## 1nerea2022001

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### EXECUTIVE SUMMARY — Context and Key Facts
- Since program approval, Niger faced a more challenging international context, including the fall-out from the war in Ukraine, exacerbating pressures on food and fertilizer prices.
- Unfavorable rainfall and a deterioration in the security situation led to a deceleration of growth to 1.3 percent in 2021 and an acute food crisis.
- A temporary deviation of fiscal deficit targets from the program in 2022-23 is needed to respond to urgent expenditure pressures.
- The medium-term outlook is largely unchanged, favored by the start of oil exports through the new pipeline.
- The authorities estimate the number of refugees and IDP at 249,945 and 264,267, respectively, at end-2021.

### Recent Developments
- COVID-19 and vaccination:
  - COVID pandemic remains well-contained with a short-lived omicron increase.
  - As of May 22, 2022, around 6 percent of the population were fully vaccinated.
  - Authorities target to vaccinate 42 percent of the population by end-2022, and 58.4 percent by December 2023 (MEFP ¶32).
- Food security and climate:
  - Unfavorable rainfall, prolonged drought, and increased security incidents in 2021 produced a severe food crisis.
  - About 4.4 million people are expected to face food insecurity by the end of the lean season in August 2022.
  - Authorities’ support plan financing needs amount to 3.1 percent of GDP.
- Macroeconomic performance:
  - Economic growth slowed to 1.3 percent in 2021 compared to 5.4 percent under the program.
  - Year-on-year inflation rose to 4.9 percent at end-2021 and to 5.4 percent at end-April 2022.
  - Current account deficit deteriorated to 13.8 percent of GDP in 2021.
- Fiscal outcomes and public debt:
  - Overall deficit reached 5.9 percent of GDP in 2021 (below budgeted 6.6 percent), mainly due to higher-than-expected grants.
  - Total revenue was 4 percent lower than expected at program approval.
  - Public and Publicly Guaranteed (PPG) debt rose to 51.2 percent of GDP in 2021.
  - Text Table 1 highlights a domestic balance change of -0.7 percent of GDP between 2020–21 and a fiscal balance (WAEMU definition) change of -0.6 percent of GDP.
- Oil pipeline:
  - Completion now planned for mid-2023 due to delays in land acquisition, population displacement in Benin, security issues, and COVID-19 disruptions.
- Monetary and financial sector:
  - Central bank maintained accommodative stance; credit to the economy grew by 15.4 percent in 2021.
  - Banking sector capital adequacy ratio reached 14.3 percent in June 2021 (above WAEMU regional average of 12 percent).
  - Non-performing loans (NPLs) increased from 15.8 percent in June 2021 to 21.2 percent in December 2021.
  - Microfinance sector NPLs rose to 40.3 percent in 2021 from 13 percent in the pre-pandemic period; restructuring and recapitalization plans initiated (MEFP ¶34).

### Program Performance and Structural Benchmarks
- Overall assessment:
  - Program implementation broadly satisfactory against end-December 2021 and end-March 2022 targets.
- Quantitative targets:
  - All quantitative performance criteria (QPCs) at end-December 2021 were met.
  - All indicative targets (ITs) at end-December 2021 were observed; three ITs missed at end-March 2022:
    - Cash revenue floor missed by 0.05 percent of GDP.
    - Ceiling on net domestic financing missed due to repayment of the float related to last year’s expenditures.
    - Basic budget balance ceiling including budget grants missed since no budget grants were received by end-March.
- Structural benchmarks (SBs):
  - All SBs at end-December 2021 and at end-March 2022 were implemented, albeit two with some delays.
  - Continuous SBs at end-March 2022 were met.
  - Notable SBs implemented:
    - Policy brief to rationalize current exemptions adopted in December 2021.
    - Feasibility studies of the nine largest investment projects produced prior to inclusion in the 2022 investment plan and budget.
    - Auditor General’s audit report on 2020 COVID-19-related public spending published with delay in April 2022 (Annex II).
    - Annual report on tax arrears (stocks and flows) with timetable and quantitative targets produced.
    - Legal instrument requiring collection of beneficial ownership information for companies awarded non-competitive contracts issued and published on the Public Procurement Portal.
    - Plan for integration of DGI and DGD digital platforms adopted with delay due to minor lag in IMF technical assistance delivery.
    - Audit on extractive sector exemptions (2017–2020), SB at end-December 2022, was met in advance in May (Annex III).

### Authorities’ Requests and IMF Staff Views
- Authorities requested:
  - (i) Modification of performance criteria for the ceiling on net domestic financing and of two indicative targets on the basic budget balance (including and excluding grants) from end-June 2022 to reflect additional domestic financing needs for a wider fiscal deficit in 2022.
  - (ii) Modification of performance criteria for the ceiling on net domestic financing with an adjustor for payments of domestic obligations (float).
  - (iii) Modification of the indicative target floor on the basic budget balance including budget support grants with an adjustor for the shortfall in external budget grants.
- IMF staff:
  - Staff supports conclusion of the first review, disbursement of SDR 39.48 million, and the authorities’ request for modification of performance criteria.

### Outlook and Risks
- Growth and inflation:
  - Economic activity projected to rebound in 2022 to 6.9 percent due to recovery in agricultural production and acceleration of large investment projects related to the oil pipeline.
  - Inflation would temporarily remain elevated before gradually easing to 2 percent in the medium term.
- Fiscal and external balances:
  - Fiscal deficit expected to widen to 6.6 percent of GDP in 2022 and to 4.7 percent in 2023, before reaching 3 percent target in 2024.
  - Current account deficit projected to widen by around 1.6 percentage points to 15.4 percent of GDP in 2022.
- Medium-term prospects and debt:
  - Growth would accelerate in the medium term, reaching double digits, as oil production ramps up.
  - PPG debt projected to be around 47 percent of GDP by 2027; higher medium-term debt path compared to program approval mainly linked to depreciation of the CFAF relative to the dollar.
  - Debt Sustainability Analysis indicates Niger’s moderate risk of overall and external debt distress.
- Risks from the war in Ukraine:
  - Limited direct impact but adds to food and fertilizer price pressures via regional market linkages.
  - Niger is a net exporter of petroleum products; not adversely affected by higher oil prices except through higher transportation costs.
  - Projections point to a small improvement in terms of trade relative to forecasts before the war, but food and fertilizer price pressures weigh on social tensions and exacerbate the food crisis.
- Downside risks:
  - Worsening security in the Sahel; higher political instability in neighboring countries; rising food prices; unfavorable climate conditions; further delays in oil pipeline construction; accelerated tightening of global financial conditions; escalation of the Ukraine crisis leading to lower aid and supply disruptions; liquidity risks given low average maturity of domestic debt.
- Upside risk:
  - Higher than expected oil and uranium prices could improve prospects.

### Policy Discussions — Fiscal Anchor and Emergency Spending (A)
- Emergency spending accommodated in 2022: CFAF 99.8 billion (1.1 percent of GDP), breakdown:
  - Acquisition of cereals: 21.5 billion CFAF, 0.24% of GDP.
  - Support of livestock feed: 23.2 billion CFAF, 0.26% of GDP.
  - Acquisition of fertilizers and pesticides: 20.1 billion CFAF, 0.22% of GDP.
  - Plan to support irrigated agriculture: 15.0 billion CFAF, 0.17% of GDP.
  - Support of dilapidated school infrastructure: 20.0 billion CFAF, 0.22% of GDP.
  - Total: 99.8 billion CFAF, 1.10% of GDP.
- IDA policy revision effective July 1, 2022:
  - Allocation for IDA–only countries assessed at moderate risk of debt distress (including Niger) will be entirely in the form of credits.
  - Conversion of grants into credits will increase the deficit by 0.6 percent of GDP in 2022; impact on debt limited due to high concessionality.
- Corrective revenue measures to limit 2022 overrun:
  - Estimated around 0.3 percent of GDP (CFAF 23.4 billion) by end-2022, mostly permanent.
  - One-off yield from collection of recoverable tax arrears expected to be over 0.2 percent of GDP.
  - Plan to increase re-export tax rates for certain products to equalize with consumption tax rates.
- Fiscal outcomes and financing:
  - Projected fiscal deficit in 2022: 6.6 percent of GDP (compared to 5.4 percent at program approval).
    - 0.6 percent of GDP deviation from change in IDA financing terms (mechanical).
    - 1.1 percent of GDP to accommodate emergency spending.
    - Partly offset by around 0.5 percent of GDP in additional revenues from tax arrears collection and additional grants.
  - Additional deficit to be entirely financed in the regional market.
- Revenue yields from corrective measures (aggregated, Text Table 3):
  - Total estimated revenue yield: -45.10 billion CFAF, 0.49% of GDP (sum of General Directorate of Customs and General Directorate of Tax measures; includes one-off and permanent items).
  - Collection of outstanding amounts of tax to be recovered: One-off 21.75 billion CFAF, 0.23% of GDP.
  - Operationalization of the One-Stop Shop for Foreign Trade (GUCE): Permanent 2.05 billion CFAF, 0.02% of GDP.
  - Digitalization of tax and customs administrations: Permanent 0.75 billion CFAF, 0.01% of GDP.
- Energy prices and subsidies:
  - Authorities have not passed-through the increase in international energy prices to consumers.
  - Staff recommended partial pass-through and expansion of social programs with temporary, targeted, and transparent transfers.
  - Authorities argued against price increases noting Niger is a net exporter of refined petroleum products.

### Policy Discussions — Revenue Mobilization and PFM (B and C)
- VAT and tax administration reforms:
  - Deployment of VAT invoicing machines and certified invoicing expanded after pilot covering 500 taxpayers.
  - All tax units in Niamey connected to SISIC; deployment started in departments and communes.
  - Process to create a fiscal cadaster for a possible future property tax initiated.
  - Staff recommended making VAT credits fully and systematically operational.
- Customs reforms:
  - Molecular marking of petroleum products started; inspections delayed but expected fully operational by end-2022.
  - Objectives include fighting corruption, creating a one-stop shop backed by ASYCUDA, accelerating digitalization using SISIC data.
  - IMF technical assistance recommendations: full automation of taxpayer directory, customs declarations, and company balance sheet processes by end-March 2023 (new proposed SB); interconnect IT systems of DGI and DGD by end-September 2023 (new proposed SB).
- Public expenditure quality:
  - Commitment to scale up spending on education and social safety nets.
  - Targets include replacing 37,000 straw-hut classrooms and identifying lower-cost construction models.
  - Treasury Single Account (TSA) progress made; scope needs expansion to local governments and donor funds.
  - PFM reforms: AE/CP double commitment system piloted across five ministries; digitalize all budgetary expenditure emissions by end-September 2023 (new proposed SB); digitalize all authorizations of expenses (AD) by end-December 2023 (new proposed SB).
  - From 2023 budget, feasibility study required for investment projects totaling more than CFAF 5 billion (Continuous SB).

### Policy Discussions — Private Sector, Financial Inclusion, Governance (D and E)
- Private sector and inclusion:
  - Revamped institutional framework for public-private dialogue; development of a Charter for SMEs and the Small Business Act.
  - National Financial Inclusion Strategy: only 17.5 percent of the population uses financial services (compared to 60 percent at WAEMU level).
  - Financial Inclusion Development Fund (FDIF) and National Support Fund for SMEs (FONAP) to be operationalized in June 2022.
  - Pilot “warrantage paysan” launched; Food and Nutritional Security Investment Fund (FISAN) supports rural finance.
- Governance and anti-corruption:
  - Officials involved in embezzlement scandals subject to sanctions and prosecution.
  - Corrective measures include moves towards full digitalization and establishment of mechanisms to monitor implementation of Auditor General recommendations (MEFP ¶27).
  - Authorities plan to adopt a new national strategy to fight money laundering and financing of terrorism and implement the new asset declaration framework by end-2022 (MEFP ¶35–36).

### External Financing Needs, Capacity to Repay, and Safeguards
- External financing needs estimated at around CFAF 799 billion over 2022-24.
- Selected figures (Text Table 5):
  - Total Financing Requirement: 2021 1,528; 2022 1,408; 2023 1,496; 2024 1,380
  - Current account deficit (excl. grants): 2021 1,307; 2022 1,481; 2023 1,429; 2024 1,134
  - Government amortization: 2021 104; 2022 126; 2023 153; 2024 148
  - Gross changes in NFA (+: increase): 2021 118; 2022 -200; 2023 -879; 2024 98
  - Total Financing Source: 2021 1,251; 2022 1,127; 2023 1,252; 2024 1,106
  - Foreign direct investment: 2021 280; 2022 380; 2023 410; 2024 375
  - Project-related financing: 2021 628; 2022 656; 2023 675; 2024 704
  - Financing Need: 2021 277; 2022 281; 2023 243; 2024 274
  - Budget support: 2021 229; 2022 215; 2023 212; 2024 243
  - Residual Financing Gap: 0 0 0 0
- Capacity to repay and risks:
  - Niger’s credit outstanding to the Fund relative to quota among the highest of past PRGT programs, peaking at nearly 300 percent of quota in 2024 (Table 11).
  - Repayment obligations to the Fund peak at 1.2 percent of exports in 2023 and at 2.0 percent of fiscal revenues in 2027-2029.
  - Risks include worsening instability, pipeline delays, and weak policy implementation; mitigants include building fiscal space and strengthening institutions.
- Safeguards:
  - BCEAO implemented all recommendations from the 2018 safeguards assessment; assessment found broadly appropriate governance and robust control environment.
  - Update assessment of the BCEAO due in 2022.

### Staff Appraisal and ECF Disbursement Schedule
- Staff appraisal:
  - Program performance broadly satisfactory; recent shocks and humanitarian situation acknowledged.
  - Planned fiscal adjustment challenging but feasible given temporary nature of emergency spending and prospects for increased oil revenue and domestic revenue mobilization.
  - Policy priorities: domestic revenue mobilization, improving spending quality, PFM strengthening, governance progress.
- ECF disbursement schedule (SDR amounts and conditions):
  - SDR 39.48 — 30 percent — Executive Board Approval of the ECF Arrangement — December 8, 2021
  - SDR 39.48 — 30 percent — Observance of December 31, 2021 performance criteria, and completion of the first review under the arrangement — April 29, 2022
  - SDR 39.48 — 30 percent — Observance of June 30, 2022 performance criteria, and completion of the second review under the arrangement — October 31, 2022
  - SDR 19.74 — 15 percent — Observance of December 31, 2022 performance criteria, and completion of the third review under the arrangement — April 28, 2023
  - SDR 19.74 — 15 percent — Observance of June 30, 2023 performance criteria, and completion of the fourth review under the arrangement — October 31, 2023
  - SDR 19.74 — 15 percent — Observance of December 31, 2023 performance criteria, and completion of the fifth review under the arrangement — April 30, 2024
  - SDR 19.74 — 15 percent — Observance of June 30, 2024 performance criteria, and completion of the sixth review under the arrangement — October 31, 2024
  - Total SDR 197.4 — 150 percent

### Annex I — Sources of Fragility (Selected Diagnostics)
- Institutional and governance weaknesses:
  - Control of corruption inadequate; state capacity constrained by weight of informal economy and security situation.
  - Niger scores well below WAEMU and SSA averages on political stability.
- Climate vulnerability:
  - Agriculture mainly rain-fed and vulnerable to temperature increases and volatile rainfall.
  - 83 percent of population lives in rural areas; groundwater resources estimated at 17,000 billion m3.
- Security and conflict:
  - In 2021, Niger recorded 418 conflict events including terrorist attacks and inter-community conflicts.
  - Spillovers from Burkina Faso, Mali, Chad, and Nigeria aggravate insecurity.
- Human capital and social indicators:
  - 42.9 percent of Nigeriens live in poverty (less than $1.90 per day).
  - Average of 2 years of schooling; Niger has the highest fertility rate in the world: 6.9 children per woman.
  - 44 percent of under-5-year-olds estimated to be stunted.

### Letter of Intent and Key Commitments (selected)
- Growth projection for 2022: 6.9 percent.
- Food crisis indicators:
  - Agricultural production decrease in 2021: close to 40 percent.
  - More than 4.4 million people will urgently need food assistance by end of the lean season.
- Program implementation:
  - All performance criteria at end-December 2021 met.
  - End-March 2022 misses: cash revenues (missed by around 4.5 billion), ceiling on domestic financing (exceeded by 39.4 billion), basic budget balance including grants missed by 4.8 billion.
- Results under ECF end-December 2021:
  - Net domestic financing ceiling: 371.4 billion; outturn: 271.3 billion.
  - Cash revenues: 853.6 billion (floor: 846.4 billion).
  - Social protection expenditure executed: 261 billion (floor: 80 billion).
  - New ratified PPG external debt: 282.5 billion (ceiling: 346 billion).

### Monitoring, Reporting, and Structural Benchmarks (selected)
- Prior action met: regulation requesting beneficial ownership information for COVID-19 related public procurement; publication of winning company beneficial ownership on Public Procurement Portal.
- Structural benchmarks (examples and timetables):
  - Adopt policy brief to rationalize exemptions: End-December 2021 — Met.
  - Produce feasibility studies for 9 largest investment projects: End-December 2021 — Met.
  - Publish Auditor General audit on COVID-19 spending: End-December 2021 — Implemented with delay (published end-April 2022).
  - Adopt plan for DGI and DGD digital platforms integration: End-March 2022 — Met.
  - Publish annual report on tax arrears: End-March 2022 — Met.
  - Issue legal instrument on beneficial ownership for single-tender contracts: End-March 2022 — Met.
  - Adopt roadmap to review and simplify tax code: End-June 2022 — Planned.
  - Adopt oil revenue management strategy with IMF TA: End-September 2022 — Planned.
  - Publish annual tax expenditure report online: End-September 2022 — Planned.
  - Publish audit on extractive sector exemptions: End-December 2022 — Met in advance (published May 2022).
  - Full automation of priority taxpayer, customs, and company accounting processes: End-March 2023 — Planned.
  - Full interconnection of DGD and DGI IT systems: End-September 2023 — Planned.
  - Digitalize all budget expenditure emissions: End-September 2023 — Planned.
  - Digitalize all expenditure authorizations: End-December 2023 — Planned.

*IMF staff report (Niger) as presented in the supplied content.*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Context
- Since program approval, Niger has faced a more challenging international context, including the fall-out from the war in Ukraine, which is exacerbating pressures on food and fertilizer prices.
- Unfavorable rainfall and a deterioration in the security situation led to a deceleration of growth to 1.3 percent in 2021 and an acute food crisis.
- A temporary deviation of fiscal deficit targets from the program in 2022-23 is needed to respond to urgent expenditure pressures.
- The medium-term outlook is largely unchanged, favored by the start of oil exports through the new pipeline.
- The authorities estimate the number of refugees and IDP at 249,945 and 264,267, respectively, at end-2021.

### Recent developments
- COVID-19:
  - The COVID pandemic remains well-contained in Niger with a short-lived omicron increase.
  - As of May 22, 2022, around 6 percent of the population were fully vaccinated.
  - Authorities target to vaccinate 42 percent of the population by end-2022, and 58.4 percent by December 2023 (MEFP ¶32).
- Food security and climate:
  - Unfavorable rainfall, prolonged drought, and increased security incidents in 2021 produced a severe food crisis.
  - About 4.4 million people are expected to face food insecurity by the end of the lean season in August 2022.
  - The authorities’ support plan financing needs amount to 3.1 percent of GDP.
- Macroeconomic performance:
  - Economic growth slowed to 1.3 percent in 2021 compared to 5.4 percent under the program.
  - Year-on-year inflation rose to 4.9 percent at end-2021 and to 5.4 percent at end-April 2022.
  - The current account deficit deteriorated to 13.8 percent of GDP in 2021, mainly because of the decline in uranium export receipts, the rise in food imports, and increased imports following the restart of large investment projects.
- Fiscal outcomes and public debt:
  - The overall deficit reached 5.9 percent of GDP in 2021, below the budgeted 6.6 percent, mainly due to higher-than-expected grants.
  - Total revenue was 4 percent lower than expected at program approval.
  - Public and Publicly Guaranteed (PPG) debt rose to 51.2 percent of GDP in 2021.
  - Text Table 1 (Sources of Fiscal Expansion, 2021) highlights a domestic balance change of -0.7 percent of GDP between 2020–21 and a fiscal balance (WAEMU definition) change of -0.6 percent of GDP.
- Oil pipeline project:
  - Completion is now planned for mid-2023 due to delays in land acquisition, population displacement in Benin, security issues, and COVID-19 disruptions.
- Monetary and financial sector:
  - The central bank maintained an accommodative monetary policy stance and credit to the economy grew by 15.4 percent in 2021.
  - Banking sector capital adequacy ratio reached 14.3 percent in June 2021 (above the WAEMU regional average of 12 percent).
  - Non-performing loans (NPLs) increased from 15.8 percent in June 2021 to 21.2 percent in December 2021.
  - Microfinance sector NPLs rose to 40.3 percent in 2021 from 13 percent in the pre-pandemic period; restructuring and recapitalization plans have been initiated (MEFP ¶34).

### Program performance
- Overall assessment:
  - Program implementation was broadly satisfactory against end-December 2021 and end-March 2022 targets.
- Quantitative targets:
  - All quantitative performance criteria (QPCs) at end-December 2021 were met.
  - All indicative targets (ITs) at end-December 2021 were observed; three ITs were missed at end-March 2022:
    - The cash revenue floor missed by 0.05 percent of GDP due to tariff cuts for some imported food staples, lingering trade restrictions at the Nigeria border, weaker compliance with the certified VAT reform, and the security situation.
    - The ceiling on net domestic financing was missed due to repayment of the float related to last year’s expenditures.
    - The basic budget balance ceiling including budget grants was missed since no budget grants were received by end-March.
- Structural benchmarks (SBs):
  - All SBs at end-December 2021 and at end-March 2022 were implemented, albeit two with some delays.
  - All continuous SBs at end-March 2022 were met.
  - Notable SB implementations:
    - A policy brief to rationalize current exemptions and tighten procedures for granting new exemptions was adopted in December 2021.
    - Feasibility studies of the nine largest investment projects were produced prior to inclusion in the 2022 investment plan and budget.
    - The audit report on 2020 COVID-19-related public spending by the Auditor General (Cour des Comptes) was published with a delay in April 2022 (Annex II).
    - An annual report on tax arrears (stocks and flows) with a timetable and quantitative targets was produced.
    - A legal instrument requiring collection of beneficial ownership information for companies awarded non-competitive contracts (except defense and security-related contracts) was issued and published on the Public Procurement Portal.
    - A plan for integration of DGI and DGD digital platforms was adopted with delay due to a minor lag in IMF technical assistance delivery.
    - The audit on extractive sector exemptions (2017–2020), SB at end-December 2022, was met in advance in May (Annex III).

### Requests and staff views
- Authorities’ requests:
  - (i) Modification of performance criteria for the ceiling on net domestic financing and of two indicative targets on the basic budget balance (including budget grants and excluding grants) from end-June 2022 to reflect the need for additional domestic financing to finance a wider fiscal deficit in 2022.
  - (ii) Modification of performance criteria for the ceiling on net domestic financing with an adjustor for payments of domestic obligations (float).
  - (iii) Modification of the indicative target floor on the basic budget balance including budget support grants with an adjustor for the shortfall in external budget grants.
- IMF staff:
  - Staff supports the conclusion of the first review, the disbursement of SDR 39.48 million, and the authorities’ request for modification of performance criteria.

### Outlook and risks
- Growth and inflation:
  - Economic activity is projected to rebound in 2022 to 6.9 percent due to recovery in agricultural production and acceleration of large investment projects related to the oil pipeline.
  - Inflation would temporarily remain elevated before gradually easing to 2 percent in the medium term.
- Fiscal and external balances:
  - The fiscal deficit is expected to widen to 6.6 percent of GDP in 2022 and to 4.7 percent in 2023, before reaching the 3 percent target in 2024.
  - The current account deficit is projected to widen by around 1.6 percentage points to 15.4 percent of GDP in 2022 mainly due to increased imports of food products and capital goods related to the pipeline project.
- Medium-term prospects:
  - Growth would accelerate in the medium term, reaching double digits, as oil production ramps up.
  - Higher oil prices and production, and steady external financing would improve the external position; the current account deficit is projected to narrow to below 10 percent of GDP from 2024 onwards.
- Debt dynamics:
  - Public debt should remain on a downward trajectory with continued recourse to concessional lending and grants.
  - The Debt Sustainability Analysis (DSA) indicates Niger’s moderate risk of overall and external debt distress.
  - PPG debt is projected to be around 47 percent of GDP by 2027; the higher medium-term debt path compared to program approval is mainly linked to depreciation of the CFAF relative to the dollar.
- Risks from the war in Ukraine:
  - Projected to have a limited direct impact on Niger’s economy but will add to food and fertilizer price pressures via regional market linkages.
  - Niger is a net exporter of petroleum products and is not adversely affected by higher oil prices except through higher transportation costs.
  - Projections point to a small improvement in the terms of trade for Niger relative to forecasts before the war in Ukraine, but food and fertilizer price pressures are weighing on social tensions and exacerbating the food crisis.

*IMF staff report: EXECUTIVE SUMMARY, June 14, 2022.*

### 15.      Risks to the outlook are titled to the downside. While the health risk related to COVID-19

### 15.      Risks to the outlook are titled to the downside. While the health risk related to COVID-19

### Downside Risks to the Outlook
- Health risk related to COVID-19 is waning (despite persistently low vaccination rates).
- Key downside risks:
  - Worsening of the security situation in the Sahel.
  - Higher political instability in neighboring countries.
  - Rising food prices.
  - Unfavorable climate conditions.
  - Further delays in the construction of the oil pipeline (see Annex IV and Text Figure 6).
  - Accelerated tightening of global financial conditions with spillovers in the WAEMU regional market.
  - Escalation of the crisis caused by the war in Ukraine could imply notably lower aid flows and further disruptions to international supply chains.
  - Liquidity risks that could adversely affect debt sustainability, given the low average maturity of domestic debt.
- Upside risk:
  - Higher than expected oil and uranium prices could improve economic prospects.

### POLICY DISCUSSIONS — Overview
- Discussions focused on the key objectives of the program and the policy agenda for 2022 and 2023.

### A. Anchoring Fiscal Policy
- Authorities will increase spending in 2022 to address urgent needs and mitigate the impact of the food crisis (Text Table 2).
- Emergency spending accommodated: CFAF 99.8 billion (1.1 percent of GDP) for:
  - Acquisition of cereals for food distribution to vulnerable populations: 21.5 billion CFAF, 0.24% of GDP.
  - Support of livestock feed: 23.2 billion CFAF, 0.26% of GDP.
  - Acquisition of fertilizers and pesticides: 20.1 billion CFAF, 0.22% of GDP.
  - Plan to support irrigated agriculture: 15.0 billion CFAF, 0.17% of GDP.
  - Support of dilapidated school infrastructure: 20.0 billion CFAF, 0.22% of GDP.
  - Total: 99.8 billion CFAF, 1.10% of GDP.
- IDA policy revision effective July 1, 2022:
  - Allocation for IDA–only countries assessed at moderate risk of debt distress (including Niger) will be entirely in the form of credits.
  - Conversion of grants into credits will mechanically increase the deficit by 0.6 percent of GDP in 2022; impact on debt is limited due to high concessionality.
- Corrective revenue measures to limit 2022 budget overrun:
  - Estimated around 0.3 percent of GDP (CFAF 23.4 billion) by end-2022, mostly permanent (measures to reduce tax evasion, reinforce controls, accelerate digitalization, improve revenue administration).
  - One-off yield from collection of recoverable tax arrears expected to be over 0.2 percent of GDP.
  - Plan to increase re-export tax rates for certain products to equalize with consumption tax rates to reduce arbitrage and fraud.
- Fiscal outcomes and financing:
  - Projected fiscal deficit in 2022: 6.6 percent of GDP (compared to 5.4 percent of GDP at program approval).
    - 0.6 percent of GDP of the deviation from change in IDA financing terms (mechanical).
    - 1.1 percent of GDP to accommodate emergency spending.
    - Partly offset by around 0.5 percent of GDP in additional revenues from tax arrears collection and additional grants from other development partners.
  - Additional deficit will be entirely financed in the regional market, which remains liquid with historically low interest rates.
- Revenue yields from corrective measures in 2022 (Text Table 3, aggregated):
  - Total estimated revenue yield: -45.10 billion CFAF, 0.49% of GDP (sum of General Directorate of Customs and General Directorate of Tax measures; includes one-off and permanent items).
  - Notable items:
    - Collection of outstanding amounts of tax to be recovered: One-off 21.75 billion CFAF, 0.23% of GDP.
    - Operationalization of the One-Stop Shop for Foreign Trade (GUCE): Permanent 2.05 billion CFAF, 0.02% of GDP.
    - Digitalization of the tax and customs administrations: Permanent 0.75 billion CFAF, 0.01% of GDP.
- Energy prices and subsidies:
  - Authorities have not passed-through the increase in international energy prices to consumers.
  - Staff recommended partial pass-through and expansion of social programs with temporary, targeted, and transparent transfers.
  - Authorities argued against price increases, noting Niger is a net exporter of refined petroleum products and current retail prices are sufficient to cover production costs; export price of petroleum products has been increased, but to a lower extent than the increase in international prices.
- SDR allocation:
  - Half of the SDR allocation was used for development purposes and priority spending in 2021; the rest will be used in 2022.
  - Total allocation amounted to 1.2 percent of GDP.
  - On-lent by the regional central bank under highly concessional terms: 20-year loan carrying a fixed interest of 0.05 percent per year.
- Fiscal path and targets:
  - Authorities remain committed to complying with the WAEMU deficit norm by 2024.
  - 2023 projected deficit: 4.7 percent of GDP (compared to 4.2 percent of GDP at program approval).
  - Medium-term: oil exports expected to boost revenue by 1.3 percent of GDP.
  - Fiscal deficit expected to narrow to 3 percent of GDP in 2024 with domestic revenue mobilization reforms and additional project grants from donors other than the World Bank.
- Prudential external debt policy:
  - Prioritize external financing in the form of concessional loans and grants.
  - Staff advised efforts to increase average tenor of domestic debt (currently 5.2 years) to reduce refinancing risk.
- Debt stock:
  - Public and publicly guaranteed (PPG) debt stood at 51.2 percent of GDP at end-2021.
  - PPG external debt makes up 65 percent of total debt stock; multilateral creditors represent around four-fifths of external debt.
  - Baseline: PPG external debt-to-GDP ratio expected to peak at close to 34 percent in 2022 and then follow a downward trajectory over medium and long term as growth and fiscal adjustment proceed.
- Oil revenue management:
  - Development of an oil resource management framework underway with technical assistance from the IMF to align with international best practices and ensure revenues are under control of the Ministry of Finance and channeled into the budget.
- Contingent spending adjustment:
  - Authorities plan to reduce and reprioritize spending beyond salaries and debt service to compensate revenue shortfalls and respect the new deficit target.
  - A treasury committee will regularly follow revenue collection and authorize spending accordingly (MEFP ¶19).

### B. Improving Domestic Revenue Mobilization to Address Development Needs
- Reforms advancing but revenue yields not yet fully realized; revenue mobilization is a key priority.
- VAT reforms:
  - Deployment of VAT invoicing machines and certified invoicing expanded after pilot covering 500 taxpayers.
  - Increased compliance among large and medium enterprises; resistance among small enterprises and retailers due to cost and misunderstanding.
  - Staff recommended making VAT credits fully and systematically operational to ensure tax neutrality, sustainability, and increased corporate income tax revenues via systematic turnover information.
- Digitalization and taxpayer monitoring:
  - All tax units in Niamey connected to Integrated Tax and Taxpayer Monitoring System (SISIC); deployment started in departments and communes.
  - Process to create a fiscal cadaster for a possible future property tax initiated.
- Customs administration reforms:
  - Objectives: fight corruption (control WAEMU certificates of origin; modify performance evaluation criteria for senior customs officials), create a one-stop shop backed by ASYCUDA, accelerate digitalization using SISIC data, reinforce controls to regularize declared values.
  - IMF technical assistance recommendations: fully automate taxpayer directory, customs declarations, and company balance sheet processes by end-March 2023 (new proposed SB); interconnect IT systems of DGI and DGD by end-September 2023 (new proposed SB).
- Molecular marking of petroleum products:
  - Marking of imports and domestic market products has started to limit smuggling.
  - Inspections and control operations delayed (planned December 2021) due to lack of trained officials and vehicles; expected to be fully operational by end-2022.
- Additional revenue measures:
  - Publish an online annual report on tax expenditures starting end-September 2022 (new proposed SB).
  - Adopt a roadmap for review and simplification of the current tax code (end-June 2022 SB) and prepare revision of the tax code (MEFP ¶23).

### C. Enhancing the Quality of Public Spending
- Commitment to scale up public spending on education and social safety nets to foster human capital and protect vulnerable populations.
- Education priorities:
  - Improve access for girls, disabled children, and children from security-affected areas via: (i) building new schools and dormitories, (ii) exploring distance learning (radio and TV), (iii) providing incentives (support to families and scholarships).
  - Improve quality via: (i) teacher training programs, (ii) revising hiring process and career prospects for teachers, (iii) adapting curriculum to labor market demand, (iv) revamping teaching materials including textbooks.
  - Address dilapidated school infrastructure and identify lower-cost construction models.
- Social safety nets:
  - Develop indicators to monitor execution of social spending in health and nutrition, protection of children in fragile areas, building resilience to shocks in vulnerable and marginalized groups particularly women and young people (MEFP ¶25).
- Treasury Single Account (TSA):
  - Progress made; several public bank accounts closed.
  - TSA scope needs expansion to local governments and donor funds.
  - Staff discussed need for a new census of accounts of public entities.
- Public Financial Management (PFM) reforms:
  - Double commitment system (AE/CP) piloted across five ministries with large investment projects; intended expansion to all ministries.
  - Decentralization of payment orders entered pilot stage.
  - Digitalize all budgetary expenditure emissions by end-September 2023 (new proposed SB).
  - Digitalize all authorizations of expenses (AD) by end-December 2023 (new proposed SB).
  - From 2023 budget, feasibility study required for all investment projects totaling more than CFAF 5 billion (Continuous SB).

### D. Developing the Private Sector and Financial Inclusion for Sustained and Inclusive Growth
- Structural reforms aim to remove constraints to private sector development and diversification.
- Institutional upgrades:
  - Revamped and upgraded institutional framework for public-private dialogue to align with regional best standards and be inclusive.
  - Development of a Charter for SMEs to create an enabling environment: simplify business creation, strengthen access to financing, improve access to public contracts, and provide tax relief measures (MEFP ¶33).
- National Financial Inclusion Strategy (SNFI) and initiatives:
  - Only 17.5 percent of the population uses financial services compared to 60 percent at the WAEMU level.
  - Financial Inclusion Development Fund (FDIF) to strengthen capacities of financial service providers to meet rural financing demand.
  - National Support Fund for Small and Medium Enterprises and Medium Industries (FONAP) to be operationalized in June 2022 to boost SME access to financial services via credit guarantees and capacity building.
  - Pilot “warrantage paysan” project launched to address low provision of credit to agriculture.
  - Food and Nutritional Security Investment Fund (FISAN), created in 2017, aims to promote rural finance and financing of food and nutrition security.

### E. Strengthening Governance to Reduce Corruption and Address Sources of Fragility
- (Content unit ends here; governance measures outlined in subsequent text beyond provided excerpt.)

*Source: IMF staff report (Niger) as presented in the supplied content.*

### 38.      The government reiterated its resolute commitment to promoting good governance

### 38. The government reiterated its resolute commitment to promoting good governance and fighting corruption

### Governance and anti-corruption measures
- Officials involved in recent embezzlement scandals are subject to administrative sanctions and legal prosecution.
- Corrective measures taken or under consideration to reduce expenditure-chain vulnerability to fraud and corruption include moves towards full digitalization.
- The Auditor General’s report on 2020 COVID-19 related spending highlights weaknesses in public procurement systems (Annex II).
- The government committed to implementing, by the end of this year, a main recommendation of the Auditor General’s report: establishment of a mechanism for monitoring implementation of recommendations from the public procurement audit reports commissioned annually by the Public Procurement Regulatory Authority-ARMP (MEFP ¶27).
- Authorities plan to implement additional measures this year to strengthen governance and anti-corruption frameworks:
  - Adopt a new national strategy to fight money laundering and the financing of terrorism, together with an action plan aimed at implementing the recommendations from the 2021 GIABA Mutual Evaluation Report (MEFP ¶36) before the end of 2022.
  - Ensure full implementation of the new framework for asset declaration by high-ranking officials by adopting a practical guide and ensure all members of the government are up to date with their declarations (MEFP ¶35).
  - Consult with the Auditor General on modalities for implementing the new asset declaration framework.
  - Resolve outstanding issues including: (i) adoption of a guidance note on how to complete the new declaration template; and (ii) determination with the High Authority on Data Privacy of information that can be published.

### Program modifications and monitoring
- To reflect changes in the macroeconomic framework (impact of changes in IDA financing terms and emergency spending for the food crisis), the authorities requested modification of program conditionality:
  - Modification of performance criteria for the ceiling on net domestic financing and of the two indicative targets on the basic budget balance (including budget grants and excluding grants) from end-June 2022 to reflect the need for additional domestic financing to finance a wider deficit in 2022 (MEFP Table 1).
  - Modification of performance criteria for the ceiling on net domestic financing with an adjustor for payments of domestic obligations (float, MEFP Table 1).
  - Modification of the indicative target floor on the basic budget balance including budget support grants with an adjustor for the shortfall in external budget grants (MEFP Table 1).
  - Establishment of new performance criteria and indicative targets for all relevant indicators for December 2022 until June 2023 (MEFP Table 1).

### External financing needs and financing sources (selected figures)
- External financing needs are estimated at around CFAF 799 billion over 2022-24.
- Text Table 5. Niger: External Financing Needs and Sources (CFAF Billions)
  - Total Financing Requirement: 2021 1,528; 2022 1,408; 2023 1,496; 2024 1,380
  - Current account deficit (excl. grants): 2021 1,307; 2022 1,481; 2023 1,429; 2024 1,134
  - Government amortization: 2021 104; 2022 126; 2023 153; 2024 148
  - Gross changes in NFA (+: increase): 2021 118; 2022 -200; 2023 -879; 2024 98
  - Total Financing Source: 2021 1,251; 2022 1,127; 2023 1,252; 2024 1,106
  - Foreign direct investment: 2021 280; 2022 380; 2023 410; 2024 375
  - Project-related financing: 2021 628; 2022 656; 2023 675; 2024 704
  - Other flows: 2021 343; 2022 91; 2023 167; 2024 27
  - Financing Need: 2021 277; 2022 281; 2023 243; 2024 274
  - Budget support: 2021 229; 2022 215; 2023 212; 2024 243
  - AfDB: 1 2 .........
  - EU: 43 34 34 35
  - France: 20 99 ...
  - Luxembourg: 1 .........
  - Others 1/: 55 173 169 209
  - IMF financing32613131
  - CCRT16400
  - Residual Financing Gap: 0 0 0 0
- Note: 1/ The estimated amounts include the World Bank's budget support for 2022-2024, which will be finalized once officially confirmed after the internal approval procedure.

### Capacity to repay and risks
- Niger’s credit outstanding to the Fund relative to quota is among the highest of past PRGT programs, peaking at nearly 300 percent of quota in 2024 (Table 11).
- Repayment obligations to the Fund peak at 1.2 percent of exports in 2023 and at 2.0 percent of fiscal revenues in 2027-2029.
- Risks to the program include worsening instability in neighboring countries and/or in Niger, further delays in construction of the oil pipeline, and weak policy implementation, which could result in continued debt accumulation.
- Risks are mitigated through policy actions: building fiscal space, strengthening key institutions, and boosting the economy’s resilience.
- Niger has a strong record of timely repayment of Fund obligations.

### Safeguards assessment
- The BCEAO implemented all recommendations provided in the 2018 safeguards assessment.
- The assessment found that the BCEAO had broadly appropriate governance arrangements and a robust control environment.
- An update assessment of the BCEAO is due in 2022, in line with the safeguards policy's four-year cycle for regional central banks.

### Staff appraisal — performance, outlook, and policy priorities
- Program performance has been broadly satisfactory:
  - All quantitative performance criteria at end-December 2021 were met.
  - All indicative targets at end-December 2021 and all but three ITs at end-March 2022 were observed (exceptions: the floor on cash revenue, the basic budget balance including budget grants ceiling, and the net domestic financing ceiling).
  - All continuous structural benchmarks at end-March 2022 were met.
  - All three SBs at end-December 2021 and all three SBs at end-March were implemented, albeit two with some delays.
- Recent shocks and humanitarian situation:
  - Low rainfall and deterioration of the security situation led to a drop in agricultural production and an acute food crisis.
  - About 4.4 million people are expected to face food insecurity during this year’s lean season.
  - The war in Ukraine is adding pressures to food and fertilizer prices.
- Macroeconomic outlook:
  - Economic growth is projected to accelerate to 6.9 percent in 2022 driven by recovery in agricultural production and acceleration of large investment projects related to the oil pipeline to Benin.
- Fiscal stance and targets:
  - The 2022 fiscal deficit is projected to widen to 6.6 percent of GDP to accommodate emergency spending needs related to the food crisis.
  - A modest relaxation of the deficit by 0.5 percent of GDP compared to program approval is expected in 2023 to smooth adjustment and accommodate a lower expected level of budget grants going forward.
  - Authorities remain committed to achieve the 3 percent of GDP deficit target by 2024.
  - Staff views the planned fiscal adjustment as challenging but feasible given the temporary nature of emergency spending in 2022 and prospects for increased oil revenue and domestic revenue mobilization efforts.
- Policy priorities:
  - Domestic revenue mobilization and improving spending quality are key priorities.
  - Authorities plan to accelerate integration of DGI and DGD revenue administration systems.
  - Plans to simplify the current tax system following IMF technical assistance recommendations.
  - Reforms to enhance public spending quality and delivery of public goods are ongoing, with commitments to scale up spending on education and social safety nets.
  - Strengthening public financial management systems is essential.
  - Continue progress on governance agenda: publish audit reports (COVID-19 expenditure and tax exemptions to the extractive sector), strengthen AML/CFT framework, implement the new asset declaration template, reinforce expenditure-chain controls, and systematically prosecute public officials suspected of corruption.

*Source: 1nerea2022001 - 38.      The government reiterated its resolute commitment to promoting good governance*

### 50.      Based on program performance and commitments under the program, staff supports

### Based on program performance and commitments under the program, staff supports the completion of the first review under the ECF arrangement and the request for modification of performance criteria.

### Macroeconomic outlook and recent developments
- Growth: "Growth slowed further in 2021 but is expected to bounce back in 2022 and pick up thereafter as oil exports increase."
- Inflation: "Inflation surged in 2021, reflecting rising food prices."
- Financial deepening: "Private sector credit growth is still somewhat modest, indicating limited financial deepening."
- Money growth drivers: "Net claims on the government have recently been the main driver of money growth."

### GDP composition and volatility
- Sectoral structure: "As of 2021, the share of the extractive industries in GDP remained low and has further declined in response to the relatively lower international prices. Agriculture and livestock continue to dominate economic activity."
- Output volatility: "GDP growth is highly volatile and is driven by the impact of climate shocks on agriculture."
- Per capita growth: "Per capita GDP growth is also fickle and relatively modest, due to high population growth."

### Fiscal developments and tax performance
- Revenue and expenditure trends: "Revenue had been declining, even before the pandemic shock hit the Nigerien economy... while expenditure has increased, reflecting in part large development needs."
- Pandemic and shocks: "The deficit widened significantly following COVID-19 and climate shocks due to automatic stabilizers and the policy response... moreover, security spending pressures have increased reflecting historical high levels of terrorist activity."
- Tax collection: "The pandemic has worsened revenue collection... and, so far, receipts for income taxes and taxes on goods and services have not recovered to pre-pandemic levels."
- Border and pipeline effects: "The closure of the border with Nigeria in 2020 and the delay in the oil pipeline added to these trends."

### Key fiscal and macro indicators (selected exact figures from tables)
- Overall balance (commitment basis, incl. grants): -3.6 -5.3 -4.4 -6.6 -5.9 -3.3 -5.4 -6.6 -4.7 -3.0 -3.0 -3.0 -3.0
- Total revenue (percent of GDP, selected): 11.2 10.8 11.9 10.9 10.8 12.2 11.5 11.8 13.0 13.8 14.9 15.1 15.1
- Total expenditure and net lending (percent of GDP, selected): 21.6 22.9 22.8 24.0 24.2 21.7 22.7 24.3 23.2 22.0 22.8 23.0 23.0
- Capital expenditure (percent of GDP, selected): 12.0 12.1 11.7 12.6 13.0 10.5 11.7 13.2 11.6 11.1 11.5 11.6 11.6
- External current account balance (incl. grants, percent of GDP): -12.2 -13.4 -16.4 -15.3 -13.8 -16.6 -16.3 -15.4 -13.2 -8.7 -6.2 -7.1 -7.0
- Total public and publicly-guaranteed debt (percent of GDP, selected): 39.8 45.0 42.1 48.8 51.2 43.7 49.8 54.1 53.8 49.8 48.1 47.5 47.2

### Financial operations of the central government (selected cash and financing figures)
- Total revenue (billions of CFA francs, selected years): 848 852 1,017 934 897 1,240 1,070 1,075 1,287 1,574 1,871 2,058 2,224
- Total expenditure and net lending (billions of CFA francs, selected years): 1,632 1,810 1,953 2,052 2,007 2,120 2,113 2,206 2,308 2,511 2,872 3,131 3,378
- Overall balance (billions of CFA francs): -269 -422 -377 -565 -489 -343 -502 -599 -467 -342 -377 -408 -440
- Financing (billions of CFA francs): 786 935 936 1,118 1,057 879 1,043 1,132 1,022 937 1,001 1,073 1,154

### Monetary conditions (selected)
- Broad money (annual percentage change, selected): 15.0 17.0 11.9 11.6 8.8 14.1 14.9 19.3 12.5 12.3 11.5 10.4 11.2
- Credit to the private sector (percent of GDP, selected): 11.2 11.7 10.9 11.5 13.0 11.6 11.5 13.4 14.0 14.1 14.7 15.6 16.5
- Net foreign assets (BCEAO, billions of CFA francs, selected): 467 402 486 284 401 420 920 1,115 211 165 479 4? 794

(Note: BCEAO net foreign assets time-series entries appear in the monetary table; values are reported as in the source.)

### External sector and balance of payments (selected)
- Current account balance (billions of CFA francs): -923 -1,062 -1,404 -1,311 -1,148 -1,063 -1,519 -1,399 -1,309 -992 -775 -971 -1,030
- Exports, f.o.b (billions of CFA francs, selected): 658 639 685 664 672 1,180 752 836 1,116 2,121 2,663 2,766 3,049
- Imports, f.o.b (billions of CFA francs, selected): 1,363 1,422 1,697 1,620 1,550 1,762 1,880 1,810 1,962 2,401 2,552 2,694 2,906
- Capital and financial account (billions of CFA francs): 1,243 956 1,389 1,177 1,289 993 1,239 1,195 1,223 1,090 1,074 1,114 1,170
- Overall balance (billions of CFA francs, selected): 320 -105 -15 -134 102 -70 -280 -205 -879 829 914 314 140

### Public debt and creditor composition (selected)
- Total debt stock (end-period, US$ million): 7,317 (2021)
- External debt (US$ million, 2021): 4,773 (65.2 percent of total)
- Domestic debt (US$ million, 2021): 2,544 (34.8 percent of total)
- Multilateral creditors (US$ million, 2021): 3,854
- Government bonds and T-Bills (domestic, 2021): T-Bills 483; Bonds 1,801

### Projected external borrowing mix (2022)
- By type of interest rate (USD million): Fixed Interest Rate 560.0; Variable Interest Rate 623.5; Unconventional Loans 0.0
- By currency (USD million): USD denominated loans 695.7; Loans denominated in other currency 487.7

### IMF engagement, ECF disbursement schedule, and capacity-to-repay indicators
- Staff recommendation: "staff supports the completion of the first review under the ECF arrangement and the request for modification of performance criteria."
- ECF disbursement schedule (SDR amounts and conditions):
  - SDR 39.48 — 30 percent — Executive Board Approval of the ECF Arrangement — December 8, 2021
  - SDR 39.48 — 30 percent — Observance of December 31, 2021 performance criteria, and completion of the first review under the arrangement — April 29, 2022
  - SDR 39.48 — 30 percent — Observance of June 30, 2022 performance criteria, and completion of the second review under the arrangement — October 31, 2022
  - SDR 19.74 — 15 percent — Observance of December 31, 2022 performance criteria, and completion of the third review under the arrangement — April 28, 2023
  - SDR 19.74 — 15 percent — Observance of June 30, 2023 performance criteria, and completion of the fourth review under the arrangement — October 31, 2023
  - SDR 19.74 — 15 percent — Observance of December 31, 2023 performance criteria, and completion of the fifth review under the arrangement — April 30, 2024
  - SDR 19.74 — 15 percent — Observance of June 30, 2024 performance criteria, and completion of the sixth review under the arrangement — October 31, 2024
  - Total SDR 197.4 — 150 percent
- Indicators of capacity to repay the Fund (selected):
  - Fund obligations based on existing and prospective credit (SDR millions, selected): 7.8 16.1 20.3 16.1 25.2 26.1 38.1 42.9 50.9 55.1 62.7 52.1 39.5
  - Outstanding IMF credit based on existing and prospective drawings (SDR millions, selected): 187.0 282.8 301.9 364.8 379.1 392.5 354.4 311.5 260.7 205.6 142.9 90.8 51.3
  - Percent of quota (outstanding IMF credit, selected): 142.1 214.9 229.4 277.2 288.1 298.3 269.3 236.7 198.1 156.2 108.6 69.0 39.0

*Sources: Nigerien authorities; and IMF staff estimates and projections.*

### Annex I. Sources of Fragility in Niger

### Annex I. Sources of Fragility in Niger

### Overview
- Countries in fragile situations (CFS) tend to exhibit: (i) significant institutional and policy implementation weaknesses; (ii) a fractious political context; (iii) severe domestic resource mobilization constraints; and (iv) vulnerability to shocks.
- The IMF has defined CFS as countries having either weak institutional capacity as measured by the World Bank’s Country Policy and Institutional Assessment (CPIA) score—with an average of 3.2 or lower—and/or having recently experienced conflict.
- While Niger’s average CPIA score has been slightly above 3.2 since 2005, the country continues to face challenges in economic management, structural policies, political stability, social inclusion, and equity.

### Governance and institutional weaknesses
- Control of corruption remains inadequate, with lower indicators relative to other WAEMU countries.
- Corruption contributes to increased transaction costs and limits formalization of the economy.
- State capacity to mobilize domestic resources and to deliver basic social services is constrained by:
  - the weight of the informal economy, and
  - the security situation.
- Weakened social contract consequences:
  - decreases the legitimacy of official institutions,
  - increases the risk of social unrest, and
  - jeopardizes internal political stability.
- Niger scores well below the average for WAEMU and SSA countries regarding the political stability dimension of governance.

### Climate vulnerability and natural disasters
- Agricultural sector is mainly rain-fed; productivity is vulnerable to rising temperatures and volatile rainfall during the growing season.
- Niger has experienced natural disasters more frequently than peer countries in the Sahel region.
- Climate change contributes to increased poverty and inequality and widens urban–rural disparities.
- 83 percent of Niger's population lives in rural areas and livelihoods depend on the agricultural sector, rendering them more vulnerable to climate change.
- Disasters such as floods destroy property, especially that of poorer households in hazard-prone areas.
- Household coping capacities remain traditional; the government lacks a comprehensive risk management strategy to prevent and respond to disasters in a timely manner.

### Security, conflict, and political instability
- In 2021, Niger recorded a total of 418 conflict events, including terrorist attacks, inter-communities’ conflicts, and violence against civilians.
- Insecurity intensity is aggravated by spillovers from conflicts in neighboring countries (Burkina Faso, Mali, Chad, and Nigeria).
- Conflict-led economic and social costs include:
  - worsening economic performance,
  - limiting domestic revenue mobilization,
  - affecting the quality of spending, and
  - crowding-out other priority expenditures due to increased security spending.
- Government intervention in at-risk geographic areas is limited, contributing to an "underdevelopment trap."
- Niger has experienced seven coup attempts in the past, including as recently as 2021 after the presidential transition; 57 percent of them were successful.

### Human capital and social indicators
- Niger is consistently ranked around the bottom of the UNDP’s Human Development Index.
- Real per capita GDP remains below its 1980 level.
- 42.9 percent of Nigeriens live in poverty, earning less than $1.90 per day.
- Average of 2 years of schooling for the population as a whole; outcomes are worse for females.
- Government education expenditure per student is very low compared to other countries in SSA.
- Niger has the highest fertility rate in the world: 6.9 children per woman.
- 44 percent of under-5-year-olds in the country are estimated to be stunted.

### Authorities’ initiatives and planned responses
- Authorities adopted a new development and poverty reduction strategy for 2022-2026 aiming to:
  - (i) strengthen good governance and security,
  - (ii) foster sustained and inclusive human capital development, and
  - (iii) stimulate a private sector-led structural transformation of the economy.
- To strengthen agricultural resilience to climate change, authorities intend to exploit the country's groundwater resources, estimated at 17,000 billion m3 of water.

*Source: Annex I. Sources of Fragility in Niger — IMF staff report content.*

### Appendix I. Letter of Intent

### Appendix I. Letter of Intent

### Economic outlook and near-term challenges
- Growth projection for 2022: 6.9 percent, driven by resumption of agricultural production and accelerated implementation of major investment projects.
- 2021 growth revised from initially projected 5.4 percent to an estimated 1.3 percent due to climate shocks and insecurity.
- Inflation: 5.3 percent at end-March 2022, driven primarily by food products.
- Food crisis indicators:
  - Agricultural production decrease in 2021: close to 40 percent.
  - More than 4.4 million people will urgently need food assistance by the end of the lean season.
- Government response to food insecurity:
  - Adopted a support plan at a total cost of CFAF 279 billion.
  - Undertaken tax reduction measures on certain basic products.

### Program implementation, performance criteria, and recent misses
- ECF program status:
  - All performance criteria at end-December 2021 met.
  - Most indicative targets at end-December 2021 and end-March 2022 met except:
    - Cash revenues (end-March 2022).
    - Ceiling on domestic financing (net domestic financing).
    - Floor on the basic budget balance including grants.
- Reasons for misses:
  - Revenue floor at end-March 2022 modestly missed due to:
    - Intensified insecurity in tax revenue-generating areas.
    - Tax relief measures included in the food insecurity policy.
  - Ceiling on net domestic financing missed due to repayment of the float related to last year’s expenditures.
  - Basic budget balance ceiling including budget grants missed since no budget grants were received by end-March.
- Government priorities and structural benchmark implementation:
  - Domestic revenue mobilization is a priority.
  - Implemented all structural benchmarks at end-December 2021 and end-March 2022.
  - Structural reforms include digitalizing tax revenue collection, decentralizing and making payment processes paperless, improving selection of public investment projects, and simplifying the general tax code.

### Requests to the IMF under the program
- Program evaluation modifications requested:
  - Modify performance criterion for the ceiling on net domestic financing and two indicative targets on the basic budget balance (including and excluding grants) from end-June 2022 to reflect need for additional domestic financing for a wider fiscal deficit in 2022.
  - Modify performance criterion for the ceiling on net domestic financing with an adjustor for payments of domestic obligations (float).
  - Modify indicative target floor on the basic budget balance including budget support grants with an adjustor for the shortfall in external budget grants.
- Disbursement request:
  - Requesting disbursement of the second tranche equivalent to SDR 39.48 million (30 percent of our quota) under the ECF arrangement to cover protracted balance of payments needs.

### Policy priorities and reform agenda
- Core objectives of the government program:
  - Consolidation of macroeconomic stability.
  - Mobilization of domestic resources.
  - Strengthening public financial management.
  - Improving spending efficiency.
  - Promoting transparency and good governance.
- Major reform measures and framework:
  - Digitalization of tax revenue collection system.
  - Decentralization and paperless payment processes across all government services.
  - Improved selection of public investment projects.
  - Simplification of the general tax code to support private-sector development and reduce informality.
  - Adoption of a new Economic and Social Development Plan (PDES 2022–2026) with three strategic axes:
    - Axis 1: foster sustained and inclusive development of human capital.
    - Axis 2: strengthen good governance and security.
    - Axis 3: stimulate structural transformation of the economy led by the private sector.

### Recent macroeconomic developments (summary from MEFP)
- 2021 macroeconomic outcomes:
  - GDP growth estimated at 1.3 percent in 2021 (compared with 3.6 percent in 2020 and 5.9 percent in 2019).
  - Primary sector decrease in 2021: 8.3 percent (compared with an increase of 7.7 percent in 2020).
  - Agricultural production drop in 2021: 13.7 percent after an increase of 9.5 percent in 2020.
  - Fall in cereal production: 37.2 percent.
  - Average general price increases: 3.8 percent per annum.
- Sectoral developments in 2021:
  - Secondary sector growth: 5.4 percent in 2021 (compared to 1.7 percent in 2020).
    - Manufacturing activities: +5.4 percent.
    - Energy: +8.4 percent.
    - Construction: +6.0 percent.
  - Tertiary sector (42.3 percent of GDP) growth: 7.7 percent in 2021 (after 2.3 percent in 2020).
    - Commercial activities: 9.7 percent.
    - Hotels and restaurants: 5.8 percent.
    - Communication: 6.2 percent.
    - Non-market services: 6.3 percent.
- Monetary and external sector:
  - Money supply: 1650 billion in December 2021, an increase of 133 billion compared with 2020.
  - Net foreign assets: 683 billion as of December 31, 2021 (566 billion in 2020), an increase of 117 billion.
  - Net domestic claims: 967 billion in December 2021 (951 billion in December 2020), an increase of 16 billion.
  - Current account deficit in 2021: 1147.5 billion, or 13.8 percent of GDP (widening by 85.5 billion or 0.4 percentage point of GDP compared with the previous year).
  - Exports rose by 5.2 percent and imports rose by 9.0 percent in 2021.
  - Overall balance: surplus of 102.0 billion in 2021 (after a deficit of 105.1 billion in 2020).
- Public finances in 2021:
  - Budget deficit (including grants): 5.9 percent of GDP (from 5.4 percent in 2020), below initially projected 6.6 percent.
  - Budget support mobilized: 484.7 billion (159.0 billion in grants and 102.4 billion in loans).
  - Total cash revenue mobilized at end-December 2021: 853.6 billion (compared with 750.3 billion in 2019 and 780.4 billion in 2020).

### Results achieved under the ECF-supported program
- End-December 2021 quantitative performance:
  - Net domestic financing ceiling: 371.4 billion; outturn: 271.3 billion.
  - No external payment arrears recorded.
  - New ratified public and publicly guaranteed external debt: 282.5 billion (ceiling: 346 billion).
  - Cash revenues: 853.6 billion (floor: 846.4 billion).
  - Basic fiscal balance without grants projected deficit: -484.6 billion; outturn: -481.3 billion.
  - Social protection expenditure executed: 261 billion (floor: 80 billion).
  - Exceptional expenditures: 0.74 percent of budget expenditure (ceiling: 5 percent).
- End-March 2022 indicative targets:
  - Cash revenues missed by around 4.5 billion.
  - Basic budget balance including grants missed by 4.8 billion.
  - Domestic financing ceiling, adjusted by planned but unrealized budgetary support, exceeded by 39.4 billion due to drawdowns from Treasury deposits to clear float of 2021 financial year by 75.5 billion and avoid accumulation of domestic arrears.
  - An upward adjustment of the domestic financing ceiling at end-June 2022 is requested to account for these drawdowns.
- Structural benchmarks and continuous benchmarks:
  - All structural benchmarks at end-December 2021 and end-March 2022 implemented.
  - Prior action implemented: circular on public procurement relating to fight against COVID-19 requiring publication of information on beneficial owners of successful tenderers on the public procurement portal.
  - Guidance note prepared to rationalize exemptions and strengthen procedures for granting new exemptions.
  - Auditor General’s audit report on COVID-19-related public expenditure in 2020 published online.
  - Feasibility studies produced for the nine largest investment projects prior to inclusion in Government Investment Program 2022.
  - Plan adopted to complete integration of digital platforms of DGI and DGD; technical assistance from the IMF received.
  - Annual report produced on tax arrears with stocks and flows, recoverability analysis, timetable with quantitative arrears-reduction targets, and detailed action plan.
  - Regulatory act published requiring collection of information on beneficial owners of corporations that have negotiated contracts by direct agreement (except defense and security contracts) and its publication on the public procurement portal.
  - Continuous structural benchmarks on track: status report on newly granted or renewed tax exemptions; publication on the public procurement portal of procurement plans, related tender notices, and final award results; regulatory act to systematize transmission and publication of final award results to ARMP planned.

*Letter of Intent signed Niamey, June 10, 2022; Ahmat Jidoud, Minister of Finance.*

### Box 2. Other Reforms Implemented Under the New Program

### Box 2. Other Reforms Implemented Under the New Program

### Tax administration (General Directorate of Taxation - DGI)
- Adoption of the new strategic plan covering the period 2022-2024.
- Creation of synthetic tax arbitration committees across the country to settle disputes arising from synthetic taxes.
- Creation of local services monitored by SISIC (Integrated Tax and Taxpayer Monitoring System).
- Strengthening of the e-invoicing machine management system aimed at improving VAT receipts.
- Strengthening of the unit in charge of online tax services with a view to improve services to users.
- Continued implementation of the “enclos fiscal”, a system to identify and rigorously monitor active taxpayers and ensure compliance with declaration and payment obligations.
- Intensification of communication and awareness-raising actions to improve consent to taxation and transparency of tax management.
- Creation of a framework for dialog between the DGI and the Chamber of Commerce and Industry of Niger to improve ownership of tax measures contained in finance laws.

### Customs administration (General Directorate of Customs)
- Start of the molecular marking of petroleum products.
- Establishment of a data exchange interface with Niger's one stop shop for international trade (GUCE) to improve mobilization of customs revenues.

### Treasury and public accounting (General Directorate of the Treasury and Public Accounting - DGTCP)
- Reorganization of the DGTCP to integrate municipal collectors into the Treasury network in the context of the enlargement of the Single Treasury Account to include local authorities and the deployment of the IATS platform.

### Budget management (General Directorate of the Budget)
- Revision of the decree and instruction on the arrangements for implementing government expenditure.
- Continuation of the suspension of payment of expenditure without prior authorization (payment authorization letters).
- Splitting in AE/CP of the budget appropriations of the five (5) pilot ministries (Ministry of Public Works, Ministry of Water and Sanitation, Ministry of Urban Planning and Housing, Ministry of Agriculture, and Ministry of Livestock) into commitment appropriations and payment appropriations.
- Devolution of the authorization function for the two pilot ministries (Ministry of Public Health, Population and Social Affairs and the Ministry of Education).
- Adoption of a decree on the selection of public investments.
- Deployment of an IT module to monitor investment projects.
- Reorganization of the General Directorate for the Budget to initiate the establishment of sectoral clusters.
- Operationalization of the Finance Directorate of Local Authorities.

### Macroeconomic and sectoral context for 2022 and medium term (select highlights)
- Growth projection: rebound in 2022 to around 7.0 percent, after 1.3 percent in 2021.
- Primary sector expected to grow by 7.0 percent over 2022-2026; agriculture and livestock average annual growth rates of 8.2 percent and 4.7 percent, respectively.
- Secondary sector projected growth of 5.5 percent in 2022; mining activity expected to decrease with uranium production down by -4.9 percent due to COMINAK closure.
- Tertiary sector expected to grow by 7.1 percent in 2022; transport projected + 17.8 percent, public administration non-market services + 8.0 percent, communication + 7.3 percent.

### Support Plan for Vulnerable Populations (early 2022)
- Plan budget estimate: CFA 279,254,989,581.
- Target population numbers:
  - 2,578,384 people in need of food assistance from January to May 2022.
  - 3,637,983 people in need from June to August 2022.
  - 1,360,783 chronically vulnerable people benefiting from multiyear social safety nets and other vulnerable groups.
  - 2,393,810 people needing curative or preventive nutritional support.

### Emergency and resilience measures (estimated aggregate cost)
- Government measures to strengthen resilience at an estimated cost of 1.1 percent of GDP; specific program costs:
  - Purchase of cereals worth 21.5 billion, for sale at moderate prices to support vulnerable or food insecure populations.
  - Emergency support program for the pastoral season at a cost of 23.2 billion (purchase/availability of wheat bran and cotton-seek cakes).
  - 2022-2023 agricultural season plan worth 20.1 billion to increase cereal production, cover 40 percent of areas sown with fertilizers in micro doses, and support flagship programs.
  - Implementation of the irrigated crops program for 2022-2023 at a cost of 15 billion to increase production under irrigation and floodplain production.
  - 20 billion program for the replacement of straw-hut classrooms; gradual replacement of 37,000 straw-hut classrooms with durable-material classrooms; adoption of an alternative classroom model built with local materials costing 30 to 50 percent less than a conventional classroom.

### Monetary policy and financial sector context (WAEMU-level)
- BCEAO policy stance in 2021: fixed rate full-allotment tender format at 2.0 percent covering banks’ liquidity needs.
- Minimum bidding interest rate in liquidity-injection tender operations: 2.0 percent.
- Marginal lending window interest rate: 4.0 percent.
- Minimum required reserve ratio for banks: 3.0 percent since March 16, 2017.
- Monetary policy expected to remain broadly accommodative; Monetary Policy Committee will monitor inflation dynamics and act if necessary.

### Budgetary measures in force since January 1, 2022 (selected)
- Obligation for taxpayers to use certified electronic VAT invoicing systems.
- Obligation to produce a certified invoice in the context of public procurement.
- Obligation for beneficiaries of exemptions under discretionary regimes to pay the full amount of duties and taxes and subsequently initiate refund application procedures.
- Taxation, at the IRVM (tax on investment income) rate, of amounts placed in free reserves which exceed one-fifth of the share capital.
- Application of the combined formality for both property registration and advertisement for all instruments previously subject to registration.
- Exclusion, within the customs boundaries, of goods produced, manufactured or available locally from the exemptions included in the national budget.

### 2022 budget framework and revenue mobilization
- Budget deficit target: within the limit of 6.6 percent of GDP.
- Package of measures to increase tax revenue by 45.1 billion or 0.5 percent of GDP (see corrective measures below).
- Interministerial Budgetary Regulation Committee to consider pace of revenue mobilization including grants before releasing appropriations.

### Box 3 — Corrective Measures to Achieve Revenue Targets in 2022 (selected measures)
- Collection of outstanding amounts of tax to be recovered.
- Stepping up of fiscal controls (desk checks) and strengthening cooperation with regional customs offices, notably to use customs permits.
- Speeding up work of the ad hoc committee tasked with cracking down on and combating tax crime in the regions.
- Speeding up the processing of litigation cases.
- Collection of mining sector taxes, particularly in regions where gold-mining sites are created (Agadez, Maradi, Tillabéry, etc.).
- Operationalization of the newly created Regional Tax Directorates and tax centers to strengthen the tax network and improve efficiency of tax administration and collection.
- Combating corruption through revision of performance criteria of office chiefs and auditors of full-capacity customs offices and control of certificates of WAEMU origin.
- Molecular marking of petroleum products by strengthening control to combat fraud in petroleum products.
- Operationalization of the One-Stop Shop for Foreign Trade (GUCE), allowing real-time use of its platform data and data from the Virtual Transaction File (DVT).
- Digitalization of revenue-collecting agencies to facilitate use of SISIC data (TIN, tax clearance certificate, waiver, company balance sheets).
- Reinforced checks to regularize non discharged T1 documents and provisional declarations of frozen offal.
- Aligning the re-export tax with the consumption tax for certain products to reduce tax arbitrage and fraud.

### Strengthening management of tax arrears and tax administration modernization
- Measures to manage and monitor tax arrears:
  - Increase reminders to taxpayers (telephone calls, notices to appear, awareness-raising).
  - Exercise of the right of discovery to make recovery actions more effective.
  - Increase in recovery actions: notifications to third party holders, external constraints, seizure of property in accordance with tax legislation.
  - Synergy with DGI departments (taxpayer management, verification, investigation, registration) to collect asset information.
  - Regular monitoring of settlement plans, closure of business premises, establishment of a write-off team.
- Accelerating tax administration reforms (key actions):
  - Completion of integration of digital platforms of the tax and customs administrations:
    - Full automation of priority processes linked to the taxpayer register, customs declarations, and accounting records of companies (Structural benchmark at end-March 2023).
    - Continuation of full interconnection of DGD’s and DGI’s IT systems for control of exchanges, VAT return consultation, customs permit consultation, motor vehicles consultations, and contentious cases consultation (Structural benchmark at end-September 2023).
  - Simplification of the current tax system based on IMF technical assistance recommendations and stakeholder consultations; drafting and forwarding to Parliament a draft law on the revision of the General Tax Code.
  - Operationalization of newly created Regional Tax Directorates and tax centers.
  - Creation of services close to taxpayers and wide coverage in the SISIC to reduce tax transaction costs and improve service quality.
  - Strengthening the unit in charge of online tax services to (i) facilitate interaction between taxpayers and the tax administration, (ii) ensure transparency in management of taxpayers’ files, (iii) reduce time spent on corporate tax management, (iv) refocus exchanges on tax files, (v) facilitate exchanges and access to tax records, (vi) extend the period for filing of returns, and (vii) make payments secure.
  - Introduction of risk control tools to ensure quality of the tax base and receipts and uniform application of tax rules.
  - Establishment of a procedure for certification of financial statements through the one-stop shop for filing of financial statements (GUDEF) to collect, analyze, and verify completeness, plausibility, and consistency before certification.
  - Continued implementation of ring fencing to identify and monitor active taxpayers and ensure compliance with declaration and payment obligations.

### Public expenditure quality and capacity building
- Prioritization of education and social expenditure.
- Promote speed of expenditure operations through gradual devolution of the authorization function; pilot operation started in 2022 involving the Ministries of Education and Public Health.
- Creation and operationalization of the Capacity Building Center of the Ministry of Finance to strengthen capacities of auditors of public procurement and budgetary operations, financial resource directors, public procurement directors, government accounting officers, etc.
- Improve execution of expenditure by connecting the Regional Budget Directorates with all decentralized services of ministerial departments at regional level.
- Step up audit and inspection of expenditure operations by building capacity of control bodies and updating governing texts.

*Italic: Box 2. Other Reforms Implemented Under the New Program (from the provided PDF content).*

### 25.      Education and social spending will be given greater priority. The government has

### 1nerea2022001 - 25.      Education and social spending will be given greater priority. The government has

### Education and social spending: objectives and implementation
- Replace straw-hut classrooms with classrooms made of durable materials; high material costs prompted search for less expensive classroom models.
- Nine projects selected on the basis of model, implementation materials, project cost, longevity, and ease of implementation.
- Guidelines drawn up to promote national solidarity and socio-economic inclusion by increasing coverage of programs promoting social protection, women’s empowerment, child protection, and youth integration.
- Targeting of social programs to be improved to ensure socio-economic inclusion of the most vulnerable or marginalized groups, including:
  - persons with disabilities;
  - women and children in a risky mobility situation;
  - populations affected by forced displacement;
  - orphans.
- Social-sector priorities: programs that sustainably reduce vulnerability and indicators for monitoring social expenditure implementation in key areas will be developed.
- Health and nutrition programs to emphasize:
  - free care;
  - routine vaccination;
  - control of communicable diseases;
  - treatment of malnutrition;
  - family planning.
- In fragile areas, deployment of social centers for prevention, promotion, and protection of children will be prioritized.
- Social protection: shock response plan remains a priority due to an unfavorable rainy season in 2021 and multiple shocks. Efforts to expand coverage of productive social safety nets will continue, targeting resilience to shocks, sustainable recovery, and socio-economic inclusion of vulnerable and marginalized groups (including women, young people in rural areas, people with disabilities, women and children in risky mobility situations, and populations affected by forced displacement).

### Public expenditure chain: digitalization and controls (structural benchmarks)
- Accelerate dematerialization of the expenditure chain by integrating manual procedures into the computerized budget preparation and implementation system (CEGIB).
- Structural benchmark at end-September 2023: digitalize budgetary expenditure emissions so that:
  - all documents produced by government accounting and integrated budget management – CEGIB – (commitments, settlements, orders) will be entered directly in the electronic file;
  - external supporting documents (invoices, notes, decisions, etc.) will be scanned and entered in the electronic file of the budgetary issuance in the CEGIB-Accounting system;
  - all physical documents in the file will be handed over to the treasury accounting officer assigned to archiving in the authorizing department;
  - when management accounts are produced, the Auditor General will receive a secure copy of all paperless files and all physical supporting documents kept by accounting officers.
- Structural benchmark at end-December 2023: digitalize expenditure authorizations for assigned funds so that:
  - all expenditure authorizations produced by the CEGIB are entered directly in the electronic file of the expenditure from assigned funds and notified to actors who acknowledge receipt within the system;
  - physical authorizations are kept by the authorizing officer;
  - after clearance, physical authorizations and corresponding dematerialized documents are entered in the management accounts sent to the Auditor General.
- Rationale: reduce vulnerabilities, secure budgetary issuances, streamline transmission of supporting documents, avoid security problems inherent in physical transmission.

### Public procurement and award procedures
- Planned actions:
  - revise the Public Procurement Code and public service delegations;
  - fully digitalize the award of public contracts and public service delegations;
  - introduce modulated control of public contracts.
- Set up system to monitor implementation of recommendations from compliance and materiality audit reports on public procurement ordered annually by the ARMP.

### Public investment management and PPPs
- Speed up reforms to improve management and quality of public investment.
- Feasibility studies for investment projects costing more than CFAF 5 billion are being prepared for inclusion in the Government Investment Program (PIE); summaries of these feasibility studies will be published on the Ministry of Planning's website.
- Strengthen and extend the AE/CP budgeting system, initiated with five pilot ministries, to all ministries and institutions to improve medium-term planning of investment programs and projects.
- Continue to give preference to the tendering procedure for awarding PPP contracts.

### Treasury and public debt management
- Continue measures to improve treasury and public debt management:
  - sign instruction on accounting of electronic payment transactions;
  - digitize collection of non-tax revenue;
  - deploy the SICA at Regional Treasuries;
  - extend the scope of the TSA to public projects and programs using external financing.
- Debt management plans:
  - acquire the Debt Management and Analysis System (SYGADE);
  - develop a debt management procedures manual;
  - provide capacity building for staff of the public debt directorate.

### Fiscal risk management
- Prepare a declaration on fiscal risks and draw up a budget contingency plan with IMF technical assistance to mitigate fiscal risks from various shocks.
- Objectives: comprehensively identify fiscal risks, measure their impact on public finances, and manage them preventively.

### Public sector reforms and governance
- Accelerate reforms to improve public sector efficiency, particularly civil service management:
  - revise law on general government civil service regulation and implementing decree;
  - finalize and operationalize biometric database of government officials;
  - adopt decree on assessment of performance of public services;
  - prepare code of ethics and professional conduct for civil servants;
  - establish forward employment planning system;
  - update statutes to national and international context;
  - strengthen training institutions’ capacity to implement administrative reforms;
  - build capacity for regional directorates in career management practice.
- Strengthen institutional framework for public enterprises with new texts; accelerate dissemination and capacity strengthening.
- Strengthen accountability framework via progressive signing of performance contracts between government and primary managers of public enterprises.
- Governance emphasis on deterrence (repression) and tamper-proof procedures via dematerialization and digitalization (SISIC in taxation; ASYCUDA in customs; use of banking system for government payments).
- Speed up collection of asset declarations from senior officials; ensure all members of Government are up to date with asset declaration obligations.

### AML/CFT measures
- Adopt a new strategy to combat money laundering and the financing of terrorism and proliferation.
- Adopt a national risk assessment on terrorism financing and its action plan.
- Decree issued creating a technical advisory committee on the administrative freeze, to be provided with human, budgetary, and technical resources.

### COVID-19 vaccination program: status and targets
- Campaign timeline and vaccines:
  - First vaccination campaign launched on March 29, 2021.
  - Over six million doses of five different vaccines received via the COVAX scheme and bilateral contributions.
- Vaccination coverage as of April 7, 2022:
  - 2,188,718 people have received at least a first dose;
  - 1,547,540 have been fully vaccinated;
  - vaccination coverage rate of 6.3 percent of the total population;
  - vaccination coverage rate of 14.5 percent of the population aged 18 and over.
- Revised deployment plan targets:
  - increase vaccination coverage to 42 percent of the total population by end-December 2022;
  - increase vaccination coverage to 58.4 percent by December 31, 2023.
- Implementation measures:
  - intensify awareness-raising campaigns at all levels;
  - increase capacity of front-line health workers by expanding the cold chain and addressing vaccine hesitancy among young people, teachers, nomadic communities, and migrants;
  - install three additional ultra-cold chambers at the National Vaccination Directorate and train logisticians for new equipment;
  - provide 30 double-insulated transport boxes to ship the Pfizer vaccine to remote clinics;
  - equip 170 health care institutions in remote areas with solar-powered refrigerators for COVID-19 and general vaccines;
  - ensure continuous monitoring of rumors and dissemination of factual information through official channels to counter disinformation.

### Private sector development and financial inclusion
- Private sector reforms:
  - adopt two laws: (i) the Charter of SMEs; (ii) the Small Business Act (to promote SME integration into extractive industries);
  - establish a new, more inclusive National Framework for Public-Private Dialogue.
- Financial sector and inclusion:
  - establish SME/SMI National Support Fund (FONAP) to mobilize resources, facilitate access to bank credit, and build technical and managerial capacity for small businesses;
  - create and institutionalize a Financial Inclusion Development Fund (FDIF) via Decree No. 2020-514/PRN/MF of July 3, 2020;
  - July 1, 2021 roundtable of donors announced resources covering 174.2 percent of the provisional budget for implementation of the National Inclusive Finance Strategy;
  - continue consolidation plan for microfinance sector: rehabilitate MCPEC, strengthen UCMN, deal with microfinance institutions in difficulty, strengthen and consolidate the microfinance sector, and provide capacity-building for the supervisory authority.

### Program monitoring: structure, reviews, and key quantitative targets
- Monitoring based on performance criteria and structural benchmarks defined in the Technical Memorandum of Understanding (TMU); authorities to submit statistical data and information as per the TMU.
- Semiannual reviews by the IMF Executive Board:
  - second program review based on performance criteria and data through end-June 2022;
  - third review through end-December 2022;
  - expected disbursements available after October 31, 2022, and April 28, 2023, respectively.
- Review schedule: semi-annual reviews based on performance criteria at end-June and end-December, and indicative targets at end-March and end-September.
- Selected quantitative targets and indicators presented in program tables (excerpted):
  - Floor on social spending: 80.0; 261.0 (Met) for specified dates in Table 1.
  - Cash revenue, floor: 846.4; 853.6 (Met) and later entries including 986.5 in Table 1.
  - Basic budget balance (commitment basis, excl. grants), floor: -484.6; -481.3 (Met) and other quarterly figures.
  - Present Value (PV) of new public and publicly-guaranteed (PPG) external debt contracted from the beginning of the relevant calendar year: 346.0; 282.5 (Met) and later 402.0; 402.0; 402.0 entries in Table 1.
  - Accumulation of new external payments arrears: 0.0 entries (Met).
  - Program indicators include ceilings on net domestic financing of the government, adjustments for shortfalls in external budget support, and other memorandum items for external budget support and grants (values and status shown in Table 1 and continuation tables).
- Continuous structural benchmarks are scheduled for December 2021—December 2024 (Table 2).

*Source: Content unit 1nerea2022001 (IMF).*

### 1. Provide Fund staff

### 1. Provide Fund staff

### Actions and Timetable
- Provide Fund staff on a semi-annual basis, starting in March 2022, with a tally of newly granted or renewed tax exemptions with their details and expiration dates.
  - Objective: Protect revenue base and improve domestic revenue mobilization.
  - Frequency: Continuous, monitored on a bi-annual basis.
  - Progress: Met for March 2022.
- Publish procurement plans, tender notices and final contract award results on the Public Procurement Portal, starting in March 2022.
  - Objective: Improve public expenditure management.
  - Frequency: Continuous, monitored on a bi-annual basis.
  - Progress: Met for March 2022.
- Produce a feasibility study for any investment project of more than CFAF 5 billion, the summary of which will be published on the website of the Ministry of Planning, prior to its inclusion in the Plan d’Investissement de l’Etat from the 2023 budget, starting in July 2022.
  - Objective: Improve the efficiency of public spending.
  - Frequency: Continuous, monitored on a bi-annual basis.

### Prior Action and Structural Benchmarks (selected)
- Prior Action
  - Issue a regulation requesting the beneficial ownership information of companies submitting bids for all Covid-19-related public procurement, with the beneficial ownership information of the winning company to be published on the Public Procurement Portal.
    - Rationale: Ensure greater transparency in the awarding of public contracts. Reduce risk of conflict of interest.
    - Status: Met.
- Structural Benchmarks (examples with timetables and progress)
  - Adopt a policy brief containing concrete and costed proposals to rationalize current exemptions and tighten procedures for granting new exemptions, in consultation with IMF staff.
    - Rationale: Protect revenue base and improve domestic revenue mobilization.
    - Timetable: End-December 2021.
    - Progress: Met.
  - Produce feasibility studies for the 9 largest investment projects prior to their inclusion in the 2022 Plan d’Investissement de l’Etat.
    - Rationale: Improve public investment management and efficiency of public spending.
    - Timetable: End-December 2021.
    - Progress: Met.
  - Publish the audit report by the Auditor General (Cour des Comptes) on 2020 COVID-19-related spending.
    - Rationale: Improve governance and transparency.
    - Timetable: End-December 2021.
    - Progress: Not Met. Comment: Implemented with a delay. The report has been published at the end of April 2022.
  - Adopt a plan for the completion of the integration of the digital platforms of the DGI and the DGD, indicating the key milestones to complete the actions described in paragraph 24 of the MEFP consistent with IMF technical assistance advice.
    - Rationale: Protect revenue base.
    - Timetable: End-March 2022.
    - Progress: Met.
  - Produce an annual report describing: (i) stocks and flows of tax arrears by fiscal year and by type, as well as by degree of collectability, (ii) a timetable with quantitative targets to reduce arrears stocks based on the recoverability analysis and a prioritization scheme and, (iii) a detailed plan, containing specific actions to achieve these objectives.
    - Rationale: Improve domestic revenue mobilization.
    - Timetable: End-March 2022.
    - Progress: Met.
  - Issue a legal instrument requiring the collection of beneficial ownership information of companies awarded single tender or sole source contracts, except defense and security-related contracts, and their publication on the Public Procurement Portal.
    - Rationale: Ensure greater transparency in the awarding of public contracts. Reduce risk of conflict of interest.
    - Timetable: End-March 2022.
    - Progress: Met.
  - Adopt a roadmap, with technical assistance from the IMF, for the review and simplification of the current tax system.
    - Rationale: Improve domestic revenue mobilization and business environment.
    - Timetable: End-June 2022.
  - Share with the IMF a status report of existing agreements, showing for each agreement the amounts of exemptions by tax type since the beginning of 2019, expiration dates, and available information on projected exemptions for 2022.
    - Rationale: Improve domestic revenue mobilization.
    - Timetable: End-June 2022.
  - Adopt an oil revenue management strategy with technical assistance from the IMF.
    - Rationale: Enhance governance and transparency of oil revenue allocation.
    - Timetable: End-September 2022.
  - Publish the annual tax expenditure report online.
    - Rationale: Protect revenue base and improve domestic revenue mobilization.
    - Timetable: End-September 2022.
  - Publish the audit by Auditor General (Cour des Comptes) on exemptions in the extractive sector.
    - Timetable: End-December 2022.
    - Progress: Met. Comment: Implemented in advance. The report has been published in May 2022.
  - Fully automate the priority processes linked to the taxpayer register, customs declarations, and the accounting records of companies, followed by the implementation of measures to strengthen the capacity of the IT systems of the DGI and DGD, while respecting the technical and functional requirements and the timetable for implementation recommended by the IMF technical assistance.
    - Rationale: Protect revenue base.
    - Timetable: End-March 2023.
  - Continue the process of full interconnection of DGD’s and DGI’s IT systems through the establishment of activities concerning the control of exchanges, VAT return consultation, customs permit consultation, motor vehicles consultations, and contentious cases consultation, while respecting the technical and functional requirements of the systems and the timetable for implementation recommended by the IMF technical assistance.
    - Rationale: Protect revenue base.
    - Timetable: End-September 2023.
  - Digitalize all budget expenditure emissions.
    - Rationale: Improve the transparency and efficiency of public spending.
    - Timetable: End-September 2023.
  - Digitalize all expenditure authorizations.
    - Rationale: Improve the transparency and efficiency of public spending.
    - Timetable: End-December 2023.

### Definitions and Program Monitoring (selected)
- Government: central government of the Republic of Niger; excludes political subdivisions, public entities, or central bank with separate legal personality.
- Debt (per paragraph 8 of the Guidelines): a current liability created under a contractual arrangement requiring one or more payments in assets or services according to a specific schedule; includes loans, suppliers’ credits, leases; arrears, penalties, and judicially awarded damages arising from failure to make payment are debt.
- Present value (PV) of new public and publicly-guaranteed external debt contracted 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.
- Domestic payment arrears: domestic payments owed by the government but not paid; include committed and authorized fiscal year expenditures not paid within 90 days.
- Government obligation: any financial obligation of the government accepted as such by the government (including any government debt).

### Quantitative Performance Criteria (high-level)
- Net Domestic Financing of the Government
  - Defined as sum of (i) net bank credit to the government; (ii) net nonbank domestic financing of the government, including government securities issued in CFAF on the WAEMU regional financial market and not held by resident commercial banks, proceeds from the sale of government assets, and privatization receipts.
  - Net bank credit components: government claims (cash holdings of the Nigerien Treasury, secured obligations, deposits with the central bank, and deposits of the Treasury with commercial banks) and government debt to the banking system (central bank assistance excluding net IMF financing, the CFAF counterpart of the 2009 and 2021 General SDR Allocations, assistance from commercial banks, and deposits with the CCP).
  - Net nonbank domestic financing includes: (i) change in stock of government securities issued in CFAF on the WAEMU regional financial market and not held by resident commercial banks; (ii) change in balance of Treasury correspondents’ deposit accounts; (iii) change in balance of various deposit accounts at the Treasury; (iv) change in stock of claims on the government forgiven by the private sector; (v) payments resulting from PPP contracts; and (vi) net income from privatizations.
  - Quarterly targets for 2022 and 2023 concern cumulative amounts since the beginning of the respective year until the date selected for the performance criterion or indicative target.
  - Adjustments:
    - If disbursements of external budgetary support fall short of projected amounts at end of each quarter, the corresponding quarterly ceilings will be raised pro tanto, up to a maximum of CFAF 30 billion.
    - Ceiling on net domestic financing will be increased by the reduction in the float from 2021 of CFAF 115 billion for 2022; starting in 2023, this adjustment capped at a maximum of CFAF 75 billion.
  - Reporting requirement: Detailed data on domestic financing of the government provided monthly, within six weeks after the end of each month.
- New External Payment Arrears on Government Debt
  - Government undertakes not to accumulate new external payment arrears on its debt (including Treasury bills and bonds issued in CFAF on the WAEMU regional financial market), except external payment arrears arising from debt being renegotiated with external creditors, including Paris Club and other bilateral official creditors.
  - Reporting requirement: Data on the stock, accumulation, and repayment of external payment arrears provided monthly, within six weeks after the end of each month.
- Present Value of New Public and Publicly-Guaranteed External Debt Contracted from the Beginning of the Relevant Calendar Year
  - Contract deemed contracted or guaranteed when signed by the government, adopted by the parliament by law and ratified by the President of the Republic; for program monitoring, deemed contracted or guaranteed on date of ratification.
  - External debt defined as debt contracted or serviced in a currency other than the franc of the Financial Community of Africa (CFAF), except BOAD borrowing which is considered external debt despite being local-currency-denominated.
  - The PC is a ceiling applying to PV of all new external debt (concessional or non-concessional) contracted or guaranteed by the government, including commitments contracted or guaranteed for which no value has been received.
  - Exemptions: (a) Short-term supplier or trade-related credit with a maturity of up to three months; (b) rescheduling agreements; and (c) IMF disbursements.
  - PV calculation: Discount projected disbursements and debt service (principal and interest) at program discount rate of 5 percent and take account of loan conditions; for loans with grant element zero or less, PV set equal to nominal value.
  - Currency denomination: value in CFAF of new external debt of 2022 and 2023 calculated using exchange rates for end September 2021 and end April 2022 in IMF’s IFS database.

### Reference Rates and Exchange Rates (as specified)
- Program discount rate for PV calculations: 5 percent.
- Program reference rate for six-month USD SOFR: 0.04 percent (fixed for duration of program).
- Spreads over six-month USD SOFR fixed for duration of program:
  - The spread of six-month Euro LIBOR over six-month USD SOFR is -56.4 basis points.
  - The spread of six-month JPY LIBOR over six-month USD SOFR is -9.0 basis points.
  - The spread of six month GBP SONIA over six-month USD SOFR is 2.5 basis point.
  - For interest rates on currencies other than Euro, JPY, and GBP, the spread over six-month USD SOFR is 15 basis points.
  - Where variable rate is linked to a benchmark other than six-month USD SOFR, a spread reflecting the difference between the benchmark and six-month USD SOFR (rounded to the nearest 50 basis points) will be added.
- Exchange Rates (end September 2021)
  - CFAF/SDR 798.1337
  - U.S. Dollar/SDR 1.408871
  - Euro/SDR 1.216747
  - Japanese Yen/SDR 157.6668
  - U.K. Pound Sterling/SDR 1.048658
  - U.A.E. Dirham/SDR 5.174080
- Exchange Rates (end April 2022)
  - CFAF/SDR 836.6272
  - U.S. Dollar/SDR 1.3443
  - Euro/SDR 1.27543
  - Japanese Yen/SDR 174.625
  - U.K. Pound Sterling/SDR 1.0695
  - U.A.E. Dirham/SDR 4.93696

### Reporting Requirements and Indicative Targets (selected)
- Authorities will inform IMF staff of any planned external borrowing and the conditions on such borrowing before loans are contracted or guaranteed and will consult with staff on any potential debt management operations.
- Indicative targets definitions:
  - Cash revenue includes tax, nontax, and special accounts revenue, but excludes proceeds from the settlement of reciprocal debts between the government and enterprises and non-cash revenue.
  - Basic fiscal balance defined as difference between (i) total revenue (sum of cash revenue and non-cash revenue) and (ii) total fiscal expenditure excluding externally financed investment expenditure but including HIPC-financed expenditure.
  - Two indicative targets on basic fiscal balance are set: one including budget grants and the other excluding budget grants.
  - If disbursements of external budgetary grants are lower than projected at end of each quarter, the corresponding quarterly floor of the basic budgetary balance, including budgetary grants, will be reduced pro rata, up to a maximum of CFAF 30 billion.
  - Floor on social spending is an indicative target. Social spending defined as expenditures from Government's own resources allocated to social sectors and those directly benefiting vulnerable groups; these expenditures will be coded in the budget according to UNICEF recommendations for tracking.
- Codification of Social Spending Activities (Budget Activities Codes)
  - Non-Social 00
  - Social-Health 11
  - Social-Education 12
  - Social-Social Protection 13
  - Social-Nutrition 14
  - Social- Hydraulics/Sanitation 15
  - Social-Others 19

*Attachment II. Technical Memorandum of Understanding.*

### 27.      A limit is set on the amount of expenditures paid through exceptional procedures

### 27.      A limit is set on the amount of expenditures paid through exceptional procedures 

### Limit on exceptional expenditures
- A limit is set on the amount of expenditures paid through exceptional procedures (without prior commitment) 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.
- Exceptional expenditure has been reported as "well contained within limits" during program implementation.

### Reporting requirements (timing and frequency)
- Basic budget revenue and expenditures: monthly, within six weeks after the end of each month.
- Social expenditures: quarterly, within six weeks after the end of each quarter.
- Exceptional expenditure: quarterly, after six weeks after the end of the quarter.

### Government finance — additional monitoring data to be provided 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.
- Table of Government Financial Operations: comprehensive monthly data on domestic and external financing of the budget, and changes in arrears and Treasury balances outstanding; monthly, within six weeks after the end of each month.
- Comprehensive monthly data on net nonbank domestic financing, including:
  - (i) the change in the stock of government securities (Treasury bills and bonds) issued in CFAF on the WAEMU regional financial market and not held by resident commercial banks;
  - (ii) the change in the balance of various deposit accounts at the Treasury;
  - (iii) the change in the stock of claims on the government forgiven by the private sector.
- Quarterly data on social expenditure (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 line ministries (National Education, Public Health, Equipment, Agriculture, Livestock).
- Monthly data on Treasury balances outstanding, by reference fiscal year, with a breakdown of maturities of more than and less than 90 days.
- Monthly data on effective debt service (principal and interest) compared with 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.

### Monetary sector reporting
- 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 (and, where applicable, these indicators for individual institutions).

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

### Real sector reporting
- Disaggregated monthly consumer price indexes: within two weeks following the end of each month.
- National accounts: within six months after the end of the year.
- Any revision of the national accounts: provide when revisions occur.

### Structural reforms and other data to be provided
- Any study or official report on Niger’s economy: within two weeks after its publication.
- Any decision, order, law, decree, ordinance, or circular with economic or financial implications: upon its publication or, at the latest, when it enters into force.
- Any draft contract in the mining and petroleum sectors, including production and sales volumes, prices, and foreign investment.
- Any agreement with private sector stakeholders having economic or financial repercussions for the government, including in the natural resources sector.

### Summary of key scheduled reporting deadlines (selected items)
- 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.
- Net government position vis-à-vis the banking system (monthly): End-month + 6 weeks.
- Complete monthly data on net nonbank domestic financing (monthly): End-month + 6 weeks.
- Provisional TOFE and breakdown of revenue and expenditure (monthly): End-month + 6 weeks.
- Data on Treasury balances outstanding (RAP) by reference fiscal year (monthly): End-month + 6 weeks.
- Execution of the investment budget (quarterly): End-quarter + 6 weeks.
- Table of fiscal expenditure execution, unified list expenditure, and HIPC-financed expenditure (monthly): End-month + 6 weeks.
- Consolidated balance sheet of monetary institutions (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 (annual): End-year + 6 months.
- Stock and repayment of external arrears (monthly): End-month + 6 weeks.
- Breakdown of all new external loans signed and projected borrowing (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.

### Recent macroeconomic developments and program implementation (selected findings and projections)
- Agriculture production: decelerated by 13.7 percent in 2021 (after increasing by 9.5 percent in 2020) due to a rainfall deficit, devastating insects, and challenging security conditions.
- Primary sector: declined by 8.3 percent in 2021.
- Secondary sector: increased by 5.4 percent in 2021, after declining by 1.3 percent in 2020, supported by energy, construction, and a newly built cement plant.
- Tertiary sector: increased by 2.3 percent in 2020 and 7.7 percent in 2021.
- GDP: decelerated from 3.6 percent in 2020 to 1.3 percent in 2021.
- Inflation: 4.9 percent on an annual average in 2021.
- Fiscal deficit: increased from 5.4 percent of GDP in 2020 to 5.9 percent in 2021.
- Domestic claims: increased by 9.18 percent.
- Program performance at end-March 2022: broadly satisfactory; all end-December 2021 and end-March 2022 structural benchmarks largely met. Quantitative Performance Criteria on the ceiling on net domestic financing of the government; accumulation of new external payments arrears; and ceiling on public and publicly guaranteed (PPG) external debt have been met.
- Indicative Targets: all met except those on cash revenue mobilization for end-March 2022, the ceiling on domestic financing, and the basic budget balance.
- Social protection spending: implemented with a large margin.

### Reforms and policy actions under the 2021-24 ECF arrangement
- Revenue and public finance modernization measures include:
  - Intensified monitoring of petroleum products and information exchange with Niger’s single window for foreign trade (GUCE) at the Customs Directorate (DGD).
  - Tax Directorate (DGI) measures: adoption of a strategic plan for 2022-24, decentralization of services, and digitalization/electronic systems.
  - Directorate of Public Treasury (DGTCP): integration of local services into the Treasury Single Account.
  - Directorate of Budget (DGB): reinforcement of controls in budgetary and public expenditure procedures and decentralization of services at the local level.
- Prior actions implemented: regulation of beneficial ownership information for COVID-19 related contracts; Auditor General’s audit report on 2020 COVID-19 related expenditure (implemented with some delay).

### Economic outlook and sectoral projections for 2022
- Overall economic perspective: optimistic for 2022 and beyond driven by broad-based recovery, continuous investments, discovery of large oil reserves in the Bilma and Kafra areas, implementation of the 3N initiative and MCC projects in agriculture, and large infrastructure and energy projects.
- Sectoral projections:
  - Primary sector: would expand by 7 percent in 2022, supported by agriculture and livestock.
  - Secondary sector: impacted by a decline of 4.9 percent in Uranium activities but could achieve growth of 5.5 percent, helped by the extractive industry and particularly oil exploitation.
  - Tertiary sector: projected annual growth (figure truncated in source).

*Source: Statement by Mr. Aivo Andrianarivelo, Executive Director for Niger; Mr. Regis N'Sonde, Alternate Executive Director; and Mr. Madjiyam Bangrim Kibassim, Advisor of the Executive Director on Niger; June 29, 2022 (excerpted IMF staff report).*

### 7.1 percent on the back of vigorous activities in oil transportation through the pipeline

### 7.1 percent on the back of vigorous activities in oil transportation through the pipeline

### Growth projections and macro outlook
- GDP growth is projected to increase from 1.3 percent in 2021 to 6.9 percent in 2022.
- Medium-term sectoral projections:
  - Primary sector expected to increase by 7.0 percent.
    - Agriculture annual growth of 8.2 percent.
    - Livestock annual growth of 4.7 percent.
  - Secondary and tertiary sectors expected to follow a similar upward trend.
- GDP growth projections:
  - 7.2 percent in 2023.
  - 12.5 percent in 2024.
  - 8.2 percent in 2025.
- Fiscal and debt outlook:
  - Due to continuation of authorities’ prudent fiscal and borrowing policies, Niger’s moderate debt level will be preserved.
- Inflation:
  - Over the period of the projection, inflation will remain contained below the 3 percent target for the WAEMU monetary union.

### IV. Policies and Reforms Undertaken — IV.1 The government’s response to recent shocks
- Emergency Plan (November 2021- March 2022):
  - Amounting to CFA 160.24 billion.
  - Targeting 2,578,384 vulnerable people through multi-sectoral mitigation responses.
- Support Plan to Vulnerable People:
  - Started at the beginning of 2022.
  - Amounting to CFA 279.25 billion.
  - Targets at least 9,970,960 people from heterogenous groups with specific needs.
  - Aims to mitigate difficulties from the lean season, increase in staple food prices, and the impact of the deterioration of security conditions; aimed at preventing food, nutritional and pastoral insecurity.
- Measures in the Agriculture Sector:
  - Amount to 1.1 percent of GDP.
  - Aim at fighting food insecurity, reinforcing resilience, and preventing a consecutive production deficit.
  - For the 2022-2023 crop year, an emergency support program for pastoral farming will be implemented.
  - Measures include improvements in irrigated agriculture, acquisition, and subsidized sales of cereals to vulnerable groups.
- Replacement of Straw-hut Classrooms:
  - Two near-term objectives in education:
    - Gradually build 37,000 classrooms in solid materials to replace straw-hut classrooms destroyed by fires that killed at least 42 children in 2021.
    - Tighten teachers’ recruiting conditions to enhance the quality of education.

### IV.2 Fiscal Policy
- Fiscal stance and objectives:
  - Government fiscal policy underpinned by a cautious approach and the necessity to increase fiscal space through further domestic revenue mobilization by ensuring traceability and tax compliance.
  - Authorities consider accommodating a fiscal deficit of 6.6 percent of GDP to address competing spending demands in security, education, and social sectors.
  - Authorities committed to a revenue increase of 0.5 percent of GDP by contemplating enhancing measures in revenue administrations and for spending efficiency.
- Financing and transparency measures:
  - To finance the deficit, the authorities intend to recourse to the regional financial market.
  - Plan to elaborate a fiscal contingency plan to strengthen transparency, credibility, and modernize PFM tools.
  - Enhance audit, inspection procedures, legislation, transparency, and traceability through the dematerialization of the expenditure chain.
- Public investment and procurement reforms:
  - Revision of the public procurement code supplemented by digitalization and targeted controls in procurement procedures and contracts to increase compliance.
  - Require feasibility studies for projects exceeding CFA 5 billion.
  - Extend the AE/CP budgeting system.
  - Award PPP contracts through competitive tendering procedures.
  - Enhance treasury management by using the TSA and electronic platforms.

### IV.3 Financial Sector
- System resilience and vulnerabilities:
  - Despite recent multiple shocks, Niger’s financial system remained resilient and supportive; credit to the economy has increased, and the banking system is well-capitalized and profitable.
  - Non-performing loans (NPLs) augmented in 2021 due to the pandemic.
  - Loan portfolio deterioration also prevalent in the microfinance sector, which remains fragile and fragmented.
- Policy responses:
  - Authorities will implement a consolidation plan to reinforce the supervisory and operational frameworks of the microfinance sector.
  - Continue the goal of expanding financial inclusion by ensuring the provision of financial services to the population, particularly in rural areas.

### IV.4 Oil Resource Management
- Policy direction:
  - Authorities prioritize implementing an efficient and transparent management of the resources resulting from oil exploitation.
  - Oil management expected to be brought under the control of the Ministry of Finance, and oil revenue channeled through the public treasury.
  - Authorities committed to using these resources to advance the transformative economic program of Niger and diversify drivers of economic growth.
- Timetable and governance:
  - With support from the Fund, authorities expect to adopt by the end-2022 an oil revenue management strategy consistent with international best practices.
  - Authorities have made significant efforts to establish a collaboration mechanism involving the active participation of civil society and other stakeholders.

### IV.5 Structural Reforms
- Private sector and financial inclusion:
  - Launch a public-private dialogue platform and enact the Charter of SMEs and the Small Business Act.
  - Implement the National Strategy for Inclusive Finance and develop mobile payment services.
  - Operationalize the Fund for the Development of Financial Inclusion, the Investment Fund for Food Security and Nutrition, and the National Fund for SMEs and SMIs.
- Human capital and governance:
  - Invest in education to improve teaching quality, delivery, and infrastructures through well-trained teachers, construction of school buildings with durable materials, and girls’ boarding schools to take advantage of demographic dividend.
  - Emphasize combatting corruption and disseminating good practices in public administrations to enhance governance.
  - Place focus on asset declarations of officials and strengthening the AML/CFT framework.

### IV.6 Climate strategy
- Risk environment:
  - Irregularity of rainfalls and recurrent episodes of droughts and flooding have posed a major development challenge.
- Policy actions:
  - Authorities engaged in combatting climate change and mitigating climate shock impacts to prevent increases in poverty and inequalities.
  - Revision of the Nationally Determined Contribution in December 2021; enforcement is being pursued at the regional level.
  - Implementing a strategy for adaptation of agriculture to climate change and a contingency plan against natural disasters.
  - Promote the green economy as a priority for addressing climate change and desertification.
  - Framework promoting agricultural sector financing is under execution and benefits from facilities settled in the green economy framework and the Investment Fund for Food and Nutritional Security.

### Conclusion
- Authorities welcome Board members and Management’s support to their request for the ECF arrangement approved on December 8, 2021.
- Government engaged in fulfilling commitments under the program; efforts to address recent shocks, including the food crisis, emphasize the need for policies to be adapted to emerging risks and to adjust fiscal targets accordingly.
- Authorities are requesting a modification of performance criteria for the ceiling on net domestic financing and indicative targets for the basic budget balance.
- Considering broadly satisfactory program implementation and strong program ownership, authorities request Directors’ support for completion of the First ECF Review and their request.

*Source: 1nerea2022001 - 7.1 percent on the back of vigorous activities in oil transportation through the pipeline*

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_Source: https://www.imf.org/-/media/files/publications/cr/2022/english/1nerea2022001.pdf_