## cr18166

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### EXECUTIVE SUMMARY — Context and Program Performance
- Context:
  - Niger has one of the lowest scores in the Human Development Index; challenges include terrorist incursions, low uranium prices, climate change, and excessive population growth.
  - GDP grew by 5 percent in the past two years and is projected to gradually rise to 5¾ percent as reforms and donor support bear fruit.
  - Donors pledged US$12.7 billion during the December 2017 donor round table against US$7 billion sought for PDES 2017-21.
- Program performance (overall assessment: satisfactory):
  - All performance criteria set out for December 2017 at program approval were met.
  - Domestic financing was 2.4 percent of GDP (excluding 0.4 percent of GDP in financing from the Fund).
  - Domestic payment arrears were cleared considerably more than programmed, though some new ones emerged in early 2018, breaching the end-March 2018 indicative target.
  - Four out of five indicative targets for December 2017 were observed; revenue mobilization fell short by 1.9 percent of GDP relative to target and 0.2 percent of GDP below 2016 levels.
  - Compliance with structural benchmarks between December 2017 and March 2018 showed delays on several items (TSA implementation, PPP legislation submission to parliament, bankification), while the national policy on gender was updated ahead of schedule and performance plans for tax and customs administrations were put in place as a prior action.

### 2018 PROGRAM OBJECTIVES AND FISCAL STRATEGY
- Main program focus:
  - Preserve macroeconomic stability underpinned by prudent fiscal policies.
  - Broaden the revenue base, improve expenditure quality, and support private sector development and financial deepening.
- Fiscal targets and debt conditionality:
  - 2018 basic fiscal balance targeted to improve by 0.9 percent of GDP to 4 percent of GDP.
  - Modification of external debt conditionality: replace ceiling on contracting non-concessional external public debt with a performance criterion limiting the present value of contracting public and publicly-guaranteed external debt.
  - Ceiling agreed for 2018: CFAF 225 billion (USD 420 million or 4.3 percent of GDP) in present-value terms.

### ECONOMIC DEVELOPMENTS (2016–2017 and EARLY 2018)
- Growth and prices:
  - Real GDP: 5 percent in 2016 and 4.9 percent in 2017.
  - Inflation: 5.4 percent in April 2018; administrative price and tax hikes contributed an estimated 1.5 ppt.
- External and monetary:
  - WAEMU pooled reserves: 4.2 months of imports at end-2017.
  - Current account deficit reduced to some 14 percent of GDP in preliminary data; overall balance of payments positive.
  - Private sector credit expanded by nearly 10 percent for most of 2017.
- Fiscal balances and revenues in 2017:
  - Basic balance: -4.9 percent of GDP.
  - Domestic financing: 2.4 percent of GDP.
  - Overall balance (WAEMU anchor): improved to -5.0 percent of GDP from -6.1 percent of GDP in 2016.
  - Revenue performance declined to 14.2 percent of GDP in 2017 (0.2 percent of GDP below 2016; 1.9 percent of GDP short of target).

### REVENUE MOBILIZATION AND TAX POLICY
- Revenue outcomes and medium-term plan:
  - Revenue ratio rose to 15.4 percent of GDP (from 14.2 percent of GDP in 2017).
  - Medium-term revenue augmentation dialed back: between 2018 and 2021 the revenue ratio is to rise by 2.3 percent of GDP (compared to 2.9 percent in the first review).
- Key 2018 measures and quantified impacts (Text Table 2, in CFAF billions unless indicated):
  - Shift to transactional valuation of imports: 29.5
  - VAT taxation at 5% of previously exempted products: 6.3
  - Removal of investment code exemptions: 2.0
  - Housing tax: 2.0
  - Other tax measures1: 10.0
  - Tax admin measures2: 5.0
  - Cuts in telecom taxes: -24.0
  - Total: 30.8 (in percent of GDP: 0.6)
  - Short-term additional measures:
    - Sale of telecommunication licenses: at least 0.2 percent of GDP (and elsewhere a minimum yield of 0.5 percent of GDP anticipated from accelerated sales).
    - Drive to collect at least 0.3 percent of GDP in tax arrears (DGE identified CFAF 64 billion = 1.3 percent of GDP recoverable arrears).
    - Molecular marking of petroleum products and stiffer sanctions to tackle smuggling.
- Tax administration and exemptions:
  - Prior action: strong performance plans for DGI and DGD furnished as prior action.
  - Computerization and process reforms: ASYCUDA world in customs, SISIC in tax administration, single window for car imports (GUAN), interconnections with customs offices in Togo and Benin technically ready since April.
  - Structural benchmarks:
    - White paper on tax exemption reform by end-June 2018.
    - Tax exemption reform legislation to be submitted to parliament by end-September 2018.

### IMPROVING SPENDING QUALITY AND PUBLIC FINANCIAL MANAGEMENT
- Budget and TSA reforms:
  - 2018 budget prepared on a program basis (first time); program budgeting to be assessed mid-year.
  - TSA reform aims to transfer 90 percent of accounts still in commercial banks by end-2018; proposed structural benchmarks for end-June 2018 and end-December 2018 for account transfers and digitalization.
  - Completion of digitalization of Treasury banking services proposed for end-December 2018.
- Public investment and DEEs:
  - New requirement: debt management committee to verify project selection criteria before approving loan conventions.
  - Audit of six large public entities launched with World Bank financing; compilation of list of ~150 DEEs in progress.
- Expenditure envelope:
  - Inter-ministerial Budget Regulation Committee effective in scaling back non-priority spending while safeguarding poverty-reduction spending.

### FINANCIAL SECTOR DEVELOPMENT, GOVERNANCE, AND DEMOGRAPHICS
- Financial sector and access:
  - Non-performing loan ratio rose to almost 20 percent (Credit Past Due/ Total Credit (Dec-17): 18.8).
  - Regulatory Capital/ Risk-Weighted Assets (Dec-17): 16.8; Provisioning Rate (Dec-17): 66.1; ROA After-Tax (Dec-17): 1.6; Liquid Assets/ Total Deposits (Dec-17): 53.4.
  - Plans: recapitalize Agricultural Bank, operationalize leasing law, prepare law on warrantage, adopt Islamic finance framework, revive National Strategy for Financial Inclusion, boost microfinance, create refinancing mechanism and deposit insurance, dematerialize fiscal payments.
  - Bankification milestones:
    - Payments to two largest customs offices in Niamey non-cash since January 2018.
    - Proposed structural benchmark: discontinue cash-payments to the large taxpayer office and ten largest customs offices by end-June 2018.
    - Proposed structural benchmark: discontinue cash-payments at DME and twenty largest customs offices by end-December 2018.
- Governance, AML/CFT, and transparency:
  - HALCIA strengthened in 2016; National Anti-Corruption Strategy adopted in January 2018; anti-corruption hotline opened at Justice Ministry.
  - Asset declaration regime has legislative shortcomings; only the President’s asset declarations are up-to-date and accessible.
  - AML/CFT aligned with WAEMU law; CENTIF strengthened; national ML/TF risk assessment underway; GIABA mutual evaluation scheduled for 2020.
  - Niger initiated process to rejoin EITI.
- Demographics:
  - Fertility: average 6 children per woman.
  - About three quarters of women marry before age 18.
  - Decree adopted December 2017 to keep girls in school until age 18; five-year action plan expected before end-June 2018.

### OUTLOOK, RISKS, AND MACRO PROJECTIONS
- Growth forecasts:
  - 2018: 5.2 percent.
  - 2019: 5.3 percent.
  - Medium-term: gradual pickup to 5¾ percent.
  - Alternative medium-run projection noted in PDES baseline: cautious GDP growth rate of 5.9 percent.
- Inflation and external sector:
  - Inflation could average around 4 percent in 2018, then decline rapidly in 2019 to well below the 3 percent convergence criterion.
  - Current account deficit to deteriorate as donor-financed projects scale up; overall external balance expected to remain positive thanks to donor inflows; oil exports under envisaged pipeline project expected to commence in 2022.
- Fiscal consolidation and debt:
  - Q1 2018 revenue collection came in better than programmed.
  - Medium-term objective: meet the WAEMU overall fiscal balance convergence criterion of -3 percent of GDP with a two-year delay in 2021.
  - Public debt projected to stabilize under 50 percent of GDP; NPV of external debt projections reported in Tables.
- Key risks:
  - Deteriorating security, unfavorable uranium prices, weather volatility, implementation capacity, inefficient use of donor funds, and explosive population growth.

### PROGRAM MODALITIES, CONDITIONALITY, AND DISBURSEMENTS
- Reviews and disbursement:
  - Staff supports conclusion of the second review under the ECF and disbursement of SDR 14.1 million (third tranche).
  - Program performance assessed semiannually; third review after end-October 2018 and fourth review after end-April 2019.
  - Disbursement schedule under the ECF arrangement: multiple tranches of SDR 14.1 across reviews; total SDR 98.7 proposed.
- Quantitative performance criteria (selected projections and levels):
  - Total revenue (percent of GDP, Table 1 projections): 14.4 16.1 15.3 14.2 15.6 15.4 15.8 16.9 17.7 18.4 18.8
  - Total public and publicly guaranteed debt (percent of GDP): 46.7 51.1 49.7 43.9 51.9 44.7 46.1 46.5 46.5 46.0 45.8
  - Current account (in percent of GDP, memorandum): -15.7 -18.0 -13.4 -13.8 -15.9 -16.7 -17.9 -19.5 -19.8 -15.7 -15.8
  - Selected fiscal levels (CFAF billions, Table 2):
    - Total revenue: 643.8 770.8 729.0 680.7 803.3 803.3 885.2 1,016.4 1,152.3 1,307.1 1,438.2
    - Total expenditure and net lending: 1,187.9 1,341.4 1,368.2 1,263.7 1,481.6 1,491.3 1,592.8 1,706.4 1,769.2 1,955.0 2,100.6
    - Overall balance (commitment including grants): -273.9 -351.8 -289.7 -240.8 -317.1 -308.4 -254.1 -221.3 -195.9 -209.3 -222.8
- Changes to debt-related performance criteria:
  - Proposed replacement of two debt-related PCs with one on the “present value of new public and publicly-guaranteed external debt contracted”; PV calculation uses a 5 percent discount rate; ceiling for 2018 set at 225.0 (CFAF billions, as presented).

### PDES 2017-21 (Annex I) — Objectives, Costs, and Financing
- PDES objectives:
  - Structurally transform the Nigerien economy for strong, sustainable, resilient, and inclusive growth.
  - Five strategic axes: (i) cultural renaissance; (ii) social development and demographic transition; (iii) acceleration of economic growth; (iv) governance, peace, and security; (v) sustainable environment management.
- Quantitative PDES targets by 2021:
  - Reduce poverty rate from 39.8 percent in 2016 to 31.3 percent.
  - Reduce percentage below national poverty line from 45.1 percent in 2014 to 31.1 percent.
  - Target growth in optimistic scenario: 7 percent.
  - Revenue-to-GDP target: 20 percent.
  - Decrease population growth from 3.9 percent in 2015 to 3.06 percent.
- Financing requirements and structure:
  - Total PDES five-year financial requirement: CFAF15,018 billion (about USD 28.3 billion or 336 percent of 2016 GDP).
  - PDES financing (Optimistic Scenario):
    - Private sector: CFAF5,713 billion; Amount (USD billions) 10.9; Amount (% of GDP) 128%; Paris Donor Conference Pledges (USD billion) 10.3.
    - Public Sector: CFAF9,306 billion; Amount (USD billions) 17.7; Amount (% of GDP) 208%; of which external: CFAF3,782 billion; Amount (USD billions) 7.2; Amount (% of GDP) 85%; Paris pledges (USD billion) 12.7.
    - Total PDES cost: CFAF15,018 billion; Amount (USD billions) 28.5; Amount (% of GDP) 336%; Paris pledges (USD billion) 23.
  - PDES assumes private investors (including PPPs) finance roughly 40 percent of total cost.
- Priority Spending List (PAP) totals CFAF4,333 billion with distribution:
  - Axis 1: 21; 0.5%
  - Axis 2: 1,328; 30.6%
  - Axis 3: 2,280; 52.6%
  - Axis 4: 502; 11.6%
  - Axis 5: 203; 4.7%

### MONITORING, REPORTING, AND TECHNICAL MEMORANDUM (Attachment II)
- Reporting obligations and definitions:
  - Net domestic financing defined as net bank credit to government plus net nonbank domestic financing (including government securities issued in CFAF on WAEMU market not held by resident commercial banks, proceeds from sale of government assets, privatization receipts).
  - Present value (PV) of new public and publicly-guaranteed external debt: discount at 5 percent; for loans with negative grant element PV set equal to loan value; valuation based on amount contracted, independent of disbursement timing.
  - Domestic payments arrears: include committed and authorized fiscal year expenditures not paid within 90 days.
  - Monthly reporting deadlines: most government finance items monthly within six weeks after month-end; monetary sector items within eight weeks after month-end; balance of payments preliminary annual data within six months after year-end.
- Quantitative and continuous PCs (selected):
  - Continuous PCs on no accumulation of external payments arrears, no new short-term external debt contracted or guaranteed, and no new non-concessional external debt contracted or guaranteed with maturities of 1 year or more — status: Met in reporting.
  - Present Value ceiling for new public and publicly-guaranteed external debt from January 1, 2018: 225.0 (CFAF billions as presented).

### STAFF VIEWS, AUTHORITIES’ REQUEST, AND CONCLUSIONS
- Fund staff:
  - Supports conclusion of the second review under the ECF and disbursement of SDR 14.1 million.
  - Notes program implementation broadly satisfactory except for revenue mobilization shortfall in 2017.
  - Emphasizes need to strengthen institutional arrangements, project selection, and implementation capacity.
- Authorities’ request:
  - Completion of the second review and disbursement of the third tranche (SDR 14.1 million).
  - Modification of performance criterion on external public debt consistent with Fund debt-limits policy.

_Italic: International Monetary Fund. cr18166 (May 16, 2018)._

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Context
- With one of the lowest scores in the Human Development Index, Niger faces daunting development challenges, exacerbated by terrorist incursions, low prices for key uranium exports, climate change, and excessive population growth.
- GDP grew by 5 percent in the past two years and should gradually rise to 5¾ percent as reforms and substantial donor support bear fruit.
- The government is reform oriented and enjoys a comfortable parliamentary majority, but ongoing demonstrations signal a degree of social discontent.
- Donors pledged US$12.7 billion during the December 2017 donor round table, against US$7 billion sought, in support of Niger’s 5-year development plan (PDES 2017-21).

### Program performance
- Overall assessment: Implementation has been satisfactory with all performance criteria met, but revenue mobilization underperformed and some structural reforms advanced more slowly than envisaged.
- Key observations:
  - All performance criteria set out for December 2017 at program approval were met.
  - Domestic financing was 2.4 percent of GDP (excluding 0.4 percent of GDP in financing from the Fund).
  - Domestic payment arrears were cleared considerably more than programmed, though some new ones emerged in early 2018, breaching the end-March 2018 indicative target.
  - Four out of five indicative targets for December 2017 were observed; revenue mobilization fell short by 1.9 percent of GDP relative to target and 0.2 percent of GDP below 2016 levels.
  - Compliance with structural benchmarks between December 2017 and March 2018 was marked by delays:
    - The national policy on gender was updated ahead of schedule.
    - Performance plans for tax and customs administrations were put in place in the first half of May 2018 as a prior action.
    - For the treasury single account (TSA): a banking impact study completed, many accounts in commercial banks transferred, a new subaccount structure agreed; implementation pending.
    - New PPP legislation not yet submitted to parliament but prior action to send it to cabinet was met.
    - Bankification of fiscal payments: a first draft plan furnished; cash payments at the large taxpayer office (DGE) still possible.
  - Recurrent structural benchmarks on budget execution monitoring, commitment and cash planning were respected.
  - The revised borrowing plan for 2018-21 was furnished in draft form with some delay.

### The 2018 program
- Focus: Preserving macroeconomic stability underpinned by prudent fiscal policies.
- Fiscal strategy:
  - 2018 foresees a fiscal effort based on revenue augmentation, on track in the first quarter and underpinned by the 2018 budget measures, steps for a short-term revenue boost, and a program for systematic buildup of revenue administration capacity.
  - The fiscal structural program also seeks improvements in spending efficiency and debt management.
- Private sector support: Financial deepening, a better business environment, and upgraded governance.

### Economic developments (2016–2017 and early 2018)
- Real GDP: 5 percent in 2016 and 4.9 percent in 2017.
- Private sector credit expanded by nearly 10 percent for most of 2017.
- WAEMU pooled reserves improved slightly to 4.2 months of imports at end-2017.
- Current account deficit reduced to some 14 percent of GDP in preliminary data; overall balance of payments positive.
- Inflation: picked up in late 2017 and ran at 5.4 percent in April 2018; estimated 1.5 ppt contribution from administrative price and tax hikes.
- Fiscal balances and revenues in 2017:
  - Basic balance: -4.9 percent of GDP.
  - Domestic financing: 2.4 percent of GDP.
  - Overall balance (WAEMU anchor): improved to -5.0 percent of GDP from -6.1 percent of GDP in 2016.
  - Revenue performance declined as a percent of GDP in 2017 due to transitory factors (trader strike, tax administration management problems, delays in tax arrears collection and sale of telecom licenses).
- Text Table 1 (fiscal revenue performance, 2018Q1 actual vs. 2018 program) excerpted figures (in billions of CFAF):
  - Q1 2017 Actual / Q1 2018 Prelim. / Change (percent)
  - Total revenue: 158 / 189 / 20.0
  - Income taxes: 37 / 37 / 0.3
  - International trade taxes: 37 / 46 / 25.4
  - Goods and services taxes: 61 / 82 / 33.2
  - Other taxes: 14 / 16 / 14.8
  - Nontax revenue: 9 / 9 / -4.5
  - 2017 Actual / 2018 Program / Change (percent)
  - Total revenue: 681 / 803 / 17.9
  - Income taxes: 171 / 194 / 13.5
  - International trade taxes: 172 / 208 / 20.9
  - Goods and services taxes: 234 / 279 / 19.2
  - Other taxes: 55 / 60 / 9.1
  - Nontax revenue: 49 / 62 / 26.5

### Outlook and risks
- Growth projections:
  - Growth projected at 5.2 percent in 2018 and 5.3 percent in 2019.
  - Medium-term growth should gradually pick up to 5¾ percent.
  - Risks to growth: security challenges, unfavorable uranium prices, weather volatility due to reliance on rain-fed crops.
- Inflation outlook: Could average around 4 percent in 2018, then decline rapidly in 2019 to well below the 3 percent convergence criterion as transitory factors wash out.
- External sector:
  - Implementation of donor-financed projects likely to deteriorate the current account until crude-oil exports under the envisaged pipeline project commence in 2022.
  - Inflow of donor funds should keep the overall external balance positive and support regional reserve accumulation at the BCEAO.
- Fiscal consolidation:
  - Fiscal targets for 2018 remain within reach with determined implementation and higher nominal GDP growth.
  - Q1 2018 revenue collection came in better than programmed.
  - Medium-term objective: reach the WAEMU convergence criterion for the overall fiscal balance of -3 percent of GDP with a two-year delay in 2021.
  - Security spending rose by 2.6 percent of GDP between 2011 and 2017; spending on the food program is 2.4 percent of GDP higher; budget support rose by 1.5 percent of GDP, partially offsetting these pressures.
- Risks to program success:
  - Implementation challenges, deteriorating security conditions, and inefficient use of donor funds to strengthen physical and human capital.
  - Long-term development prospects threatened by explosive population growth if not reined expeditiously.
- Upside potential: Reform momentum and strong donor support could generate a stronger-than-expected virtuous cycle of private sector development.

### Policy discussions and key policy measures
- Four main policy objectives for 2018:
  1. Preserving macroeconomic stability.
  2. Broadening the revenue base.
  3. Improving expenditure quality.
  4. Brightening development prospects through financial sector development, better governance, and addressing demographics.
- Preserving macroeconomic stability:
  - Fiscal effort reflected in the basic fiscal balance targeted to improve by 0.9 percent of GDP to 4 percent of GDP in 2018.
  - Revenue mobilization remains primary; expenditure restraint remains an important second line.
  - Overall fiscal balance set to remain elevated reflecting donor fund absorption.
  - Public debt projected to remain on a sustainable trajectory; Niger’s capacity to repay the Fund remains adequate.
  - Modification of external debt conditionality: replace ceiling on contracting non-concessional external public debt with a performance criterion limiting the present value of the contracting of public and publicly-guaranteed external debt from this review onward.
  - A ceiling of CFAF 225 billion (USD 420 million or 4.3 percent of GDP) in present-value terms agreed for 2018.
- Debt management strengthening:
  - Inter-Ministerial Debt Management Committee to be guided by the 2015 decree: hold regular meetings, fully staff its technical support committee, require Finance Ministry co-signature of loan conventions, and certify selection procedures for investment projects underlying loan conventions.
  - New recurrent structural benchmark: quarterly meetings and reporting on committee decisions.
  - Authorities to publish debt management reports and debt statistics and adopt debt management policy guidelines.
  - Medium-term objective: consolidate debt management in the Ministry of Finance into a front-middle-back office structure.
- Public-Private Partnerships (PPPs):
  - Authorities reviving PPPs with new legislation being finalized.
  - New PPP arrangements are of build-operate-transfer type, avoiding taking on public debt or granting public guarantees.
  - New PPP law will require Ministry of Finance signature of all PPP contracts, integration in the budget cycle, and a PPP definition aligned with best practices.
  - Structural benchmark for submission of PPP law to parliament proposed to be reset for end-June 2018.
  - Mission urged authorities to contain tax exemptions in PPP contracts until limits in the new legislation come into effect.
- Broadening the revenue base:
  - Revenue generation is central for fiscal consolidation and creating fiscal space for social spending and investment.
  - Authorities and mission welcomed good revenue performance in Q1 2018 as signs that transitory factors are unwinding and that 2018 budget measures are effective.
  - Additional steps to back nominal revenue projections of the first review were agreed (details in MEFP and technical attachments).

### Staff views and program modalities
- Staff supports the conclusion of the second review under the ECF, which will result in a disbursement of SDR 14.1 million.
- Program conditionality adjustments, structural benchmarks, and prior actions were negotiated to support program objectives and safeguard debt sustainability.

_Italic: International Monetary Fund. EXECUTIVE SUMMARY (cr18166) — May 16, 2018._

### 15.4 percent of GDP from 14.2 percent of GDP in 2017. For the medium-term, targeted revenue

### cr18166 - 15.4 percent of GDP from 14.2 percent of GDP in 2017. For the medium-term, targeted revenue

### Revenue mobilization and tax policy
- Revenue ratio rose to 15.4 percent of GDP from 14.2 percent of GDP in 2017.
- Medium-term revenue augmentation dialed back: between 2018 and 2021 the revenue ratio is to rise by 2.3 percent of GDP, compared to 2.9 percent in the first review.
- Key revenue measures and expected impacts:
  - Roll-out of valuation of imports at transaction prices for customs purposes (supported by IMF technical assistance).
  - A number of previously VAT-exempt products subjected to the reduced rate.
  - New presumptive taxes to bring smaller-scale economic activity into the tax net.
  - Net of the full-year effect of last June’s telecommunication tax cut, these measures should boost revenues by 0.6 percent of GDP.
- Short-term additional measures:
  - Completing delayed sale of telecommunication licenses for at least 0.2 percent of GDP.
  - Drive to collect at least 0.3 percent of GDP in tax arrears—CFAF 64 billion (1.3 percent of GDP) of recoverable arrears identified in the large taxpayer unit alone.
  - Accelerated implementation of molecular marking of petroleum products and stiffer sanctions to tackle rampant smuggling of petroleum products.
- Tax administration and exemptions:
  - Prior action: strong performance plans for revenue administrations.
  - Recent administrative reforms include establishing a large taxpayer unit, adoption of ASYCUDA world in customs, rolling out SISIC software in tax administration, a single window for car imports, and interconnections with customs offices in Togo and Benin (technically ready since this April).
  - Containing discretionary tax and customs exemptions remains critical; end-September 2018 structural benchmark to submit tax exemption reform legislation to parliament, with an interim white paper by end-June 2018.

- Text Table 2. Fiscal Measures, 2018 (In billions of CFAF, unless otherwise indicated):
  - Shift to transactional valuation of imports: 29.5
  - VAT taxation at 5% of previously exempted products: 6.3
  - Removal of investment code exemptions: 2.0
  - Housing tax: 2.0
  - Other tax measures1: 10.0
  - Tax admin measures2: 5.0
  - Cuts in telecom taxes: -24.0
  - Total: 30.8
  - in percent of GDP: 0.6
  - Sources: Nigerien authorities; and IMF staff calculations.
  - 1 Minimum taxes, real estate taxes, fees, etc.
  - 2 TIN requirements, computerization, recruitment of auditors, etc.
  - 2018 Proj.

### Improving spending quality and public financial management
- Expenditure envelope strictly limited; Inter-ministerial Budget Regulation Committee effective in scaling back non-priority spending while safeguarding poverty-reduction spending.
- Program budgeting:
  - 2018 budget prepared on a program basis (first time).
  - Progress toward program targets to be assessed mid-year to inform medium-term expenditure plans and 2019 budget preparation.
  - Authorities envisage refining program targets and moving to the double commitment system AE/CP.
- Treasury Single Account (TSA) reforms:
  - Reform aims to improve government liquidity management and reduce interest expenses; supported by an IMF resident advisor.
  - Authorities to transfer 90 percent of accounts still in commercial banks by end-2018 (proposed structural benchmark for end-June 2018 and end-December 2018).
  - Completion of digitalization of Treasury banking services is a proposed structural benchmark for end-December 2018.
- Public investment management:
  - New requirement for debt management committee to verify project selection criteria before approving loan conventions.
  - Authorities requested IMF technical assistance under the Public Investment Management Assessment (PIMA) program.
- Reform of public enterprises and entities (DEEs):
  - Six large public entities selected for audit; funding secured from the World Bank; tenders launched.
  - Compilation of list of some 150 DEEs in progress; goal to finalize and publish list and audit reports of largest DEEs as available.

### Financial sector development, governance, and demographics
- Business environment and private sector:
  - High priority on improving the business environment with monthly monitoring by the President and Prime Minister using World Bank “Doing Business” indicators.
  - Recent reforms: streamlined Commercial Court procedures, lower fees for mediation and construction permits, faster transfer of real estate, simplified access to public and chartered accountants.
  - Government committed to establish a VAT refund mechanism and clear all remaining domestic payment arrears by end-2018.
- Financial sector soundness and access to credit:
  - Recent rise in the non-performing loan ratio to almost 20 percent needs watching.
  - Recapitalization of the Agricultural Bank should be accelerated.
  - Authorities strengthened the credit bureau (March 2018 legislation), plan to operationalize leasing law and prepare a law on warrantage, adopted legislation for Islamic finance lending, intend to revive the National Strategy for Financial Inclusion, boost the microfinance sector, create a refinancing mechanism, roll out deposit insurance, and dematerialize fiscal payments.
  - Payments to two largest customs offices in Niamey on a non-cash basis since January 2018.
  - By end-June 2018, cash-payments to the large taxpayer office and the ten largest customs offices will be discontinued (proposed structural benchmark).
  - By end-December 2018, cash-payments will no longer be accepted at the tax office for medium-sized enterprises and at the twenty largest customs offices (proposed structural benchmark).
- Governance, AML/CFT, and transparency:
  - Reinforced investigative powers of HALCIA in 2016; Criminal Code and Code of Criminal Procedure amended; National Anti-Corruption Strategy adopted in 2018; anti-corruption hotline opened at the Justice Ministry.
  - Asset declaration regime hampered by legislative shortcomings and weak implementation; funding at HALCIA and the Court of Accounts tight; few cases referred to justice and convictions rare.
  - AML/CFT legislation aligned with WAEMU requirements; financial intelligence unit strengthened; national risk assessment underway; mutual evaluation by GIABA scheduled for 2020.
  - Private sector reporting of suspicious transactions remains low, especially among non-banks; authorities to better sensitize non-banks.
  - Niger has initiated process of rejoining the Extractive Industry Transparency Initiative (EITI).
  - Authorities agreed to improve fiscal transparency: publish budget audit and performance reviews, make a citizen budget available, and grant free online access to the Government Gazette.
- Demographics:
  - Fertility decline observed but remains high at 6 children per women on average.
  - About three quarters of women marry before age 18; low female education attainment levels.
  - Decree adopted December 2017 focusing on girls’ education to keep girls in school until age 18; government making effort to promulgate the decree.

### Program modalities, risks, and staff appraisal
- Program assessment cadence:
  - Program performance assessed semiannually.
  - Prior actions for the second review: furnishing strong performance plans for revenue administrations and submission of new PPP legislation to cabinet.
  - Third review will assess performance against end-June 2018 performance criteria and indicative targets, continuous performance criteria, structural benchmarks, and proposed structural benchmarks.
  - Fourth review will assess performance against end-December 2018 performance criteria and indicative targets, continuous performance criteria, and proposed structural benchmarks.
  - Proposed replacement of two debt-related performance criteria with one on the “present value of new public and publicly-guaranteed external debt contracted” as of date of completion of the second review.
- Repayment capacity and risks:
  - Niger should have sufficient capacity to repay the Fund, including when repayments rise to 1.3 percent during 2021-24.
  - Key risks: security developments, climatic shocks, and implementation capacity.
- Safeguards:
  - Safeguard assessments at the regional central bank (BCEAO); most recent assessment completed April 2018 found a continuing strong control environment.
- Staff appraisal and macroeconomic outlook:
  - Program implemented in an overall satisfactory manner except for fiscal revenue mobilization.
  - All performance criteria and indicative targets met except fiscal revenues at end-December 2017 and domestic arrears clearance at end-March 2018.
  - Revenue underperformance in 2017 is an important concern for fiscal consolidation and creating fiscal space.
  - Program set in a realistic macroeconomic framework: recent economic growth around 5 percent; gradual pickup to 5¾ percent is well within reach.
  - Somewhat elevated inflation should quickly recede; sizable current account deficit financed by external support.
  - WAEMU convergence criterion for the overall fiscal balance to be met only with a two-year delay in 2021, reflecting donor-fund absorption.
  - 2018 fiscal program appears on track: first-quarter revenues slightly ahead of program targets, supported by 2018 budget measures and short-term revenue steps.
  - Extensive fiscal structural reform agenda in place; strengthening institutional arrangements and project selection critical with more flexibility for external public borrowing.
  - Reforms to strengthen private sector and address population growth and gender bias remain essential; implementation bottlenecks need more attention.
  - Submission of the new Economic Development Document (EDD) aligns national development strategy (PDES) and reform plan with ECF-supported program objectives.

*IMF staff report content as provided in the source PDF.*

### 37.      Staff supports the authorities’ request for the conclusion of the second ECF review and

### 37.      Staff supports the authorities’ request for the conclusion of the second ECF review and

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

### Key macroeconomic projections and indicators (selected, as reported)
- GDP at constant prices: 4.9 5.2 5.2 4.9 5.2 5.2 5.3 5.7 5.8 7.2 6.0
- Non-resources GDP at constant prices: 4.9 5.0 4.8 4.5 5.1 5.3 5.4 6.0 6.1 4.7 5.7
- Oil production (thousand barrels per day): 17 18 18 18 19 18 20 20 40 50
- GDP deflator: -0.3 2.4 1.8 2.0 2.3 3.8 1.9 1.9 1.9 1.7 2.0
- Consumer price index (annual average): 0.2 2.0 2.0 2.4 2.5 3.9 2.0 2.0 2.0 2.0 2.0
- Exports, f.o.b. (CFA francs): -4.9 13.7 9.7 9.9 8.2 9.2 11.0 10.4 6.1 26.0 12.5
- Imports, f.o.b (CFA francs): -13.0 19.5 5.4 7.0 14.3 16.7 13.2 12.9 7.5 2.7 10.6
- Total revenue (percent of GDP, Table 1 projections): 14.4 16.1 15.3 14.2 15.6 15.4 15.8 16.9 17.7 18.4 18.8
- Total expenditure and net lending (percent of GDP): 26.6 28.1 28.6 26.5 28.8 28.6 28.4 28.3 27.2 27.6 27.4
- Basic balance (excluding grants, percent of GDP): -4.2 -4.9 -4.6 -4.9 -4.2 -4.0 -2.7 -1.0 -0.7 -0.7 -0.6
- Overall balance (commitment basis, including grants, percent of GDP): -6.1 -7.4 -6.1 -5.0 -6.2 -5.9 -4.5 -3.7 -3.0 -3.0 -2.9
- Total public and publicly guaranteed debt (percent of GDP): 46.7 51.1 49.7 43.9 51.9 44.7 46.1 46.5 46.5 46.0 45.8
- NPV of external debt (percent of GDP): 25.5 25.4 22.4 22.4 22.6 23.4 21.9 22.4 23.5 24.1 24.3
- GDP at current market prices (CFAF billions): 4,464 4,773 4,778 4,777 5,143 5,217 5,601 6,032 6,504 7,091 7,663
- GDP at current prices (annual percent change): 4.6 7.7 7.0 7.0 7.6 9.2 7.4 7.7 7.8 9.0 8.1

### Fiscal operations (selected levels and projections, Table 2)
- Total revenue (CFAF billions): 643.8 770.8 729.0 680.7 803.3 803.3 885.2 1,016.4 1,152.3 1,307.1 1,438.2
- Tax revenue (CFAF billions): 606.9 721.3 653.8 619.8 728.2 728.2 795.1 906.9 1,014.1 1,158.3 1,286.3
- Total expenditure and net lending (CFAF billions): 1,187.9 1,341.4 1,368.2 1,263.7 1,481.6 1,491.3 1,592.8 1,706.4 1,769.2 1,955.0 2,100.6
- Total current expenditure (CFAF billions): 631.3 696.0 681.4 663.5 722.9 732.6 772.9 827.2 855.1 910.6 979.2
- Capital expenditure (CFAF billions): 556.6 645.4 686.8 600.2 758.7 758.7 819.9 879.2 914.1 1,044.4 1,121.4
- Overall balance (commitment including grants, CFAF billions): -273.9 -351.8 -289.7 -240.8 -317.1 -308.4 -254.1 -221.3 -195.9 -209.3 -222.8
- Basic balance (CFAF billions): -188.9 -235.9 -220.4 -232.4 -200.3 -210.0 -150.7 -60.8 -47.8 -52.1 -45.6
- External financing (CFAF billions): 441.2 387.2 536.7 503.5 559.3 576.1 681.5 746.6 680.4 705.1 731.8
  - Grants (CFAF billions): 270.3 218.9 349.5 342.2 361.2 379.6 453.6 468.8 421.0 438.7 439.5
  - Loans (CFAF billions): 203.4 208.3 233.2 182.9 246.8 245.2 263.7 312.6 306.9 323.5 358.6
- Domestic financing (CFAF billions): 84.0 226.8 145.9 133.1 184.4 141.1 26.1 -56.6 -63.5 -57.1 -69.4

### Monetary and financial indicators (selected, Table 4 and Table 6)
- Net foreign assets (BCEAO and commercial banks, CFAF billions): 569.8 609.3 601.8 575.0 614.8 601.0 641.0 743.0 833.0 905.0
- Money and quasi-money (CFAF billions): 1,210.7 1,424.2 1,360.7 1,284.3 1,507.6 1,405.8 1,517.3 1,642.8 1,757.2 1,931.3 2,098.6
- Broad money (percent change): 8.7 11.1 12.4 6.1 10.8 9.5 7.9 8.3 7.0 9.9 8.7
- Credit to the private sector (change, percent): 12.8 9.1 7.9 2.2 12.1 7.9 9.4 10.3 12.0 12.7 13.2
- Regulatory Capital/ Risk-Weighted Assets (Dec-17): 16.8
- Credit Past Due/ Total Credit (Dec-17): 18.8
- Provisioning Rate (Dec-17): 66.1
- Return on Assets (ROA), After-Tax Return (Dec-17): 1.6
- Liquid Assets/ Total Deposits (Dec-17): 53.4

### Balance of payments and external sector (selected, Table 5)
- Current account balance (CFAF billions): -700.4 -857.9 -638.9 -658.4 -818.1 -870.2 -1,003.3 -1,177.0 -1,289.5 -1,111.6 -1,207.9
- Exports, f.o.b (CFAF billions): 611.8 653.3 670.9 672.6 726.2 734.6 815.4 899.8 954.5 1,202.8 1,353.5
  - Uranium (CFAF billions): 177.7 247.5 182.1 151.6 167.9 124.5 130.8 144.8 143.8 164.0 94.9
  - Oil (CFAF billions): 91.3 93.1 96.1 151.4 101.9 205.4 228.5 259.3 265.1 447.1 548.0
- Imports, f.o.b (CFAF billions): 1,017.2 1,232.5 1,072.1 1,088.2 1,225.0 1,270.2 1,438.2 1,623.2 1,745.0 1,792.0 1,982.5
- Capital and financial account (CFAF billions): 681.7 847.9 704.9 690.9 833.1 885.2 1,041.3 1,237.0 1,356.5 1,201.6 1,309.9
  - Direct investment (FDI, CFAF billions): 155.7 432.4 160.5 175.5 233.5 291.5 330.1 439.7 541.4 414.2 441.2
  - Project grants (CFAF billions): 204.0 164.2 220.5 201.0 269.9 269.9 333.7 360.1 349.0 322.9 328.2
- Overall balance (CFAF billions): -24.9 -10.0 65.9 32.5 15.0 15.0 38.0 60.0 67.0 90.0 102.0
- Memorandum: Current account (in percent of GDP): -15.7 -18.0 -13.4 -13.8 -15.9 -16.7 -17.9 -19.5 -19.8 -15.7 -15.8

### IMF obligations and capacity to repay (Table 7)
- Disbursement of the third tranche requested: SDR 14.1 million.
- Fund obligations based on existing and prospective credit (SDR millions, total obligations): 4.3 7.8 11.6 19.1 21.8 25.2 27.5 28.6 22.2 18.3 12.7
- Outstanding IMF credit based on existing prospective drawings (SDR millions): 161.0 181.4 183.9 164.8 143.0 117.8 90.3 61.7 39.5 21.2 8.5
- Net use of IMF credit (SDR millions): 22.4 20.4 2.5 -19.1 -21.8 -25.2 -27.5 -28.6 -22.2 -18.3 -12.7
- Memorandum items:
  - Exports of goods and services (CFAF billions): 859.4 944.5 1033.5 1099.6 1356.3 1513.3 1612.2 1874.2 2146.1 2342.0 2566.1
  - External debt service (CFAF billions): 104.4 152.0 133.8 143.4 191.5 224.7 243.5 263.8 273.1 283.8 300.3
  - Tax revenue (CFAF billions): 728.2 795.1 906.9 1010.8 1154.7 1282.5 1428.8 1522.8 1716.3 1830.8 1957.2

_Source: IMF staff and Nigerien authorities (as presented in the cited chapter)._

### Annex I. Social and Economic Development Plan 2017-21

### Annex I. Social and Economic Development Plan 2017-21 (PDES 2017-21)

### Plan objectives and strategic axes
- The PDES 2017-21 was approved in September 2017 with the objective of structurally transforming the Nigerien economy to achieve strong, sustainable, resilient, and inclusive growth to increase living standards.
- The PDES is based on five strategic axes:
  - (i) promoting a cultural renaissance;
  - (ii) social development and demographic transition;
  - (iii) acceleration of economic growth;
  - (iv) improvement to governance, peace, and security;
  - (v) sustainable management of the environment.

### Quantitative targets by 2021
- Reduce the poverty rate from 39.8 percent in 2016 to 31.3 percent.
- Reduce the percentage of the people below the national poverty line from 45.1 percent in 2014 to 31.1 percent.
- Pursue structural reforms to increase the growth rate of the economy to 7 percent in the optimistic scenario.
- Continue domestic revenue mobilization to raise the revenue-to-GDP ratio to 20 percent (in line with the WAEMU convergence criterion).
- Decrease the rate of population growth from 3.9 percent in 2015 to 3.06 percent.

### Baseline scenario and macroeconomic anchoring
- Authorities developed a baseline scenario with cautious GDP growth rates of 5.9 percent consistent with the IMF-supported program.
- Baseline assumptions include average tax burden of 16.5 percent of GDP and a fiscal deficit path consistent with the WAEMU convergence criteria (3 percent of GDP).
- Implementation is expected in a complicated environment requiring navigation of political balance, security threats, physical and human capital deficiencies, and climatic change.

### Financing requirements and assumptions
- Total PDES five-year financial requirement: CFAF15,018 billion (about USD 28.3 billion or 336 percent of 2016 GDP).
- PDES financing structure (Optimistic Scenario of the PDES):
  - Private sector: CFAF5,713 billion; Amount (USD billions) 10.9; Amount (% of GDP) 128%; Paris Donor Conference Pledges (USD billion) 10.3.
  - Public Sector: CFAF9,306 billion; Amount (USD billions) 17.7; Amount (% of GDP) 208%.
    - of which: External: CFAF3,782 billion; Amount (USD billions) 7.2; Amount (% of GDP) 85%; Paris Donor Conference Pledges (USD billion) 12.7.
    - of which: Internal: CFAF5,524 billion; Amount (USD billions) 10.5; Amount (% of GDP) 124%; Paris Donor Conference Pledges n/a.
  - Total PDES cost: CFAF15,018 billion; Amount (USD billions) 28.5; Amount (% of GDP) 336%; Paris Donor Conference Pledges (USD billion) 23.

- PDES assumes private investors (including PPPs) finance roughly 40 percent of the total cost.
- Remaining financing via public sources: external support from development partners, domestic revenue mobilization, and domestic borrowing.
- Authorities held a Paris event in December 2017 (donor roundtable and private-sector investors forum) that yielded strong support and pledges, with significant investor interest in energy, commodity, and telecommunication sectors.
- The PDES success hinges on authorities following up on pledges made during the Paris conference.

### Priority Spending List (PAP)
- The PAP represents approximately one-third of baseline PDES spending and emphasizes Axis 3 (activities supporting higher economic growth).
- PAP spending by PDES axis (Amounts in CFA billions and percent of total PAP):
  - 1) Promoting a Cultural Renaissance: 21; 0.5%
  - 2) Social Development and Demographic Change: 1,328; 30.6%
  - 3) Acceleration of Economic Growth: 2,280; 52.6%
  - 4) Improvement to Governance, Peace, and Security: 502; 11.6%
  - 5) Sustainable Management of the Environment: 203; 4.7%
  - Total PAP: 4,333; 100.0%

### Implementation risks and constraints
- Key constraints include a delicate political balance, security threats, limited physical and human capital, and climatic change.
- Success depends on sustained domestic revenue mobilization and effective follow-up on donor and investor pledges.
- The authorities exercised prudence in baseline assumptions given these headwinds.

### Business environment and infrastructure context (summary)
- The business environment has made limited progress with notable weaknesses in getting electricity, access to credit, and paying taxes.
- High population growth rates have resulted in very low capital stock per capita.
- Access to infrastructure remains low compared to peers.
- A challenging security environment weights on the business climate.
- Access to credit remains far below regional averages.

---

### Annex II. Governance and the Fight Against Corruption

### Prevalence and perception of corruption
- A government survey found 86 percent of respondents recognized widespread corrupt practices.
- Comparative indicators present mixed signals: Transparency International’s Corruption Perceptions Index and the Worldwide Governance Indicator for control of corruption suggest similar prevalence to WAEMU average; Afrobarometer readings imply relatively good governance in Niger; Varieties of Democracy Project indicates Niger falls short, with executive corruption highlighted.

### Anti-corruption legal and institutional framework
- Niger is party to: United Nations Convention Against Corruption (UNCAC), African Union Convention on Preventing and Combatting Corruption (AUCPCC), and ECOWAS Protocol on the Fight Against Corruption.
- Combatting corruption is mandatory under the 2010 Constitution. The Criminal Code penalizes graft, trading in influence, and misappropriation of public funds.
- HALCIA (High Authority to Combat Corruption and Related Infractions):
  - Created by decree in 2011; decree replaced by an organic law in 2016 that strengthened HALCIA’s investigative powers (directly refer cases to the Public Prosecutor, initiate investigations) and put in place protection mechanisms for witnesses, informers, and experts.
- An anti-corruption hotline (“Ligne Verte”) was opened within the Ministry of Justice.
- January 2018: government adopted a National Anti-Corruption Strategy—a three-year action plan focused on reinforcing prevention, repression, and coordination.

### Gaps and limitations
- Niger is not fully compliant with UNCAC requirements; the 2016 implementation review of UNCAC Chapters III and IV identified pending deficiencies.
- HALCIA remains attached to the Office of the President, lacks financial autonomy, and faces financial and human resources constraints.
- Despite receiving many cases, HALCIA refers only a handful to the Public Prosecutor; only three such cases led to convictions to date, reflecting judicial institutional shortcomings.
- “Ligne Verte” is underfunded; none of its complaints have had legal consequences.
- Asset declaration regime weaknesses:
  - Constitutional requirement for publication of asset declarations for the President, members of government, and other high-ranking officials at start and end of tenure, with annual updates.
  - Legislative framework falls short of international best practices: deficiencies in scope of individuals covered, lack of clarity on the declaration process and assets to be declared, and absence of sanctions for non-compliance.
  - Compliance uneven: only the President’s asset declarations are up-to-date and accessible on the Constitutional Court’s website.

### AML/CFT framework and implementation
- 2016: Niger transposed the WAEMU 2015 uniform law into national legislation to align AML/CFT framework with FATF standards.
- Compliance with the 2012 FATF standards will be assessed in 2020 by GIABA.
- Authorities are finalizing the national ML/TF risk assessment.
- CENTIF (financial intelligence unit) budget increased fourfold in 2012; recruitments and staff training ramped up.
- Implementation weaknesses: spotty reporting of suspicious transactions (STRs) and need for strengthened supervision.
- Out of 27 cases referred to the Public Prosecutor since CENTIF’s inception, only one led to a conviction.

### Extractive industries transparency
- Constitution provides for greater transparency in reporting of revenues from extractive industries and mandates disclosure of exploration and exploitation contracts.
- Public disclosure of licenses, contracts, and revenues is not systematic; publication of annual audit reports of natural resource revenue collection has been delayed.
- Niger quit the Extractive Industry Transparency Initiative (EITI) in 2017 when suspension was looming but has since undertaken steps to rejoin.

---

### Appendix I. Letter of Intent — Key program and macroeconomic points (May 15, 2018)
- 2017 real GDP growth reached an estimated 4.9 percent despite an unfavorable 2017/18 crop season.
- Inflation: annual average inflation rose to 2.4 percent from 0.2 percent in 2016; a transitory uptake occurred in late 2017 and early 2018.
- Program implementation broadly on track, except for revenue mobilization: all performance criteria for end-December 2017 were met except the revenue target, which was missed by a large margin; first quarter 2018 revenue exceeded the first review target.
- Government priorities: expanding the revenue base, improving public financial management, fiscal consolidation, diversification of the economy, strengthening the private sector, tackling high population growth and gender inequality.
- Request to IMF: (i) completion of the second review, and (ii) disbursement of the third tranche of SDR 14.1 million under the ECF arrangement.
- Request to modify program conditionality on external debt monitoring: monitor public and publicly-guaranteed external debt through a performance-criterion ceiling on the present value of contracting such debt.
- Agreement to publication on the IMF website of the staff report, this letter of intent, the MEFP, and the TMU.

### MEFP introduction and recent developments (high-level)
- The MEFP supplements prior MEFPs (December 21, 2016 and November 30, 2017) and aligns the ECF-supported program with the PDES 2017-21.
- Program priorities remain focused on:
  - (i) maintaining macroeconomic stability;
  - (ii) improving public financial management;
  - (iii) expanding fiscal space by increasing tax revenue (broadening base and strengthening tax administration), better controlling public expenditures, and strengthening cash management;
  - (iv) improving debt management;
  - (v) increasing transparency in management of the mining and oil sectors;
  - (vi) supporting development of the private and financial sectors to diversify the economy and address demographic challenges.
- Recent economic trends:
  - Real GDP growth 2017: 4.9 percent, driven by buoyant oil production, robust construction activities, and a strong telecommunication sector.
  - Annual average inflation: 2.4 percent.
  - Private sector credit grew at almost 10 percent for most of the year.
  - Current account deficit narrowed to some 14 percent of GDP due to completion of import-intensive investment projects, donor financing, and reduced food import needs.
  - Available indicators for 2018 point to continued activity expansion, temporarily higher inflation partly due to tax and administrative price hikes in January 2018, opportunistic price increases related to the 2018 budget, and reasonably strong credit and money growth.

*Source: cr18166 - Annex I. Social and Economic Development Plan 2017-21 (PDES 2017-21) and accompanying annexes.*

### 3.      The targets for the overall fiscal deficit, domestic budget financing, and domestic

### 3.      The targets for the overall fiscal deficit, domestic budget financing, and domestic

### Performance under the ECF-supported program
- The targets for the overall fiscal deficit, domestic budget financing, and domestic arrears reduction were achieved.
- All performance criteria for end-December 2017 were met, including:
  - Net domestic government financing.
  - Domestic arrears reduction.
  - Continuous performance criteria on avoidance of external payments arrears.
  - Contracting of short-term and long-term non-concessional external debt.
- All indicative targets for end-December 2017 were respected except those related to government revenue.
- Government revenue underperformed by 1.9 percent of GDP at end-December 2017.
- The program remained within the ceiling for domestic budget financing and reduced the overall budget deficit to 5 percent of GDP from 6.1 percent of GDP in 2016.
- Higher-than-expected external budget support allowed substantially more clearing of domestic arrears than envisaged.

### Revenue outturn and drivers
- Revenue collection in 2017: 14.2 percent of GDP.
  - This remained 0.2 percent of GDP below 2016 and 1.9 percent of GDP short of target.
- Chief causes of 2017 revenue shortfall:
  - A strike of importers throughout the second half of 2017.
  - The cut of a telecommunication tax.
  - Difficulties in tax administration.
  - Delays in selling telecommunication licenses.
- First-quarter 2018 revenue collections met the end-March indicative target.

### Structural benchmarks and reforms (progress and status)
- Adopted and advanced:
  - Updated National Gender Policy adopted in August 2017 (ahead of end-December 2017 target).
  - Performance plans for revenue collection agencies: partially met (DGI plan being strengthened; DGD plan under development). Strong plans communicated to DGI and DGD in first half of May 2018 as a prior action; each plan targets more than five operational indicators, sets quarterly numerical targets, assigns functional-level responsibility, and applies from beginning of July 2018.
  - Treasury Single Account (TSA) project: interface between BCEAO and DGTCP improved; BCEAO financial impact study finalized; TSA account structure clarified; some active public-entity accounts transferred. Not all dormant accounts may have been closed and implementation is delayed.
  - New PPP legislation submitted to Council of Ministers as prior action; PPPs defined in line with international standards, integrated into the budget cycle, require Ministry of Finance consent, unsolicited offers subject to same scrutiny, and scope for tax exemptions limited.
  - Bankification project: drafted a masterplan; payments to/from several key customs offices and most tax payments to the Large Taxpayer Unit (DGE) are already non-cash.
- Recurrent structural benchmarks:
  - All but one were observed on time.
  - Quarterly spending allocations released within the first month as committed.
  - Quarterly commitment plans with corresponding cash plans prepared.
  - Quarterly debt management reports prepared, validated, and furnished on time.
  - Revised borrowing plan for 2018-21 communicated to IMF staff in draft form with delay in mid-April.

### Governance, financial inclusion, and social measures
- Governance and anti-corruption:
  - Legal framework strengthened; graft, trading in influence, and misappropriation criminalized.
  - HALCIA strengthened in 2016: anchored in organic law, increased investigative powers, direct court referrals, protective mechanism for witnesses/informers/experts.
  - National Anti-Corruption Strategy adopted in January 2018 with a three-year action plan.
  - Regulations promoting transparency in public procurement and a financial intelligence unit (CENTIF) in place; AML/CFT legal framework aligned with WAEMU uniform law.
- Financial inclusion:
  - January 2018: legislation allows microfinance institutions to conduct activities in line with principles of Islamic finance.
  - March 2018: decree simplifying access to regulated professions under the law on the National Order of Certified Public Accountants and Chartered Accountants.
  - National financial inclusion strategy is being revised and updated.
- Social measures:
  - Updated National Gender Policy followed by development of a five-year action plan expected before end-June 2018.
  - December 2017 decree aimed at keeping girls in school longer to delay marriage and child bearing; implementation campaign underway.
  - Implementation of the Sahel Women’s Empowerment and Demographic Dividend (SWEDD) project moving ahead.

### Economic outlook and projections (2018 and medium run)
- 2018 outlook:
  - GDP growth expected to rise to 5.2 percent driven by construction and services (offsetting oil refinery maintenance shutdown and unfavorable uranium prices).
  - Annual average inflation likely initially elevated in 2018, then receding rapidly thereafter.
  - Credit to the private sector and broad money expected to expand by around 10 percent.
  - Current account expected to deteriorate as donor-financed projects scale up; overall external balance to remain positive thanks to donor financing.
- Medium run:
  - Growth projected to rise to close to 6 percent due to reforms, strong donor support, and expected boost to oil production.
  - Inflation expected to fall quickly, complying with WAEMU convergence criterion of 3 percent.
  - Fiscal path: achieve near basic fiscal balance in 2021, compared to a deficit of 4.9 percent of GDP in 2017.
  - Overall balance to comply with the 3 percent of GDP overall deficit anchor of WAEMU member countries with a two-year delay in 2021.
  - Public debt projected to stabilize at under 50 percent of GDP.
  - Current account deficit to remain high until oil exports surge from 2022.
- Notable risks: fragile regional security, global commodity price developments, possible delays in oil pipeline construction, and weather conditions.

### Fiscal policy stance and targets for remainder of 2018
- Targets reaffirmed (as projected at first program review, with ratios lower due to upward revision to nominal GDP):
  - Basic deficit target: CFAF 210 billion (4 percent of GDP).
  - Overall deficit including grants: CFAF 308 billion (5.9 percent of GDP).
  - Domestic financing: CFAF 141 billion (2.7 percent of GDP), including from the IMF.
- Rationale: despite 2017 revenue shortfall, targets seen as within reach due to reinforced revenue measures, fading transitory 2017 shocks, and higher nominal GDP growth.

### Revenue strategy and measures to close shortfall
- Revenue drivers and measures:
  - 2018 budget measures expected to yield at least 0.6 percent of GDP.
  - Sale of telecom licenses expected to yield 0.2 percent of GDP (and elsewhere the text anticipates at minimum 0.5 percent of GDP from accelerated sales).
  - Tax-arrears collection drive expected to yield 0.3 percent of GDP.
  - Crackdown on petroleum smuggling.
  - Ambitious goal to boost foreign-financed investment by nearly 2 percent of GDP to 9.2 percent of GDP.
  - Strengthen public debt management and quality of public spending.
- Specific tax policy measures (2018 budget measures):
  - Apply reduced VAT rate of 5 percent to previously exempted items in line with WAEMU standards.
  - Subject previously exempted industrial inputs and packaging under the investment code and transport services to standard VAT rate of 19 percent.
  - Introduce a progressive housing tax.
  - Overhaul property transfer tax.
  - Strengthen presumptive taxation of informal activities (higher proxy taxes for small merchants, new minimum tax for capital gains in real estate transactions, introduction of cable network subscription taxes).
  - Strict requirement for all individuals and legal entities with activities giving rise to fiscal liabilities to obtain tax identification numbers (DGD helps enforce for importers).
- Tax exemptions:
  - Commit to overhauling and streamlining tax exemptions in new legislation to be submitted to Parliament by end-September (structural benchmark).
  - Furnish a white paper for rationalization of tax exemptions for discussion with IMF staff by end-June 2018 (structural benchmark).
  - Tightly manage new discretionary tax exemptions in the interim and keep Fund staff informed.
- Short-term revenue boost actions:
  - Aggressive collection of tax arrears: stock of recoverable tax arrears at DGE amounts to CFAF 64 billion (1.3 percent of GDP).
  - DGD and DGI to fully roll out crackdown on petroleum smuggling, including molecular marking of fuels produced for the domestic market and stiffer sanctions.
  - Accelerate sales of telecommunication licenses; anticipated minimum yield of 0.5 percent of GDP in additional revenues.
- Revenue administration reforms:
  - Prior action: ambitious and detailed performance plans for DGI and DGD in place.
  - Computerization and reforms expected to yield gains: single window for car imports (GUAN), computerization of DGI with SISIC, and DGD with ASYCUDA world.

### Public expenditure management and efficiency measures
- Expenditure stance:
  - Government will hold back expenditure if revenue underperforms program targets; focus on improving quality of spending and efficient absorption of donor financing while keeping public debt in check.
  - Continued efforts to strengthen public financial management.
- Specific measures:
  - Program budgeting introduced in 2018 to better monitor performance; outcomes to be assessed mid-year and used to update medium-term expenditure plans (DPPD and DPBEP).
  - Prioritize highly concessional financing to protect sustainability of external public debt; Ministry of Finance to oversee PDES implementation to avoid unsustainable external debt.
  - TSA implementation:
    - Timetable for account closures to reduce still-to-be-transferred balances of public administration and public entities to less than 10 percent of the level of CFAF 65 billion established in the BCEAO study (structural benchmark for end-June 2018).
    - Implement new TSA account structure at the BCEAO (structural benchmark for end-June 2018).
    - By end-2018, reduce still-to-be-transferred balances to less than 10 percent of CFAF 65 billion and digitalize Treasury’s banking services for transferred accounts of public administration and public entities (structural benchmark for end-December 2018).
    - Separate banking and accounting functions in the Treasury and ensure operational continuity of banking services.
  - Bankification:
    - Discontinue cash tax and customs-duty payments to the DGE and the ten largest customs offices by end-June 2018; provide a white paper for bankification (structural benchmark for end-June 2018).
    - Next step: discontinue cash tax and customs-duty payments to the Medium Taxpayer Unit (DME) and the twenty largest customs offices (structural benchmark for end-December 2018).
  - Computerization:
    - Computerize public procurement with SIGMAP and debt management with CS-DRMF+.
    - SIGIB to interconnect DGTCP and Directorate General of the Budget (DGB) and link DGTCP to payment systems SICA and STAR.
    - Ultimate goal: fully-integrated IT system for all financial agencies.

### Debt management, PPPs, and institutional strengthening
- Debt management commitments:
  - Inter-Ministerial Debt Management Committee (CISPENAB) to operate as set out in Decree No. 2015-311/CAB/PM.
  - Resume regular meetings; fully staff technical support committee; all loan conventions and government guarantees require Minister of Finance approval to be valid.
  - Quarterly meetings and reporting of decisions in quarterly debt management reports to be a recurrent structural benchmark starting end-June 2018.
  - Publish debt management reports and debt statistics later in the year; adopt debt management policy guidelines.
  - Medium-term commitment to centralize debt management under the Ministry of Finance and reorganize into a front-middle-back-office structure as required by WAEMU directives.
- PPPs and public debt containment:
  - Implement infrastructure projects through PPPs, focusing on Build-Operate-Transfer projects free of government debt guarantees.
  - Submit new PPP legislation to parliament no later than end-June 2018 (structural benchmark reset to end-June 2018 from end-March 2018).
- Debt management capacity:
  - Recent upgrading of Niger’s debt management capacity to “sufficient” by the IMF and the World Bank; conditionality on external public debt under the program will be primarily monitored through a performance criterion on the present value of contracting new public and publicly-guaranteed external debt.

*Source: International Monetary Fund (excerpt from CR18166).*

### 22.      The fiscal framework for 2018 is fully financed and includes our firm commitment to clear

### 22.      The fiscal framework for 2018 is fully financed and includes our firm commitment to clear

### Fiscal framework and financing for 2018
- The basic budget deficit (CFAF 210 billion), the clearance of all domestic payment arrears remaining at end-2017 (CFAF 29 billion), and the amortization of external debt (CFAF 49 billion) will be financed through:
  - budget support (CFAF 147 billion)
  - net domestic financing (CFAF 141 billion), including financing from the Fund (CFAF 17 billion)
- Firm commitment to clear all outstanding domestic payment arrears by end-2018.

### Reforms of state-owned enterprises and public entities
- Initiatives and actions:
  - Initiated the audit of six large public entities and secured World Bank financing.
  - Tenders have been opened.
  - Will finalize and transmit to the Fund a study on subsidies for state-owned enterprises.
  - Will conduct and publish an inventory of all public entities and state-owned enterprises.
  - Will publish key financial indicators and make available audit reports of state-owned enterprises and public entities whenever they are audited by the Court of Audit.

### Public administration and civil service management
- Management overhaul:
  - Civil service management is undergoing a complete overhaul guided by World Bank recommendations on civil service reform initiated in 2017.
  - Plans to conduct a comprehensive biometric census of civil servants.
  - Plans to establish an integrated pay-civil service database.

### Structural reforms for private sector development and demographic abatement
- Strategic objectives:
  - Develop a strong private sector and address demographic challenges to support medium-term economic development and poverty reduction.
  - Translate donor financing into self-sustained improvements.
- Policy areas to be advanced:
  - Strengthen the business climate.
  - Improve access to credit.
  - Address governance issues.
  - Implement gender and population policies.

### Business climate improvements and remaining bottlenecks
- Progress and continued actions:
  - Reforms will continue to benefit from the World Bank Project to Support Competitiveness and Growth (PRAAC).
  - Will address bottlenecks identified by the business community including:
    - frequent power outages,
    - competition from the informal sector,
    - overly complicated customs procedures,
    - a weak judiciary,
    - insufficient infrastructure and human capital.
  - VAT refunds: solutions found for the largest exporters, but objective remains to put in place a proper system to reduce pressures for exemptions.
  - Commitment to clear remaining domestic government payment arrears no later than end-December 2018; this is a performance criterion under the program.
  - To encourage investment in the mining sector, will continue efforts to rejoin the Extractive Industry Transparency Initiative (EITI) this year.

### Access to credit and financial inclusion
- Ongoing measures:
  - Bankification of fiscal payments expected to contribute to financial deepening.
  - Push to implement the financial inclusion agenda.
  - Efforts to mobilize donor-funding for microfinance reforms, including:
    - consolidation of the sector,
    - furnishing training for providers,
    - establishing a refinance mechanism,
    - setting up a deposit guarantee and resolution funds.
  - Regulatory actions:
    - Put in place missing regulations to enable leasing as soon as possible.
    - Develop a legal framework for warrantage.

### Governance, AML/CFT, and anti-corruption measures
- Governance actions and gaps:
  - Continued emphasis on fighting corruption; institutional and legal frameworks have progressed.
  - Need to clarify and bring asset declaration legislation in line with best practices to facilitate effective implementation.
  - Commitment to strengthen resources of the Court of Audit, HALCIA and Ligne Verte.
- AML/CFT status:
  - Financial intelligence unit has been strengthened.
  - Cases referred to the judiciary have resulted in one conviction so far.
  - Reports of suspicious transactions referred to CENTIF remain rare, especially from non-banks.
  - Niger is carrying out an ML/TF National Risk Assessment as required by the 2012 FATF standard.

### Fiscal transparency and public communication
- Planned publications and measures:
  - Publish an end-year report and an audit report for the 2017 budget.
  - Publish a performance report for 2018.
  - Publish a citizen budget for 2019.
  - Make an effort to better prepare the public for forthcoming fiscal changes.
  - Make the Government Gazette freely available online.

### Gender equality and demographic containment policies
- Commitments:
  - Pursue policies in the updated National Gender Strategy, the recent decree on the education of girls, and the PDES 2017-21.
  - Seek donor funds, supplemented by own resources, to implement and expand concrete programs.
  - Continue ongoing efforts to implement the decree.
- Implementation challenge:
  - As with governance policies, the main challenge is stepping up implementation to achieve tangible results.

### Program monitoring and requests to the IMF
- Request:
  - Government requests approval of the second review under the arrangement, and the disbursement of SDR 14.1 million.
- Monitoring framework:
  - Program monitoring will be based on performance criteria (Tables 2) and structural benchmarks (Tables 4 and 7).
  - Authorities will provide IMF staff with statistical data and information identified in the attached Technical Memorandum of Understanding, and any other information necessary or requested by IMF staff for monitoring purposes.

### Changes to performance criteria on external public debt
- In application of the IMF’s debt limits policy:
  - As of the date of completion of the second review, 2018, a new performance criterion on the present value (PV) of the contracting of new public and publicly-guaranteed external debt will be applied.
  - This new criterion will replace the current performance criteria on the contracting and guaranteeing of long-term non-concessional external public debt and short-term external public debt.

*IMF staff and Niger authorities — Excerpt from the IMF documentation on the 2018 ECF-supported program (cr18166).*

### 33.      The program will be monitored through semiannual reviews. The third and fourth

### cr18166 - 33.      The program will be monitored through semiannual reviews. The third and fourth

### Program monitoring schedule
- The program will be monitored through semiannual reviews.
- The third program review is expected to take place after end-October 2018.
- The fourth program review is expected to take place after end-April 2019.

### Quantitative performance criteria and indicative targets (high-level points from Tables 1 and 2)
- Table 1 (Dec. 2016 – Dec. 2017) reports multiple program (Prog.) and actual (Act.) quarterly and end-year outcomes for indicators including:
  - Net domestic financing of the government (cumulative for each fiscal year): sample reported values include 113.8; 62.0; 120.3; 186.6; 207.0.
  - Adjustment for shortfall in budget support up to CFA 15 billion max: -4.1; 0.0; -15.0; -15.0; -15.0.
  - Adjusted net domestic financing of the government: 109.7; 77.4; 62.0; 27.5; 105.3; 66.2; 171.6; 147.9; 192.0; 113.9.
  - Change in domestic payment arrears of government obligations: -8.4; 19.0; 10.0; -40.0; 20.0; -44.9; 10.0; -47.6; -43.4; -78.9.
  - External budgetary assistance / Budget support (memorandum item): 114.3; 118.4; 0.0; 0.0; 0.0; 43.8; 0.0; 50.4; 92.4; 174.5.
  - New external debt contracted or guaranteed by the government on concessional terms (ceiling): 800.0; 490.1; 350.0; 60.8; 350.0; 88.8; 350.0; 350.0.
  - Basic budget balance (commitment basis, excl. grants) (indicative target, cumulative): -194.3; -188.9; -71.2; 2.5; -130.7; -74.3; -186.6; -155.3; -235.9; -232.4.
  - Basic budget balance (commitment basis, incl. budget grants): -130.7; -122.7; -71.2; 2.5; -130.7; -30.5; -186.6; -104.9; -181.3; -91.3.
  - Total revenue (indicative targets vs actuals): Prog. 676.6 / Act. 643.8; Prog. 160.7 / Act. 157.7; Prog. 353.4 / Act. 331.7; Prog. 554.5 / Act. 496.4; Prog. 770.8 / Act. 680.7.
  - Spending on poverty reduction (indicative): Prog. 356.8 / Act. 447.2; Prog. 103.8 / Act. 104.1; Prog. 222.2 / Act. 223.8; Prog. 348.4 / Act. 351.4; Prog. 487.5 / Act. 488.8.
  - Ratio of exceptional expenditures on authorized spending (percent) (maximum = 5.0 percent): 5.0; 1.8; 5.0; 3.4; 5.0; 3.0; 5.0; 2.7; 5.0; 5.0.

- Table 2 (Mar. – Dec. 2018) key program numeric items:
  - Net domestic financing of the government (cumulative for each fiscal year): End-Mar. 2018 Prog. 46.1 / Act. 70.6; End-Jun. 2018 Prog. 140.4 / Act. 123.8.
  - Adjustment for extra arrears clearance in 2018 up to a cap of FCFA 30 billion: 30.0; 30.0.
  - Adjusted net domestic financing criteria (example): 76.1; 100.6.
  - Change in domestic payment arrears of government obligations (minimum): -15.0; -30.0; -15.0.
  - Adjusted for FCFA 35.5 billion over-performance in 2017 up to a cap of zero net accumulation: 0.0; 23.7; 0.0; -29.2.
  - External budget support (memorandum item): 0.0; 0.0; 23.0; 68.4; 146.9.
  - Present Value (PV) of new public and publicly-guaranteed external debt contracted from January 1, 2018: 225.0.
  - Basic budget balance (commitment basis, excl. grants) (cumulative for each fiscal year): -61.2; -123.5; -169.7; -210.0.
  - Basic budget balance (commitment basis, incl. budget grants): -61.2; -100.5; 60.0; -100.3.
  - Total revenue (cumulative): 172.7; 189.2; 369.5; 567.0; 803.3.
  - Spending on poverty reduction (cumulative): 108.0; 237.9; 345.9; 538.4.
  - Ratio of exceptional expenditures on authorized spending (percent): 5.0 across reporting dates.

### Continuous quantitative performance criteria (selected)
- Accumulation of external payments arrears: 0.0 reported repeatedly; status: Met.
- New external debt contracted or guaranteed by the government with maturities of less than 1 year: 0.0 reported repeatedly; status: Met.
- New non-concessional external debt contracted or guaranteed by the government and public enterprises with maturities of 1 year or more: 0.0 reported repeatedly; status: Met.

### Structural benchmarks, prior actions, and progress (selected highlights from Tables 3–7)
- Recurrent structural benchmarks, 2017 (Table 3):
  - Release quarterly budget allocations in the first month of each quarter: Timetable Quarterly — Met for Q1, Q2, Q3, and Q4.
  - Prepare quarterly commitment plan consistent with cash plan: Quarterly — Met for Q1, Q2, Q3, and Q4.
  - Prepare quarterly debt management report: Quarterly — Met for Q1 and Q3; furnished with delay for Q2; Met for Q4.
  - Produce a quarterly report on VAT credit reimbursement: Quarterly — Not met.
  - Prepare a revised borrowing plan (each year at end-June): Not met.

- Recurrent structural benchmarks, 2018 (Table 4):
  - Release quarterly budget allocation in the first month of each quarter: Quarterly — Met for Q1.
  - Prepare a quarterly commitment plan consistent with the corresponding cash plan: Quarterly — Met for Q1.
  - Prepare quarterly debt management report to be validated by the National Public Debt Management Committee: Quarterly — Met for Q1.
  - Hold at least quarterly meetings of the Inter-Ministerial Debt Management Committee and publish decisions/from Q3 onward: Quarterly from Q3 onward (timing noted).
  - Prepare a revised borrowing plan (each year at end-June, but end-March for 2018): Not met for Q1; draft plan furnished in mid-April.

- Structural benchmarks, 2017 (Table 5) — selected measures and progress:
  - Broaden the jurisdiction of the large enterprises Directorate (DGE) by transferring control of identified 120 large companies: End-January — Met.
  - Estimate the stock of VAT credits arrears and launch VAT reimbursement mechanism: End-March — Not met (stop-gap offsetting by mining companies described).
  - Finalize interconnection of ASYCUDA central server with all main customs offices and with Benin and Togo: End-July — Not met (domestic offices connected; connection to Benin and Togo not yet operational).
  - Launch process of establishing the 2018 budget under program format by finalizing DPBEP and DPPD: End-June — Met.
  - Finalize TSA framework by signing agreements and closing outstanding public accounts covered by TSA: End-June — Not met (agreement with BCEAO signed; impact study not conducted; few dormant accounts closed).

- Structural benchmarks and prior actions, Jan–May 2018 (Table 6) — selected items:
  - Prior Action: Adopt high-quality plans for tax administration and customs administration (each with at least five indicators and quarterly targets) to apply from beginning of July 2018 — Prior Action Met.
  - Prior Action: Submit new legislation on public private partnerships (PPP) to cabinet — Prior Action Met.
  - Formulate and share with Fund staff performance plans for revenue collection agencies (end-January) — Not met.
  - Regarding TSA implementation, complete and share with Fund staff an impact study with BCEAO, make operational an interface between BCEAO and DGTCP IT systems, establish account/subaccount structure, and close dormant accounts (end-March) — Not met.
  - Send to the National Assembly a new PPP law consistent with investment code and 2012 budget law (end-March) — Not met.
  - Put in place legal requirements that all payments to and from the Large Taxpayer Unit (DGE) are made through the financial system and finalize bankification action plan (end-March) — Not met.

- Structural benchmarks, June–December 2018 (Table 7) — selected new SBs and timetables:
  - Provide white paper on streamlining tax exemption and monthly data on newly-granted discretionary tax exemptions: End-June.
  - Send legislation overhauling tax and customs exemptions to the National Assembly: End-September.
  - TSA implementation: establish timetable for account closures to reduce still-to-be-transferred balances to less than 10 percent of level established in BCEAO study; implement new TSA account structure at BCEAO: End-June.
  - TSA implementation: reduce still-to-be-transferred balances to less than 10 percent and digitalize Treasury’s banking services: End-December.
  - Reset SB: Send PPP law to National Assembly: End-June.
  - Discontinue cash payments for tax and customs duties at DGE and largest customs offices by issuing a circular; transform bankification plan into white paper: End-June.
  - Discontinue cash payments at DME and twenty largest customs offices by issuing a circular: End-December.

### Disbursement schedule under the ECF arrangement (Table 8)
- Proposed disbursements scheduled under the new ECF Arrangement, 2017–20:
  - SDR 14.1 — Condition: Executive Board Approval of the ECF Arrangement — Date Available: January 23, 2017.
  - SDR 14.1 — Condition: Observance of continuous and performance criteria, and completion of the first review under the arrangement — Date Available: June 30, 2017 / December 15, 2017 (as presented).
  - SDR 14.1 — Condition: Observance of continuous and performance criteria, and completion of the second review under the arrangement — Date Available: December 31, 2017 / April 30, 2018 (as presented).
  - SDR 14.1 — Condition: Observance of continuous and performance criteria, and completion of the third review under the arrangement — Date Available: June 30, 2018 / October 31, 2018 (as presented).
  - SDR 14.1 — Condition: Observance of continuous and performance criteria, and completion of the fourth review under the arrangement — Date Available: December 31, 2018 / April 30, 2019 (as presented).
  - SDR 14.1 — Condition: Observance of continuous and performance criteria, and completion of the fifth review under the arrangement — Date Available: June 30, 2019 / October 31, 2019 (as presented).
  - SDR 14.1 — Condition: Observance of continuous and performance criteria, and completion of the sixth and last review under the arrangement — Date Available: September 30, 2019 / January 8, 2020 (as presented).
  - SDR 98.7 — Total.

### Technical Memorandum of Understanding — selected definitional and methodological points (Attachment II)
- Purpose: Defines performance criteria and indicative targets of Niger’s program under the ECF arrangement for period Q1-2017 to Q1-2020 and sets out data-reporting requirements for program monitoring.
- Definitions and methodological notes:
  - Government: central government of the Republic of Niger; excludes political subdivisions, public entities, or central bank with separate legal personality.
  - Debt: follows paragraph 8 of the Guidelines on Public Debt Conditionality (Executive Board Decision No. 15688-(14/107) of December 5, 2014). Debt is a current (not contingent) liability created under a contractual arrangement requiring future payments in assets or services; forms include loans, suppliers’ credits, leases (PV at inception).
  - Present value (PV) of new public and publicly-guaranteed external debt contracted: discounts future payment stream at a five percent annual rate; for loans with a negative grant element, PV is set equal to the value of the loan; calculation based on loan amount contracted in a given year, independent of disbursement timing.
  - Domestic payments arrears: domestic payments owed by the government but not paid; include committed and authorized fiscal year expenditures not paid within 90 days.
  - External payments arrears: payments due but not paid.
  - Government obligation: any financial obligation of the government accepted as such by the government (including any government debt).

- Notes on application of ceilings and adjustments:
  - Ceiling on domestic financing of the budget will be adjusted if disbursements of external budgetary assistance fall short of or exceed program forecasts; adjustments pro tanto, up to CFAF 15 billion at end of each quarter of 2017; from December 2017 onward, net domestic financing will be adjusted for any excess (shortfall) in domestic payment arrears clearance.
  - For 2018, the maximum adjustment for external budgetary assistance is CFAF 30 billion at the end of each quarter of 2018; from beginning of 2018, net domestic financing will also be adjusted for excess/shortfall in domestic payment arrears clearance.

*Source: IMF staff compilation from the cited Memorandum of Economic and Financial Policies, associated tables, and Attachment II (Technical Memorandum of Understanding).*

### 3.      Net domestic financing of the government is defined as the sum of (i) net bank credit

### 3.      Net domestic financing of the government is defined as the sum of (i) net bank credit to the government; (ii) net nonbank domestic financing of the government, including government securities issued in CFAF on the WAEMU regional financial market and not held by resident commercial banks, proceeds from the sale of government assets, and privatization receipts.

### Definitions: Net domestic financing, net bank credit, and net nonbank financing
- Net domestic financing of the government = sum of:
  - (i) net bank credit to the government; and
  - (ii) net nonbank domestic financing of the government, including government securities issued in CFAF on the WAEMU regional financial market and not held by resident commercial banks, proceeds from the sale of government assets, and privatization receipts.
- Net bank credit to the government:
  - Equal to the balance of government claims and debts vis-à-vis national banking institutions.
  - Government claims include cash holdings of the Nigerien Treasury, secured obligations, deposits with the central bank, and deposits of the Treasury (including regional offices) with commercial banks.
  - Government deposits with commercial banks are excluded from government claims insofar as they are used solely to finance externally financed capital expenditure.
- Government debt to the banking system includes:
  - Assistance from the central bank (excluding net IMF financing under the ECF);
  - The CFAF counterpart of the 2009 General SDR Allocation;
  - Assistance from commercial banks (including government securities held by the central bank and commercial banks);
  - Deposits with the CCP (postal checking system).
- Scope and calculation:
  - The scope of net bank credit to the government, as defined by the BCEAO, includes all central government administrations.
  - Net bank credit to the government and the amount of Treasury bills and bonds issued in CFAF on the WAEMU regional financial market are calculated by the BCEAO.
- Net nonbank domestic financing includes:
  - (i) the change in the stock of government securities (Treasury bills and bonds) issued in CFAF on the WAEMU regional financial market and not held by resident commercial banks;
  - (ii) the change in the balance of Treasury correspondents’ deposit accounts;
  - (iii) the change in the balance of various deposit accounts at the Treasury; and
  - (iv) the change in the stock of claims on the government forgiven by the private sector.
  - Net nonbank financing of the government is calculated by the Nigerien Treasury.

### Adjustment of ceilings on net domestic financing
- Quarterly targets:
  - The 2017 quarterly targets are based on the change between the end-December 2016 level and the date selected for the performance criterion or indicative target.
- Adjustment for external budgetary support:
  - The ceiling on net domestic financing of the government will be subject to adjustment if disbursements of external budgetary support net of external debt service and external arrears payments, including disbursements under the ECF, fall short of program projections.
  - If, at the end of each quarter of 2017, disbursements of external budgetary support fall short of the projected amounts at the end of each quarter, the corresponding quarterly ceilings will be raised pro tanto, up to a maximum of CFAF 15 billion in 2017 and CFAF 30 from 2018 onward.
- Adjustment for domestic payment arrears (from 2018 onward):
  - The ceiling on net domestic financing will be adjusted up (down) one-for-one for arrears clearance in excess (in deficit) of programmed levels.

### Reporting requirements (domestic financing)
- Detailed data on domestic financing of the government will be provided monthly, within six weeks after the end of each month.

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

### External payments arrears — definition and reporting
- Definition:
  - Government debt is outstanding debt owed or guaranteed by the government.
  - For the program, the government undertakes not to accumulate external payments arrears on its debt (including Treasury bills and bonds issued in CFAF on the WAEMU regional financial market), with the exception of external payments arrears arising from debt being renegotiated with external creditors, including Paris Club creditors.
- Reporting:
  - Data on the stock, accumulation, and repayment of external payments arrears will be provided monthly, within six weeks after the end of each month.

### External non-concessional loans contracted or guaranteed by the government — definitions, scope, and reporting
- Restriction:
  - The government and the public enterprises listed will not contract or guarantee external debt with an original maturity of one year or more, and having a grant element of less than 35 percent.
- Grant element definition:
  - For program purposes, a debt is concessional if it includes a grant element of at least 35 percent, calculated as: the grant element (the difference between the present value (PV) of debt and its nominal value) expressed as a percentage of the nominal value of the debt.
  - The PV of debt at the time of its contracting is calculated by discounting the future stream of payments of debt service due on this debt using a discount rate of 5 percent.
- Scope and exclusions:
  - This performance criterion applies to debts and any obligation contracted or guaranteed for which no value has been received, but does not apply to financing provided by the IMF and to debt rescheduling in the form of new loans.
  - Guarantee definition: any explicit legal obligation of the government to service a debt in the event of nonpayment by the debtor (payments in cash or kind).
  - External debt for this criterion is debt denominated, or requiring repayment, in a currency other than the CFA franc; this applies to debt contracted among WAEMU member countries and with WAEMU financial institutions.
- Public sector coverage:
  - Includes the government and the following public enterprises: (i) Société Nigérienne d’Electricité (Nigelec); (ii) Société de Construction et de Gestion des Marchés (Socogem); (iii) Société Nigérienne des Produits Pétroliers (Sonidep); (iv) Société Nigérienne des Télécommunications (Sonitel); (v) Société de Patrimoine des Mines du Niger (Sopamin); and (vi) Société propriétaire et exploitante de l’Hotel Gaweye (SPEG).
- Reporting:
  - Details on all external public sector debt will be provided monthly, within six weeks after the end of each month.
  - The same requirement applies to guarantees granted by the central government.
  - The Ministry of Finance will forward regularly to Fund staff a list of loans in process of negotiation, and prepare semiannual reports on any external debt contracted or in process of negotiation and the terms thereof, as well as on the borrowing program for the next six months including the terms thereof.

### Short-term external debt of the central government — definition and reporting
- Definition:
  - The government will not accumulate or guarantee new external debt with an original maturity of less than one year.
  - This performance criterion applies to debt and any obligation contracted or guaranteed for which no value has been received.
  - Exclusions: short-term loans related to imports, and short-term securities issued in CFAF on the regional financial market.
- Reporting:
  - Details on all external government debt will be provided monthly, within six weeks after the end of each month. The same requirement applies to guarantees granted by the government.

### Present value (PV) of public and publicly-guaranteed external debt — definitions, calculation rules, and reporting
- Definition of debt:
  - Uses the debt definition in paragraph 8(a) of the Guidelines on Public Debt Conditionality in Fund Arrangements (Executive Board Decision No. 15688-(14/107), adopted December 5, 2014).
  - Debt includes loans, suppliers’ credits, leases (PV at inception excluding operation/repair/maintenance payments), arrears, penalties, and judicially awarded damages arising from failure to make payment under a contractual obligation that constitutes debt.
- External debt:
  - Defined as debt contracted or serviced in a currency other than the franc of the Financial Community of Africa (CFAF).
- Performance criterion (PC):
  - A ceiling on the PV of all new external debt (concessional and non-concessional) contracted or guaranteed by the central government, including commitments contracted or guaranteed for which no value has been received.
  - Not applicable to: (a) short-term supplier or trade-related credit with a maturity of up to three months; (b) rescheduling agreements; and (c) IMF disbursements.
- Applicable contractual date:
  - For monitoring, external debt is deemed contracted or guaranteed at the date of effectiveness of the contract, including its approval where required by government members with authority to do so.
- Currency denomination:
  - For program purposes, the value in CFAF of new external debt of 2018 is calculated using the average exchange rate for January 2018 in the IMF’s International Financial Statistics (IFS) database.
- PV calculation:
  - Discount all projected disbursements and debt service payments (principal and interest) using a program discount rate of 5 percent, taking account of all loan conditions including projected disbursements, maturity, grace period, payment schedule, front-end fees and management fees.
  - The PV is calculated using the IMF “DSA template,” based on the amount of the loan and the above parameters.
  - For loans with a grant element of zero or less than zero, the PV is set equal to the face value.
- Reporting:
  - The authorities will inform IMF staff of any planned external borrowing and the conditions on such borrowing before the loans are either contracted or guaranteed by the government.

### Quantitative targets — definitions and reporting requirements
- Definitions:
  - Total revenue is an indicative target and includes tax, nontax, and special accounts revenue, but excludes proceeds from the settlement of reciprocal debts between the government and enterprises.
  - The basic fiscal deficit = difference between (i) total tax revenue, as defined in paragraph 25; and (ii) total fiscal expenditure excluding externally financed investment expenditure but including HIPC-financed expenditure.
  - WAEMU definition: the basic fiscal deficit is the basic balance described under paragraph 26 plus budgetary grants.
  - The floor on poverty-reducing expenditure is an indicative target; comprises all budget lines in the Unified Priority List (UPL) of poverty-reducing and HIPC-financed expenditures.
  - Limit on expenditures paid through exceptional procedures (without prior commitment), excluding debt service payments and expenditures linked to tax exemptions: 5 percent of total authorized expenditures during the quarter for which the target is assessed.
- Reporting:
  - Information on basic budget revenue and expenditures will be provided monthly, within six weeks after the end of each month.
  - Information on UPL expenditures will be provided quarterly, within six weeks after the end of each quarter.
  - Information on exceptional expenditure will be provided quarterly after six weeks after the end of the quarter.

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

B. Monetary Sector — monthly submissions (within eight weeks after month-end)
- Consolidated balance sheet of monetary institutions and, where applicable, consolidated balance sheets of individual banks.
- Monetary survey (provisional data).
- Borrowing and lending interest rates.
- Customary banking supervision indicators for banks and nonbank financial institutions (and where applicable, for individual institutions).

C. Balance of Payments — reporting
- Any revision of balance of payments data (including services, private transfers, official transfers, and capital transactions) whenever they occur.
- Preliminary annual balance of payments data, within six months after the end of the reference year.

D. Real Sector — reporting
- Disaggregated monthly consumer price indexes, within two weeks following the end of each month.
- The national accounts, within six months after the end of the year.
- Any revision of the national accounts.

E. Structural Reforms and Other Data
- (Section heading included; specific items not listed in the provided content.)

*Source: cr18166*

### 47.      The authorities will provide IMF staff with the following information:

### cr18166 - 47.      The authorities will provide IMF staff with the following information:

### Information and Reporting Obligations
- The authorities will provide IMF staff with the following information:
  - Any study or official report on Niger’s economy, within two weeks after its publication;
  - Any decision, order, law, decree, ordinance, or circular with economic or financial implications, upon its publication or, at the latest, when it enters into force.
  - Any draft contract in the mining and petroleum sectors, including production and sales volumes, prices, and foreign investment; and
  - Any agreement with private sector stakeholders having economic or financial repercussions for the government, including in the natural resources sector.

### Summary of Data to be Reported (selected items and deadlines)
- Real sector
  - National accounts. Frequency: Annual. Reporting Deadline: End-year + 6 months
  - Revisions of the national accounts. Frequency: Variable. Reporting Deadline: 8 weeks after the revision
  - Disaggregated consumer price indexes. Frequency: Monthly. Reporting Deadline: End-month + 2 weeks
- Government finance
  - Net government position vis-à-vis the banking system. Frequency: Monthly. Reporting Deadline: End-month + 6 weeks
  - Complete monthly data on net nonbank domestic financing: (i) change in the stock of government securities (Treasury bills and bonds) issued in CFAF on the WAEMU regional financial market and not held by resident commercial banks; (ii) change in the balance of various deposit accounts at the Treasury; (iii) change in the stock of claims on the government forgiven by the private sector. Frequency: Monthly. Reporting Deadline: End-month + 6 weeks
  - Provisional TOFE, including a breakdown of revenue (DGI, Monthly DGD and DGTCP) and expenditure, including the repayment of domestic wage and nonwage arrears, as at end-1999, and the change in Treasury balances outstanding. Frequency: Monthly. Reporting Deadline: End-month + 6 weeks
  - Data on Treasury balances outstanding (RAP), by reference fiscal year (total and RAP at more than 90 days). Frequency: Monthly. Reporting Deadline: End-month + 6 weeks
  - Monthly statement of Treasury correspondents’ deposit accounts. Frequency: Monthly. Reporting Deadline: End-month + 6 weeks
  - Execution of the investment budget. Frequency: Quarterly. Reporting Deadline: End-quarter + 6 weeks
  - Table of fiscal expenditure execution, unified list expenditure, and HIPC-financed expenditure. Frequency: Monthly. Reporting Deadline: End-month + 6 weeks
  - Treasury accounts trial balance. Frequency: Monthly.
  - Monthly statement of the balances of accounts of the Treasury and of other public accounts at the BCEAO. Frequency: Monthly. Reporting Deadline: End-month + 6 weeks (provisional); End-month + 10 weeks (final)
  - Petroleum products pricing formula, petroleum products tax receipts, and pricing differentials. Frequency: Monthly. Reporting Deadline: End-month + 6 weeks
- Monetary and financial data
  - Consolidated balance sheet of monetary institutions and, where applicable, consolidated balance sheets of individual banks. Frequency: Monthly. Reporting Deadline: End-month + 8 weeks
  - Borrowing and lending interest rates. Frequency: Monthly. Reporting Deadline: End-month + 8 weeks
  - Banking supervision prudential indicators. Frequency: Quarterly. Reporting Deadline: End-quarter + 8 weeks
- Balance of payments and external debt
  - Balance of payments. Frequency: Annual. Reporting Deadline: End-year + 6 months
  - Balance of payments revisions. Frequency: Variable. Reporting Deadline: At the time of the revision.
  - Stock and repayment of external arrears. Frequency: Monthly. Reporting Deadline: End-month + 6 weeks
  - Breakdown of all new external loans signed and projected borrowing, including the financial terms and conditions. Reporting Deadline: End-month + 6 weeks
  - Table on the monthly effective service of external debt (principal and interests), compared with the programmed maturities. Frequency: Monthly. Reporting Deadline: End-month + 4 weeks

### Statement by Mr. Sembene (Executive Director for Niger) and Mr. Diakite (Advisor) — Key Findings (June 1, 2018)
- Program performance and recent outcomes
  - Niger continues to make good progress toward program objectives amid daunting security challenges, climatic shocks, and unfavorable evolution of some commodity prices.
  - Program performance was strong even though the target on revenue mobilization was missed due to transitory shocks experienced in 2017.
  - Revenue performance during the first quarter of 2018 was robust, demonstrating corrective actions are yielding positive results.
  - The authorities met all performance criteria and indicative targets except for the revenue target.
  - Total revenue fell below program target notably as a result of traders’ strikes, and delays in the sale of telecom licenses and collection of tax arrears.
  - The shortfall in tax revenue was offset by higher than expected external budget support, while public expenditure was kept well below program targets.
  - Overall fiscal deficit was reduced from 6.1 percent in 2016 to about 5 percent in 2017.
- Structural reforms and benchmarks
  - A number of structural benchmarks were met—albeit with delay in some cases—including:
    - Preparation of the updated national gender policy;
    - Establishment of performance plans for tax and customs administrations;
    - Submission of a new PPP law to the Cabinet.
  - Progress was made in the energy sector, the financial sector, the business climate, and governance.
  - Capacity constraints remain and will need to be overcome to accelerate implementation of the structural reform agenda.

### Economic Outlook and Policy Priorities
- Growth projections
  - For 2018, projections suggest that GDP growth will be strong, hovering around 5.2 percent and driven notably by the construction and services sectors.
  - In the medium term, reform efforts combined with increased oil production and external assistance should sustain growth at around 6 percent.
- Policy anchors and priorities under the ECF-supported program
  - Maintain macroeconomic stability.
  - Improve public financial and debt management.
  - Expand fiscal space by broadening the tax base and strengthening tax administration.
- Fiscal stance and security spending
  - Authorities committed to achieving the program's fiscal targets for 2018; significant efforts and policy adjustment are required given the heavier burden of military and security expenditures.
  - Security spending was projected to increase noticeably between 2016 and 2017 and exceed 200 billion CFAF, claiming a macro-critical proportion of public expenditure.
  - The authorities expect staff reports for future program reviews in fragile countries to sustain a strong focus on security-related issues where they are macro-critical.
- Tax policy and administration
  - Authorities will embody reforms to tax exemption policies in new draft legislation to be submitted to the National Assembly; in the meantime they will aim to limit the use of new discretionary exemptions.
  - Performance plans will continue to be used to sustain revenue mobilization efforts.
- Debt management
  - Authorities committed to preserving public debt sustainability and will:
    - Strengthen debt management by operationalizing the inter-Ministerial committee on debt management and avoiding short-term external borrowing.
    - Require committee certification that appropriate procedures have been used for selected projects to be financed.
    - Require the signature of the Minister of Finance for the validity of all loan contracts and public guarantees.
    - Centralize debt management at the Ministry of Finance in the medium term, in line with WAEMU directives.
  - Considering the recent upgrading of Niger’s debt management capacity, the authorities request modification of the performance criterion on external debt accumulation, consistent with the Fund’s policy on debt limits.
- Expenditure quality and public financial management
  - Focus on improving the quality of spending through measures including:
    - Implementation of the single treasury account;
    - Program budgeting;
    - Road map to absorb efficiently external financial assistance in support of the PDES 2017-21.
- State-owned enterprises, civil service, and technology
  - Priority reforms include reforming State-owned enterprises and civil service, with expected World Bank assistance.
  - Increased use of new technologies to improve expenditure quality, revenue administration efficiency, and debt management.

### Private Sector, Financial Intermediation, and Other Reforms
- Private sector development
  - A strong private sector is essential for reducing poverty and improving long-term prospects.
  - Authorities will continue to improve the business climate, increase access to credit, and address governance, demographic and gender issues.
  - Despite improvements in the “Doing Business” ranking, impediments remain: frequent electricity shortages, competition from the informal sector, cumbersome customs procedures, weaknesses in the judicial system, and lack of infrastructure and human capital.
  - Authorities committed to clearing domestic arrears to boost private sector activity.
  - Steps are expected to be taken to rejoin the Extractive Industry Transparency Initiative (EITI) this year.
- Financial sector deepening
  - Efforts to address low financial intermediation will continue:
    - Increase recourse to banking services for government payments to contribute to financial deepening and improved access to credit.
    - Request technical and financial assistance to consolidate microfinance institutions, develop training programs, and establish a refinancing scheme and guarantee funds.

### Conclusion and Authorities’ Request
- The Nigerien authorities remain committed to the Fund-supported program, reflected in strong performance under the ECF arrangement.
- They are determined to pursue reforms to preserve macroeconomic stability and enhance fiscal buffers to achieve strong and inclusive economic growth.
- The authorities value the Fund’s technical and financial assistance and request Directors’ support for:
  - Completion of the second review under the Fund-supported program; and
  - Modification of the performance criterion on external public debt.

*Statement by Mr. Sembene, Executive Director for Niger, and Mr. Diakite, Advisor to the Executive Director for Niger — June 1, 2018*

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_Source: https://www.imf.org/-/media/files/publications/cr/2018/cr18166.pdf_