## MALI — REQUEST FOR MODIFICATION OF PERFORMANCE CRITERIA UNDER THE EXTENDED CREDIT FACILITY (ECF)

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**Canonical URL:** [MALI — REQUEST FOR MODIFICATION OF PERFORMANCE CRITERIA UNDER THE EXTENDED CREDIT FACILITY (ECF)](https://www.imf.org/-/media/files/publications/cr/2021/english/1mliea2021002.pdf)

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### Purpose and scope
- Proposal to modify the performance criteria for end-December 2020 under the three-year ECF arrangement approved on August 28, 2019.
- Modifications aim to:
  - Accommodate the needed response to combat the COVID-19 pandemic;
  - Adjust end-December 2020 targets to take account of the impact of the pandemic shock;
  - Reflect tightening of the external financing environment after the August 2020 coup and resulting retrenchment of international donor support.

### Recent developments and program context
- Two major shocks affected the program:
  - COVID-19 pandemic, with policy measures announced to support households, firms, and the healthcare sector.
  - Socio-political crisis culminating in a coup d’état in August 2020.
- Transitional government took office in early October 2020:
  - In place for 18 months until general elections in early 2022.
  - Announced it will assume all international obligations and commitments of the previous government.
  - Policy priorities include: addressing the country’s security situation; carrying out political and institutional reforms conducive to transparent and credible elections within 18 months; improving governance and reducing corruption; achieving strong and inclusive growth; fighting COVID-19.
- Discussions with IMF staff underway to complete the second and third reviews under the ECF, with a Board discussion expected in late-January 2021 at the earliest.
- Original program targets for end-December 2020 have become inconsistent and/or infeasible; authorities requested resetting of these targets prior to the Board meeting.

### Macroeconomic outlook adjustments reported to the Board
- At time of the CCRT request staff indicated:
  - Growth expected to decline from 5 percent pre-covid to -2 percent in 2020.
  - Accompanied by muted inflation and a strengthening external current account due to a significant improvement in the terms of trade.
  - Weakening activity and policy response were expected to widen the fiscal deficit to 6.2 percent of GDP, compared to the programmed 3½ percent.
- After the coup and tightening external financing:
  - Some non-priority spending cannot be implemented as envisaged.
  - Proposed modifications target an overall fiscal deficit of 5½ percent of GDP in 2020, narrower than projected at the time of the CCRT request.

### Requested modifications to performance criteria (end-December 2020)
- The request covers modification of the following targets:
  - (i) the floor on net tax revenues;
  - (ii) the ceiling on the overall fiscal deficit;
  - (iii) the ceiling on net domestic financing, which covers the on-lending of IMF borrowing from the regional Central Bank.

### Authorities’ position (Letter of Intent, December 21, 2020)
- Transitional Government is fully committed to implementing the ECF-supported program.
- The COVID-19 shock compelled the government to react to save lives and livelihoods and fundamentally changed ability to meet targets set during the first review (January 2020).
- Requested revisions reflect two factors:
  - Expected decline in revenues and policy response on expenditures led the previous government to revise the 2020 budget deficit from 3½ percent of GDP to 6.2 percent of GDP; these revisions were discussed with staff in the context of the Rapid Credit Facility request.
  - The current government (since October 8, 2020) is adhering to the inherited revised budget envelope, but serious external financing constraints after the political transition limit the ability to fully implement spending plans, likely leading to a lower-than-budgeted overall deficit in 2020, estimated at around 5½ percent of GDP.
- The authorities request the revised targets reflect these two factors and will endeavor to meet them.
- The Minister of Economy and Finance authorizes publication of the Letter of Intent and the Staff Report.

### IMF staff assessment
- Staff supports the authorities’ request to modify the end-December 2020 performance criteria.
- Rationale:
  - Modifications accommodate the macroeconomic impact of the pandemic and the authorities’ policy response needed to contain COVID-19 and mitigate its economic impact.
  - Modifications render program targets credible and consistent with the pandemic shock’s impact on the economy.

*Source: IMF Staff Report and Letter of Intent, December 21, 2020.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2021/english/1mliea2021002.pdf_