## 1nerea2020001 ## Source details **Canonical URL:** [1nerea2020001](https://www.imf.org/-/media/files/publications/cr/2020/english/1nerea2020001.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2020/english/1nerea2020001.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2020/english/1nerea2020001.pdf.json) --- ### Executive summary — context, program performance, and outlook - Context and risks: - Niger faces terrorist incursions, climate change, and low uranium export prices. Presidential elections are due in late 2020. - Nigeria’s closure of its borders to trade since mid-August 2019 weakened revenues; estimated drag of some 0.4 percent of GDP for 2019 (text also cites 0.3 percent of GDP in 2019 as estimated loss from Nigeria border closure). - Program implementation: - 2019 program implementation: broadly satisfactory. - All quantitative targets for end-June 2019 were met. - End-September 2019 indicative targets were missed due to revenue shortfalls partly from Nigeria’s border closure. - Staff supports conclusion of the fifth review and disbursement of SDR14.1 million and supports authorities’ request to modify PCs on domestic budget financing and contracting of external public debt. - Recent economic indicators and outlook: - Real GDP growth: should reach 6.3 percent in 2019. - Authorities and staff agreed economic activity will likely expand by at least 7 percent annually over the next five years on average; medium-term real GDP growth expected to average 7 percent. - Inflation: a better-than-expected harvest has turned inflation negative and is described as "well contained" and "will stay below the WAEMU norm of 3 percent throughout." - Current account deficit: likely to widen to 19.4 percent of GDP in 2019 due to import-intensive large-scale projects. - Fiscal deficit: should come down to 3.9 percent of GDP in 2019; fiscal policy aims to reduce the deficit below 3 percent of GDP from 2020 (2020 budget targets a deficit of 2.7 percent relative to the preliminary revised GDP). ### Oil exporter transition — project summary, fiscal returns, and policy guidance - Project summary (Box 1): - Local refinery capacity: 20,000 bpd. - Proposed pipeline: 2,000 km long with capacity of 185,000 bpd, of which roughly half would initially be utilized. - Current oil project based on total production of 590 million barrels over 25 years, with output falling rapidly after 10 years; recent explorations suggest reserves might be substantially higher. - Total project cost expected: US$6.1 billion (US$4 billion for oil field development; US$2.1 billion for the pipeline and oil terminal). - Cost for the Nigerien part of the pipeline: US$1.3 billion. - Construction should ramp up in mid-2020 and conclude by end-2021, permitting oil exports in 2022. - Niger and CNPC signed a transport convention in September 2019; WAPCO established in April 2019 to own and manage the pipeline; WAPCO will be majority owned by CNPC with the state of Niger having the option to buy into its equity. - Fiscal returns and use: - IMF FAD TA estimated Niger’s effective return is currently comparable to other countries; Niger receives about 25 percent of crude oil export receipts under current price projections. - Prospect of state participation would entitle the state to a foreign-currency revenue stream that could be used to service any foreign debt contracted to finance its investment. - Projected macroeconomic impact (2021–24, ppt change in ratio to GDP): GDP 6.1; GNDI 3.0; Fiscal revenues 2.0; Domestically-financed expenditure 1.2; Exports 8.6; Current account balance 8.2; Overall external balance 1.5. - Policy guidance: - Secure favorable contractual arrangements with foreign investors. - Establish a framework administering oil resources consistent with good practices, notably channeling all revenues directly through the Treasury. - Increase spending on physical and human capital while being mindful of volatility in natural-resource revenues and building buffers. ### Fiscal policy, revenue mobilization, and structural reforms - 2019 fiscal developments: - Cash tax revenues grew by 16 percent in the first three quarters of 2019, short of the programmed 20 percent. - Additional World Bank budget support top-up: 1.6 percent of GDP. - Domestic financing needs turned negative, allowing Niger to retire domestic debt equivalent to 0.9 percent of GDP (net basis, excluding IMF financing). - According to data through September 2019, the deficit should come down to 3.9 percent of GDP in 2019—a reduction by 2.2 percent of GDP since 2016. - 2020 fiscal program: - Final and moderate consolidation push in 2020 aims to bring the deficit below 3 percent of GDP and comply with the WAEMU convergence criterion. - The 2020 fiscal program reduces the deficit by 0.2 percent of GDP to 2.7 percent of the provisionally revised GDP (3.7 percent of the old GDP). - The basic balance excluding grants improves by 0.8 percent of GDP. - Domestically-financed spending (including non-cash and excluding special account spending) in the budget submitted to Parliament: CFAF 1,175 billion. - Revenue measures and expected yields (preserve numeric precision): - Streamlining tax exemptions — total yield: 0.28 percent of GDP (2020) | 0.49 percent of GDP (medium-term). - End registration fee and stamp duty exemptions on externally-funded and NGOs projects: 0.11% (2020) | 0.11% (medium-term). - Remove VAT exemptions for purchase of domestic service under several codes: 0.05% (2020) | 0.14% (medium-term). - End renewability of benefits under Investment Code: 0.02% (medium-term). - Abolish VAT exemptions for subcontractors under Petroleum Code and introduce VAT withholding for suppliers to PPP projects: 0.02% (2020) | 0.04% (medium-term). - Apply statistical fee on imports of exempted goods: 0.06% (2020) | 0.06% (medium-term). - Other: 0.03% (2020) | 0.08% (medium-term). - Additional revenue measures — total yield: 0.40% (2020) | 0.59% (medium-term). - Introduction of VAT machines; new "lifestyle test"; tougher sanctions; transfer tax on foreclosed real estate: 0.07% (2020) | 0.26% (medium-term). - Higher valuation of transportation services for border-tax purposes: 0.25% (2020) | 0.25% (medium-term). - Reexport tax on processing of imported gold: 0.05% (2020) | 0.05% (medium-term). - Customs clearance of car imports at border: 0.03% (2020) | 0.03% (medium-term). - Authorities expect additional revenues from 2020 measures: some 1 percent of GDP (macro-framework tentatively incorporates CFAF 36 billion). - Prospective oil revenues from 2022: some 2 percent of GDP projected increase in fiscal revenues. - Revenue administration measures: - Target to tackle CFAF 15 billion of outstanding tax arrears classified as readily collectable in Q4 2019; expected to yield at least CFAF 5 billion in revenue in 2019. - Performance plans for tax (DGI) and customs (DGD) administrations to be adopted before end-2019; director general to oversee implementation and quarterly analysis. - Transaction valuation for border-tax purposes; fully exploit interconnected IT systems (ASYCUDA and SISIC); molecular marking of petroleum products contract to be finalized and technically effective in Q3 2020. - Seek IMF FAD technical assistance to review and simplify the tax system. ### Spending quality, public financial management, and PFM reforms - Budget and PFM shortcomings: - 2020 budget allows a security augmentation of 16.4 percent while maintaining other tasks. - Introduction of the double authorization framework (AE/CP) with the 2020 budget proved elusive; pilot to be applied in next budget. - No tangible progress in the framework for public investment; persistent discrepancies between budget allocations and execution. - Capacity-building and reforms: - Build capacity in the Ministry of Finance’s Budget Department and Budget Departments of Line Ministries. - Upgrade unit in the Ministry of Finance in charge of financial supervision of SOEs into a Directorate General. - Implement tracking system for main social spending programs (prior action met). - Authorities to draw maximum benefit from the public expenditure review with the World Bank scheduled for early 2020. - Selected expenditure evolution (Text Table 4 selected entries): - Education: Growth 11.4% | Share 20.1% | %GDP 5.1% (domestically-financed: Growth 14.0% | Share 29.5% | %GDP 4.5%). - Rural Development and Food Security: Growth 34.8% | Share 19.4% | %GDP 5.0% (domestically-financed: Growth -7.3% | Share 5.4% | %GDP 0.8%). - Energy and Infrastructure: Growth 7.6% | Share 17.1% | %GDP 4.4% (domestically-financed: Growth 34.0% | Share 9.0% | %GDP 1.4%). - Security: Growth 16.4% | Share 16.5% | %GDP 4.2% (domestically-financed: Growth 21.6% | Share 25.4% | %GDP 3.9%). - Health: Growth 11.8% | Share 9.5% | %GDP 2.4% (domestically-financed: Growth 0.2% | Share 9.6% | %GDP 1.5%). - Transfers: Growth 63.6% | Share 4.7% | %GDP 1.2% (domestically-financed: Growth 46.3% | Share 6.9% | %GDP 1.0%). ### Public-private partnerships (PPPs) and fiscal risks - PPP governance and specific case: - PPP law requires cost-benefit analyses for all projects; requirement was not followed for a pipeline project under negotiation. - The pipeline contract would have the state-owned enterprise commit to large annual payments over an extended period under seemingly unfavorable terms. - Authorities put the project on hold pending a solid cost-benefit analysis; possible outcomes: restructure the project or exit. - Authorities committed to publish in the future all cost-benefit analyses before contractual commitments with private partners. - Staff recommendation: - Revisit existing PPPs and guide future projects with robust cost-benefit analyses to limit fiscal risks. ### Cash and debt management; debt policy - Treasury Single Account (TSA): - Government instructed ARCEP to move all its accounts to the TSA by end-2019. - Two large public entities outside the TSA (OPVN and CAIMA) are being restructured into commercial SOEs and their financial performance will be included in fiscal assessment going forward. - Government analyzed gaps between initial balances of transferred accounts and amounts received by the TSA; draft report shared with IMF staff. - Debt management institutions and reporting: - Dedicated debt management unit in the Treasury is being established. - Quarterly debt management reports will be prepared; an annual report for 2019 to be prepared and published in Q1 2020 and will include debt of major SOEs, public administrative entities, and local governments. - Future debt management reports to be published at least once a year with expanded coverage. - Prudence and requests: - So far Niger has taken on almost exclusively concessional external debt; this cautious approach will continue. - Due to frontloaded donor support, government requests modification of the PC on the ceiling to CFAF 325 billion for end-December 2019 to avoid stalling projects; adjustment rules in TMU allow specific ceilings to be raised by quantified amounts (e.g., up to CFAF 30 billion or CFAF 50 billion in specified instances; PV ceiling adjuster up to CFAF 140 billion for World Bank Policy Based Guarantee). ### Governance, anti-corruption, transparency, and asset declarations - HALCIA and transparency: - HALCIA recorded more cases than ever, increased staffing, launched a social media awareness campaign, upgraded its website, and enabled electronic filing of complaints. - Niger completed application to rejoin EITI in October 2019 and is on track to publish all natural-resource related contracts on EITI’s website. - Asset declaration regime: - New legislation extends declaration requirements beyond constitutionally required personalities but gaps remain (family members not adequately included; implementation aspects such as submission process and sanctions for non-compliance are missing). - Proposed structural benchmark reset for end-December 2019: publish on an official website the list of personalities subject to the constitutional requirement and their recent declarations. - AML/CFT: - Niger adopted the national risk assessment report in July 2019 and will implement the action plan. - Mutual evaluation by GIABA scheduled for January 2020. - Suspicious transaction reports predominantly from banks with recent filings from NGO regulator, a microfinance institution, and an insurance company. - Publication commitments: - Government will publish key documents: budget outturns, draft and approved budgets (including supplementary ones), a citizen budget, major conventions with foreign investors, PPP contracts, and tender awards. - Government Gazette to be made available online and free of charge from 2020 onward. ### Financial inclusion and microfinance - Access to finance: - Private sector credit at only 14 percent of GDP. - Use of the credit bureau has improved; leasing, warrantage, and regional BCEAO financing scheme for SMEs have not yet been used. - FISAN fund for agricultural credit operates only on a small scale. - Framework for mobile banking and payments exists but needs better promotion, interconnectivity, and infrastructure. - Microfinance sector status: - Sector dominated by a few large MFIs; sector has been shrinking in recent years. - MFIs primarily rely on deposits to finance short and medium-term credit; negative profitability in recent years. - Compliance with prudential ratios uneven; largest MFI under receivership since May 2018. - Recommended actions: - Consolidation and capacity building in microfinance; establish deposit guarantee and resolution funds; better screening by the microfinance regulator. - Hold a donor roundtable to raise financing for the national financial inclusion strategy. - Exploit financing vehicles: leasing, warrantage, regional BCEAO scheme, Maison de l’Entreprise co-financing, and make FISAN fully operational. ### Program modalities, monitoring, capacity to repay, and safeguards - Program modality and monitoring: - ECF-supported program remains broadly on track; program performance assessed semi-annually. - Prior action on establishment of a tracking system for main social spending programs has been met. - Existing and proposed modified quantitative PCs and ITs for end-December 2019 appear in Table 1 of the MEFP; performance for the sixth review to be assessed against end-December 2019 PCs and ITs and applicable structural benchmarks. - Capacity to repay IMF: - Niger should have sufficient capacity to repay the IMF, including when repayments peak at 1.5 percent of tax revenues in 2025 and 1.4 percent of exports in 2021 (Table 8). - Outstanding IMF credit based on existing and prospective drawings (SDR millions) series highlighted: 160.9 187.0 203.6 184.5 162.7 137.5 111.4 80.3 54.1 31.9 15.2 (tabled values). - Safeguards: - Last safeguards assessment of the BCEAO completed in 2018 found a strong control environment, audit arrangements broadly in conformity with international standards, and financial statements prepared in accordance with IFRS. - BCEAO enhanced oversight role of its audit committee and is strengthening its risk management function; financial statements continue to be published on a timely basis. ### Staff appraisal — key findings, priorities, and final recommendations - Key findings: - Authorities have implemented the program satisfactorily through end-June 2019; corrective measures committed to address subsequent fiscal weakening. - Growth is solid (2019 growth estimated at 6.3 percent) despite security challenges, benefiting from large FDI and donor-financed projects. - National accounts revision to SNA2008 could raise GDP by more than one third; staff calls on authorities to consider international expert group advice when finalizing revisions. - Priorities and recommended actions: - Continue revenue mobilization via tax-base expansion and improved administration; implement exemption reductions and additional measures anticipated to yield some 1 percent of GDP. - Intensify efforts to raise spending efficiency and improve public investment management; implement PIMA recommendations and track social spending. - Revisit PPPs urgently; require high-quality cost-benefit analyses and publish analyses before commitments. - Strengthen financial inclusion: activate leasing/warrantage, mobilize donor support for microfinance restructuring, and promote mobile money. - Strengthen governance: implement asset declaration improvements, rejoin EITI, act on AML/CFT national risk assessment, and enhance HALCIA capabilities. - Staff support: - Staff supports conclusion of the fifth review, disbursement of SDR14.1 million, and authorities’ request to modify performance criteria on domestic budget financing and contracting of external public debt. *Source: IMF staff report, Memorandum of Economic and Financial Policies, Technical Memorandum of Understanding, and Letter of Intent (Niamey, December 16, 2019); Executive Summary (December 23, 2019); Statement by Mr. Raghani (January 8, 2020).* ### EXECUTIVE SUMMARY ### EXECUTIVE SUMMARY ### Context and program performance - Niger faces development challenges from terrorist incursions, climate change, and low uranium export prices. Presidential elections are due in late 2020. - Reforms are advancing and economic activity is reasonably strong. - 2019 program implementation: broadly satisfactory. - All quantitative targets for end-June 2019 were met. - Subsequent weakening of revenues, partly due to Nigeria’s closure of its borders to trade, and topped-up budget support required mitigating policy measures and the adjustment of end-December 2019 targets. - Structural reforms are advancing with delays: - Tax exemption cuts are on track. - Tracking of key social programs implemented as a prior action. - Strengthening of the asset declaration regime for senior public officials is in prospect under a structural benchmark proposed to be reset for end-December 2019. - Staff supports conclusion of the fifth review, disbursement of SDR14.1 million, and the authorities’ request for modification of the performance criteria on domestic budget financing and the contracting of external public debt. ### Recent economic developments and outlook - Growth and activity - Real GDP growth should reach 6.3 percent in 2019. - Authorities and staff agreed that economic activity will likely expand by at least 7 percent annually over the next five years on average. - Inflation and trade shocks - The drag from Nigeria’s closure of its borders to trade since mid-August is estimated at some 0.4 percent of GDP for 2019; a better-than-expected harvest has turned inflation negative. - External sector - The current account deficit will likely widen to 19.4 percent of GDP in 2019 due to import-intensive large-scale projects. - The external deficit is set to rise further in the near term but fall sharply when projects come on stream. - Fiscal trajectory and public debt - Fiscal policy aims to reduce the deficit below 3 percent of GDP from 2020. - According to data through September 2019, the deficit should come down to 3.9 percent of GDP in 2019—a reduction by 2.2 percent of GDP since 2016. - Some 60 percent of the revenue windfall from the expansion of oil production from 2022 onward is projected to be spent. - At some 55 percent of GDP, Niger’s public debt remains sustainable; the DSA for the fourth program review (June 2019) rates risks of external and overall debt distress as "moderate". - National accounts revision - As part of WAEMU-wide migration to SNA2008, a new GDP estimate for 2018 is 38 percent higher than before. This review remains based on the old national accounts; the 2020 budget anticipates some upward revision of GDP to avoid unwarranted expenditure compression. - Program performance details - All four performance criteria (PCs) were met for end-June 2019: no external payment arrears; domestic budget financing and contracting of new external public debt remained below program ceilings; domestic payment arrears were kept below the program ceiling and practically cleared by end-October. - End-September 2019 indicative targets were missed due to revenue shortfalls, partly from Nigeria’s border closure. - Compliance with structural benchmarks: 2 out of 5 complied; end-December SB for reorganization of debt management met; tax exemption reporting and tracking systems experienced administrative bottlenecks but are being revamped. ### Oil exporter transition and implications - Project summary (Box 1) - Existing and proposed capacity: - Local refinery capacity: 20,000 bpd (current constraint). - Proposed pipeline: 2,000 km long with capacity of 185,000 bpd, of which roughly half would initially be utilized. - Current oil project based on total production of 590 million barrels over 25 years, with output falling rapidly after 10 years; recent explorations suggest reserves might be substantially higher. - Cost and timing: - Total project cost expected: US$6.1 billion (US$4 billion for oil field development; US$2.1 billion for the pipeline and oil terminal). - Cost for the Nigerien part of the pipeline: US$1.3 billion. - Construction should ramp up in mid-2020 and conclude by end-2021, permitting oil exports in 2022. - Institutional arrangements: - Niger and CNPC signed a transport convention in September 2019; West African Oil Petroleum Company (WAPCO) established in April 2019 to own and manage the pipeline; WAPCO will be majority owned by CNPC with the state of Niger having the option to buy into its equity. - Fiscal returns and use: - IMF FAD TA estimated Niger’s effective return is currently comparable to other countries; Niger receives about 25 percent of crude oil export receipts under current price projections. - Such state participation would entitle the state to a foreign-currency revenue stream that could be used to service any foreign debt contracted to finance its investment. - Policy guidance for oil revenue management - Secure favorable contractual arrangements with foreign investors. - Establish a framework for administering oil resources in line with good practices, notably channeling all revenues directly through the Treasury. - Increase spending on physical and human capital while being mindful of volatility in natural-resource revenues. ### Fiscal policies, revenue mobilization, and structural reforms - 2019 fiscal update - Cash tax revenues grew by 16 percent in the first three quarters of 2019, short of the programmed 20 percent. - Estimated loss from Nigeria border closure: 0.3 percent of GDP for 2019. - Additional World Bank budget support top-up: 1.6 percent of GDP. - Domestic financing needs turned negative, allowing Niger to retire domestic debt equivalent to 0.9 percent of GDP (net basis, excluding IMF financing). - Program ceiling on contracting public and publicly guaranteed external debt was too low due to higher and more front-loaded donor support; proposal to tighten PC on domestic financing and loosen PC on external debt contracting accordingly. - 2020 fiscal program - A final and moderate consolidation push in 2020 aims to bring the deficit below 3 percent of GDP and comply with the WAEMU convergence criterion. - The 2020 fiscal program reduces the deficit by 0.2 percent of GDP to 2.7 percent of the provisionally revised GDP (3.7 percent of the old GDP). - The basic balance excluding grants improves by 0.8 percent of GDP. - Domestic spending in the draft budget law, together with a commitment to set 0.6 percent of GDP in allocations aside pending final review of 2019 revenue performance, is in line with the fiscal program. - Revenue mobilization priorities and measures - Prospective oil revenues of some 2 percent of GDP from 2022 are helpful but development needs remain substantial; 2020 projected budget and project aid at 3.3 and 10.2 percent of GDP, respectively. - Authorities’ measures include: - Reducing tax exemptions as per the end-September 2019 SB: - 2020 budget law eliminates VAT exemptions for services purchased by beneficiaries under the Investment, PPP, Petroleum, and Mining Codes. - Ends renewability of fiscal advantages under the Investment Code. - Subjects contracts with Nigerien providers in donor or NGO-financed projects to registration fees and stamp duties. - Associated annual revenue yield should rise from 0.3 to 0.5 percent of GDP over time as benefits phase out. - Implementing additional miscellaneous tax policy and tax administration measures with an estimated yield of 0.4 percent of GDP as part of the 2020 budget law. - Applying transaction valuation for border-tax purposes and fully exploiting newly interconnected IT systems of tax and customs administrations; administrative reforms monitored through upgraded performance plans ready for 2020 before end-2019. - Finalizing contract with a provider of marking for petroleum products allowing full technical effectiveness in Q3 2020. - Expanding the tax base via better tax-customs cooperation, post-customs-clearance control, and identifying inactive taxpayers. - Seeking IMF technical assistance to review the tax system for ease of administration and efficiency. - Fiscal risks and PPPs - Substantial fiscal risks from public private partnerships need urgent attention by revisiting existing projects and guiding future projects with robust cost-benefit analyses. - The authorities are urged to guard against excessively burdensome, ad-hoc and unequal pressure on compliant taxpayers in the formal sector and to intensify efforts to rein in non-compliant actors in the informal sector with large commercial activities. ### Program modalities and staff appraisal - Program status - The ECF-supported program remains broadly on track: all quantitative targets for end-June 2019 met; end-September 2019 ITs missed due to revenue shortfalls. - Structural reform program advancing with delays; two of five structural benchmarks complied with; recurrent SBs largely met. - Staff conclusions - Staff supports the conclusion of the fifth review and the disbursement of SDR14.1 million. - Staff supports the authorities’ request to modify performance criteria on domestic budget financing and contracting of external public debt. *Source: EXECUTIVE SUMMARY, December 23, 2019.* ### 13. Efforts to raise spending quality need stepping up and require strong progress on ### 13. Efforts to raise spending quality need stepping up and require strong progress on ### Spending quality and public financial management (PFM) - 2020 budget allows a significant augmentation of security outlays by 16.4 percent while maintaining other tasks. - Shortcomings identified: - Introduction of the double authorization framework (AE/CP) with the 2020 budget proved elusive. - No tangible progress in the framework for public investment. - Persistent discrepancies between budget allocations and execution hinder tighter expenditure planning and control. - Capacity building actions: - Build further capacity in the Ministry of Finance’s Budget Department and improve capacity in Budget Departments of Line Ministries. - Upgrade of the unit in the Ministry of Finance in charge of financial supervision of SOEs. - Implementation of a tracking system for the main social spending programs. - Authorities to draw maximum benefit from the public expenditure review with the World Bank scheduled for early 2020. - Text Table 4 (expenditure evolution) highlights sectoral growth, share, and %GDP (selected entries): - Education: Growth 11.4% | Share 20.1% | %GDP 5.1% (domestically-financed: Growth 14.0% | Share 29.5% | %GDP 4.5%) - Rural Development and Food Security: Growth 34.8% | Share 19.4% | %GDP 5.0% (domestically-financed: Growth -7.3% | Share 5.4% | %GDP 0.8%) - Energy and Infrastructure: Growth 7.6% | Share 17.1% | %GDP 4.4% (domestically-financed: Growth 34.0% | Share 9.0% | %GDP 1.4%) - Security: Growth 16.4% | Share 16.5% | %GDP 4.2% (domestically-financed: Growth 21.6% | Share 25.4% | %GDP 3.9%) - Health: Growth 11.8% | Share 9.5% | %GDP 2.4% (domestically-financed: Growth 0.2% | Share 9.6% | %GDP 1.5%) - Transfers: Growth 63.6% | Share 4.7% | %GDP 1.2% (domestically-financed: Growth 46.3% | Share 6.9% | %GDP 1.0%) - Hydraulic Projects: Growth -25.8% | Share 2.9% | %GDP 0.8% (domestically-financed: Growth 61.7% | Share 1.3% | %GDP 0.2%) - Other 1/: Growth -31.5% | Share 2.4% | %GDP 0.6% (domestically-financed: Growth -57.0% | Share 1.6% | %GDP 0.2%) - Staff recommendation: intensify efforts to raise efficiency of spending and build on budgeting process improvements. ### Revenue measures and tax exemptions (Text Table 2 highlights) - Exemption cuts in the 2020 budget (Percent of GDP): - End registration fee and stamp duty exemptions on externally-funded and NGOs projects: 0.11% (2020) | 0.11% (medium-term) - Remove VAT exemptions for purchase of domestic service under several codes: 0.05% (2020) | 0.14% (medium-term) - End renewability of benefits under Investment Code: 0.02% (medium-term) - Abolish VAT exemptions for subcontractors under the Petroleum Code and introduce VAT withholding for suppliers to PPP projects: 0.02% (2020) | 0.04% (medium-term) - Apply statistical fee on imports of exempted goods: 0.06% (2020) | 0.06% (medium-term) - Other: 0.03% (2020) | 0.08% (medium-term) - Total: 0.28% (2020) | 0.49% (medium-term) - Additional revenue measures (2020 and medium-term totals): - Introduction of VAT machines; new "lifestyle test"; tougher sanctions; transfer tax on foreclosed real estate: 0.07% (2020) | 0.26% (medium-term) - Higher valuation of transportation services for border-tax purposes: 0.25% (2020) | 0.25% (medium-term) - Reexport tax on processing of imported gold: 0.05% (2020) | 0.05% (medium-term) - Customs clearance of car imports at border: 0.03% (2020) | 0.03% (medium-term) - Total additional measures: 0.40% (2020) | 0.59% (medium-term) ### Public-private partnerships (PPPs) - PPP law requires cost-benefit analyses for all projects, but this requirement was not followed for a pipeline project under negotiation. - Project specifics and response: - The pipeline contract would have the state-owned enterprise commit to large annual payments over an extended period under seemingly unfavorable terms. - Authorities put the project on hold pending a solid cost-benefit analysis to ensure a positive net public benefit and limited fiscal risks. - Possible outcomes: restructure the project or exit. - Authorities committed to publish in the future all cost-benefit analyses before contractual commitments with private partners. ### Cash and debt management - Treasury Single Account (TSA) developments: - Government instructed ARCEP to move all its accounts to the TSA by end-2019. - Two large public entities outside the TSA (OPVN and CAIMA) are being restructured into commercial SOEs, putting them outside the TSA perimeter; their financial performance will be included in fiscal assessment going forward. - Debt management: - Establishment of a dedicated debt management unit in the Treasury is underway. - Future debt management reports will be published at least once a year and coverage will be expanded to include debt of major SOEs and PPPs. ### Governance, anti-corruption, and transparency - HALCIA (anti-corruption agency) actions: - Recorded more cases than ever in the year, increased staffing, launched a social media awareness campaign, upgraded its website, and enabled electronic filing of complaints. - Strengthened collaboration with the Audit Court and civil society. - Extractive Industry Transparency Initiative (EITI): - In October 2019, Niger completed its application to rejoin EITI and is on track to publish all natural-resource related contracts on EITI’s website. - AML/CFT: - Niger adopted the national risk assessment report in July 2019 and will implement the action plan. - Mutual evaluation by GIABA (to assess compliance with the 2012 FAFT standards) scheduled for January 2020. - Suspicious transactions reports continue to come predominantly from banks, with recent filings from the NGO regulator, a microfinance institution, and an insurance company. - IMF technical assistance requested to design an institutional framework for the oil sector that adheres to good international practice. ### Asset declaration regime - New legislation extends declaration requirements beyond constitutionally required personalities but gaps remain: - Family members not adequately included. - For personalities covered directly by the constitution (President, members of government, agency presidents), implementation aspects such as submission process and sanctions for non-compliance are missing. - Proposed structural benchmark reset for end-December 2019: publish on an official website the list of personalities subject to the constitutional requirement and their recent declarations. ### Financial inclusion and access to financing - Main challenge: private sector credit at only 14 percent of GDP. - Developments and constraints: - Use of the credit bureau has improved. - Leasing, warrantage, and regional BCEAO financing scheme for SMEs have not yet been used. - FISAN fund for agricultural credit operates only on a small scale. - Framework for mobile banking and payments exists but needs better promotion and improved interconnectivity and infrastructure. - Microfinance sector struggles; largest institution under receivership since May 2018. - Recommended actions: - Consolidation and capacity building in microfinance. - Establish a deposit guarantee and resolution funds. - Better screening by the microfinance regulator. - Hold a donor roundtable to raise financing for the national financial inclusion strategy. ### Managing oil wealth — projected macroeconomic impact and policy considerations - Macroeconomic framework: onset of crude oil production for export in 2022 through 2024 with projected total oil production of 110,000 bpd by 2024 results (between 2021 and 2024): - GDP: 6.1 percent (ppt change in ratio to GDP) - GNDI: 3.0 - Fiscal revenues: 2.0 - Domestically-financed expenditure: 1.2 - Exports: 8.6 - Current account balance: 8.2 - Overall external balance: 1.5 - Key policy areas to manage oil wealth: 1. Contractual arrangements with foreign investors: - Signed pipeline transport convention already fixes most aspects. - Degree of state participation via equity, loans, or guarantees still under discussion. - Staff suggested containing fiscal risks and ensuring fair return; gradual equity build-up up to the threshold needed for better control but well below the 45 percent contractual maximum might be an option. - Secure favorable terms for marketing government’s oil and use of terminal/storage/post-terminal arrangements. 2. Institutional framework for resource management and governance: - Authorities consider expanding SONIDEP’s role as state shareholder, guardian of commercial interests, manager of concessions, and seller of Niger’s crude oil. - Staff emphasized careful delineation of roles among Ministry of Finance, Ministry of Petroleum, and SONIDEP to ensure efficiency and avoid conflicts of interest. - Agreement that Ministry of Finance should play the lead role in oil revenue administration; revenues should flow directly to the Treasury and any revenues passing through SONIDEP should be carefully monitored for timely transfer of dividends. 3. Fiscal policy on spending versus saving oil revenues: - Niger’s large development needs and young population argue for spending, subject to implementation bottlenecks and revenue volatility. - Staff advised building a buffer and attuning spending to long-term average revenues once in place. - Well-planned spending focused on investment in physical and human capital would best serve development and diversification beyond the oil industry. - High import content of infrastructure projects reduces inflation risks and real exchange rate appreciation pressures; loosen domestic supply constraints such as availability of land. ### Program modalities, capacity to repay, and safeguards - Program monitoring: - Program performance assessed semi-annually. - Prior action on establishment of a tracking system for main social spending programs has been met. - Existing and proposed modified quantitative PCs and ITs for end-December 2019 appear in Table 1 of the MEFP. - For the sixth review, performance will be assessed against end-December 2019 PCs and ITs and applicable structural benchmarks. - Capacity to repay IMF: - Niger should have sufficient capacity to repay the IMF, including when repayments peak at 1.5 percent of tax revenues in 2025 and 1.4 percent of exports in 2021 (Table 8). - Key risks: security developments, climatic shocks, slowing of external support, and implementation capacity. - The program is fully financed for the remainder of the arrangement. - Safeguards: - Last safeguards assessment of the BCEAO completed in 2018 found a strong control environment, audit arrangements broadly in conformity with international standards, and financial statements prepared in accordance with IFRS. - BCEAO enhanced oversight role of its audit committee and is strengthening its risk management function; financial statements continue to be published on a timely basis. ### Staff appraisal — key findings and recommendations - Implementation and growth: - Authorities have continued implementing the program satisfactorily; all performance criteria and indicative targets for end-June were met. - Authorities committed to corrective measures to address subsequent weakening of fiscal performance. - Economic growth is solid despite a difficult security situation, benefiting from large-scale FDI and donor-financed projects. - Priorities and risks: - Continue efforts to improve business-environment indicators to aid growth, diversification, and formalization of the informal sector. - Activating, consolidating, and supplementing schemes to improve access to credit is an important priority. - Construction of the crude oil export pipeline could spur economic growth and national income; vigilance needed on contract design, institutional framework, and prudent planning for additional resources. - Public finances need continued attention: 2020 budget allows significant spending growth financed by revenue measures; authorities committed to set aside some planned expenditure in early 2020 if revenues fall short. - Revenue mobilization through tax-base expansion and improved spending quality remain key. - Fiscal risks from PPPs are a concern; pausing finalization of a large PPP pending in-depth review was welcome, but institutional framework and practical application need revisiting. - Progress on governance is encouraging (HALCIA staffing, EITI reapplication, asset declaration improvements), and ongoing fiscal governance improvements should reduce corruption vulnerabilities. - Final staff call: - Staff calls on the authorities to take the advice of the international expert group into account when finalizing the revision of its national accounts. *Sources: Nigerien authorities; and IMF staff calculations.* ### 31. Staff supports the authorities’ request for the modification of the performance ### 1nerea2020001 - 31. Staff supports the authorities’ request for the modification of the performance ### Program decision and financing - Staff supports the authorities’ request for: - modification of the performance criterion on the contracting of new external public debt; - modification of the end-December 2019 performance criterion on domestic budget financing; - completion of the fifth program review; - disbursement of the sixth tranche of SDR 14.1 million. - The attached Letter of Intent and the Memorandum of Economic and Financial Policies set out appreciate policies to achieve program objectives. ### Recent economic developments and outlook (high-level indicators) - Broad-money (Money and quasi-money) contribution components shown Jan. 2013–Jun. 2019: Net foreign assets; Net bank claims on the government; Credit to the economy; Other items, net. - Credit and money growth (Jan. 2013–Jun. 2019, 12-month average, Percent change, YoY): Money (M2) and Credit to the private sector series depicted. - Inflation (Jan. 2016–Jun. 2019, Percent change, YoY) components: Overall, Food, Non-food (average). - Contribution to Real GDP Growth, 2013–24 (Percent change, YoY) components and projections: Gov. consumption; Priv. consumption; Net exports; Gov. investment; Priv. investment; Real GDP. - Projections and sources: Nigerien authorities; and IMF staff calculations. ### Fiscal developments and composition (2010–18) - Expenditure composition charts (Percent of GDP): External financed investment; Dom. Financed investment; Current expenditure; Total Expenditure. - Revenue composition charts (Percent of GDP): Non-resource cash; Resource-cash; Non-cash; Total Revenue. - Fiscal balance charts (Percent of GDP): Basic fiscal balance; Overall balance (WAEMU). - Security spending (Percent of GDP) trend shown. ### GDP composition and output volatility - Sectoral shares reported for 2010 and 2018 (percent shares by sector, as displayed): - 2010: Agriculture 26.0; Livestock and fishing 14.9; Extractive industries 7.2; Constructions, public works 2.5; Manufacturing 4.8; Commerce 14.2; Transport 6.1; Financial activities, other services 4.4; Water and electricity 1.1; Government 11.3; Indirect taxes 7.5. - 2018: Agriculture 28.5; Livestock and fishing 13.4; Extractive industries 4.4; Constructions, public works 2.8; Manufacturing 6.7; Commerce 11.8; Transport 6.3; Financial activities, other services 6.6; Water and electricity 0.9; Government 12.2; Indirect taxes 6.2. - Key observations: - GDP growth is highly volatile and driven by climatic shocks on agriculture. - Per capita GDP growth is highly volatile and, due to high population growth, is on average low. - Real GDP growth (Percent change, YoY) and real per capita GDP growth (Percent change, YoY) series shown for 2008–2018. ### Tax performance (2015–19) - Cumulative monthly tax series presented (December 2014 = 100, nominal GDP discounted): - Total Tax Revenue; Non-Tax Revenue; Taxes on Income, Profits, and Capital Gains; Domestic Taxes on Goods and Services; Taxes on International Trade and Transactions; Extractive Industries. - Annual series for 2015–2019 depicted by month. ### Financial inclusion indicators (2011–18) - Indicators and comparisons with WAEMU and SSA aggregates: - ATMs (per 100,000 adults) for 2013–2018. - Ratio of Mobile Money Agents to Commercial Bank Branches (mobile money agents per bank branch) for 2013–2018. - Mobile Money Accounts (Per 1,000 adults): Active and Registered (2013–2018). - Mobile Money Transactions (Number per 1,000 adults; Value in percent of GDP) and trend (2013–2018). - Mobile Cellular Subscriptions (per 100 people) and Individuals Using the Internet (percent of population). - Key summary points: - Access to traditional banking remains low. - Mobile money offers new opportunities. - Registered mobile money accounts are growing. - Volume of mobile money transactions remains small. - Uptake of mobile phones is lagging and access to Internet is low despite recent progress. ### Microfinance sector indicators (2011–19) - Composition of MFI resources (CFAF billion): Deposits; Capital; Credit lines; Subsidies and other (2011–2019). - Distribution of MFI loans by maturity (CFAF billion): Short-term; Medium-term; Long-term; NPLs (2011–2019). - Profitability and prudential compliance: - ROE and ROA series show negative profitability in recent years. - Compliance to Prudential Ratios (end-June 2019) percentages for multiple ratios (e.g., Risk exposure ≤ 200% of total ressources; Stable funding of MT and LT assets ≥ 100%; Related party lending ≤ 10% of capital; Single large exposure ≤ 10% of capital; Liquidity ratio ≥ 100%; etc.). - Sector structure notes: - Dominated by a few large MFIs. - MFIs primarily rely on deposits to finance short and medium-term credit. - MFIs record negative profitability and uneven compliance with prudential ratios. - Contribution to main aggregates by MFI size, end-June 2019: Members, Loans, NPLs, Deposits, Capital (percent breakdown across Large MFIs, Medium MFIs, Small MFIs, ASUSU). - Number of MFIs and points of service trends show the microfinance sector has been shrinking since recent years. ### Key tables and selected indicators (2016–24 excerpts) - Table 1: Selected Economic and Financial Indicators (highlights, various years and projections): - GDP at constant prices: 4.9 4.9 6.5 6.3 6.3 6.0 6.0 5.6 11.9 6.1 6.8 (presented in table layout). - Oil production (thousand barrels per day): 17 18 17 20 20 20 20 70 83 97 (table layout). - GDP deflator and Consumer price index series included (annual average and end-of-period). - External sector: Exports, f.o.b. (CFA francs) and non-uranium exports series with values including -4.9 14.4 -4.6 14.6 10.7 8.3 12.0 5.9 65.4 11.9 12.3 (as tabulated). - Government finances: Total revenue and Total expenditure and net lending series presented as both annual changes and percent of GDP (e.g., Total revenue 14.3 14.4 16.7 16.0 15.6 17.2 16.6 17.0 18.4 18.7 19.0; Total expenditure and net lending 26.3 26.8 29.1 28.9 29.2 28.4 29.6 28.1 28.6 28.0 27.6). - Basic balance (excl. grants) and Overall balance (commitment basis, incl. grants) series with precise values (e.g., Basic balance -4.2 -5.0 -4.0 -3.0 -3.6 -1.1 -2.8 -1.9 -1.7 -1.4 -1.0). - Public debt indicators: Total public and publicly-guaranteed debt 44.6 54.4 53.7 54.2 55.2 52.7 54.4 53.6 50.1 49.0 47.3; Public and publicly-guaranteed external debt and NPV of external debt figures also tabulated. - GDP at current market prices (billions of CFA francs) series: 4,511 4,726 5,175 5,571 5,555 6,056 6,009 6,472 7,386 7,996 8,708 (and a revised provisional series also shown). - Table 4: Monetary Survey highlights (billions of CFA francs and percent changes): - Net foreign assets series (e.g., 570 442 322 273 312 226 297 249 294 377 467) and percent changes (e.g., -3.6 -22.5 -27.1 -15.3 -3.1 -17.2 -4.8 -16.2 18.0 28.3 24.0). - Net domestic assets and Domestic credit series (e.g., Domestic credit 910 1,013 1,128 1,246 1,216 1,322 1,324 1,438 1,596 1,769 1,979). - Money and quasi-money (1,211 1,151 1,127 1,221 1,218 1,283 1,320 1,422 1,599 1,797 2,039). - Credit to the private sector and Credit to the economy percent-of-GDP memorandum items. - Table 5–6: Balance of Payments (2016–24, billions of CFA francs and percent of GDP): - Current account balance (billions): -700 -742 -903 -1,103 -1,075 -1,358 -1,311 -1,471 -999 -896 -872. - Balance on goods, services, and income (billions): -865 -981 -1,173 -1,406 -1,423 -1,656 -1,622 -1,765 -1,293 -1,200 -1,195. - Exports, f.o.b. series (billions): 612 700 668 773 740 837 828 877 1,451 1,623 1,823; and percent of GDP series for exports: 13.6 14.8 12.9 13.9 13.3 13.8 13.8 13.6 19.6 20.3 20.9. - Imports, f.o.b. and subcomponents (food products, petroleum products, capital goods, other products) in both levels and percent of GDP. - Unrequited current transfers (net) and Capital and financial account aggregates with detailed public sector disbursements and amortization figures. - Table 7: Financial soundness indicators (Dec. 2012–Dec. 2018 percentages) include solvency ratios, asset quality, profitability, and liquidity ratios (e.g., Regulatory capital to risk-weighted assets 17.5 16.2 16.2 13.5 13.9 16.8 13.3 12.3; Gross NPLs to total loans 17.1 16.4 17.6 15.5 17.7 18.8 19.0 17.0). - Table 8: Indicators of capacity to repay the Fund, 2018–28 (SDR millions, CFAF billions, and percent metrics): - Fund obligations based on existing credit (Principal, SDR millions): 5.8 7.8 11.6 19.1 21.8 25.2 26.1 28.3 20.5 16.6 11.0. - Total obligations based on existing and prospective credit (SDR millions and CFAF billions series). - Outstanding IMF credit based on existing and prospective drawings (SDR millions): 160.9 187.0 203.6 184.5 162.7 137.5 111.4 80.3 54.1 31.9 15.2. - Net use of IMF credit (SDR millions) series shown (e.g., 22.4 26.1 16.6 -19.1 -21.8 -25.2 -26.1 -31.1 -26.2 -22.3 -16.6). - Memorandum items: Exports of goods and services (CFAF billions), External debt service (CFAF billions), Nominal GDP (CFAF billions), Tax revenue (CFAF billions), Quota (SDR millions). *Source: https://www.imf.org/-/media/files/publications/cr/2020/english/1nerea2020001.pdf* ### Appendix I. Letter of Intent ### Appendix I. Letter of Intent ### Overview - Letter dated Niamey, December 16, 2019, addressed to Kristalina Georgieva, Managing Director, International Monetary Fund. - Niger requests: modification of the continuous performance criterion on contracting new external public debt and the end-December 2019 performance criterion on domestic budget financing; completion of the fifth program review; disbursement of the sixth tranche of SDR 14.1 million. - Attachments: I. Memorandum of Economic and Financial Policies (MEFP). II. Technical Memorandum of Understanding (TMU). ### Recent developments and macroeconomic outlook - Real GDP growth: - On track to reach 6.3 percent in 2019. - Should average at least 7 percent over the next five years. - Medium-term real GDP growth expected to average 7 percent. - Inflation: described as "well contained" and "will stay below the WAEMU norm of 3 percent throughout." - External current account: likely to widen further due to weak commodity exports and import-intensive large projects; largely financed by donors and foreign investors; a small overall deficit remains. - Fiscal balance: - Deficit should remain below the program ceiling of 4.1 percent of GDP in 2019. - Deficit should reach 3.9 percent of GDP in 2019 (paragraph 3 and Recent Developments). - 2020 budget targets a deficit of 2.7 percent relative to the preliminary revised GDP. - Arrears: stock fell below CFAF 5 billion in October 2019. - Major project pipeline: - Convention with China National Petroleum Corporation (CNPC) signed for a 2,000 km pipeline from Agadem to Cotonou. - Project cost estimated at US$ 6.1 billion or 60 percent of GDP. - Once exports begin, fiscal revenues expected to rise by at least 2 percent of GDP. - Outstanding requirements: final feasibility study, environmental impact study, final transport authorization; amount of state participation still under discussion. - National accounts revision: - Adopting SNA 2008; GDP could be more than one third higher. - New accounts to be finalized before year-end following validation workshop held in October 2019. ### Performance under the ECF-supported program - Program implementation status: - "Broadly on track." - All performance criteria (PCs) and indicative targets (ITs) for end-June 2019 were met. - End-September 2019: some performance targets fell behind due to weakened revenue performance and the Nigeria border closure. - Structural benchmarks (SBs) and governance: - Tax exemptions substantially reduced (end-June SB met). - Decree to centralize debt management and ministerial instruction organizing front-middle-back office issued, meeting end-December SB ahead of time. - Tracking system for social spending implemented with a delay (treated as a prior action). - Legislation prepared to extend asset declaration requirements beyond president, members of government, and heads of key public institutions; to be submitted to Parliament in 2019; includes sanctions, disclosure form, publication of declarations, and authorization to investigate family members by decree. - Reset SB: full list of names and last two declarations of covered officials posted on an official government website by end-December 2019. - One recurrent SB in Q2 2019 missed (information on tax exemptions compiled with a delay); an upgraded system to tally newly granted discretionary tax exemptions to be agreed with IMF staff and implemented ahead of next review. ### Fiscal policy and revenue measures - 2019 fiscal stance and adjustments: - Underlying revenue performance improving but less than programmed; Nigeria border closure and weak resource sector are drags. - Inter-Ministerial Budget Regulation Committee held back some spending allocations implying an expenditure reduction of CFAF 15 billion relative to the program. - Domestically-financed expenditure (including non-cash and excluding special accounts) set at CFAF 948 billion for 2019. - Program ITs and PCs for end-December 2019 to be updated accordingly. - Revenue drive and concrete steps (Q4 2019 and 2020 preparations): - Target to tackle CFAF 15 billion of outstanding tax arrears classified as readily collectable in Q4 2019; expected to yield at least CFAF 5 billion in revenue in 2019 with payment plans for remainder. Names of delinquent taxpayers published on DGI website. - Performance plans for tax and customs administrations to be adopted before end-2019; director general to oversee implementation and quarterly analysis. - Transaction valuation of imports: dedicated working group to accelerate application and better populate database with reference prices from ASYCUDA. - Risk-based inspection regime at customs with emphasis on post-clearance audits to be implemented. - Molecular marking of petroleum products: contract a supplier by year end and begin marking in mid-2020. - Better cooperation between DGD and DGI: biweekly meetings; IT systems link (ASYCUDA and SISIC) established; DGI posted a database of fiscally active tax identification numbers; Minister of Finance instructed blocking imports of operators without fiscally active tax identification number under "Fiscal Enclosure Program." - 2020 budget and revenue measures: - Domestically-financed spending (including non-cash and excluding special account spending) of CFAF 1,175 billion in the budget submitted to Parliament. - Government will review 2019 fiscal performance in early 2020 and set aside spending authorizations by communication of the Minister of Finance as needed by end-February 2020. Macro-framework tentatively incorporates CFAF 36 billion. - Expected additional revenues from 2020 measures: some 1 percent of GDP. - Key revenue measures envisaged: - Streamlining tax exemptions expected to yield 0.3 percent of GDP in the first year and 0.5 percent of GDP when fully phased in, including: - Registration fees and stamp duty to apply to projects funded by NGOs and Development Agencies. - Provision of services no longer VAT exempt under investment, mining, petroleum, and PPP codes. - No possibility to renew exemptions under investment code. - Subcontractors no longer to benefit from VAT exemptions under petroleum code. - Statistical fee to apply to all imports otherwise exempt from border taxes. - Introduction of VAT machines in major stores. - Higher tax on re-exports; subjecting temporary imports of gold for processing to the re-export tax. - Updating low valuation of transport services for border taxes. - Audits to identify inconsistencies between lifestyle and tax payments. - Moving customs clearance for cars from inland facilities to the border. - Higher penalties for non-cooperation with tax authorities. - Application of real estate registration fees to foreclosed real estate. - Ministry of Finance requested technical assistance from FAD to review and simplify the tax system. ### Spending quality, PPPs, and public financial management - Expenditure control and PFM reforms: - Commitment to raise spending quality and program budgeting to improve efficiency. - For 2020, spending ministries asked to make spending more efficient within programs. - Implementation of tracking system for main social programs together with World Bank public expenditure review to prioritize and scale up interventions (e.g., school lunch, cash transfer). - Continued capacity building for program budgeting. - Implementation of PIMA recommendations to better scrutinize projects before consideration. - Double authorization framework (AE/CP) pilot in 2020 did not materialize; government committed to apply it in next budget. - Public procurement: raise competitive purchases from two-thirds to WAEMU norm of 95 percent, including entities receiving large subsidies/transfers (e.g., CAIMA and OPVN); regular monitoring to be put in place. - Improving performance of public entities and enterprises (EEP): strengthen financial oversight and governance; expand performance contracts; Finance Ministry unit overseeing EEPs upgraded to a Directorate General. - Functional review of public administration to be completed by mid-2020 to enable restructuring and streamlining of ministries and agencies. - Public-private partnerships (PPPs): - Finalization of the PPP contract for a domestic fuel product pipeline halted pending review, cost-benefit analysis, and renegotiation. - Understandings on terms-of-reference for cost-benefit analysis reached with IMF staff. - Government committed to: high-quality cost-benefit analysis confirmed by IMF staff and vetted by World Bank experts; request a financial feasibility study from private partner; proceed only if analysis demonstrates clear positive net benefit for public partner and contained fiscal risks; publish cost-benefit analyses of all PPPs before public partner enters contractual obligations. ### Commitments and transparency - Government commitments: - To take additional measures as necessary and consult with IMF before making changes to policies in the MEFP per IMF consultation policies. - To provide timely information to monitor economic situation and program implementation as agreed under the TMU or at the IMF's request. - To comply with WAEMU convergence criterion on budget deficit (no more than 3 percent of GDP). - To continue revenue mobilization while using expenditure restraint as second line of defense. - To allocate the revenue boost from oil exports (from 2022) largely to address development needs while maintaining sustainable public finances. - Publication and transparency: - Government agrees to publication of the staff report, this letter of intent, the MEFP, and the TMU on the IMF’s website. *Appendix I. Letter of Intent (Niamey, December 16, 2019).* ### 16. The government remains committed to improving debt and cash management. In ### 16. The government remains committed to improving debt and cash management. In ### Debt and cash management — commitments and operational measures - Domestic payment arrears will be reduced to close to zero from the beginning of September onward. - To ease Treasury rollover of short-term debt, the sizable prospective top-up of budget support from the World Bank will mostly go toward paying down debt in regional markets. - TSA implementation: - The Minister of Finance has instructed the accounts of ARCEP at commercial banks to be closed at end-2019 and transferred to the TSA. - The government is reconsidering whether CAIMA and OPVN are inside the parameter of the TSA. - Henceforth the evolution of CAIMA’s and OPVN’s financial position with banks will be considered when evaluating Niger’s fiscal performance. - The government has analyzed the sizable gap between the initial balances of the transferred accounts and the amounts received by the TSA and a copy of the draft report has been shared with IMF staff. - Inter-Ministerial Committee on Public Debt and Budgetary Support: - The upgraded functionality will be preserved; quarterly meetings will continue to assess and pronounce on public debt and guarantees and validate compliance with established selection procedures for debt-financed projects. - Committee remit widened from mid-2019 to cover PPPs, debt of major SOEs and public administrative entities, and local governments. - Quarterly debt management reports will continue to be prepared. - An annual report for 2019 will be prepared and published in the first quarter of 2020; it will report on debt by major SOEs and public administrative entities, and local governments. - Prudence on external debt: - The frontloaded surge in donor support requires signing conventions worth CFAF 100 billion more than previously programmed. - The government requests modification of the PC on the ceiling to CFAF 325 billion for end-December 2019 to avoid stalling projects vital to Niger’s development. - So far Niger has taken on almost exclusively concessional external debt; this cautious approach will continue. ### Public financial management and administrative reforms - The government will allocate sufficient financial resources for training, maintenance of IT systems, and other supporting operations for administrative reforms; financing will be sourced from donors to the extent possible. - Reforms to improve public sector efficiency: - Civil service and governance reform of state-owned enterprises (SOEs) and public administrative entities. - Review of human resource management processes and functional review of ministries. - Preparation of a biometric database for civil servants and government employees. - Performance audits conducted for five large SOEs and public administrative entities; an action plan is being developed to improve governance framework, including financial oversight, board member selection, auditing, and processing of financial information. ### Oil sector preparatory framework and fiscal management of oil revenues - The government is establishing main tenets for dealing with the likely surge of oil revenues from 2022: - Aim to maximize the return for the Nigerien economy; may involve taking an equity stake in the pipeline company if terms are favorable and fiscal risks remain contained. - The government will consult closely with IMF staff before irrevocable decisions are taken. - Objective: all oil taxes remain at all times under the sole control of the Treasury. - The Ministry of Finance will take the lead role in administering financial flows from the oil sector. - The government will avail itself of technical assistance from the IMF. - Other contractual arrangements highlighted: local content requirements, third-party access rights, level playing field between foreign investors and Niger. - Spending intention and fiscal safeguards: - Most of the additional revenues will likely be spent on spurring Niger’s development, while taking into account supply bottlenecks, limited administrative capacity to ramp up spending quickly without compromising on quality, and the volatility of oil revenues. - Well-designed medium-term fiscal and expenditure plans and suitable fiscal rules can help deal with these constraints. ### Broader structural reforms to support private sector and inclusion - Private sector development: - Government plans a consolidated platform to bring together stakeholders, including the private sector, proposing a critical mass of measurable and time-bound reforms. - Incentives for local private sector to formalize: access to credit, training, certification and partnerships with businesses outside Niger. - Financial deepening and inclusion: - Exploit financing vehicles: leasing, warrantage projects from the EU and the World Bank, regional financing scheme under the BCEAO, lending co-financed through the Maison de l’Entreprise, and support for the agricultural sector by making FISAN fully operational. - Mobile banking and payments framework in place; needs popularization, improved interconnectivity, and infrastructure investment. - New microfinance strategy to be implemented once donor round table is held with a credible re-structuring plan. - Governance and transparency: - Application filed for rejoining the Extractive Industry Transparency Initiative (EITI) in October; favorable response expected later this year or in early 2020. - Commitment to publish all natural-resource contracts on EITI’s website. - Anti-corruption agency HALCIA: opened more cases than ever in the year, increased staffing, upgraded website for electronic filing of complaints, launched social media awareness campaign. - Commitment to upgrade asset declaration regime for high-level public officials. - AML/CFT: Niger adopted the national risk assessment report in July 2019 and will act upon its action plan. - Fiscal transparency: - Publication of the 2019 budget as submitted to the National Assembly was a first step. - Government will continue to publish key documents: budget outturns, draft and approved budgets (including supplementary ones), a citizen budget, major conventions with foreign investors, PPP contracts, and tender awards. - The Government Gazette will be made available online and free of charge from 2020 onward. - Demographics and gender: - Build on updated National Gender Policy and the decree on the Education of Girls, with stepped-up awareness campaigns for religious leaders and the public. - Work with the World Bank on child protection committees at community level, married adolescent girls’ access to health services without consent of husbands or parents, and the right of adolescent girls to stay in school when married or pregnant. - Donor community invited to expand projects in gender and demographics. - Example synergy: expanded school lunch program would help keep girls in school longer, discouraging early marriage and childbearing. ### Program monitoring, requests, and disbursements - The government requests: - Modification of the continuous PC on the contracting of new external public debt and the PC on domestic budget financing to take latest fiscal developments on board. - Approval of the fifth review under the arrangement. - Disbursement of SDR 14.1 million. - Program monitoring: - Based on performance criteria (Table 1) and structural benchmarks (Tables 2 and 3). - Authorities will provide IMF staff with statistical data and information identified in the Technical Memorandum of Understanding. - Program will be monitored through semiannual reviews. - The sixth and final program review is expected to take place at or after April 8, 2020 and before the program expires on April 22, 2020. - Proposed disbursements scheduled under the ECF Arrangement, 2017–20 (selected items from the schedule): - SDR 14.1 — Executive Board Approval of the ECF Arrangement — January 23, 2017. - SDR 14.1 — Observance of continuous and end-June 2017 performance criteria, and completion of the first review under the arrangement — December 15, 2017. - SDR 14.1 — Observance of continuous and end-December 2017 performance criteria, and completion of the second review under the arrangement — June 1, 2018. - SDR 14.1 — Observance of continuous and end-June 2018 performance criteria, and completion of the third review under the arrangement — December 10, 2018. - SDR 33.84 — Observance of continuous and end-December 2018 performance criteria, and completion of the fourth review under the arrangement — June 26, 2019. - SDR 14.1 — Observance of continuous and end-June 2019 performance criteria, and completion of the fifth review under the arrangement — January 8, 2020. - SDR 14.1 — Observance of continuous and end-December 2019 performance criteria, and completion of the sixth and last review under the arrangement — April 8, 2020. - Total SDR 118.44. *Source: IMF staff report and attached Memorandum of Economic and Financial Policies and Technical Memorandum of Understanding (Niamey, December 16, 2019).* ### 2. For the purposes of this technical memorandum, the following definitions of ### 1nerea2020001 - 2. For the purposes of this technical memorandum, the following definitions of ### Definitions: government, debt, payment arrears, government obligations - Government: refers to the central government of the Republic of Niger; it does not include any political subdivision, public entity, or central bank with separate legal personality. - Debt (paragraph 8 of the Guidelines on Public Debt Conditionality in Fund Arrangements): a current, i.e., not contingent, liability, created under a contractual arrangement through the provision of value in the form of assets (including currency) or services, and which requires the obligor to make one or more payments in the form of assets (including currency) or services, according to a specific schedule; these payments discharge the obligor of the principal and/or interest liabilities incurred under the contract. - Primary forms of debt: - (i) loans: advances of money to the obligor by the lender (including deposits, bonds, debentures, commercial loans, and buyers’ credits) and temporary exchanges of assets equivalent to fully collateralized loans (such as repurchase agreements and official swap arrangements); - (ii) suppliers’ credits: supplier permits obligor to defer payments until after delivery/provision of goods or services; - (iii) leases: property provided for use for specified period(s); for these guidelines, debt is the present value (at the inception of the lease) of all lease payments expected to be made during the period of the agreement, excluding payments for operation, repair, or maintenance of the property. - Under this debt definition, arrears, penalties, and judicially awarded damages arising from failure to make payment under a contractual obligation that constitutes debt are debt. Failure to make payment on an obligation not considered debt under this definition (e.g., payment on delivery) will not give rise to debt. - Present value (PV) of new public and publicly-guaranteed external debt: discounts at a five percent annual rate the future payment stream, except for loans with a negative grant element, in which case the PV is set equal to the value of the loan. Calculation based on the loan amount contracted in a given year, independent of disbursement timing. - Domestic payment arrears: domestic payments owed by the government but not paid; include committed and authorized fiscal year expenditures that are not paid within 90 days. - External payment arrears: external payments due but not paid. - Government obligation: any financial obligation of the government accepted as such by the government (including any government debt). ### A. Quantitative Performance Criteria — Net Domestic Financing of the Government - Definition: - Net domestic financing of the government = (i) net bank credit to the government; (ii) net nonbank domestic financing of the government, including government securities issued in CFAF on the WAEMU regional financial market and not held by resident commercial banks, proceeds from the sale of government assets, and privatization receipts. - Net bank credit to the government: - 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 includes all central government administrations as defined by the BCEAO. - Net bank credit 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) 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 Treasury correspondents’ deposit accounts; - (iii) change in the balance of various deposit accounts at the Treasury; - (iv) 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. - Quarterly targets: - The 2018 and 2019 quarterly targets are based on the change between the end-December 2017 and end-December 2018 levels, respectively, and the date selected for the performance criterion or indicative target. ### Adjustments to the Net Domestic Financing Ceiling - Adjustment trigger: - 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. - Specific rules: - If disbursements of external budgetary support fall short of projected amounts at the end of each quarter, the corresponding quarterly ceilings will be raised pro tanto, up to a maximum of CFAF 30 billion. - From October 1, 2019 onward, the ceiling on domestic financing will be reduced by the amount of borrowing under the World Bank's Policy Based Guarantee operation. - For 2018 (but not 2019), the ceiling on net domestic financing will also be adjusted for deviations from programmed domestic payment arrears clearance: the ceiling will be adjusted up (down) one-for-one for arrears clearance in excess (in deficit) of programmed levels. The upward adjustment is capped at CFAF 30 billion. - From end-June 2019, the ceiling on domestic financing of the budget will be increased/reduced by the reduction/increase in the stock of outstanding domestic payment obligations since end-2018, excluding the supplementary period adjustment. Domestic payment obligations comprised arrears and float and stood at CFAF 95.8 at end-2018. - This adjuster will be reduced by the amount of any external budget support in excess of the program amount as quantified in the memorandum item of the PC table and will be capped at a maximum of CFAF 50 billion. ### Reporting Requirement for Net Domestic Financing - Detailed data on domestic financing of the government will be provided monthly, within six weeks after the end of each month. ### Stock of Domestic Payment Arrears - Definitions and targets: - For 2018, reduction of domestic payment arrears = difference between the stock of arrears at end-2017 and the stock of arrears on the reference date. - For 2019, continuous ceiling on the stock of outstanding domestic payment arrears: - Ceiling set at CFAF 25 billion from the date of the completion of the fourth review to September, 30 2019, inclusive; - Starting on October 1, 2019 the ceiling is reduced to CFAF 5 billion through the end of the arrangement period. - Calculation and responsibility: - The Centre d’amortissement de la dette intérieure de l’Etat (CAADIE) and the Treasury are responsible for calculating the stock of domestic payment 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. - Adjustments: - 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. The adjusted target on domestic payment arrears clearance shall not be negative. - For the purpose of evaluating performance against the end-December 2018 target, domestic payment arrears clearance includes arrears’ reduction during the supplementary budget period. - For the purpose of evaluating performance against the targets in 2019, the stock of outstanding domestic arrears will be assessed excluding the arrears’ reduction during the supplementary period. - Note: The fiscal accounts for the current year are revised to incorporate transactions for expenditure engagements made in the current fiscal year but not finalized until the supplementary period (January and February) in the subsequent fiscal year. ### External Payment Arrears - Definition: - Government debt is outstanding debt owed or guaranteed by the government. - For the program, the government undertakes not to accumulate external payment arrears on its debt (including Treasury bills and bonds issued in CFAF on the WAEMU regional financial market), with the exception of external payment arrears arising from debt being renegotiated with external creditors, including Paris Club creditors. - Reporting: - Data on the stock, accumulation, and repayment of external payment arrears will be provided monthly, within six weeks after the end of each month. ### Short-Term External Debt of the Central Government - Definition: - The government will not accumulate or guarantee new external debt with an original maturity of less than one year. - This performance criterion applies to debt as defined in paragraph 8 of the Guidelines on Public Debt Conditionality in Fund Arrangements and also to any obligation contracted or guaranteed for which no value has been received. - Exclusions: short-term loans related to imports and short-term securities issued in CFAF on the regional financial market are excluded from this performance criterion. - 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 of Public and Publicly-Guaranteed External Debt - Debt definition reiteration and scope: - Debt definition as per paragraph 8(a) of the Guidelines on Public Debt Conditionality in Fund Arrangements (Executive Board Decision No. 15688-(14/107), December 5, 2014). - Guarantees: a guarantee arises from any explicit legal obligation of the government to service a debt in the event of nonpayment by the debtor (involving payments in cash or kind). - External debt: 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 for this performance criterion includes the government (as defined) 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); - (vi) Société propriétaire et exploitante de l’Hotel Gaweye (SPEG). - Performance criterion scope and exclusions: - The PC is a ceiling and applies to the present value of all new external debt (concessional or non-concessional) contracted or guaranteed by the central government, including commitments contracted or guaranteed for which no value has been received. - Does not apply to: - (a) Short-term supplier or trade-related credit with a maturity of up to three months; - (b) rescheduling agreements; - (c) IMF disbursements. - Applicable contractual date: - For program monitoring purposes, external debt is deemed to be contracted or guaranteed at the date of effectiveness of the contract, including its approval, where required, by the member(s) of the government of Niger 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: - PV of new external debt is calculated by discounting all projected disbursements and debt service payments (principal and interest) on the basis of a program discount rate of 5 percent and taking account of all loan conditions, including projected disbursements, the maturity, grace period, payment schedule, front-end fees and management fees. - The PV is calculated using the IMF “DSA template,” which is based on the amount of the loan and the above parameters. - In the case of loans for which the grant element is zero or less than zero, the PV is set at an amount equal to the face value. - Adjustment: - The ceiling on the PV of new PPG external debt will be raised by the amount of borrowing under the World Bank's Policy Based Guarantee operation up to an amount of CFAF140 billion from October 1, 2019 onward. - 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 and will consult with staff on any potential debt management operations. ### B. Quantitative Targets — Definitions and Limits - Total revenue: - An indicative target for the program; includes tax, nontax, and special accounts revenue, but excludes proceeds from the settlement of reciprocal debts between the government and enterprises. - Basic fiscal deficit: - Defined as the difference between (i) total tax revenue, as defined in paragraph 36; and (ii) total fiscal expenditure excluding externally financed investment expenditure but including HIPC-financed expenditure. - According to the WAEMU definition, the basic fiscal deficit is defined as the basic balance described under paragraph 37 plus budgetary grants. - Floor on poverty-reducing expenditure: - An indicative target; comprises all budget lines included in the Unified Priority List (UPL) of poverty-reducing and HIPC-financed expenditures. - Limit on expenditures paid through exceptional procedures: - Excluding debt service payments and expenditures linked to tax exemptions. - The limit is 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 to the IMF monthly, within six weeks after the end of each month. - Information on UPL expenditures will be provided to the IMF quarterly, within six weeks after the end of each quarter. - Information on exceptional expenditure will be provided to the IMF quarterly after six weeks after the end of the quarter. ### Additional Information for Program Monitoring — Government Finance - The authorities will forward the following to IMF staff: - Detailed monthly estimates of revenue and expenditure, including priority expenditure, the payment of domestic and external arrears, and a breakdown of customs, DGI, and Treasury revenue. - The Table of Government Financial Operations with comprehensive monthly data on domestic and external financing of the budget, and changes in arrears and Treasury balances outstanding; provided monthly, within six weeks after the end of each month. - Comprehensive monthly data on net nonbank domestic financing covering: - (i) change in the stock of government securities (Treasury bills and bonds) issued in CFAF on the WAEMU regional financial market and not held by resident commercial banks; - (ii) change in the balance of various deposit accounts at the Treasury; - (iii) change in the stock of claims on the government forgiven by the private sector. - Quarterly data on expenditure for UPL lines (statement of appropriations approved, disbursed, and used). - Quarterly reports on budget execution, including the rate of execution of poverty-reducing expenditure and, in particular, the use of appropriations by the line ministries concerned (National Education, Public Health, Equipment, Agriculture, Livestock). - Monthly data on Treasury balances outstanding, by reference fiscal year, with a breakdown of maturities of more than and less than 90 days. - Monthly data on effective debt service (principal and interest) compared with 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. *International Monetary Fund — Technical Memorandum of Understanding (excerpts).* ### 43. The authorities will provide the following information each month, within eight weeks ### 1nerea2020001 - 43. The authorities will provide the following information each month, within eight weeks ### Data Reporting Requirements (Monetary and Financial) - Monthly, within eight weeks following the end of each month: - Consolidated balance sheet of monetary institutions and, where applicable, the 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 (where applicable, these same indicators for individual institutions may also be provided). ### Balance of Payments - Authorities will provide IMF staff with: - 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. ### Real Sector Reporting - Authorities will provide IMF staff with: - 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. ### Structural Reforms and Other Data - Authorities will provide IMF staff with: - Any study or official report on Niger’s economy, within two weeks after its publication. - Any decision, order, law, decree, ordinance, or circular with economic or financial implications, upon its publication or, at the latest, when it enters into force. - Any draft contract in the mining and petroleum sectors, including production and sales volumes, prices, and foreign investment. - Any agreement with private sector stakeholders having economic or financial repercussions for the government, including in the natural resources sector. ### Table 1: Summary of Key Reporting Deadlines (highlights) - Real sector - National accounts: Annual — End-year + 6 months. - Revisions of the national accounts: Variable — 8 weeks after the revision. - Disaggregated consumer price indexes: Monthly — End-month + 2 weeks. - Government finance (selected) - Net government position vis-à-vis the banking system: Monthly — End-month + 6 weeks. - Provisional TOFE, breakdown of revenue and expenditure: Monthly — End-month + 6 weeks. - Treasury balances outstanding (RAP), by reference fiscal year: Monthly — End-month + 6 weeks. - Monetary and financial data (selected) - Consolidated balance sheet of monetary institutions and, where applicable, consolidated balance sheets of individual banks: Monthly — End-month + 8 weeks. - Borrowing and lending interest rates: Monthly — End-month + 8 weeks. - Banking supervision prudential indicators: Quarterly — End-quarter + 8 weeks. - Balance of payments - Balance of payments: Annual — End-year + 6 months. - Balance of payments revisions: Variable — At the time of the revision. - External debt (selected) - Stock and repayment of external arrears: Monthly — End-month + 6 weeks. - Table on the monthly effective service of external debt (principal and interests), compared with the programmed maturities: Monthly — End-month + 4 weeks. ### Statement by Mr. Raghani et al. (January 8, 2020): Performance, Outlook, and Policy Program - Context and recent performance - Discussions held in October-November 2019 in Niamey under the fifth review of the ECF-supported program. - Security environment: recurrent and intensified terrorist attacks; border closure with Nigeria noted. - 2019 estimates and fiscal performance: - Growth in 2019 is estimated to have reached 6.3 percent. - Current account deficit widened to 19.4 percent of GDP. - Fiscal deficit for 2019 is expected to be reduced to 3.9 percent of GDP from 4.1 percent of GDP in 2018 and 6.1 percent of GDP in 2016. - Financing: Current account deficit largely financed by foreign direct investors and donors. - Request: Authorities request Board approval for completion of the fifth review and modification of certain performance criteria. - Outlook and risks - Medium-term real GDP growth projection: 7 percent. - Oil sector: Pipeline construction and oil production expected to transform the economy. - Oil production start date cited: 2022. - Projected fiscal revenue increase from oil: around 2 percent of GDP. - Risks: security threats in the Sahel region, slowdown of global growth, delays in donors’ assistance. - Key policy commitments and reforms for 2020 1. Fiscal policy - Aim to comply with WAEMU convergence criterion: deficit of no more than 3 percent of GDP. - 2020 budget submitted to Parliament aims at a deficit of 2.7 percent of GDP. - Revenue measures: collection of tax arrears; enforcement of performance plans for tax and customs administrations; increased cooperation between tax and customs administrations; streamlining of tax exemptions; introduction of VAT machines; higher tax on re-exports; updating low valuation of transport services. - Strengthening Treasury Single Account (TSA): remaining entities instructed to close commercial bank accounts and transfer balances to the TSA. - Expenditure measures: improve quality of spending; strengthen program budgeting; implement tracking system for social programs and PIMA recommendations. - Public-private partnerships (PPPs): finalize PPP related to the domestic fuel product pipeline based on cost-benefit analysis and renegotiations; publish all PPP contracts before contractual obligations; request technical assistance from the Fund and the World Bank for assessing fiscal risks. - Strengthen financial oversight and governance of public entities and enterprises; implement performance contracts. 2. Debt policy and management - Reliance mainly on concessional loans to ensure debt sustainability. - Inter-Ministerial Committee of Public Debt and Budgetary Support responsibilities extended to cover PPPs, debt of SOEs and public administrative entities and local governments. - Compliance with procedures for debt-financed projects to be validated by this Committee; 2019 annual report expected to be published in early 2020. - Donors’ frontloaded support resulted in signing conventions worth CFAF 100 billion; authorities request modification of the ceiling on contracting new external public debt to execute essential public investments. 3. Management of oil revenues - Plan for well-designed management framework and governance to mitigate risks of oil exporter status. - Projected increase in fiscal revenue from oil: around 2 percent of GDP. - Use expected revenues through well planned projects to spur development and economic diversification beyond oil. 4. Structural reforms - Promote private sector, deepen financial inclusion, improve governance and transparency, address climate change and demographic challenges. - Improve business environment to diversify non-oil sector and create jobs; adopt time-bound reforms with stakeholder monitoring. - Financial inclusion: mobile banking and payments framework adopted; address interconnectivity and infrastructure gaps; implement new microfinance strategy including re-structuring plan. - Social and climate policies: implement Plan de Developpement Economique et Social (PDES) 2017-2021; emphasize updated National Gender Policy, awareness campaigns on girl’s education and vocational training; seek sustained international assistance for climate resilience. - Governance and transparency: application to rejoin EITI expected to receive a favorable response; committed to publish on EITI’s web site all-natural resource contracts; HALCIA to receive electronic filing of complaints after staffing and website enhancements; pursue improvements to asset declaration regime and AML/CFT framework including action plan from July 2019 national risk assessment; commit to publish key documents (draft and approved budgets, conventions with foreign investors, PPP contracts, tender awards) through an official gazette and online free of charge. - Conclusion - Authorities reaffirm strong commitment to the success of the ECF-supported program despite difficult environment. - Request Executive Board’s completion of the fifth review and approval of requested modification of performance criteria. *Source: Extract from the Niger IMF staff report and Statement by Mr. Raghani, Executive Director for Niger (January 8, 2020).* --- _Source: https://www.imf.org/-/media/files/publications/cr/2020/english/1nerea2020001.pdf_