor on Gross Tax Revenue
- Gross tax revenue is defined as the revenue appearing in the TOFE and includes all tax revenue in the national budget, before deducting the tax refunds generated during the year, in particular accumulated VAT credits.

### Indicative targets
- Indicative targets are set for end-June 2018, and end-September 2018.

### Floor on the Basic Fiscal Balance
- Definition: the basic fiscal balance is the difference between net total revenue, plus budgetary grants (general budgetary support) and HIPC resources, and total authorized expenses plus net lending, excluding capital expenditure financed by creditors or donors, pursuant to the definition in WAEMU texts (Additional Act N° 05/2009/CCEG/UEMOA of March 17, 2009, amending Act Nº04/1999).
- Adjuster for budgetary grants:
  - The floor on the basic fiscal balance is adjusted downward if budgetary grants (general budgetary support) fall short of program projections.
  - The adjuster will be applied at the rate of 100 percent up to a threshold of CFAF 25 billion and at a rate of 0 percent for larger amounts.
- Adjuster for VAT credits and tax refunds:
  - The floor on the basic fiscal balance will be adjusted downward (upward) for the payment of VAT credits and other tax refunds exceeding (under) the programmed amounts (MEFP, Tables 1 and 2).

### Floor on Priority Poverty-Reducing Expenditure
- Definition: priority poverty-reducing expenditure is the sum of expenditure in the sectors of basic education, secondary and higher education, scientific research, health, and social development other than transfers to the Malian Social Security Fund (CMSS).
- Exclusions: It excludes project-related capital expenditure financed by foreign technical and financial partners.

### Structural benchmarks and reporting of implementation
- Information on implementation of measures constituting structural benchmarks will be reported to IMF staff when implemented.
- Changes to TOFE reporting (as of May 31, 2011):
  - Income and expenses recorded in suspense accounts are reported above the line as income or expenses, with no breakdown.
  - Cash basis adjustments distinguish operations charged to previous fiscal years and those charged to the current fiscal year; for current fiscal year, a distinction is made between funds in transit (less than three months) and changes in arrears (more than three months) with respect to budgetary expenditures (including VAT credits and called guarantees and pledges).
  - Under “net domestic financing,” bank financing is separated from privatization income and other financing. Bank financing includes changes in the net position of the government vis-à-vis the central bank, the IMF, and the resident commercial banks. In showing operations with commercial banks, a distinction is made between the Treasury, the National Social Security Institute (INPS), and other government agencies.
  - Other financing includes mainly changes in cash accounts (uncashed checks), advance tax installments received for the following year, adjustments to the installments received the previous year for the current year, operations with nonresident WAEMU creditors, and changes in deposits and consignments from Treasury correspondents.
- Transfers to Treasury single account (as of June 30, 2014):
  - Available balances in current accounts opened for government accounting officers included within the net government position (narrowly defined) will be transferred to the Treasury single account at the BCEAO, except:
    - frozen Treasury accounts at the Malian Development Bank (BDM) in the amount of CFAF 19.5 billion pursuant to the privatization agreement concerning that bank;
    - blocked Treasury funds at the Banque Régionale de Solidarité (BRS) in the amount of CFAF 12 billion; Orabank agreed to reimburse at CFAF 500 million per month in 2014 and clear the remaining balance no later than end-2015;
    - accounts corresponding to grants from Japan in the amount of CFAF 3 billion at the BDM pursuant to an agreement with Japan;
    - an account at the Banque Malienne de Solidarité (BMS) used for cash collection operations, which is zeroed out every day and transferred to the Receiver account at the BCEAO;
    - term deposits (DAT) with commercial banks where the DNTCP places cash surpluses, so long as interest rates on such term deposits are greater than the BCEAO deposit rates.
- Extrabudgetary expenditures:
  - Defined as domestically funded expenditures by central government entities not provided for in the finance law and not executed according to applicable budgetary rules and procedures. This applies to transactions, commitments, acceptances of goods or services, or provisions of guarantees that could create an expense not authorized in the budget law.

### Additional information for program monitoring — reporting requirements (selected items and deadlines)
- Real Sector:
  - National accounts: Yearly; Year-end + 9 months.
  - Revised national accounts: Variable; 8 weeks after revision.
  - Consumer price index breakdowns: Monthly; Month-end + 2 weeks.
- Public Finance (selected):
  - Net position of the government vis-à-vis the banking system (broad and narrow) and breakdown of nonbank financing: Monthly; Month-end + 4 weeks (provisional); month-end + 6 weeks (final).
  - Balance of SOTELMA privatization income account deposits with the BCEAO: Monthly; Month-end + 3 weeks.
  - Central government TOFE: Monthly; Month-end + 4 weeks (provisional); Month-end + 6 weeks (final).
  - Budget execution throughout the expenditure chain (automated system): Monthly; Month-end + 2 weeks.
  - Breakdown of income and expenses recorded in the TOFE: Monthly; Month-end + 6 weeks.
  - Separately report HIPC resources: Monthly; Month-end + 6 weeks.
  - Investment budget execution: Quarterly; End of quarter + 8 weeks.
  - Tax revenue as recorded in the TOFE showing tax refunds (including VAT credits): Monthly; Month-end + 6 weeks.
  - Wage bill as recorded in the TOFE: Monthly; Month-end + 6 weeks.
  - Basic fiscal balance as recorded in the TOFE: Monthly; Month-end + 6 weeks.
  - Tax and customs exemptions: Monthly; Month-end + 4 weeks.
  - Order fixing petroleum prices, tax revenue from petroleum products, and total exemptions granted: Monthly; Month-end.
  - Imports of petroleum products broken down by type and by point of entry: Monthly; Month-end + 2 weeks.
  - Expenses authorized and not paid 90 days after validation by the financial comptroller: Monthly; Month-end + 1 week.
  - Report by the Minister of Economy and Finance on extra-budgetary spending: Six-Monthly; End-February and August.
- Monetary and Financial Data (selected):
  - Summary survey of the BCEAO, summary survey of the banks, survey of monetary institutions: Monthly; Month-end + 4 weeks (provisional); Month-end + 8 weeks (final).
  - Foreign assets and liabilities and breakdown of other items net (OIN) of the BCEAO and the commercial banks: Monthly; Month-end + 8 weeks.
  - Lending and deposit interest rates, BCEAO policy rate, BCEAO reserve requirements: Monthly; Month-end + 4 weeks.
  - Bank prudential ratios: Monthly; Month-end + 6 weeks.
  - Account statements for the escrow account at the BCEAO for the Libyan Foreign Bank debt service: Monthly; Month-end + 1 week.
- Balance of Payments:
  - Balance of payments: Yearly; Year-end + 12 months.
  - Revised balance of payments: Variable; 8 weeks after each revision.
- External Debt:
  - Debt service with breakdown of principal, interest, relief obtained under the HIPC Initiative: Monthly; Month-end + 4 weeks.
- Budget Directorate:
  - Priority poverty-reducing expenditure as defined in ¶24: Quarterly; End of quarter + 4 weeks.
- EDM:
  - Detailed financial statements showing EDM’s total revenues, including subsidies received; total expenditures; the level of debts to banks; and the situation in terms of arrears: Quarterly; Month-end + 4 weeks.

### Debt Sustainability Analysis — Summary findings
- Risk assessment:
  - Risk of external debt distress: Moderate.
  - Augmented by significant risks stemming from domestic public debt? No.
- Baseline macroeconomic assumptions (high-level):
  - Real GDP growth: 5.3 percent in 2017; projected 5.0 percent in 2018; long-term convergence to 4.7 percent.
  - Fiscal policy: In 2018 authorities aim to contain the overall fiscal deficit (including grants) to 3.3 percent of GDP; target an overall fiscal balance of 3 percent of GDP by 2019 (WAEMU convergence criterion).
  - Current account (including grants): projected deficit of 6.5 percent of GDP in 2018; projected to narrow to 6.3 percent in 2019, widen to about 6.4 percent by 2023, and stabilize at about 6.6 percent of GDP over the long term.
  - Financing of current account deficit: mainly through foreign direct investment, public sector borrowing, and official grant flows.
- Financing composition:
  - For 2018 and the near term, gross financing needs will be covered by a combination of external and domestic debt; authorities plan increased domestic issuance in 2018 to offset temporary shortfall in external financing.
  - Over the medium term, expected composition: about 70 percent from external sources and 30 percent from regional and domestic sources.
- Key changes relative to the previous DSA:
  - GDP deflator in U.S. dollar terms projected higher during the projection period.
  - Official aid (concessional grants and loans) expected at 3.4 percent of GDP in 2018 compared to 5.2 percent of GDP in the previous DSA; official aid projected to converge to about 4.5 percent of GDP long-term.
  - Gold prices projected higher than in the previous DSA; gold exports as a percent of GDP projected slightly lower.
  - Oil prices projected lower in 2017 but higher in 2018-19 than in the previous DSA.
  - Updated domestic debt data for 2016 and 2017 show higher levels of domestic debt than in the previous DSA.
- Projected public debt trajectory:
  - Public debt projected to grow from about 35.6 percent of GDP in 2017 to 51.1 percent in 2038.
  - External debt projected to increase from about 24.5 percent of GDP to 35.1 percent in 2038 (previous DSA: about 25 percent to 36 percent).
- External DSA results:
  - Under the baseline, all external debt ratios remain below indicative thresholds.
  - The PV of PPG debt-to-exports ratio shows a distinct uptrend, rising some 87 percent over the coming 20 years and is a note of concern due to subdued export growth.
  - PV of PPG debt-to-GDP (5 percent discount) projected to remain between 15 and 21 percent of GDP, below the 40 percent threshold.
  - PV of PPG debt-to-revenue projected to remain around 86 percent, below the 250 percent threshold.
  - Under extreme stress scenarios, almost all debt indicators remain below thresholds, except the PV debt-to-exports ratio breaches its threshold from 2030 to 2038 under a ‘terms shock’ (tighter financing conditions for public debt).
    - The breach averages 43 points, or 28 percentage points above threshold over the period; characterized as substantial and prolonged, leading to the assessment of moderate risk of external debt distress.
- Vulnerabilities and mitigating factors:
  - External debt profile vulnerable to changes in financing conditions, exchange rate depreciation, and shocks to export growth.
  - Full implementation of the 2015 peace agreement and continued policy reforms should promote economic development and diversification.
  - Scaling up and country-wide expansion of public sector investment in high-priority infrastructure could increase economy-wide productivity growth and development of other export sectors (food, cotton, tourism, phosphate, uranium, bauxite, iron ore, copper, nickel), helping to offset declines in gold export earnings.

*Source: cr18141 — IMF staff report excerpt (selected sections).*

### 8.      Mali’s external debt sustainability is sensitive to an export-market growth shock, a

### 8.      Mali’s external debt sustainability is sensitive to an export-market growth shock, a

### External debt sustainability — bounds tests and shocks
- A bounds test that reduces export growth temporarily in 2018–19 with the effect of reducing exports levels permanently:
  - The PV of the debt-to-exports ratio would breach its threshold in 2037 (Table 2b, Scenario B2).
- A bounds test that reduces FDI and official and private transfers in 2018–19:
  - Would cause the PV of the debt-to-exports ratio to start rising toward threshold, almost breaching it in 2038 (Table 2b, Scenario B4).
- A bounds test that combines shocks to growth, export values, the US dollar GDP deflator and FDI:
  - Would cause the debt to exports ratio to almost breach its threshold in 2038 (Table 2b, Scenario B5).
- Policy implication highlighted:
  - Need to diversify exports, reducing current vulnerabilities to (largely) external shocks.

### Public DSA — inclusion of domestic debt and implications
- Inclusion of domestic debt somewhat worsens the assessment of Mali’s debt sustainability, contributing to a higher PV of total public debt-to-GDP ratio contrasted with the previous DSA.
- The projected shortfall of external financing in 2018, while assumed to be temporary, is offset by an increase in domestic debt in the short-term that deteriorates further the profile of overall debt sustainability. (Figure 2, Table 2a, Table 2b).
- PV of public sector debt-to-GDP ratio:
  - Increases to between 26.8 and 36.1 percent of GDP during the entire projection period.
  - Compared with 23.5 and 28.5 percent of GDP, respectively, in the previous DSA.
- PV of public sector debt-to-revenue ratio:
  - Deteriorates to between 134 and 151 percent during the entire projection period.
  - Compared with 107 and 123 percent, respectively, in the previous DSA.
- Risk/monitoring note:
  - The recent rapid growth of the domestic debt stock needs to be monitored closely to maintain debt sustainability and financial stability going forward.

*Source: cr18141 - 8.      Mali’s external debt sustainability is sensitive to an export-market growth shock, a*

### 10.      This updated DSA, as the previous one, suggests that Mali’s risk of debt distress remains

### This updated DSA, as the previous one, suggests that Mali’s risk of debt distress remains moderate

### Debt sustainability assessment: main findings
- The DSA indicates Mali’s risk of debt distress remains moderate.
- A projected shortfall in external financing in the near-term, while assumed temporary, puts additional moderate pressure on Mali’s debt sustainability.
- The extent of the worsening in the debt profile will depend on the size and duration of the shift from external to domestic financing.
- Stress tests highlight a sustained breach of the threshold for the PV of PPG external debt-to-exports under the most extreme shock.
- Mali’s debt sustainability is highly sensitive to:
  - a tightening of financing terms,
  - a combination shock (noted in the previous DSA as a temporary two-year shock),
  - reductions in transfers and FDI,
  - an export shock owing to export concentration in gold.

### Key statistics and fiscal outcomes (selected)
- Overall fiscal deficit is estimated to be about 2.9 percent of GDP in 2017.
- Real GDP growth for 2018 is projected to remain strong at around 5 percent.
- The current account deficit for 2018 is expected to widen to 6.5 percent of GDP.
- Quota: 186.60 (SDR Million) — 100.00 percent.
- Fund holdings of currency: 153.28 — 82.14 percent.
- Reserve Tranche Position: 33.33 — 17.86 percent.
- Net cumulative allocation (SDR Department): 89.36 — 100.00 percent.
- Holdings (SDR Department): 74.73 — 83.63 percent.
- Outstanding Purchases and Loans:
  - RCF loans: 22.00 — 11.79 percent of quota.
  - ECF Arrangements: 121.85 — 65.30 percent of quota.
- Latest ECF arrangement: Date of Expiration Dec 17, 2018; Amount Approved 186.60 (SDR Million); Amount Drawn 91.65 (SDR Million).
- Projected principal payments (selected years): 2018: 11.30; 2019: 13.80; 2020: 15.20; 2021: 15.40; 2022: 17.00.
- Projected charges/interest (selected years): 2018: 0.09; 2019: 0.13; 2020: 0.13; 2021: 0.13; 2022: 0.13.
- Total (selected years): 2018: 11.39; 2019: 13.93; 2020: 15.33; 2021: 15.53; 2022: 17.13.
- HIPC assistance committed (US$ Million): Original framework 121.00; Enhanced framework 417.00.
- IMF assistance (US$ million) under HIPC: 14.00 (original), 45.21 (enhanced).
- MDRI-eligible debt (SDR Million): 75.07; Financed by MDRI Trust: 62.44; Remaining HIPC resources: 12.63.

### Risks and scenario analysis
- Most extreme shock in previous DSA was a combination shock designed as a temporary two-year shock.
- Under adverse scenarios, PV of PPG external debt-to-exports breaches the policy threshold and this breach can be sustained under the most extreme shock.
- Vulnerabilities are amplified by:
  - export concentration in gold and an expected decline in gold’s export performance over the medium term,
  - potential reduction in transfers and FDI,
  - less favorable terms for external finance going forward.

### Policy recommendations and priorities
- Maintain prudent macroeconomic policies.
- Strengthen the effectiveness of public debt management.
- Continue to meet external financing needs with grants and concessional loans wherever possible.
- Ensure underlying projects deliver a high return on investment.
- Continue implementation of structural reforms to improve the investment climate and export diversification.
- Expand fiscal space through revenue mobilization and improved effectiveness of public expenditures.
  - Accelerate reforms in tax, customs, and State property and land registry to broaden the tax base, reduce exemptions, and better control and verify imports to reduce fraud.
  - Implement results-based management in revenue administration and promote tax compliance.
  - Continue implementing the pricing formula for petroleum products to contain fiscal risks.
  - Streamline tax legislation to reduce administrative burden, clarify stakeholder roles, reform the law on regional and local development taxes, and expand the tax base.
  - Strengthen the legal framework for transfer pricing and enforce transfer pricing regulations in compliance with international standards.
- Strengthen public financial management:
  - Continue transposition of regional directives into Malian laws.
  - Improve preparation, execution and control of the budget.
  - Implement program budgeting and results-based management (noted as implemented in the 2018 budget).
  - Improve cash management and implement the Single Treasury Account (STA).
  - Strengthen control of public finances.
- Improve efficiency of public investment and socioeconomic impact of projects; consolidate investment efforts and maintain infrastructure.
- Implement structural reforms to promote private sector development:
  - Reform electricity sector (with World Bank assistance) to adjust tariffs, reduce operational costs and losses, reduce subsidies, and put EDM on a sustainable financial footing.
  - Address financial sector vulnerabilities: revise accounting methods for provisioning nonperforming loans, strengthen the merged bank from BHM and BMS, improve microfinance effectiveness, develop mobile banking, and strengthen the leasing market to support SMEs.

### Program performance and authorities’ views
- Program implementation under the ECF continues to be broadly satisfactory despite difficult socio-political and security conditions.
- All performance criteria and indicative targets at end-June and end-December 2017 were met.
- Progress on structural benchmarks was slower than expected in the second half of 2017, partly due to social tensions and strikes.
- Authorities estimate real GDP growth could be faster than staff’s medium- to long-term projections but broadly share staff’s overall assessment.
- Authorities emphasize continued commitment to program objectives, good governance, fighting corruption, and fiscal consolidation aligned with WAEMU convergence framework.

### Technical assistance, statistical issues, and data adequacy
- Extensive technical assistance delivered across fiscal, debt management, public financial management, tax administration, national accounts, balance of payments, and financial sector topics (selected entries include missions and experts from FAD, AFRITAC, MCM, STA).
- Data provision has shortcomings but is broadly adequate for surveillance.
  - National Accounts: annual data compiled with base year 1999; rebasing to 2015 and quarterly estimates are underway and expected to be released in 2019.
  - CPI: harmonized CPI for Bamako compiled monthly since early 1998 with base year 2008.
  - Government Finance Statistics: broadly adequate; progress toward GFSM 2001/2014 and expanded TOFE coverage is ongoing.
  - Monetary and Financial Statistics: broadly adequate; migration to SRFs completed in August 2016.
  - Financial Sector Indicators (FSIs): finalized for deposit takers; regular reporting to STA expected to begin by December 2018.
  - External Sector Statistics: balance of payments and IIP compiled in conformity with BPM6 since 2011; latest published data on BCEAO website are for 2016.
- Mali participates in the e-GDDS (since September 2001) and in the Coordinated Direct Investment Survey (CDIS) since 2011.
- Common Indicators Required for Surveillance: summary table indicates latest observations and reporting frequencies for multiple categories (exchange rates, international reserve assets, reserve/base money, broad money, central bank balance sheet, consolidated banking system balance sheet, interest rates, CPI, central government fiscal data through December 2017, external current account balance and trade data through 2016, GDP/GNP through 2016, gross external debt through December 2017, IIP through 2016).

*Source: IMF staff report and DSA content as presented in the provided document excerpt.*

### Conclusion

### Conclusion

### Commitments and policy efforts
- The Malian authorities are determined to fulfil their commitments under the ECF-supported program.
- They will continue their efforts to implement strong macroeconomic policies, improve public financial management and achieve strong and inclusive growth.

### IMF review request
- In view of Mali’s satisfactory progress under the ECF arrangement, we would appreciate Directors’ support for the completion of the eighth and ninth reviews of the Fund-supported program.

*cr18141 - Conclusion*

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_Source: https://www.imf.org/-/media/files/publications/cr/2018/cr18141.pdf_