## 1nerea2024001 ## Source details **Canonical URL:** [1nerea2024001](https://www.imf.org/-/media/files/publications/cr/2024/english/1nerea2024001.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2024/english/1nerea2024001.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2024/english/1nerea2024001.pdf.json) --- ### EXECUTIVE SUMMARY — Context and recent developments - Political instability and sanctions following the military takeover in July 2023 have severely and persistently affected economic and social conditions. - Security situation reversing 2022 decline in conflict-related fatalities (Data updated as of March 14, 2024). - Authorities declared commitment to ECF and RSF objectives and intend to adopt a new development strategy (PRSP) based on four pillars: (i) revitalizing the business climate, (ii) improving security management, (iii) reinstating good governance, and (iv) enhancing social cohesion. - After lifting of sanctions in February 2024, authorities resumed full collaboration with WAEMU institutions, despite exiting ECOWAS in late January 2024. ### Recent economic developments and baseline outlook - Growth and inflation: - Growth in 2023: 2.4 percent. - Inflation rate at end-December 2023: 7.2 percent. - Projected growth in 2024: 10.6 percent (start of oil exports, spillovers, increased agricultural production, lifting of sanctions). - Annual average inflation projected: 4.4 percent in 2024; 3.6 percent in 2025; fall below WAEMU upper band of 3 percent in the medium term. - External sector and food security: - External current account deficit: 16.2 percent of GDP in 2022; 14.4 percent of GDP in 2023. - World Food Program estimate: 3.4 million people (13 percent of the population) face acute food insecurity during the 2024 lean season. - Refugees and internally displaced persons: around 3 percent of the population as of end March 2024. - Fiscal and public finances: - 2023 fiscal deficit: 5.4 percent of GDP. - Revenue shortfalls in H2 2023 due to political events, sanctions, delays in crude oil exports, insecurity, and tax measures to alleviate inflation. - Authorities reduced expenditures, particularly capital expenditures, while preserving priority spending on security, health, education, and food security. - Debt service arrears and resolution: - Total debt service arrears as of May 15, 2024: CFAF 172.9 billion (1.5 percent of GDP). - External debt service arrears in 2023: CFAF 64.5 billion (0.6 percent of GDP). - Domestic arrears as of April 2024: CFAF 108.4 billion (0.9 percent of GDP). - Authorities developed a plan (Prior Action #1) aiming for complete clearance of arrears by end-2024. - Regional market issuance on April 26, 2024: CFAF 458 billion (3.9 percent of GDP); proceeds used to repay part of overdue domestic debt service obligations. - Monetary and financial sector: - BCEAO benchmark rates increased by a total of 50 basis points from July to December 2023; policy rate unchanged at 3.5 percent in May 2024. - NPLs: preliminary NPLs increased by about 5.6 percentage points to 22.6 percent as of end-December 2023. - System-wide capital adequacy ratio: 8.1 percent as of end-December 2023 (regional norm: 11.5 percent); excluding banks with negative equity, estimate is 15 percent as of end-December 2023. - Development partner financing resumed after lifting of sanctions (World Bank, AfDB, several bilateral partners). *Source: IMF staff team mission to Niamey, Niger, May 20–June 1, 2024; IMF document "EXECUTIVE SUMMARY" (June 28, 2024).* ### Baseline projections and medium-term macro framework (selected indicators) - Growth (GDP at constant prices, percent change): 2023 Est. 2.4; 2024 10.6; 2025 7.4; 2026 6.1; 2027 6.4; 2028 6.0; 2029 6.0. - Consumer price index, average (percent change): 2023 3.7; 2024 4.4; 2025 3.6; 2026 3.2; 2027 2.0; 2028 2.0; 2029 2.0. - Consumer price index, end of period (percent change): 2023 7.2; 2024 3.0; 2025 4.7; 2026 2.5; 2027 2.0; 2028 2.0; 2029 2.0. - Credit to the private sector (percent change): 2023 -6.5; 2024 6.5; 2025 11.6; 2026 9.1; 2027 9.3; 2028 8.9; 2029 8.6. - Total revenue (percent of GDP): 2023 8.7; 2024 9.4; 2025 10.6; 2026 11.0; 2027 11.4; 2028 11.9; 2029 12.2. - Total expenditure and net lending (percent of GDP): 2023 15.8; 2024 16.3; 2025 15.8; 2026 15.9; 2027 16.0; 2028 16.1; 2029 16.1. - Overall fiscal balance (commitment basis, incl. grants) (percent of GDP): 2023 -5.4; 2024 -4.1; 2025 -3.0; 2026 -3.0; 2027 -3.0; 2028 -3.0; 2029 -3.0. - External current account balance (excl. grants) (percent of GDP): 2023 -15.4; 2024 -7.1; 2025 -4.6; 2026 -5.4; 2027 -5.9; 2028 -4.8; 2029 -5.4. - Total public and publicly-guaranteed debt (percent of GDP): 2023 56.6; 2024 52.5; 2025 49.9; 2026 48.8; 2027 48.2; 2028 47.9; 2029 47.7. ### Debt outlook, arrears, and debt policy - Risk of debt distress: moderate under LIC DSA framework. - Public and PPG debt at end-2023: 56.6 percent of GDP. - Arrears and recent actions: - As of May 15, 2024, total arrears: CFAF 172.9 billion (1.5 percent of GDP). - Text Table 3 (as of May 15, 2024) external arrears by creditor totals: Principal 51.1; Interest 19.4; Total 70.5 (CFAF Billions). - Authorities returned to regional market on April 26, 2024 and issued securities amounting to about CFAF 458 billion (3.9 percent of GDP). - Authorities developed an arrears clearance plan aiming for full clearance by end-2024 (Prior Action #1). - Debt dynamics and assumptions: - Crude oil production expected to rise from 20,000 to 110,000 per day in the medium term. - DSA assumptions include fiscal consolidation to reach WAEMU deficit target of 3 percent of GDP by 2025. - Noted increased reliance on higher-cost domestic financing increasing rollover risks. - CNPC-NP Niger loan of US$400 million equivalent classified as domestic debt in the DSA (repayment tied to oil export proceeds; CNPC-NP withholding 80 percent of Niger's anticipated share). ### Program performance, conditionality, and requested modifications - Program status: - Program implementation broadly on track at end-June 2023 but disrupted by political crisis and sanctions. - Quantitative performance criteria (QPCs) mostly met before takeover; continuous QPC ceiling on accumulation of new external payment arrears breached between July 2023 and May 2024. - All indicative targets (ITs) met at all target dates except the floor on cash revenue, which was not met at any target date. - Structural benchmarks and reforms: - Several SBs met (notably DGI-DGD IT interconnection and some automation measures); others delayed or unmet — notably adoption of the oil revenue management strategy (postponed to December 2024). - RSF-supported RMs: RM7 (guide for analysis of fiscal risks related to natural disasters) implemented; RM9 (order to establish DRM focal points) implemented; RM10 (flood and drought risk studies) published; RM11 (FONAP window for renewable energy SMEs) signed. - Staff actions supported: - Staff supports conclusion of the fourth and fifth ECF reviews and first RSF review, extension and rephasing of ECF and RSF; disbursements of SDR 19.74 million (ECF) and SDR 34.216 million (RSF). - Staff supports waivers for non-observance of performance criteria and modification of PCs and ITs under the ECF. - Extension requested: six-month extension of the ECF arrangement to December 2025 and rephasing of the RSF; disbursement adjustments reduce fourth and fifth reviews to SDR 9.87 million each. - Adjustor to fiscal target: - Basic budget balance target could be relaxed by an amount equivalent to 0.5 percent of GDP (expressed in billion CFAF) to accommodate priority spending, conditional on securing additional concessional budget-support financing. ### Monetary and financial sector vulnerabilities and policy - BCEAO policy rate: 3.5 percent (unchanged in May 2024). - Financial sector indicators: - NPL ratio as of end-December 2023: 22.6 percent (increase of about 5.6 percentage points). - System-wide capital adequacy ratio as of end-December 2023: 8.1 percent (regional norm: 11.5 percent); excluding banks with negative equity: 15 percent. - Banking sector recommendations: - Strengthen internal controls, cash management, credit underwriting, portfolio monitoring, and recapitalize banks with negative equity as needed. - WAEMU 2023 regulation increased minimum regulatory capital for banks from 10 billion CFAF to 20 billion CFAF. ### RSF reform package, climate, and public investment management - RSF progress: - Four RMs implemented related to disaster-informed fiscal planning, DRM focal points, flood/drought risk assessments, and FONAP renewable energy window. - Six RMs proposed to be rephased for forthcoming RSF reviews; one RM related to publication of fiscal risk assessment including natural disasters risks is on track. - Climate and PIM actions: - Methodology for tagging climate-related expenditures developed; to be submitted to NDC Technical Committee before end-September 2024. - Guide for project preparation drafted; revision of PIM Order to be initiated in second semester 2024; pilot climate-informed feasibility studies may require additional time. - Financing needs for NDC (2021-2030): $9.9 billion. - Mobilized climate funds to date: Adaptation Fund $10 million; Green Climate Fund $11 million. - Funding secured to elaborate a carbon market development strategy as part of Article 6 commitment. ### Mobilizing domestic revenues and tax administration reforms - Short-term measures: - Broaden tax base by reducing tax exemptions and increasing active taxpayers. - Implement alignment of re-export duties on sugar and vegetable oils, and specific export tax/3 percent SER on crude oil, gold, and uranium as included in the 2024 budget law. - Medium-term measures: - Revise and simplify the General Tax Code (CGI); CGI adoption expected by Council of Ministers by end-April 2025 (SB#4). - Accelerate property and land registration by creating a cadaster for future property tax. - Digitalization and administration: - IT platforms of tax and customs administrations exchange information in real time; e-SECEF and certified invoicing for VAT contributed to increased VAT and CIT revenues. - Progress on the integrated tax and taxpayer information system (SISIC): 67 out of 83 tax units covered to date. ### Social protection, education, and public spending quality - Social protection: - Objective to expand the Unified Social Registry (USR) to 800,000 households by 2024 (delayed due to suspension of partner support). - Plan to register all poor and vulnerable households (more than 3 million) by 2030. - Prepaid cards for scholarships and pensions distributions planned in 2024. - Education: - Replace 36,000 straw-hut classrooms with durable classrooms; 2,331 classrooms under construction; 1,059 more planned for 2024. - Convert around 2,150 contractual teachers to civil servants; construct 100 boarding schools for girls. - Spending priorities: - Wage bill increase: average yearly public wage bill increase of CFAF 35 billion (0.3 percent of GDP). - Social spending average yearly increase in subsidies and transfers totaling CFAF 40 billion. - Some lower-priority capital expenditures deferred to adhere to deficit targets. ### Governance, AML/CFT, and anti-corruption - Anti-corruption: - CoLDEFF created; recovered CFAF 42 billion. - Dissolution of Supreme Audit Institution interrupted audit monitoring and asset declarations; authorities preparing new order to define new Supreme Audit Institution. - AML/CFT/WMD: - Authorities transposing WAEMU 2023 regional law into domestic law and implementing GIABA 2021 mutual evaluation recommendations. - CENTIF faces capacity and financial challenges and low reporting rates of suspicious transactions. ### ECOWAS exit — macro implications (Annex II highlights) - Niger, Burkina Faso, and Mali announced exit from ECOWAS on January 28, 2024; exit assumed to take effect in 2025 while Niger remains in WAEMU. - Key quantified effects (staff analysis): - Tariff revenue projected increase: US$21.4 million. - Trade impacts: exports to GDP change -0.06 percentage points (Panel a reported) and imports to GDP change -0.30 percentage points; trade openness decreases by -0.36 percentage points (Panel a). - GDP per capita effect: -0.45 percentage points (Panel a). - Growth projected to slow by 0.8 percentage points in 2025; annual average inflation projected to rise by 0.6 percentage points in 2025; adverse effects dissipate in medium term if bilateral agreements restored. - Channels: cross-border trade, labor mobility, increased uncertainty, electricity reliance on Nigeria (70 percent of Niger’s electricity supply from Nigeria). ### Risk assessment and recommended policy responses (selected entries) - High likelihood / High impact risks: - Intensification of regional conflicts; policy response: implement domestic revenue mobilization reforms; advance structural reforms; enhance efficiency of social spending. - Commodity price volatility; policy response: implement targeted social measures; bolster domestic food production; strengthen fiscal buffers. - Deepening geoeconomic fragmentation; policy response: promote regional economic integration; accelerate market reforms. - Medium likelihood / High impact risks: - Deterioration of security situation; policy response: allow more gradual fiscal consolidation to accommodate security spending; increase international engagement. - Political tensions with Benin; policy response: pursue partner-mediated discussions; strengthen fiscal buffers. - Extreme climate events; policy response: targeted social measures; improve water management; strengthen climate budgeting. - Constrained financing conditions; policy response: seek concessional financing and enhance domestic revenue mobilization. - Reduced donor support (Relative Likelihood: High; Impact: High): enhance engagement with traditional and new donors; strengthen implementation capacity. ### Capacity to repay the Fund and program financing - Capacity assessed as adequate but subject to significant downside risks. - Repayment obligations peak: - 1.7 percent of exports in 2029. - 3.0 percent of fiscal revenues in 2027. - Net disbursements positive during program period: - 3.2 percent of exports in 2024. - 1.0 percent of exports in 2025. - Program financing: - Fully financed under proposed extension and rephasing, with firm commitments in the next 12 months and good prospects for remaining period. ### Key quantitative facts (selected exact figures) - Growth in 2023: 2.4 percent. - Projected growth in 2024: 10.6 percent. - Inflation rate at end-December 2023: 7.2 percent. - External current account deficit: 16.2 percent of GDP in 2022; 14.4 percent of GDP in 2023. - People facing acute food insecurity in 2024 lean season: 3.4 million (13 percent of the population). - 2023 fiscal deficit: 5.4 percent of GDP. - Total debt service arrears as of May 15, 2024: CFAF 172.9 billion (1.5 percent of GDP). - Regional market issuance on April 26, 2024: CFAF 458 billion (3.9 percent of GDP). - BCEAO policy rate: 3.5 percent (unchanged in May 2024). - NPL ratio as of end-December 2023: 22.6 percent (increase of about 5.6 percentage points). - System-wide capital adequacy ratio as of end-December 2023: 8.1 percent (excluding banks with negative equity: 15 percent). ### Staff assessment and recommendations (selected) - Staff supports completion of the fourth and fifth ECF reviews and the first RSF review, extension and rephasing of arrangements, waivers for non-observance of specific PCs, and related disbursements (SDR 19.74 million and SDR 34.216 million). - Staff judgment: program objectives remain achievable conditional on: - (i) implementation of the arrears clearance plan, - (ii) adherence to the fiscal adjustment path to prevent excessive domestic financing, - (iii) commitment to prudent debt policies and reliance on concessional financing. - Priority policy actions: - Adopt oil revenue management strategy by end-2024 (Prior Action #2). - Fully implement arrears clearance plan and avoid accumulation of new external arrears. - Mobilize domestic revenues through CGI reform, digitalization, and property tax reforms. - Preserve priority social and security spending; allocate any adjustor relaxation to health, education, food security, and social safety nets. - Strengthen governance, reinstate an independent Supreme Audit Institution, and implement GIABA recommendations on AML/CFT. *Source: IMF staff team mission to Niamey, Niger, May 20–June 1, 2024; IMF document "EXECUTIVE SUMMARY" (June 28, 2024).* ### EXECUTIVE SUMMARY ### EXECUTIVE SUMMARY ### Context - Political instability and sanctions following the military takeover in July 2023 have severely and persistently affected economic and social conditions. - The security situation continues to exacerbate the country's fragility, reversing the 2022 decline in conflict-related fatalities (Data updated as of March 14, 2024). - Authorities declared firm commitment to the objectives of the ECF and RSF-supported programs and intend to adopt a new development strategy (PRSP) based on four pillars: (i) revitalizing the business climate, (ii) improving security management, (iii) reinstating good governance, and (iv) enhancing social cohesion. - After the lifting of sanctions in February 2024, the authorities resumed full collaboration with WAEMU institutions, despite exiting ECOWAS in late January 2024 (along with Burkina Faso and Mali). ### Recent economic developments and outlook - Growth and inflation: - Growth in 2023 is estimated at 2.4 percent, down from a projected 7 percent at the time of the 3rd ECF review. - Inflation rate of 7.2 percent at end-December 2023. - Growth is projected to rebound to 10.6 percent in 2024 due to the start of oil exports, spillover effects across the economy, increased agricultural production, and the lifting of sanctions. - Despite higher projected growth, scarring from repeated shocks and sanctions will persist and take time to resolve. - External sector and food security: - External current account deficit narrowed from 16.2 percent of GDP in 2022 to 14.4 percent of GDP in 2023, primarily due to diminished imports from sanctions and the economic slowdown. - According to the World Food Program, 3.4 million people (13 percent of the population) are estimated to face acute food insecurity during the 2024 lean season. - Refugees and internally displaced persons represent around 3 percent of the population as of end March 2024 (UNHCR classification: main country of asylum in West Africa). - Fiscal outcomes and public finances: - Fiscal deficit in 2023 was 5.4 percent of GDP, marginally higher than programmed. - Revenue shortfalls persisted throughout the second half of 2023 due to political events, sanctions, delays in crude oil exports, insecurity, and tax measures to alleviate inflation. - Authorities significantly reduced expenditures, particularly capital expenditures, while preserving priority spending on security, health, education, and food security financed by tax revenues and domestic resources. - Text Table 1 (excerpt) compares 3rd Review projections and 2023 outturns in CFAF and percent of GDP (see source for full table). - Debt service arrears and resolution: - As of May 15, 2024, total debt service arrears amounted to CFAF 172.9 billion (1.5 percent of GDP). - External debt service arrears: CFAF 64.5 billion (0.6 percent of GDP) in 2023; domestic arrears: CFAF 108.4 billion (0.9 percent of GDP) as of April 2024. - Authorities developed a plan (Prior Action #1) aiming for complete clearance of arrears by end-2024. - Outstanding bilateral creditors include Belgium, China, France, India, Kuwait, Spain, Taiwan, Province of China, and the United Arab Emirates. - On April 26, 2024, authorities returned to the regional market and issued securities amounting to about CFAF 458 billion (3.9 percent of GDP); proceeds used to repay part of overdue domestic debt service obligations. - Monetary and financial sector: - BCEAO benchmark rates increased by a total of 50 basis points from July to December 2023; policy rate unchanged at 3.5 percent in May 2024. - Financial sector vulnerabilities: preliminary NPLs increased by about 5.6 percentage points to 22.6 percent as of end-December 2023. - System-wide capital adequacy ratio declined to 8.1 percent as of end-December 2023, below regional norm of 11.5 percent (excluding banks with negative equity, estimate is 15 percent as of end-December 2023). - Development partner financing: - After lifting of sanctions, development partners including the World Bank and the African Development Bank resumed financing operations; several bilateral partners have active programs and discussions for new support have advanced. ### Program performance - Implementation timeline and disruptions: - Program implementation broadly on track at end-June 2023 but disrupted by the political crisis and sanctions. - Quantitative performance criteria (QPCs) and indicative targets (ITs): - Government net domestic financing QPC met at all target dates except end-December 2023. - Present value of new public and publicly guaranteed (PPG) external debt QPC met at all target dates. - Continuous PCs on exchange restrictions, multiple currency practices, and import restrictions were observed. - Continuous QPC ceiling on the accumulation of new external payment arrears was breached between July 2023 and May 2024. - All ITs were met at all target dates except the floor on cash revenue, which was not met at any target date. - ITs on the basic budget balance (including and excluding grants), social spending, and ratio of exceptional expenditures were met at all target dates. - Structural benchmarks (SBs) and reform measures (RMs): - Several SBs were not met; some were implemented with delays. - Three out of four continuous SBs were met in May 2024; only one (out of three) met in September 2023. - Authorities publish beneficial ownership information for companies awarded non-competitive contracts and plan to strengthen legal instruments on public procurement to expand and reinforce compliance. - Three structural benchmarks related to automation and interconnexion of tax and customs systems were met. - Two SBs on digitalization of expenditure orders and expenditure authorizations were not met and implemented with delays. - SB to create a technical committee to prepare a detailed report on projected crude oil revenue streams and assess fiscal risks was not met; adoption of oil revenue management strategy initially scheduled for end-September 2023 was not met and postponed to December 2024. - Under the RSF, authorities implemented four reforms related to fiscal and disaster risk management (DRM) and renewable energy promotion; most remaining RMs are proposed to be rephased. - Specific RM achievements: - Adopted and published a guide for the analysis of fiscal risks related to natural disasters (RM7). - Adopted an order to establish DRM focal points in selected sectoral ministries (RM9). - Studies on flood and drought risk published on the national DRM data platform (RM10). - Signed an order to create a new window within FONAP to support enterprises investing in renewable energy (RM11). - For forthcoming RSF reviews, six RMs are proposed to be rephased; one RM related to publication of a fiscal risk assessment including natural disasters-related risks analysis is on track. ### Staff assessment and program actions - Reviews, disbursements, and waivers: - Staff supports conclusion of the fourth and fifth reviews under the ECF and the first review of the RSF, together with extension and rephasing of the two arrangements (ECF and RSF), which will result in disbursements of SDR 19.74 million and SDR 34.216 million, respectively. - Staff supports authorities’ request for waivers for non-observance of performance criteria and modification of performance criteria and indicative targets under the ECF. - Staff judgment on program feasibility: - Despite non-observance of some performance criteria, staff assesses that program objectives remain achievable given authorities’ commitments to corrective measures: (i) implementation of the arrears clearance plan; (ii) adherence to the fiscal adjustment path under the program to prevent excessive domestic financing; (iii) commitment to follow prudent debt policies over the program horizon, including reliance on concessional financing. - Extension of the ECF program will support: (i) implementing additional reforms, (ii) entrenching fiscal policies to reach and sustain the regional deficit target, and (iii) addressing protracted balance of payments needs induced by the political turmoil. - Given authorities’ strong commitment and technical assistance pipeline, staff believes RSF reform measures remain achievable over the program horizon. ### Key statistics and quantitative facts (as presented) - Growth in 2023: 2.4 percent. - Projected growth in 2024: 10.6 percent. - Inflation rate at end-December 2023: 7.2 percent. - External current account deficit: 16.2 percent of GDP in 2022; 14.4 percent of GDP in 2023. - People facing acute food insecurity in 2024 lean season: 3.4 million (13 percent of the population). - Refugees and internally displaced persons: around 3 percent of the population as of end March 2024. - 2023 fiscal deficit: 5.4 percent of GDP. - Total debt service arrears as of May 15, 2024: CFAF 172.9 billion (1.5 percent of GDP). - External debt service arrears in 2023: CFAF 64.5 billion (0.6 percent of GDP). - Domestic arrears as of April 2024: CFAF 108.4 billion (0.9 percent of GDP). - Regional market issuance on April 26, 2024: CFAF 458 billion (3.9 percent of GDP). - BCEAO policy rate: 3.5 percent (unchanged in May 2024). - NPL ratio as of end-December 2023: 22.6 percent (increase of about 5.6 percentage points). - System-wide capital adequacy ratio as of end-December 2023: 8.1 percent (regional norm: 11.5 percent); excluding banks with negative equity: 15 percent. *Source: IMF staff team mission to Niamey, Niger, May 20–June 1, 2024; IMF document "EXECUTIVE SUMMARY" (June 28, 2024).* ### 11. The macroeconomic outlook is favorable with the removal of sanctions and the start ### 11. The macroeconomic outlook is favorable with the removal of sanctions and the start ### Baseline projections and macro outlook - Growth is expected to rebound to 10.6 percent in 2024 due to the start of oil exports through the newly constructed pipeline (May 2024), spillovers across the economy (notably transport), increased agricultural production, and the lifting of sanctions. - Crude oil production is expected to rise from 20,000 to 110,000 per day in the medium term. - Annual average inflation rate is projected at 4.4 percent in 2024 and 3.6 percent in 2025, before falling below the WAEMU upper band of 3 percent in the medium term. - Current account deficit (excl. grants) is projected to narrow to 6.5 percent of GDP in 2024 and average below 5 percent of GDP from 2025 onwards. - Selected medium-term indicators (percent change or percent of GDP unless otherwise indicated): - GDP at constant prices (percent change): 2023 Est. 2.4, 2024 10.6, 2025 7.4, 2026 6.1, 2027 6.4, 2028 6.0, 2029 6.0 - Consumer price index, average (percent change): 2023 3.7, 2024 4.4, 2025 3.6, 2026 3.2, 2027 2.0, 2028 2.0, 2029 2.0 - Consumer price index, end of period (percent change): 2023 7.2, 2024 3.0, 2025 4.7, 2026 2.5, 2027 2.0, 2028 2.0, 2029 2.0 - Credit to the private sector (percent change): 2023 -6.5, 2024 6.5, 2025 11.6, 2026 9.1, 2027 9.3, 2028 8.9, 2029 8.6 - Total revenue (percent of GDP): 2023 8.7, 2024 9.4, 2025 10.6, 2026 11.0, 2027 11.4, 2028 11.9, 2029 12.2 - Total expenditure and net lending (percent of GDP): 2023 15.8, 2024 16.3, 2025 15.8, 2026 15.9, 2027 16.0, 2028 16.1, 2029 16.1 - Overall fiscal balance (commitment basis, incl. grants) (percent of GDP): 2023 -5.4, 2024 -4.1, 2025 -3.0, 2026 -3.0, 2027 -3.0, 2028 -3.0, 2029 -3.0 - External current account balance (excl. grants) (percent of GDP): 2023 -15.4, 2024 -7.1, 2025 -4.6, 2026 -5.4, 2027 -5.9, 2028 -4.8, 2029 -5.4 - External current account balance (incl. grants) (percent of GDP): 2023 -14.4, 2024 -6.5, 2025 -4.1, 2026 -4.9, 2027 -5.4, 2028 -4.4, 2029 -5.0 - Total public and publicly-guaranteed debt (percent of GDP): 2023 56.6, 2024 52.5, 2025 49.9, 2026 48.8, 2027 48.2, 2028 47.9, 2029 47.7 - Public and publicly-guaranteed external debt (percent of GDP): 2023 32.5, 2024 28.7, 2025 27.6, 2026 27.0, 2027 26.9, 2028 27.3, 2029 27.9 - Public domestic debt (percent of GDP): 2023 24.1, 2024 23.7, 2025 22.3, 2026 21.8, 2027 21.3, 2028 20.6, 2029 19.8 ### Debt outlook and risks - The risk of debt distress remains moderate in the LIC DSA framework due to: commencement of oil exports, fiscal consolidation efforts, prudent debt policies, and a favorable medium-term outlook. - Increased reliance on higher-cost domestic financing has exacerbated rollover risks. - Uncertainty around the baseline is significant; downside risks dominate: - Domestic: deterioration of security situation; constrained fiscal space if global/regional financing tightens; subdued donor support leading to delays in capital spending; persistence of political tensions with Benin potentially disrupting crude oil production and exports through the port of Seme (Benin); vulnerability to climate change and natural disasters affecting agriculture. - External: commodity price volatility; escalation of regional conflicts (e.g., Gaza-Israel). - Upside: implementation of additional mining investment projects (gold and uranium) and operationalization of a new oil refinery could boost medium-term growth. ### Anchoring fiscal policy and creating space for development spending - Fiscal consolidation path: - Fiscal deficit projected at 4.1 percent of GDP in 2024; regional deficit target of 3 percent of GDP expected to be reached in 2025. - Cumulative fiscal adjustment of 2.4 percent of GDP over 2023-25, primarily from increases in resource revenues and restrained expenditure growth. - Pressures on domestic financing have increased due to tightening external financing and reductions in donor flows. - Cash revenue performance: - Cash revenue was below programmed target by CFAF 144 billion in Q1 2024 and declined by 19 percent y-o-y in nominal terms. - Tax revenue projections for 2024 revised downward by CFAF 539 billion. - Spending priorities and adjustments: - Resources reallocated toward security and social spending (health, education, food security, social safety nets). - Authorities plan recruitment and salary increases in tax, education, and health administrations, resulting in an average yearly public wage bill increase of CFAF 35 billion (0.3 percent of GDP). - Wage bill as percentage of revenues expected to remain below the 35-percent WAEMU norm. - Social spending to be scaled up with an average yearly increase in subsidies and transfers totaling CFAF 40 billion. - Some lower-priority capital expenditures will be deferred to adhere to the deficit target. - Text Table 4: Sources of fiscal consolidation (In percent of GDP): - (1) Revenue, Natural Resources Sector: Baseline 2.0; ∆ 2023-24 1.4; ∆ 2024-25 1.1; ∆ 2023-25 2.5 - (2) Revenue, Other: Baseline 6.7; ∆ 2023-24 -0.7; ∆ 2024-25 0.1; ∆ 2023-25 -0.6 - (3) Budget grants (Incl. CCRT): Baseline 0.5; ∆ 2023-24 -0.1; ∆ 2024-25 0.0; ∆ 2023-25 -0.2 - (4) Domestic expenditure: Baseline 12.4; ∆ 2023-24 -0.5; ∆ 2024-25 -0.2; ∆ 2023-25 -0.8 - (5) Foreign loan-financed capex: Baseline 2.1; ∆ 2023-24 -0.2; ∆ 2024-25 0.3; ∆ 2023-25 0.1 - (6) = (1)+(2)+(3)-(4)-(5) Fiscal balance / total consolidation: Baseline -5.4; ∆ 2023-24 1.3; ∆ 2024-25 1.1; ∆ 2023-25 2.4 - Memo: Compound average GDP growth rate: 2023 14.9%, 2024 11.1%, 2025 10.6% ### Mobilizing domestic revenues - Short-term measures: - Intensify efforts to broaden the tax base by reducing tax exemptions and increasing the number of active taxpayers. - Fully implement alignment of re-export duties on sugar and vegetable oils, and the specific export tax on crude oil, gold, and uranium, as included in the 2024 budget law. - Medium-term measures: - Revise and simplify the general tax code, promote digitalization, and pursue strategies to boost revenues from mining and petroleum sectors. - Accelerate property and land registration by creating a cadaster and improve estimation of property values in preparation for a future property tax. - Tax administration and digitalization: - Authorities implementing measures to strengthen tax enforcement, fight tax fraud, and collect tax arrears; expected modest net impact. - IT platforms of tax and customs administrations now exchange information in real time; next step is exploiting data to identify and prioritize compliance risks. - e-SECEF and certified invoicing for VAT have contributed to increased VAT and CIT revenues; further controls and awareness campaigns target small enterprises and retailers. - Progress on the integrated tax and taxpayer information system (SISIC) is ongoing; recommendation to expand tax agency coverage in underserved areas. - General Tax Code (CGI): - Revision and simplification underway with delays; revised CGI expected to be adopted by the council of Ministers by end-April 2025 (SB#4). ### Enhancing public spending quality and fiscal governance - Social spending and human capital: - Authorities plan to replace 36,000 straw-hut classrooms with classrooms of durable materials. - Around 2,150 contractual teachers converted to civil servants. - Priority on girls’ boarding schools and measures to support girls' school participation and retention (scholarships, transport grants, mentorship, foster families). - Expansion of the unified social registry to reach 800,000 households by 2024 has been delayed due to suspension of development partners’ support; prepaid cards for scholarships and pensions distributions planned in 2024. - Oil revenue management: - Adoption of an oil revenue management strategy by end-2024 remains a priority (Prior Action #2); roadmap to include stabilization mechanism, reference price formula, stabilization fund, and expert committee (SB #9). - Strengthen budget preparation and execution processes to ensure fiscal transparency and accountability. - Solidarity Fund for Safeguarding the Homeland (FSSP): - FSSP to be incorporated into the budget (new SB#10) to improve fiscal transparency. - Total contributions CFAF 13 billion (0.1 percent of GDP) between October 2023 and May 2024; expenditures have remained well below total contributions. - Staff recommended transparent reporting, oversight by established budget audit mechanisms, and World Bank fiduciary assessment update by end-2024. - Public financial management reforms: - Expansion of AE/CP budgeting to all ministries by 2025. - Reform priorities: improve, simplify, and digitalize expenditure payment methods and supporting documents; revise budgetary nomenclature; appoint officials for public management and programs. - Expansion of the Treasury Single Account (TSA) to local governments to strengthen cash management; recommendation to inventory and close 34 remaining commercial bank accounts if projects ended. - Fiscal risks and SOE oversight: - Authorities conducted a detailed fiscal risks analysis and plan to publish a fiscal risks statement within the 2026 budget covering macroeconomic risks, State-owned enterprises, and climate change risks; a budget contingency plan should be elaborated. - Monitoring and oversight of State-Owned Enterprises being strengthened; several mergers undertaken and quality of budgets improved, though performance contracts not yet implemented. ### Addressing inclusive growth, governance, and transparency - Private sector development: - Authorities committed to improving the business climate and private-sector-led growth; institutional and technical committees created to enhance public-private dialogue. - Revised SMEs charter submitted for adoption; one-stop foreign trade window (“Guichet Unique du Commerce Extérieur”) operational to improve trade efficiency and traceability. - Remaining challenges: - Strengthen private sector representation in the fiscal recourse arbitration committee (CARFI). - Address higher transport and input costs from cross-border trade disruptions. - Simplify tax and investment codes. - Financial stability and inclusion: - Financial inclusion remains a priority; delays in implementation of national financial inclusion strategy (SNFI 2019-2023). - Evaluation of SNFI planned for 2024 to inform a new strategy and action plan; national financial education program ongoing. - Authorities promoting digitalization, mobile money, and other digital services to foster inclusion. - FDIF and FONAP operational but face difficulties mobilizing resources; FDIF created an Islamic finance window in 2024; FONAP created a window to support SMEs in renewable energies; both face challenges mobilizing sufficient external resources from development partners. *Source: IMF staff estimates and projections, and Nigerien authorities (from the provided chapter).* ### 32. The microfinance sector still faces significant challenges despite the implementation ### 32. The microfinance sector still faces significant challenges despite the implementation ### Microfinance sector - TAANADI: license revoked by the regulator (ARSM). - ASUSU and UCMN: still under interim administration. - December 2023 WAEMU regional-level regulations on the microfinance sector: expected to support restructuring and strengthening of the sector. ### Banking sector vulnerabilities - Non-performing loans (NPLs): remain structurally higher in Niger compared to the average of the WAEMU region. - Sources of elevated NPLs: - concentration risks in certain banks’ loan portfolios, - effects of sanctions, - payment delays in public procurement contracts. - Staff emphasized importance of: - strengthening internal controls, - cash management, - credit underwriting, - portfolio monitoring, - recapitalizing banks with negative equity, as needed. - WAEMU 2023 banking regulations: increase in minimum regulatory capital requirements for banks from 10 billion CFAF to 20 billion CFAF is essential. ### Advancing the governance agenda - Anti-corruption institutions: - Economic, Financial, and Tax Crime Fighting Commission (CoLDEFF) created as primary anti-corruption institution; CoLDEFF has recovered funds amounting to CFAF 42 billion. - CoLDEFF replaced the previous anti-corruption agency (HALCIA). - Supreme Audit Institution (Cour des Comptes): dissolution has interrupted monitoring of recommendations from previous audit reports on COVID-19 spending and extractive sector, and interrupted asset declaration of senior government officials. - Authorities preparing a new order to define the organization and operation of a new Supreme Audit Institution. - Authorities requested a governance diagnostic assessment technical assistance mission from the IMF to identify weaknesses and provide recommendations. ### Combating money laundering and terrorist financing (AML/CFT/WMD) - Authorities transposing the new WAEMU regional law on combating money laundering, the financing of terrorism, and the proliferation of weapons of mass destruction (AML/CFT/WMD) adopted in 2023 into domestic law. - Implementation of GIABA 2021 mutual evaluation report recommendations continues; sectoral risk assessments undertaken. - National Financial Information Processing Unit (CENTIF) faces significant capacity and financial challenges, including a low rate of reporting of suspicious transactions by relevant sectors. ### Building resilience to climate change — RSF reform package implementation - Authorities remain committed to implement the RSF reform package despite disruptions and interruptions of technical assistance (MEFP ¶52-57). - Four RMs (reform measures) supporting disaster-informed fiscal planning and management and promotion of renewable energy are being implemented: - Integrating disaster-related risks into fiscal planning: - IMF technical assistance supported guide for analysis of fiscal risks related to natural disasters published in May 2024 on the website of the MEF (RSF First Review, RM7). - A first quantitative natural disasters-related fiscal risk analysis included in the Macroeconomic and Budget Framework Note 2025-2027. - Authorities continue to enhance analysis to publish it as a fiscal risks statement (RSF Second Review, RM8) with the DPBEP. - Strengthening disaster risk reduction and management: - In line with the 2022 DRM law, an order adopted appointing DRM focal points in relevant directorates of five Ministries (RSF First Review, RM9). - World Bank support via PIDUREM to provide technical capacity to DRM Units. - Flood and drought risk assessments in seven urban areas published in June 2024 on the National DRM platform (RSF First Review, RM10). - Promoting renewable energy sources: - Government signed an order in June 2024 to create a new window within the FONAP to provide financial and technical support to SMEs operating in the renewable energy sector (RSF First Review, RM11). - World Bank to provide technical assistance for development of the technical manual for the window. - Risk: window might become fully operational only in 2025 due to weak implementation capacity and limited external funding. - Improving sensitivity of public investment management (PIM) to climate issues: - World Bank and IMF technical assistance supporting PIM-related RMs (RSF Second Review RM4 and RSF Third Review, RM5). - A guide for project preparation and assessment drafted; will incorporate climate vulnerability assessment methodology and sectoral consultations. - Revision of the 2021 PIM Order to be initiated in the second semester of 2024; delay due to TA constraints. - RM6 (piloting climate-informed feasibility studies) may require additional time given complexity. - Planning and budgeting of climate-related spending: - Methodology for tagging climate-related expenditures led by the Ministry of Economy and Finance and the Ministry of Hydraulics, Sanitation and Environment is back on track after a one-year delay (RSF Second Review, RM1). - Related RMs (2 and 3) supporting piloting of the CBT framework and amendment of the budget circular are proposed to be rephased by 12 months. ### Scaling up climate finance - Priority to create environment conducive to scaling up climate finance through strengthening accreditation, coordination, and public financial management. - World Bank to conduct staff training on new climate finance instruments (such as green bond, debt swap, insurance scheme, etc.) and unlocking concessional climate finance. - Funding secured to elaborate a carbon market development strategy as part of Government’s commitment to Article 6 of the Paris Agreement. - RSF-supported measures aim to improve climate-informed planning and project quality, leverage private finance, and promote renewable energy to scale up private investment and contribute to energy transition. ### Program modalities, extension, and rephasing - Fund resources: to be entirely used for budget support to address protracted balance of payments needs resulting from deteriorating financing prospects and vulnerabilities linked to insecurity, climate change, and structural issues. - Resumption of program reviews: crucial to reignite financial assistance from other development partners, especially budget support. - Authorities requested: - six-month extension of the ECF arrangement to December 2025, - a rephasing, and modification of performance criteria given regime change and new macroeconomic/policy environment. - Impacts of military takeover and sanctions (ECOWAS and WAEMU): severely impacted economy and delayed implementation of SBs and technical assistance. - Disbursement adjustments: - Disbursements under the fourth and fifth reviews would be reduced to SDR 9.87 million each. - Remaining access available at the time of newly set eighth review with an end-June 2025 test date. - Total disbursements under the ECF and RSF would remain unchanged. ### Waivers, performance criteria deviations, and corrective commitments - Authorities requested waivers for: - non-observance of the performance criterion on the accumulation of external payments arrears, - the performance criterion on the ceiling of net domestic financing of the government, - completion of the fourth and fifth reviews of the ECF arrangement. - Causes of breaches: - ceiling on new external arrears breached due to sanctions after the military takeover, - deviation from net domestic financing ceiling PC (by about 1 percent of GDP) linked to sanctions, lack of repayment of domestic debt service, and suspension of most external financing in H2 2023. - Staff assessment: despite non-observance, program objectives remain achievable given authorities’ corrective measures: - implementation of the debt service arrears clearance plan, - adherence to the fiscal adjustment path under the program to prevent excessive domestic financing, - commitment to follow prudent debt policies over the program horizon, including reliance on concessional financing. - Ceiling on the present value of new public and publicly guaranteed (PPG) external debt recalibrated in line with the arrears clearance plan. ### Adjustor to fiscal target - An adjustor introduced to the program’s basic budget balance target to accommodate priority spending and a more gradual adjustment path if additional external concessional financing materializes. - The basic budget balance target could be relaxed by an amount equivalent to 0.5 percent of GDP, expressed in billion CFAF, to accommodate security and other priority social spending, provided authorities secure additional concessional budget-support financing beyond currently envisaged amounts. - Any relaxation should be devoted to previously outlined spending priorities: health, education, food security, and social safety nets. ### RSF first review, rephasing, and timeline - Authorities requested completion of the first review of the RSF arrangement, and a six-month extension and rephasing of supported reform measures to address implementation delays and revised TA timelines. - Six RMs will have to be rephased, except the one related to publication of a fiscal risks statement. - Staff view: revised schedule feasible and aligned with TA availability; Government showed strong commitment. - Implementation status: despite fragile context, three out of initial six RMs due in October 2023 and one due in June 2024 have been implemented as part of RSF first review in June 2024. ### Capacity to repay the Fund and program financing - Niger’s capacity to repay the Fund: assessed as adequate but subject to significant downside risks. - Repayment obligations: - peak at 1.7 percent of exports in 2029, - peak at 3.0 percent of fiscal revenues in 2027. - Net disbursements positive during program period: - amounting to 3.2 percent of exports in 2024, - amounting to 1.0 percent of exports in 2025. - Risks to capacity to repay include possible fiscal slippages and climate-related shocks. - Mitigating factors: swift implementation of reform agenda and contingency measures. - Program financing: - fully financed under proposed extension and rephasing, with firm commitments in the next 12 months and good prospects for remaining period. - Tightening of external financing underpins authorities’ plans for fiscal restraint. - Any shortfall would need contingency measures, including reductions in spending. ### Safeguards, technical assistance, and capacity-building priorities - BCEAO 2023 safeguards assessment: central bank continues to have well-established audit arrangements and a strong control environment; BCEAO still to align its statute with changes in the 2019 cooperation agreement with France. - Authorities requested technical assistance priorities include: - climate budget tagging, - public investment management, - treasury and debt management, - improving the compilation of government finance statistics. *Source: IMF staff report content in the supplied chapter.* ### 47. Staff commends the authorities‘ efforts to implement the ECF and RSF supported ### 1nerea2024001 - 47. Staff commends the authorities‘ efforts to implement the ECF and RSF supported ### Program implementation and structural reforms - All quantitative performance criteria (QPCs) and indicative targets (ITs)—except the cash revenue floor—were met before the military takeover. - Regional sanctions and political turmoil disrupted the achievement of some QPCs and ITs. - Most structural benchmarks have been implemented, albeit some with delays; notable exception: - Adoption of the oil revenue management strategy (not yet adopted). - Authorities committed to adopt the oil revenue management strategy by end-2024 following a roadmap and further internal consultations. - Despite proposed rescheduling of several climate-related reform measures, progress achieved: - Enhanced disaster-informed fiscal planning and management. - Creation of new instruments to promote renewable energy. - Staff recommendation: - Maintain the reform momentum under the RSF. ### Economic outlook and risks - Growth drivers and timing: - Start of crude oil exports in May 2024 expected to spur growth and increase fiscal revenues. - Scaling up investment in irrigated agriculture should also support growth. - Downside risks: - Political tensions with Benin. - Security issues. - Climate shocks. - Staff recommendation: - Accelerate measures to boost the private sector’s contribution to growth through improved investment climate and fostering financial inclusion. ### Fiscal trajectory and oil revenue management - Fiscal objective: - Converge to the WAEMU criteria of 3 percent of GDP by 2025. - Strategy balance: - Fiscal consolidation relies on increases in resource revenues while restraining expenditure growth. - Priority actions: - Adopt oil revenue management strategy by end-2024 to: - Protect the budget against oil price fluctuations. - Strengthen budget preparation and execution for oil revenue management challenges. - Ensure fiscal transparency and accountability. - Financing pressures: - Reduction in donor flows has increased pressures to tap higher-cost domestic financing and exacerbated rollover risks. - This underpins authorities’ plans for fiscal restraint. ### Domestic revenue mobilization and digitalization - Need to step up efforts to mobilize domestic revenue to create fiscal space for priority spending. - Tax code reform: - Revision and simplification of the general tax code now scheduled to be implemented in April 2025. - IT and administration modernization: - Completion of integration of IT platforms of the tax and customs administrations. - Essential to leverage shared data to identify, assess, and prioritize key compliance risks and undertake automated risk profiling. - Maintain momentum for digitalization reforms, including continuing deployment of SISIC and facilitating e-payments for taxes. - Other revenue measures: - Sustain efforts to rationalize tax exemptions. - Reforming property taxes identified as a promising avenue to mobilize revenues. ### Budget monitoring, debt policy, and spending quality - Incorporation of the FSSP in the budget: - Authorities’ commitment welcomed; expected benefits include consolidated fiscal data for program monitoring, improved spending efficiency and transparency, and more precise tracking of resources. - Short-term debt priorities: - Fully implement the arrears clearance plan to rebuild public trust and support the recovery. - Continue to prioritize concessional and semi-concessional external financing and grants. - Avoid overreliance on high-cost domestic borrowing subject to rollover risks. - Medium- and long-term priorities: - Entrench sound macroeconomic policies. - Enhance debt management practices. - Improve public investment management. - Increase public spending efficiency to buttress debt sustainability. ### Governance, AML/CFT, and anti-corruption - Recent setback: - Dissolution of the Supreme Audit Institution interrupted auditing of public resources management and the asset declaration framework for senior government officials. - Staff recommendations: - Expedite establishment of a new independent Supreme Audit Institution to ensure transparency, accountability, and efficiency in use of public resources. - Enhance financial and administrative independence of the new anti-corruption agency, CoLDEFF. - Proceed with planned request for a governance diagnostic assessment. - Continue efforts to fully implement the GIABA recommendations to strengthen the country’s AML/CFT framework. *Source: IMF staff assessment as presented in the provided content unit.* ### 54. Based on performance and commitments under the program, staff supports the ### 1nerea2024001 - 54. Based on performance and commitments under the program, staff supports the ### Program approvals, modifications, and disbursements - Staff supports the completion of the fourth and fifth reviews under the ECF arrangement and the first review under the RSF arrangement. - Staff supports: - (i) the request for the extension and the rephasing of both arrangements; - (ii) the request for modification of performance criteria and indicative targets under the ECF-arrangement; - (iii) waivers for the non-observance of the performance criteria on the accumulation of external payments arrears and the ceiling of net domestic financing of the government; - (iv) the disbursement of the fifth and sixth tranches under the ECF arrangement and the related amount associated with implemented reforms under the RSF arrangement totaling SDR 19.74 million and SDR 34.216 million, respectively. - Policies outlined in the attached MEFP are judged adequate to achieve the program’s goals. - Staff believes that RSF reform measures remain achievable given the authorities’ strong commitment and the expected technical support from development partners. ### Recent economic developments (selected findings from figures and tables) - Services and commerce growth was severely affected by sanctions and political instability. - Inflationary pressures persisted in the first quarter of 2024, despite the lifting of sanctions. - Broad money growth and credit to the private sector declined markedly in the second half of 2023. - All categories of government revenue declined in the second half of 2023. - The primary, extractive industries, and commerce sectors still dominate economic activity. - GDP growth is highly volatile and mainly driven by the impact of climate shocks on agriculture. - Per capita GDP growth is relatively modest due to high population growth. ### Medium-term outlook and key macro projections (2019–29 highlights) - Growth: - Growth should rebound in 2024 propelled by the extractive sector and a recovery in agriculture production. - Inflation: - Inflation should converge to the upper-limit of the WAEMU target band by end-2026. - External sector: - The current account deficit is projected to narrow over the near-term with higher oil exports. - Fiscal stance: - Fiscal consolidation efforts to reach the regional deficit target will persist in the near-term. - Public debt and debt service: - Public debt should remain relatively contained despite large shocks. - The debt service burden is projected to gradually decline over the medium-term. ### Fiscal performance and government financial operations (selected figures and exact amounts) - Total revenue (billions of CFAF), projection entries include: 972; 1,182; 888; 1,644; 1,105; 1,378; 1,563; 1,759; 1,985; 2,200. - Natural resource revenue (billions of CFAF): 179; 221; 206; 466; 402; 584; 584; 566; 559; 594. - Tax revenue (billions of CFAF): 905; 1,084; 821; 1,528; 979; 1,222; 1,374; 1,541; 1,749; 1,945. - Total expenditure and net lending (billions of CFAF): 2,076; 2,308; 1,611; 2,741; 1,911; 2,053; 2,264; 2,473; 2,686; 2,899. - Overall balance (commitment) (billions of CFAF): -1,104; -1,125; -723; -1,097; -806; -675; -701; -714; -701; -700. - Overall balance (percent of GDP): -11.5; -10.7; -7.1; -9.0; -6.9; -5.2; -4.9; -4.6; -4.2; -3.9. - Basic balance excl. budget grants (percent of GDP): -5.4; -4.4; -3.7; -2.7; -2.4; -1.0; -0.7; -0.5; -0.1; 0.2. ### Monetary and financial sector (selected indicators) - Net foreign assets (BCEAO and commercial banks combined, billions of CFA francs): 699; 775; 402; 1,115; 352; 582; 803; 903; 1,103; 1,203. - Net domestic assets (billions of CFA francs): 1,163; 1,370; 1,444; 1,381; 1,688; 1,748; 1,788; 1,909; 1,939; 2,086. - Credit to the private sector (billions of CFA francs): 1,199; 1,271; 1,121; 1,398; 1,194; 1,333; 1,455; 1,590; 1,731; 1,880. - Broad money (M2) (billions of CFA francs): 1,862; 2,145; 1,846; 2,496; 2,039; 2,330; 2,591; 2,811; 3,042; 3,289. - Broad money growth (annual percentage change): 11.9; 15.2; -0.9; 16.4; 10.5; 14.2; 11.2; 8.5; 8.2; 8.1. ### External sector and reserves (selected figures) - Current account balance (billions of CFA francs): -1,560; -1,290; -1,468; -629; -762; -532; -692; -839; -727; -900. - Exports, f.o.b (billions of CFA francs): 653; 954; 601; 1,986; 1,435; 2,143; 2,235; 2,221; 2,236; 2,256. - Imports, f.o.b (billions of CFA francs): 1,822; 1,905; 1,642; 2,016; 1,588; 1,768; 1,916; 1,945; 1,842; 1,929. - Pooled gross international reserves, WAEMU (in USD billion): 18.4; ...; 17.5; ..................... - Pooled gross international reserves, WAEMU (in CFAF billion): 11,397; ...; 10,759.8; ..................... ### Debt, financing, and IMF obligations (selected tables) - Total public debt (US$ million, end-2023): 9,585 (100.0 percent). - External debt (US$ million): 5,501 (57.4 percent of total). - Domestic debt (US$ million): 4,084 (42.6 percent of total). - Nominal GDP (US$ million): 16,949. - Summary projected external borrowing program (USD million, totals): By sources of debt financing: USD 1,117.6 (100 percent); Concessional debt: 895.6 (80.2 percent); Non-concessional debt: 222.0 (19.8 percent). - Uses of debt financing (USD million): Infrastructure 85.3 (7.6 percent); Social Spending 682.3 (61.1 percent); Budget Financing 350.0 (31.3 percent). - Indicators of capacity to repay the Fund (SDR millions, projected Fund obligations based on existing and prospective credit): - Total obligations (SDR millions): 26.8; 41.8; 47.9; 55.9; 58.2; 61.8; 53.2; 44.5; 36.6; 20.9; 16.9; 15.7; 14.5; 14.0; 13.6; 13.1; 12.7; 12.2; 11.8; 11.4; 10.9; 3.7 (calendar years 2024–2045 entries shown). - Outstanding IMF credit based on existing and prospective drawings (SDR millions): 426.1; 453.1; 410.2; 359.4; 306.3; 249.5; 201.3; 161.9; 130.3; 114.5; 102.6; 91.9; 82.0; 72.1; 62.2; 52.4; 42.5; 32.6; 22.8; 12.9; 3.0; 0.0 (calendar years 2024–2045 entries shown). ### Rephased disbursement schedules (selected exact amounts and dates) - Proposed Rephased Schedule of Disbursements Under the ECF Arrangement, 2021–25: - SDR 39.48 (30 percent of quota) — Executive Board Approval of the ECF Arrangement — December 8, 2021. - SDR 39.48 (30 percent of quota) — Observance of December 31, 2021 performance criteria, and completion of the first review under the arrangement — April 29, 2022. - SDR 39.48 (30 percent of quota) — Observance of June 30, 2022 performance criteria, and completion of the second review under the arrangement — October 31, 2022. - SDR 19.74 (15 percent of quota) — Observance of December 31, 2022 performance criteria, and completion of the third review under the arrangement — April 28, 2023. - SDR 9.87 (7.5 percent of quota) — Observance of June 30, 2023 performance criteria, and completion of the fourth review under the arrangement — October 31, 2023. - SDR 9.87 (7.5 percent of quota) — Observance of December 31, 2023 performance criteria, and completion of the fifth review under the arrangement — April 30, 2024. - SDR 13.16 (10 percent of quota) — Observance of June 30, 2024 performance criteria, and completion of the sixth review under the arrangement — October 31, 2024. - SDR 13.16 (10 percent of quota) — Observance of December 31, 2024 performance criteria, and completion of the seventh review under the arrangement — April 30, 2025. - SDR 13.16 (10 percent of quota) — Observance of June 30, 2025 performance criteria, and completion of the eighth review under the arrangement — October 31, 2025. - Total SDR 197.4 (150 percent of quota). - Proposed Schedule of Disbursements Under the RSF Arrangement, 2024–25 (selected entries and totals): - Individual disbursements of SDR 8.554 (6.5 percent of quota) linked to reform measure implementations and ECF reviews on dates including October 31, 2023; April 30, 2024; October 31, 2024; April 30, 2025; October 31, 2025. - Total SDR 98.7 (75 percent of quota). ### Risk Assessment Matrix — key risks, likelihood, impact, and recommended policy responses - Global conjunctural risks: - Intensification of regional conflicts; Relative Likelihood: High; Impact if realized: High. - Recommended policy response: Implement domestic revenue mobilization reforms; advance structural reforms to enhance resilience to external shocks; enhance the efficiency of social spending. - Commodity price volatility; Relative Likelihood: High; Impact if realized: High. - Recommended policy response: Implement targeted social measures; bolster domestic food production; strengthen fiscal buffers. - Global structural risks: - Deepening geoeconomic fragmentation; Relative Likelihood: High; Impact if realized: High. - Recommended policy response: Promote regional economic integration initiatives; accelerate market reforms to improve competitiveness and support trade diversification. - Domestic and regional risks: - Deterioration of security situation in the Sahel and neighboring countries; Relative Likelihood: Medium; Impact if realized: High. - Recommended policy response: Allow for a more gradual fiscal consolidation path to accommodate high priority security spending; increase engagement with the international community on security issues. - Persistence of political tensions with Benin; Relative Likelihood: Medium; Impact if realized: High. - Recommended policy response: Pursue discussions intermediated by partners to resolve differences; develop and implement a plan to strengthen fiscal buffers and protect priority spending. - Extreme climate events (Floods, Droughts, Rising Temperature); Relative Likelihood: Medium; Impact if realized: High. - Recommended policy response: Implement targeted social measures; improve management of water resources; strengthen planning and budgeting of climate-related spending. - Constrained financing conditions due to high interest and rising risk premia; Relative Likelihood: Medium; Impact if realized: High. - Recommended policy response: Create fiscal space by seeking concessional financing and enhancing domestic revenue mobilization. - Reduced donor support; Relative Likelihood: High; Impact if realized: High. - Recommended policy response: Enhance engagement with traditional and new donors; strengthen implementation capacity to ensure high returns from investment projects. - Persistence of political instability and social discontent; Relative Likelihood: Medium; Impact if realized: High. - Recommended policy response: Accelerate governance reforms; strengthen the social safety net. *Source: Niger — IMF staff report and associated tables and figures.* ### Annex I. Country Engagement Strategy ### Annex I. Country Engagement Strategy ### Background and context - Political instability: five successful coups d’état since 1960, including the military takeover of July 2023. - Human development and poverty: consistently ranked at the bottom of the UNDP’s Human Development index; close to 46 percent live in poverty earning less than $2.15 per day. - Economic structure: - Agriculture: about 40 percent of GDP; employs about 80 percent of the Nigerien population; largely subsistence and rainfed and frequently disrupted by droughts and climate change. - Export concentration: reliant on a limited number of primary commodities, including uranium, oil, and gold. - IMF engagement: provision of financial support under the ECF and RSF arrangements, policy advice, and extensive capacity development activities. ### Fragility and drivers of conflict - Political and social drivers: - Fragmentation and elite capture fostering clientelism and exclusion. - Weak social contract distorting economic incentives. - Limited state capacity and governance undermining political stability. - Demographic pressures and low human capital accentuating development challenges. - Stark gender and regional inequalities reinforcing exclusion. - Economic and financial drivers: - Lack of diversification and excessive reliance on extractive industries fostering rent seeking. - High informality and lack of access to finance fueling grievances. - Inadequate revenue mobilization due to pervasive exemptions, informality, extreme poverty and security challenges. - Inefficient and inadequate social spending to address poverty and inequalities. - Governance and corruption risks: - Civil service: low wages, poorly trained officials, weak administrative controls fostering petty corruption. - Higher-level risks: lack of transparency in public procurement and extractive industries’ contracts. - Cross-cutting stressors: - Climate change: frequent severe natural disasters (droughts and floods) causing displacement, growth collapses, inflationary pressures, chronic food insecurity and poverty. - Regional security spillovers: dampen economic activity, disrupt trade, increase refugee inflows, and raise fiscal costs via reduced tax revenues and higher security spending. - Resilience factors: - Culture of open dialogue via traditional and religious authorities. - Existence of institutions for conflict resolution and peace preservation. - Dynamic civil society conducting awareness and fragility-related projects. - Historically strong international support for resilience-building policies. ### Constraints to reform implementation - Political instability: - Limits ownership and appetite for deep reforms due to social unrest and disruption of political balances. - Undermines continuity of reform efforts. - Institutional capacity: - Limited human capital, concentration of institutional knowledge in a few individuals, over-centralization of reform efforts. - High staff turnover and lack of hand-over of responsibilities impede continuity and absorption of reforms. ### Macroeconomic policies to escape fragility - Short-term priorities: - Clear accumulated external and domestic debt service arrears to regain access to the regional market and external financing, ensure fiscal stability, and rebuild public trust. - Address financial stability risks amplified by sanctions and revive credit to the private sector. - Medium-term pillars (remain relevant under ongoing IMF-supported programs): - Strengthen revenue mobilization. - Reduce debt vulnerabilities. - Adopt a fully functioning legal and fiscal framework for oil revenue management. - Strengthen governance and combat corruption. - Promote financial inclusion. - Address climate change challenges. ### Capacity development priorities - Current CD focus areas: revenue, public financial management, tax policy (simplification of the General Tax Code), debt management, and statistics. - Going forward, CD priorities include: - Support the arrears clearance strategy. - Adopt climate reforms. - Expand fiscal space and improve quality of spending. - Enhance macroeconomic and financial statistics. - Foster governance and transparency. - Specific CD actions: - Strengthen tax policy and revenue administration. - Improve efficiency of the expenditure chain. - Improve national accounts, fiscal, and balance of payments statistics. - Implement climate budget tagging and green public investment management. - Risks to CD implementation: - Limited absorption capacity due to excessive turnover of senior staff and other personnel. - Lack of hand-over of responsibilities, public administration complexity with overlapping mandates, and over-centralization of reform efforts. ### Cooperation with stakeholders and risks to IMF engagement - Development partners: Niger has historically benefited from substantial partner support; IMF engagement is crucial to catalyze further support by underpinning macroeconomic policy design and macro-critical reforms. - IMF enterprise risks: exposed to significant risks related to engagement with Niger; CES aims to mitigate risks related to program performance, de-globalization, risk to debt sustainability, and overdue obligations. ### Reform priorities to escape fragility (summary of Table 1) - Fiscal: - Establish a strategy to clear both domestic and external arrears and adopt a prudent debt management policy. - Adopt a legal and fiscal framework for oil revenue management. - Strengthen revenue mobilization by revising and simplifying the general tax code; improve revenue administration to reinforce tax compliance and integrate digital systems of tax agencies; rationalize tax exemptions and deter fraud. - Commit to reduce gradually the overall fiscal deficit towards the regional target of 3 percent of GDP. - Foster fiscal governance and spending quality via improved expenditure chain transparency, strengthened budget preparation, execution and control, expanded TSA, and strengthened cashflow forecasting. - Financial sector: - Address financial stability risks and restructure the microfinance sector. - Enhance banks’ internal controls, treasury management, and AML/CFT procedures. - Foster financial inclusion, develop a national financial literacy program, and foster digitalization. - Adapt and diversify financial products to include Islamic and agricultural finance. - Governance: - Improve transparency of public procurement and strengthen the country’s governance framework. - Advance operationalization of the asset declaration framework. - Climate change: - Strengthen planning and budgeting of climate-related spending and enhance disaster-informed fiscal planning and management. - Make public investment management more sensitive to climate change and promote renewable energy sources. - Improve management of water resources and address obstacles hindering access to climate finance. *Source: IMF staff — Annex I. Country Engagement Strategy and Annex II. Macroeconomic Implications of Niger’s Exit from ECOWAS (selected extracts).* ### Annex II. Macroeconomic Implications of Niger’s Exit from ECOWAS ### Background - On January 28, 2024, Niger, Burkina Faso and Mali jointly announced their decision to leave ECOWAS. - The Alliance of Sahelian States (AES) was established in September 2023 by Burkina Faso, Mali, and Niger. - ECOWAS treaty: an exit requires a one-year notice period. ### Channels and stylized facts - Identified channels to quantify potential impact of exit: - Cross-border trade (tariff increases on imports). - Labor mobility (potential restrictions on movement and remittances). - Uncertainty (increased risk premia, tighter financing conditions, lower FDI). - Additional vulnerability: reliance on Nigeria for a large part of electricity imports (70 percent of Niger’s electricity supply is provided by Nigeria), posing value chain and inflation risks. - Mitigating factors: - Other trade agreements such as AfCFTA. - High levels of informality in border trade with Nigeria and Benin. - Trade exposure: - Trade with ECOWAS non-WAEMU countries: 11 percent of total exports and 6 percent of total imports. - Nigeria is Niger’s main trading partner among all ECOWAS countries when considering total trade (exports and imports). - Migration and remittances: - Main destinations for Niger migrants: Nigeria 30 percent, Benin 20 percent, Côte d'Ivoire 17 percent, Togo 16 percent, Mali 3 percent of diaspora stock. - In 2020, remittances to Niger amounted to US$514 million (3.8 percent of GDP), with US$161 million originating from Nigeria. ### Assumptions and analytical parameters - Exit assumed to take effect in 2025 while Niger remains in the WAEMU. - Tariffs between Niger and non-WAEMU ECOWAS countries assumed to increase by 10 percentage points reciprocally. - Trade elasticity to a tariff increase used: -1.98 (IMF research). - Implies an approximate 18 percent decrease in trade flows for the assumed tariff increase. - GDP per capita sensitivity: estimated decrease of 1.25 percentage points for every 1 percentage point decrease in trade openness. ### Quantified effects (selected results) - Direct effects on trade flows (staff analysis): - Effects of leaving ECOWAS reduce Niger’s exports to GDP by -0.06 percentage points and imports to GDP by -0.30 percentage points (Panel a: reported exports and reported imports). - Trade balance to GDP ratio improves by 0.24 percentage points due to a larger decrease in imports. - Openness (trade openness) decreases by -0.36 percentage points (Panel a). - GDP per capita effect: -0.45 percentage points (Panel a). - Import Tariff revenue: 21.42 $mn (Panel a). - Alternative mirror statistics (Panel b: mirrored imports and mirrored exports) show: - Exports to GDP effect: -0.01 percentage points. - Imports to GDP effect: -0.30 percentage points. - Trade balance to GDP ratio improves by 0.29 percentage points. - Openness decreases by -0.32 percentage points. - GDP per capita effect: -0.40 percentage points. - Import Tariff revenue: 21.42 $mn. - Persistence of the shock depends on speed of re-establishing bilateral trade agreements, especially with Nigeria. *Source: IMF staff calculations — Annex II. Macroeconomic Implications of Niger’s Exit from ECOWAS (selected extracts).* ### 10. Niger’s tariff revenue is projected to increase modestly by US$21.4 million, while the ### 10. Niger’s tariff revenue is projected to increase modestly by US$21.4 million, while the total effects on government revenues will be driven by multiple factors ### Tariff revenue and ECOWAS exit effects - Tariff revenue is projected to increase by US$21.4 million. - Improvement in tariff revenues is attributed to Niger importing more goods from non-WAEMU ECOWAS countries than it exports. - By leaving the ECOWAS common external tariff (CET), Niger is likely to see a larger increase in import tariff revenues than losses in export volume (due to tariffs on Nigerien exports to other countries). - The total impact on government revenues is complex: the decrease in revenue resulting from the slowdown of economic activity could potentially outweigh the benefits of tariff increases. - Baseline staff projections of the effects on growth and inflation were calibrated mostly on effects on trade and transport and their spillovers, but did not account for effects of increased uncertainty, labor mobility, and electricity supply interruption. ### Growth and inflation projections - Growth is projected to slow down by 0.8 percentage points in 2025. - Annual average inflation is expected to rise by 0.6 percentage points in 2025. - These adverse effects are projected to be fully dissipated in the medium term, contingent upon the establishment of bilateral agreements between Niger and other ECOWAS countries that will restore conditions to those prior to Niger's departure. - Authorities believe that leaving ECOWAS will not necessarily end the bilateral electricity supply agreement with Nigeria; sanctions following the military takeover in July 2023 led to interruption of Nigeria's electricity supply. ### Recent macroeconomic and external developments (selected figures) - Economic growth: 2.4 percent in 2023 (compared to an initial forecast of 7.0 percent). - Agricultural branch growth (irrigated production): 3.1 percent. - People in need of humanitarian assistance in 2023: 3.4 million (need increased by 14 percent in 2023 in Diffa, Maradi, Tahoua and Tillabéri). - Annual average inflation in 2023: 3.7 percent (above the WAEMU community norm ceiling of 3 percent). - Current account deficit: 14.4 percent of GDP in 2023 (improved from 16.2 percent in 2022). - Current account balance: improved from 1559.5 billion CFAF in 2022 to 1468.4 billion in 2023 (improvement of 5.8 percent). - Deficit in the balance of goods and services narrowed by 157.2 billion (+8.6 percent) in 2023. - Exports of goods fell by -7.9 percent in 2023; imports fell by -9.9 percent in 2023. - Secondary income balance: 272 billion in 2023 compared to 338 billion in 2022 (driven by remittances from foreign workers falling by -13.8 percent and withdrawal of budget support by -37.8 percent). ### Fiscal, monetary, and financial sector outcomes (selected figures) - Overall fiscal deficit: 5.4 percent of GDP in 2023. - Total cash revenue in 2023: fell short of the program's target. - Money supply: contracted by 0.9 percent in 2023 (from 1862.1 billion in 2022 to 1845.6 billion in 2023, decrease of 16.5 billion). - Transferable deposits at commercial banks fell by 6.8 percent in 2023 (compared with increases of 13.9 percent in 2022 and 19.4 percent in 2021). - On counterparty side: net foreign assets decreased by 42.6 percent; claims on the economy decreased by 7.6 percent. - BCEAO policy rate: raised from 2.75 percent to 3.5 percent in 2023. - Interest rate on marginal lending window: increased from 4.75 percent to 5.5 percent in 2023. - Gross non-performing loans: increased from 17.0 percent in 2022 to 22.6 percent in 2023 (deterioration of 5.6 percentage points). - WAEMU average gross NPLs in 2023: 8.7 percent. - Net non-performing loans increased by around 3.6 billion to 161.78 billion in 2023. - Net deterioration rate of banks' portfolio: 12.6 percent at end-December 2023 vs. 11.0 percent at end-December 2022. - Accrued provisions increased by 66.7 billion to reach 171.1 billion as of end-December 2023. ### Debt management, arrears clearance and oil export developments - Sanctions led to significant accumulation of both domestic and external debt service arrears. - On April 26, 2024, a special issuance of securities for 419.05 billion CFA francs raised 457.99 billion CFA francs to alleviate accumulated debt service arrears. - On May 6, 2024, the BCEAO purchased 77 billion CFA francs of Niger's public securities held by WAEMU banks to increase liquidity and facilitate debt management and restructuring. - Niger-Benin oil pipeline: 1,980 km long; inaugural export capacity of 90,000 barrels/day; first ship loaded with about 1 million barrels in mid-May 2024; exports started in May 2024. ### Program implementation, requests, and commitments - Implementation of the ECF and RSF arrangements was broadly on track at end-June 2023 but disrupted by sanctions. - All quantitative performance criteria were met except: - Continuous criterion on the non-accumulation of new arrears in external debt service payments. - Criterion on the net domestic financing ceiling, excluding IMF net financing at end-December 2023. - All indicative targets were met except the floor on cash revenues. - Some structural benchmarks under the ECF were achieved; others were not, including adoption of the oil revenue management strategy (postponed to end-December 2024). - Government requests: - Extension of six months, to December 2025, and rephasing of the two arrangements under the ECF and the RSF. - Disbursement of the fifth and sixth tranches of the ECF and the first tranche under the RSF corresponding to SDR 19.74 million and SDR 34.216 million respectively (or 15 percent and 26 percent of our quota, respectively). - Waivers for non-compliance with the continuous criterion on non-accumulation of new arrears in external debt service payments and the criterion for net domestic financing at end-December 2023. - Corrective and supporting measures cited by the government: - Developed an arrears clearance plan. - Committed to the budgetary adjustment path under the program. - Remain committed to implementing key structural reforms and strengthening debt policies, focusing on use of concessional financing. - Request modification of the performance criterion relating to net domestic financing of the government, excluding net IMF financing. - Government commitments under the MEFP: - Consolidating macroeconomic stability. - Strengthening mobilization of domestic resources. - Improving effectiveness of public expenditures, with emphasis on social and poverty-reduction spending. - Fostering good governance. - Implementing RSF reforms to mitigate climate change risks. *Source: Letter of Intent and Memorandum of Economic and Financial Policies, Niamey, June 27, 2024.* ### 13. All indicative targets were met at the end-June, end-September, end-December ### 13. All indicative targets were met at the end-June, end-September, end-December ### Performance on quantitative indicative targets - Indicative targets for the basic budget balance—including and excluding grants—have been met at end-June, end-September, end-December 2023 and end-March 2024. - Indicative targets for social expenditures and the ratio of exceptional expenditures were met on all target dates. - The indicative target for the cash revenue floor was not met on any target date. ### Structural benchmarks and reform implementation - Implementation of structural benchmarks of the ECF has been mixed following events of July 26, 2023. - Achievements: - All structural benchmarks relating to the digitalization and interconnection of the DGI and DGD administrations have been achieved. - Digitalization of budget expenditure orders and expenditure authorizations has been finalized (albeit with delays). - Order No. 0209/MEF/SG/DGER of May 27, 2024 was adopted to establish a technical committee (representatives of the Ministries of Petroleum, Economy and Finance) to prepare a detailed report on forecasted revenue from crude oil production and export and to assess fiscal risks. - Outstanding: - Adoption of the oil revenue management strategy, originally scheduled for September 2023, has not yet been carried out. ### Continuous structural benchmarks - Of four continuous structural benchmarks, three were met in May 2024: - The government provided IMF staff with a list of newly granted or renewed tax exemptions. - The government continues to produce and publish feasibility studies for any investment project costing more than CFAF 5 billion. (Note: no investment project costing more than CFAF 5 billion has been included in the budget this year—due to financing constraints.) - Publication of information about beneficial owners of companies awarded non-competitive contracts (excluding defense and security contracts) on the public procurement portal continues. ### Rephasing and RSF-supported reforms - A rephasing of reform measures under the RSF arrangement is proposed to address delays from the political crisis and interruption of technical assistance. - Based on the new timetable, all four reform measures planned for June 2024 have been implemented. - Progress on fiscal risk management and disaster resilience: - Published a methodological guide for analysis of fiscal risks related to natural disasters and flood and drought risk assessments. - Strengthened sectoral capacities by establishing focal points in some sectoral ministries. - Support for private investment in renewable energy: - Order No. 0208/MEF/SG/SE-FONAP of 27 May 2024 created a new window within FONAP to support SMEs operating in the renewable energy sector. ### Macroeconomic framework and growth projections - Outlook drivers: start of crude oil exports via the new pipeline and increase in irrigated agricultural production. - 2024 projection: - Economic activity in 2024 is expected to reach 10.6 percent after 2.4 percent in 2023. - Medium-term (2025-2029) projection: - Real GDP growth expected to average 6.4 percent. - Yearly projections: 7.4 percent in 2025, 6.1 percent in 2026, and 6.4 percent in 2027. - Sectoral contributions: primary sector average growth 7.3 percent; secondary sector average 6.4 percent; tertiary sector average 6.3 percent. ### External sector and current account - Current account deficit path: - Expected to increase to 6.5 percent of GDP in 2024 (owing to expected increase in oil production). - In the medium term, current account expected to improve to an average of 4.8 percent of GDP. - Drivers of improvement: strengthening of crude oil exports, surplus in balance of secondary income, and exports of mining products (uranium and gold). ### Fiscal consolidation, targets, and risks - Fiscal deficit targets: - Reduce fiscal deficit to 4.1 percent of GDP in 2024. - Reduce fiscal deficit to 3 percent of GDP from 2025 onwards. - Measures to achieve targets: increased natural resource revenue, better mobilization of non-resource revenue, and better control of public spending growth. - Risks and contingent actions: - If disbursements from development partners are lower than expected or regional market borrowing conditions deteriorate, authorities will intensify revenue mobilization and reprioritize spending to reduce the fiscal deficit and financing needs. ### Debt arrears and debt policy - Commitment to clear debt arrears and avoid new external debt payment arrears. - As of May 15, 2024, total arrears amounted to 172.9 billion CFAF, composed as follows: - (i) arrears to multilateral creditors: 21.7 billion CFAF - (ii) arrears to bilateral creditors: 27.8 billion CFAF - (iii) commercial debt arrears: 14.99 billion CFAF - (iv) arrears on domestic debt: 108.4 billion CFAF - Actions: - A plan to settle arrears (Prior Action #1) aiming for full clearance by the end of 2024; the revised budget will include payments relating to these arrears. - Government will monitor and report quarterly to IMF staff, starting in June 2024, on outstanding arrears and payments made. - Debt policy stance: - Continue to prioritize concessional resources and grants. - Strengthen institutional capacity for public debt management and monitoring. ### Monetary policy stance - Determinants: level of inflation and reserves. - 2023: BCEAO tightened monetary conditions to limit inflationary expectations and ensure stability of foreign exchange reserves. - Future stance will depend on evolution of global inflation and interest rates of major central banks. ### Oil revenue management strategy and related reforms - Commitment: develop and implement an oil revenue management strategy by the end of 2024 (Prior action #2). - Planned actions: - Adopt a regulatory text to establish and approve a roadmap with a precise timetable for adoption of the oil revenue management strategy before the end of 2024. - Technical committee responsibilities: develop macroeconomic and fiscal framework for finance laws, prepare report on forecasted revenue from extractive industries, ensure consistency of macroeconomic accounts, prepare detailed report on forecasted revenue from crude oil production and export over recoverable reserves' economic life and assess fiscal risks (Structural benchmark at end-March 2024). - Subsequent adoption of a regulatory text to set up a stabilization mechanism including: (i) a formula for calculating the reference price, (ii) an oil stabilization fund, and (iii) a committee of experts for implementing the calculation formula (Structural benchmark at end-March 2025). ### Fiscal framework, financing, and budget execution - Fiscal framework for 2024 is fully financed. - Interministerial Budget Regulation Committee will release credits considering pace of revenue and grant mobilization to maintain deficit within 4.1 percent of GDP. - Efforts to raise additional domestic revenue to finance priority social and development spending. ### Revenue mobilization measures and tax policy reforms - Emphasis on mobilizing domestic revenue to finance security, agriculture, education, health, food security, irrigated crops programs, and recruitment of government officers and civil servants. - New tax measures in Budget 2024 (expected to increase fiscal revenue): - Align duties on re-export of sugar with consumption duties at a rate of 27 percent. - Align duties on re-export of edible oil with consumption duties. - Introduce a 3 percent Statistical Export Royalty (SER) on crude oil that passes through the pipeline (as for refined products). - Introduce a 3 percent SER on gold and uranate. - Customs revenue mobilization measures: - Activation of the Special Customs Rapid Intervention Unit (USIR) under the Director General of Customs to fight fraud. - Reinforcement of customs controls, implementation of the National Plan against Hydrocarbon Fraud, deployment of the Annual Plan of the Directorate of Customs Investigations, Intelligence and Risk Analysis (DEDRAR), Audit Program of the Audit and Internal Control Directorate (DACI), and Regional Inspection Program. - Consideration of reorganizing customs services and agents to better exploit high revenue potential activities. - Creation of an observatory and a framework for exchange with the private sector to improve regulatory understanding and increase speed of customs clearance. - Property tax mobilization: - Implement geolocation of land properties, create a cadaster, and improve estimation of real estate values to accelerate property and owner registration. - Authorities cite lagging property tax revenue relative to Mali and Burkina Faso and note considerable revenue potential. ### Tax administration reforms and digitalization - Certified invoice reform: - Free online platform for issuance of certified electronic invoices (e-SECEF) implemented. - Generalization of SECEF to all taxpayers, including those not subject to VAT. - Compliance rates of large and medium-sized companies are now close to 100 percent. - Notable increase in VAT and income tax (IT) revenue, exceeding expectations in Q1 2024. - Ongoing monitoring, awareness-raising and communication to increase compliance among small businesses and retailers to 50 percent. - Revision of the General Tax Code (CGI): - Draft of the first book available; being reviewed and validated by the technical committee. - Six other books to be developed and validated. - Commitment to adopt the new CGI prior to the March 2025 structural benchmark (end-March 2025). - Interconnection and data sharing: - Revised and validated interfacing manual defining data to be shared and exchange architecture following IMF technical assistance. - Operationalized interconnection of SISIC and SYDONIA platforms with staged exchanges: - (i) complete automation of priority processes related to taxpayer directories and customs declarations (Structural benchmark at end-March 2024), - (ii) exchanges relating to exchange control unit, VAT declarations inquiries unit, customs permits inquiries unit, automobile inquiries unit, and disputes inquiries unit (Structural benchmark at end-June 2024), - (iii) exchanges concerning full automation of priority processes relating to corporate balance sheets (Structural benchmark at end-September 2024). - Plan to improve availability of data on both platforms, particularly companies' financial statements which are rarely entered, to strengthen compliance risk management, inspections, audits, and combat tax fraud and tax evasion. - Digital payment and SISIC deployment: - Electronic payments for tax revenue: 164 billion CFAF in 2022 and 131 billion CFAF in the first seven months of 2023. - Recent financial sanctions temporarily disrupted digital financial inclusion and taxpayers' trust in the electronic payment system. - Deployment of Integrated Tax and Taxpayer Information System (SISIC): 67 out of 83 tax units have been covered to date; rollout to remaining units will continue. ### Fiscal priorities and public sector staffing - Resource allocation priorities shifted to security and social spending: health, education, food security, and social safety nets. - Recruitment strategy: - Total workforce at end-December 2023: 89,002 agents (all categories combined). - Recruitment plan targets an increase of 7,654 agents and civil servants, on average, per year in the civil service over 2024-2026. - Planned recruitment for DGI: about 831 agents in 2024. - Conversion of nearly 2,150 contractual workers from the Ministry of National Education into civil servants. - Consideration of recruiting staff for the Ministry of Health (no recruitment since 2021) to enable provision of quality health services. *Source: 1nerea2024001 - 13. All indicative targets were met at the end-June, end-September, end-December* ### 36. The government intends to strengthen the social protection system to protect ### The government intends to strengthen the social protection system to protect vulnerable populations. ### Social protection expansion and Unified Social Register (USR) - Spending on subsidies and transfers is expected to increase to provide support to vulnerable populations and lead to a significant improvement in social indicators. - Objective to expand coverage of the USR to 800,000 households in the coming years, targeting particularly 43 percent of the poorest individuals to ensure more efficient and targeted distribution of social spending. - Ultimate plan: register all poor and vulnerable households, estimated at more than 3 million, by 2030. - USR implementation focuses on: - data collection and keeping the USR dynamic by regularly updating household information; - achieving interoperability with other national information systems. - Authorities face challenges including mobilizing necessary financial resources, establishing a unique identifier for vulnerable individuals and households, and including diverse social groups in the registry. ### Education access, quality, and governance reforms - Access: - Gradual replacement of 36,000 straw hut classrooms with hard-material constructions has been initiated. - 2,331 classrooms already under construction in the 8 regions using Niger’s own resources from the 2022 budget. - 1,059 more classrooms planned for 2024. - Construction of 100 boarding schools for girls and creation of grouping centers for children affected by insecurity to enroll more girls and reintegrate displaced children. - Quality: - Continuation of curriculum reform and introduction of digital technology in schools to improve teaching practices and online learning. - Governance: - Plans to respect the school card, set up a human resources database, and establish performance contracts to improve resource management and accountability. - Reforms are supported by the government and partners to transform the education system to meet development needs. ### Solidarity Fund for the Safeguarding of the Homeland (FSSP) - Government committed to integrating the FSSP as a special account in the 2025 budget (new structural benchmark). - FSSP focuses on: - (i) financing defense and security expenditures; - (ii) support for citizens forcibly displaced (relocation, local reintegration, voluntary return); - (iii) financing social mobilization in the context of citizen actions. - FSSP resources derived from voluntary contributions and various levies (telephone operator levies, levies on the price structure of hydrocarbons, etc.). - Commitment to rigorous accounting of all contributions and expenditures for transparency and accountability. ### Fiscal transparency, budgeting, and payment digitalization - Technical assistance requested for a governance diagnostic assessment to strengthen fiscal transparency. - A fiduciary evaluation by the World Bank is scheduled for the end of 2024 to formulate recommendations to strengthen budget transparency and governance. - AE/CP (Commitment Authorizations / Payment Credits) budgeting reform: - Extended to all Ministries in 2025; currently includes eleven Ministries with the highest investment portfolios. - A preliminary assessment will identify challenges encountered; reform to cover all Ministries by 2025 with additional training planned for sectoral ministry staff. - Digitalization of government payment processes: - e-Tresor Niger and I-ATS platforms introduced to modernize payments, enable various payment methods, promote real-time management of state bank accounts, and interconnect banks and the Public Treasury. - Prepaid cards will soon be distributed to students and retirees for scholarship and pension payments. - Reform aims to reduce transaction times and costs, fight corruption, and improve financial inclusion by minimizing reliance on cash. - Success contingent on a robust regulatory framework, change management, and cybersecurity commitment. - Treasury Single Account (TSA) achievements preserved to strengthen cash management: - Restricted opening of new bank accounts by public entities in commercial banks despite freezing the Treasury account. - Ongoing inventory of accounts, including local authorities; plan to close the 34 accounts still active if projects they funded are completed. - Treasury accountants manage the accounts of 122 out of 266 local authorities. - Expansion of coverage by Treasury's direct accountants to continue, aided by collaboration with finance directorates of local authorities and merger of local authorities based on geographical proximity and similarities. ### State-owned enterprises, public expenditure chain, and budget management - Supervision and monitoring of state-owned enterprises improved: - Budgets submitted for approval by the Minister of Finance have been significantly improved; several public institutions merged. - Implementation of performance contracts pending but actively pursued. - 2024 objectives: update database of budgets and financial statements transmitted by companies and public institutions, publish their financial statements, and produce three reports: report on debts and receivables, report of the State portfolio, and the general report of public enterprises. - Efforts to update state's participation, company listings, organization of general assemblies, and awareness-raising among managers. - Plan to equip authorities with an information and management system for electronic archiving and better appointment texts, training, and certifications for board members. - Public expenditure chain reforms: - Revision of the order on supporting documents to simplify expenditure execution. - Development of guides for budget nomenclature utilization and program budget execution. - Accelerated processing of personnel expenditure files by pay agents. - Elaboration of a decree on budget management to establish a coherent regulatory framework for the new public management system. - Establishment of a communication framework between the Directorate General of Budget (DGB) and actors in budget preparation and execution. ### Private sector, financial inclusion, and microfinance reforms - Private sector development: - New framework for public-private dialogue created in April 2022 with institutional framework at central and regional levels and technical committees to support the private sector. - Plan to adopt a decree instituting a charter for SMEs before the end of the year to improve competitiveness and access to financing. - Strategy on access to electricity (2018-2035) adopted in 2018 to provide reliable, affordable, and environmentally responsible electricity and encourage private sector emergence. - Financial inclusion: - National inclusive finance strategy adopted since 2018 with an assessment planned for this year to inform actions to increase financial inclusion of vulnerable populations, including women and youth. - Development of a financial education plan based on a diagnostic study on financial inclusion. - Continued digitalization of the financial system through promotion of mobile money and other digital services. - Financial Inclusion Development Fund (FDIF): - Main government financing instrument for financial inclusion, strengthening technical and financial capacities of financial service providers through credit lines for Decentralized Financial Systems (DFS), guarantee fund for credit operations, Facilitation Funds for bank refinancing of DFS, and technical assistance and counterpart grants. - An additional window focused on Islamic finance services was established in 2024. - National Support Fund for SMEs and SMIs (FONAP): - Supports access to finance and complements FDIF, FISAN, and BCEAO's SME Financing Facility. - Four windows: (1) Loan and Refinancing Funds, Participation and Credit Guarantees to SMEs/SMIs; (2) Interest Rate Subsidy Funds; (3) Leasing Funds; (4) Technical Assistance and Counterpart Funds. - For 2023, FONAP benefited from state subsidies amounting to 3.78 billion CFA francs. - Microfinance sector restructuring: - State secured a loan of 10 billion CFA francs from BOAD for retrocession to ASUSU to rehabilitate the structure under provisional administration since 2018; disbursement subject to certification of ASUSU's financial statements by statutory auditor. - Withdrawal of accreditation for TANAADI initiated by ARSM and validated by BCEAO; procedures underway for appointment of a liquidator. - Union des Caisses Mutuelles du Niger remains under provisional administration. - Government committed to internalizing the WAEMU community law on microfinance regulation adopted in December 2023. ### Governance, anti-corruption, and AML/CFT - Anti-corruption and asset recovery: - Ordinance No. 2023-09 of September 13, 2023 established the Commission for Combatting Economic, Financial and Tax Delinquency (CoLDEEF). - CoLDEEF missions include investigations, receiving and processing investigation and handover reports, analyzing audit reports, recovering assets owed to the state, and making recommendations. - Since creation, CoLDEEF has recovered an amount of 42 billion CFA francs. - Dissolution of the Supreme Audit Institution (Cours des Comptes) led to interruption in asset declarations; an ordinance on a new Supreme Audit Institution is being drafted in line with PRSP strategic axis "Strengthening of governance, peace and security." - Morality survey mechanism extended to appointment of administrative officials. - AML/CFT/CPF strengthening: - Transposition into domestic law of the new WAEMU regional Law on Combating Money Laundering, Terrorist Financing and the Proliferation of Weapons of Mass Destruction (adopted in 2023) is ongoing. - An order signed and four draft decrees being validated to strengthen Niger's AML/CFT framework. - Continued implementation of GIABA's recommendations. - CENTIF plans to set up a compliance forum for companies as a quarterly consultation framework with stakeholders. - National terrorism financing risk assessment and sectoral risk assessments (banking, real estate, non-profit, mining) undertaken. ### Climate change commitments and disaster risk management - Climate governance and NDC implementation: - Governance bodies established to guide, monitor, and coordinate NDC implementation. - All strategic NDC documents finalized: (i) resource mobilization strategy (2021-2025); (ii) climate investment plan (2022-2026); (iii) partnership plan to address financing needs; (iv) national adaptation plan (2022-2027); (v) communication strategy (2023). - Awareness campaigns on the NDC conducted in the eight regional capitals and in all departments and municipalities of Dosso and Tahoua (June 2022), Maradi and Zinder (ongoing). - Support to integrate climate considerations into Communal Development Plans. - With World Bank support, aim to establish, before the end of 2024, a Measuring, Reporting and Verification (MRV) mechanism under the Enhanced Transparency Framework to assess NDC actions. - Plan to revise the NDC in 2025 to include migration, security and peace, and waste management. - Fiscal risk management for natural disasters: - With IMF technical assistance in July 2023, developed and published in May 2024 a guide for analysis of fiscal risks related to natural disasters on the Ministry of Economy and Finance website (First Review of the RSF, RM7). - Quantitative analysis of macroeconomic impacts of natural disasters developed in the Macroeconomic and Budgetary Framework Note 2025-2027, including impacts on the state budget. - Plan to publish the fiscal risks statement, including natural disaster risks, in the Multiannual Fiscal and Economic Programming Document (DPBEP 2025-2027) before the end of September 2024 (Second Review of the RSF, RM8). - Strengthening sectoral capacity and natural disaster risk management: - For Law No. 2022-61 on disaster risk management, an order established a National Platform for Disaster Risk Prevention and Reduction in March 2023 within the Ministry of Humanitarian Action and Disaster Management. - Adopted an order in June 2024 appointing focal points (a titular and an alternate) in relevant directorates of five Ministries21 to carry out responsibilities under the new law, including sectoral disaster risk reduction plans, monitoring and evaluation, preparedness and response, and coordination between Ministries (First Review of the RSF, RM9). - World Bank support via PIDUREM and CREWS to strengthen sectoral ministry capacity. - Flood and drought risk assessments conducted in seven urban areas: Niamey, Maradi, Tessaoua, Diffa, Gaya, Agadez, and Tahoua with World Bank technical support under PIDUREM. - Following a pre-validation workshop in 2023 and ownership by the Ministry of Humanitarian Action, these studies were published in June 2024 on the National DRM Data Platform (www.risques-niger.ne) (First Review of the RSF, RM10). *Source: Content unit 1nerea2024001 (excerpts provided).* ### 54. We have made progress in implementing our agenda for a low-cost energy ### 1nerea2024001 - 54. We have made progress in implementing our agenda for a low-cost energy ### Progress on the low-cost energy transition and renewable sector support - The revised NDC from 2021 commits to reducing greenhouse gas (GHG) emissions by 12.5 percent compared to the status quo in 2030 and by up to 22.7 percent with international support. - The energy sector contributes 48 percent to the emission reductions envisaged in the NDC. - The government signed an order for the creation of a new window within FONAP to provide financial and technical support to SMEs operating in the renewable energy sector in May 2024 (RSF First Review, RM11). - Operational rules and intervention mechanisms for the window will be developed in a technical manual, with the support of the World Bank. - Pending finalization of the technical manual, authorities plan to draft a concept note to ensure operationalization of the window. - The government intends to establish an inclusive consultation framework focused on three strategic axes: - (i) mobilizing researchers within local institutions to enrich the operating modalities of the window and adapt it to the Niger context; - (ii) developing proposals to argue to strengthen the contribution of development partners to the financing of the window; - (iii) developing communication and awareness-raising strategies for SMEs regarding the offers and technical assistance provided for in the window. - Niger will benefit from a Project for the Deepening of the Financial Sector and Financial Inclusion in Niger (PASFIF), with the support of the AfDB, which provides for activities related to the training of the entire financial ecosystem to accelerate access to the Green Fund. ### Making infrastructure investments green and resilient (Public Investment Management) - Commitment to climate-sensitive public investment management (PIM) and revision of the PIM Order (No. 0041 of 3 November 2021) to strengthen integration of climate change aspects in project evaluation and selection. - Institutional strengthening: establishment of a Committee for the Analysis and Eligibility of Public Investment Programs. - IMF technical assistance to continue the revision of the Order, expected to be completed before the end of March 2025 (Third Review of the RSF, RM5). - With GIZ support, the General Directorate of Planning and Development Programming validated, in September 2023, a draft guide of methods for the preparation and evaluation of investment projects. - World Bank technical assistance is planned to systematically include climate change considerations in the guide and organize dissemination workshops to sectoral ministries before September 2024 (Second Review of the RSF, RM4). - Commitment: publish feasibility studies, including climate vulnerability assessments, for at least three public investment projects of more than 5 billion FCFA by the end of September 2025 (Fourth Review of the RSF, RM6). ### Strengthening planning and budgeting of climate-related spending (budget tagging) - IMF technical support finalized development of a methodology for budget tagging of climate-related spending. - The technical assistance covered: - training of representatives of several ministries, under leadership of the Ministry of Economy and Finance and the Ministry of Hydraulics, Sanitation and the Environment; - institutional arrangements required in the marking process; - definition of the taxonomy of climate-related expenditures (including adaptation and mitigation aspects); - tagging tools. - The methodology will be submitted to the NDC Technical Committee for validation before the end of September 2024 (Second Review of the RSF, RM1). - IMF technical assistance will support piloting the 2025 budget methodology for at least four sectoral ministries, with results expected by March 2025 (Third RSF Review, RM2). ### Mobilizing climate finance and carbon market development - Financing needs for adaptation and mitigation under the NDC are estimated at $9.9 billion for the period 2021-2030. - Mobilized resources to date from international climate funds include: - Adaptation Fund: $10 million; - Green Climate Fund: $11 million. - To date, only the Agricultural Bank of Niger (BAGRI) is accredited as a national implementing entity of the Adaptation Fund. - The National Agency for the Financing of Local Authorities has been proposed as a potential candidate as an accreditation entity to the Green Fund. - The government plans to strengthen capacity of officials on climate finance, including development of project concept notes, to better meet access criteria for existing funds. - Funding has been secured to develop a carbon market development strategy as part of commitment to implement Article 6 of the Paris Agreement. ### ECF/RSF program monitoring and performance framework - ECF program monitoring will be based on the performance criteria (Table 1) and structural benchmarks (Tables 2 and 3); indicators and reporting requirements are defined in the accompanying Technical Memorandum of Understanding (TMU). - Authorities will submit data and statistics to the IMF as set out in the TMU, and any other information considered useful or requested by the IMF for monitoring purposes. - The ECF and RSF supported programs will be monitored by joint semiannual reviews by the IMF Executive Board. - Semiannual reviews under the ECF are based on performance criteria at end-June and end-December, and on indicative targets at end-March and end-September. - New quantitative performance criteria are being proposed at end-December 2024 and end-June 2025 as well as new indicative targets at end-September 2024 and end-March 2025 based on Table 1. - RSF reviews will be based on evaluation of implementation of the reform measures set out in Table 4. *Source: Excerpt from the IMF country document.* ### 2. Digitize all expenditure ### 2. Digitize all expenditure ### Digitization of expenditure orders and authorizations - Objective: Improve the transparency and effectiveness of public spending by digitizing expenditure orders and expenditure authorizations (AD). - Target dates and implementation status: - Digitize all expenditure orders issued in the context of budget execution. Target: End-September 2023. Status: Not met, implemented with delay. Note: The digitization of expense orders was completed in March 2024. - Digitize all expenditure authorizations (AD). Target: End-December 2023. Status: Not met, implemented with delay. Note: The digitization of expenditure authorizations was completed in March 2024. ### Broader public finance, tax, and revenue governance benchmarks - Adoption and reform of tax code: - Adoption of the revised, simplified General Tax Code (CGI) by the Council of Ministers in accordance with IMF staff recommendations. - Policy objective: Simplify the CGI, promote private sector development, shift the tax burden from factors of production to consumption, and increase revenue. - Target: End-June 2024. Status: Postponed to end-April 2025. - DGD and DGI IT systems interconnection (tax and customs administrations): - Continue interconnecting all DGD and DGI IT systems by fully automating priority processes relating to taxpayer databases and customs declarations per IMF technical assistance. Objective: Protect the tax base. Target: End-March 2024. Status: Met. - Further automation of exchanges: automate activities relating to the exchange control unit, the VAT declarations inquiries unit, the customs permit inquiries unit, the automobile inquiries unit, and the disputes inquiries unit per IMF technical assistance. Objective: Protect the tax base. Target: End-June 2024. Status: Met — Completed in advance. - Complete full interconnection by fully automating priority processes relating to corporate balance sheets per IMF technical assistance. Objective: Protect the tax base. Target: End-September 2024. Status: Met — Completed in advance. ### Oil revenue governance and fiscal transparency - Creation of technical committee to report on projected revenue streams from crude oil production and exports and assess fiscal risks: - Objective: Enhance governance and transparency of oil revenue allocation. - Target: End-March 2024. Status: Not met, implemented with delay. Note: The decree for the creation of the committee was adopted in May 2024. - Adopt a decree determining the formula for calculating the reference price for the oil stabilization fund and create a committee of experts to implement the calculation: - Objective: Enhance governance and transparency of oil revenue allocation. - Target: End-September 2024. Status: The date of this benchmark has been postponed to the end of March 2025. - Integrate the Solidarity Fund for the Safeguarding of the Homeland (FSSP) into the 2025 budget as a special account; include an annex detailing terms and conditions of financing the FSSP: - Objective: Ensuring fiscal transparency in the mobilization of public resources. - Target: December 2024. Status: New benchmark. ### Procedural and timing notes on benchmarks - Several benchmarks were implemented with delay or rephased; some IT interconnection items were completed in advance. - Specific delays noted: - CGI adoption postponed to end-April 2025. - Oil stabilization fund decree postponed to end-March 2025. - Technical committee for oil revenue adopted by decree in May 2024 (delayed vs. end-March 2024). ### Reform measures under the RSF (selected highlights) - Reform Area 1 — Strengthening planning and budgeting of climate-related spending: - RM1: Government to validate a methodology for tagging climate-related expenditures (CBT). Indicative deadline: 6th review (End September 2024). Status: Rephased. - RM2: Government to apply the CBT framework for at least 4 sectoral ministries in their 2025 budget and share results with IMF staff. Indicative deadline: 7th review (End March 2025). Status: Rephased. - RM3: Amend the 2026 budget circular to include instructions on identifying climate-related allocations. Indicative deadline: 8th review (End August 2025). Status: Rephased. - Reform Area 2 — Improving sensitivity of public investment management to climate issues: - RM4: Develop and publish a guide defining methodology for climate vulnerability assessments of public investment projects and programs. Indicative deadline: 6th review (End September 2024). Technical assistance: IMF and WB. Status: Rephased. - RM5: Amend decree no. 0041 dated November 03, 2021 to require integration of climate change in public investment management and publish it. Indicative deadline: 7th review (End March 2025). Technical assistance: IMF. Status: Rephased. - RM6: Publish feasibility studies, including climate vulnerability assessments, for at least three public investment projects of more than 5 billion CFAF. Indicative deadline: 8th review (End September 2025). Technical assistance: IMF. Status: Rephased. - Reform Area 3 — Enhancing disaster-informed fiscal planning and management: - RM7: Publish a guide for analysis of fiscal risks related to natural disasters on the Ministry of Economy and Finance website. Indicative deadline: 4th review (End - September 2023). Technical assistance: IMF. Status: Implemented with a delay. - RM8: Publish a statement on fiscal risks, including an assessment of fiscal risks related to natural disasters, on the Ministry website. Indicative deadline: 6th review (End September 2024). - RM9: Adopt an order to establish focal points (at least two persons) in relevant directorates of three selected ministries to carry out responsibilities in the new DRM law. Indicative deadline: 4th review (End October 2023). Technical assistance: World Bank. Status: Implemented with a delay. - RM10: Publish flood and drought risk assessments in key exposed areas on the National DRM Data Platform: www.risques-niger.ne. Indicative deadline: 5th review (End April 2024). Technical assistance: World Bank (PIDUREM project). Status: Implemented. - Reform Area 4 — Promoting renewable energy sources: - RM11: Create a new window (“Guichet”) within the FONAP to provide technical and financial assistance to improve bankability of SME projects in renewable energy. Indicative deadline: 4th review (End October 2023). Status: Implemented with a delay. ### Technical Memorandum of Understanding — selected quantitative definitions, adjustments, and reporting - Scope and period: Defines performance criteria and indicative targets of the ECF arrangement for Q2-2024 to Q2-2025. Performance criteria and indicative targets for June 2024 through June 2025 are in Table 1 of the MEFP attached to the Letter of Intent of June 27, 2024. Structural benchmarks are in Tables 2 and 3. - Definitions (selected): - Government refers to the central government of the Republic of Niger (excludes political subdivisions, public entities, or central bank with separate legal personality). - Debt: current liability created under contractual arrangement requiring payments in assets or services per Guidelines on Public Debt Conditionality (Decision No. 16919-(20/103) of October 28, 2020). - 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 include committed and authorized fiscal year expenditures not paid within 90 days. - Net Domestic Financing of the Government: - Definition: Sum of (i) net bank credit to the government; (ii) net nonbank domestic financing including government securities issued in CFAF on the WAEMU regional financial market not held by resident commercial banks, proceeds from sale of government assets, and privatization receipts. - Net bank credit includes cash holdings of the Nigerien Treasury, secured obligations, deposits with the central bank, deposits of the Treasury with commercial banks, excluding government deposits with commercial banks used solely to finance externally financed capital expenditure. - Net nonbank domestic financing components include change in stock of government securities issued in CFAF on the WAEMU market and not held by resident commercial banks; change in balance of Treasury correspondents’ deposit accounts; change in balance of various deposit accounts at the Treasury; change in stock of claims on government forgiven by the private sector; payments from PPP contracts; and net income from privatizations. - Quarterly targets concern cumulative amounts since the beginning of 2024 and 2025 respectively until the date selected for the performance criterion or indicative target. - Adjustments to ceiling on net domestic financing: - Will be adjusted if disbursements of external budgetary support net of external debt service, external arrears payments, and net IMF financing fall short of program projections. - If disbursements of external budgetary support fall short of projected amounts at the end of each quarter, the corresponding quarterly ceilings will be raised pro tanto, up to a maximum of CFAF 30 billion. - The ceiling on net domestic financing will also be adjusted for payments of the float related to previous year's expenditure. This adjustment will be capped at a maximum of CFAF 75 billion. - Reporting requirement: Detailed data on domestic financing of the government will be provided monthly, within six weeks after the end of each month. - New External Payment Arrears on Government Debt: - For the program, the 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), with the exception of 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 will be 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 is deemed contracted or guaranteed when signed by government, adopted by parliament by law and ratified by the President; for monitoring, external debt is deemed contracted or guaranteed on the date of ratification of the contract. - External debt defined as debt contracted or serviced in a currency other than the franc of the Financial Community of Africa (CFAF), except for borrowing from BOAD which is considered external debt despite being local-currency-denominated. - Performance criterion (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. Exclusions: (a) Short-term supplier or trade-related credit with maturity up to three months; (b) rescheduling agreements; (c) IMF disbursements. - Currency denomination rule: For program purposes, the value in CFAF of new external debt of 2024 and that of 2025 is respectively calculated using the exchange rates for end March 2023 and end May 2024, in the IMF’s International Financial Statistics (IFS) database. - Exchange Rates (end March 2023) as specified: - CFAF/SDR 811.4146 - U.S. Dollar/SDR 1.3452 - Euro/SDR 1.2370 - Japanese Yen/SDR 179.5614 - U.K. Pound Sterling/SDR 1.0870 - U.A.E. Dirham/SDR 4.9404 - PV Calculation: Discounting all projected disbursements and debt service payments (principal and interest) on the basis of a program discount rate of 5 percent and taking account of all loan conditions (projected disbursements, maturity, grace period, payment schedule, front-end fees and management fees). PV is calculated using the IMF “DSA template,” based on the loan amount and the above parameters. For loans with grant element zero or less, the PV is set equal to the nominal value. - Reference rate: For variable interest rate debt (benchmark rate plus fixed spread), PV of the debt is calculated using a program reference rate plus the fixed spread. The program reference rate for the six-month USD Secured Overnight Financing Rate (SOFR) is 0.04 percent and will remain fixed for the duration of the program as will the spreads over six-month USD SOFR for interest rates in other currencies as follows: (1) The spread of six-month Euro LIBOR over six-month USD SOFR is - *Source: 1nerea2024001 - 2. Digitize all expenditure (Niger), IMF PDF content provided.* ### 56.4 basis points; (2) The spread of six-month JPY LIBOR over six-month USD SOFR is -9.0 basis ### 1nerea2024001 - 56.4 basis points; (2) The spread of six-month JPY LIBOR over six-month USD SOFR is -9.0 basis ### Benchmark spreads and variable-rate adjustment - Spread for six-month Euro-denominated benchmark: 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 Sterling Overnight Interbank Average (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 the variable rate is linked to a benchmark interest rate other than the six-month USD SOFR, a spread reflecting the difference between the benchmark rate and the six-month USD SOFR (rounded to the nearest 50 basis points) will be added. ### Reporting requirement for external borrowing - The authorities will inform IMF staff of any planned external borrowing and the conditions on such borrowing before the loans are either contracted or guaranteed by the government. - The authorities will consult with IMF staff on any potential debt management operations. ### Indicative targets — definitions and adjustments - Cash revenue is an indicative target for the program: includes tax, nontax, and special accounts revenue; excludes proceeds from the settlement of reciprocal debts between the government and enterprises and non-cash revenue. - Basic budget balance is defined as the difference between: - (i) total revenue, which is the 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 budget balance are set: one including budget grants and the other excluding budget grants. - If disbursements of external budgetary grants are lower than the amounts projected at the end of each quarter (as quantified in the performance criteria table), the corresponding quarterly floor of the basic budgetary balance, including budgetary grants, will be reduced on a pro rata basis, up to a maximum of CFAF 30 billion. - The basic budget balance target will be relaxed by an amount equivalent to 0.5 percent of GDP, expressed in billions of CFA francs, to account for priority spending, provided that the authorities secure concessional financing (in addition to the amounts currently envisaged). ### Social spending, coding, and limits on exceptional procedures - The floor on social spending is an indicative target for the program. - Social spending is defined as expenditures from the Government's own resources allocated to the social sectors and those directly benefiting poor households, children, young people and women in vulnerable situations, the elderly, the disabled, victims of armed conflict and trafficking, refugees, or displaced persons and the unemployed. - These expenditures will be coded in the budget according to the recommendations of UNICEF to facilitate tracking. - Vulnerability definition: the risk that individuals may fall into poverty, face food insecurity or be physically and financially unable to meet their basic needs. - Limit set on expenditures paid through exceptional procedures (without prior commitment) excluding debt service payments and expenditures linked to tax exemptions: 5 percent of total authorized expenditures during the quarter for which the target is assessed. ### Codification of social spending activities (budget activity codes) - Non-Social: 00 - Social-Health: 11 - Social-Education: 12 - Social-Social Protection: 13 - Social-Nutrition: 14 - Social-Hydraulics/Sanitation: 15 - Social-Others: 19 ### Exchange rates (end May 2024) - CFAF/SDR 800.02484 - U.S. Dollar/SDR 1.32354 - Euro/SDR 1.21963 - Japanese Yen/SDR 207.333 - U.K. Pound Sterling/SDR 1.04035 - U.A.E. Dirham/SDR 4.85725 ### Reporting frequency and deadlines (selected entries) - Information on basic budget revenues and expenditures: monthly, within six weeks after the end of each month. - Information on social expenditures: quarterly, within six weeks after the end of each quarter. - Information on exceptional expenditure: quarterly, within six weeks after the end of the quarter. - Detailed monthly estimates of revenue and expenditure (including priority expenditure and arrears) and Table of Government Financial Operations: monthly, within six weeks after the end of each month. - Comprehensive monthly data on net nonbank domestic financing (specified components): monthly, within six weeks after the end of each month. - Monthly data on Treasury balances outstanding, by reference fiscal year, with breakdown of maturities > and < 90 days: monthly, within six weeks after the end of each month. - Monthly data on effective debt service (principal and interest) compared with programmed maturities: monthly, within four weeks after the end of each month. - Consolidated balance sheet of monetary institutions and monetary survey (provisional): monthly, within eight weeks following the end of each month. - Disaggregated monthly consumer price indexes: monthly, 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 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: to be provided. - Any agreement with private sector stakeholders having economic or financial repercussions for the government, including in the natural resources sector: to be provided. ### Table of data to be reported (selected rows and deadlines) - National accounts (annual): End-year + 6 months. - Disaggregated consumer price indexes (monthly): End-month + 2 weeks. - Net government position vis-à-vis the banking system (monthly): End-month + 6 weeks. - Provisional TOFE, including a breakdown of revenue and expenditure and change in Treasury balances outstanding (monthly): End-month + 6 weeks. - Data on Treasury balances outstanding (RAP), by reference fiscal year: 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, including financial terms and conditions: End-month + 6 weeks. - Table on the monthly effective service of external debt (principal and interests) compared with programmed maturities: Monthly, End-month + 4 weeks. ### Prior actions, arrears clearance, and oil revenue management roadmap - Prior action 1: Elaborate a plan to clear external and domestic arrears containing (i) a precise timeframe; (ii) a commitment to allocate funds in future budget laws for the payment of arrears; and (iii) a commitment to track and report to IMF staff the stock of outstanding arrears and arrears paid, on a quarterly basis. Status: Met. - Prior action 2: Approve a roadmap by regulatory text, with a precise timeline, for the adoption of the oil revenue management strategy before the end of 2024. Status: Met. - The arrears clearance plan was adopted by the Prime Minister and contains: (i) a precise timeframe for settlement of accumulated arrears within the program horizon; (ii) a commitment to allocate funds in future budget laws for payment of arrears; and (iii) a commitment to track and report to IMF staff the stock of outstanding arrears and arrears paid, on a quarterly basis. - In the context of the plan, the authorities have recently cleared arrears to the European Investment Bank. - As of end-June 2024, authorities estimate: - External debt service arrears amount to 64.5 billion CFAF (0.6 percent of GDP). - Domestic debt service arrears amount to 118.2 billion CFAF (1 percent of GDP). - Oil revenue management roadmap (five stages, timeline): - Stage 1: Establish an inter-ministerial technical team by end-July (members from Ministry of the Economy and Finance, Ministry of Petroleum, Presidency, Prime Minister’s cabinet) to conduct analysis and draft strategy. - Stage 2: Technical workshop by end-August to discuss draft strategy with government stakeholders, civil society, and development partners. - Stage 3: Present refined draft strategy to the government by end-October. - Stage 4: Conduct public information campaign concluding by end-November. - Stage 5: Complete the draft strategy and adopt it by the Prime Minister by end-2024. ### Debt Sustainability Analysis (DSA) — key assessments and policy implications - Niger’s risk of external debt distress: Moderate. - Overall risk of debt distress: Moderate. - Granularity in the risk rating: Limited space to absorb shocks. - Application of judgement: No. - Niger’s risk of external and overall public debt distress is assessed as “moderate”—unchanged from July 2023. - Debt indicators remain below their thresholds under the baseline scenario, except for one single year breach in the external debt service-to-revenue ratio (discounted from analysis). - Factors affecting vulnerability: decline of new financing, economic rebound following lifting of sanctions, commencement of crude oil exports in 2024, intensified conflict in the Sahel, extreme weather events. - The space to absorb shocks is assessed to be limited; special attention should be paid to risks linked to: - crude oil price volatility, - deterioration in the security situation, - vulnerability to climate change. - Policy recommendations and imperatives: - Fully implement the arrears clearance plan to ensure fiscal stability, rebuild public trust, and support economic recovery. - Prioritize external financing in the form of concessional and semi-concessional loans and grants. - Avoid overreliance on high-cost domestic borrowing to finance the budget. - In the medium and long term, entrench sound macroeconomic policies, implement reforms, enhance debt management practices, improve public investment management, and increase public spending efficiency to buttress debt sustainability. - Given vulnerabilities to climate change, build resilience through adaptation investments and policies while maintaining fiscal prudence. *Source: NIGER — INTERNATIONAL MONETARY FUND.* ### 1. Niger’s public and public guaranteed (PPG) debt primarily covers the central government ### 1. Niger’s public and public guaranteed (PPG) debt primarily covers the central government ### Debt coverage and data gaps - Central government debt is the primary component of PPG debt; state and local government entities do not borrow directly on their own. - The social security fund (CNSS) and extra-budgetary funds (EBFs) are not covered by the DSA. - State guarantees for external borrowing are included; publicly guaranteed private debt includes only the guarantee issued to the China National Petroleum Company (CNPC) for a loan to finance the SORAZ refinery to cover the government’s minority stake. - CNPC extended a US$880 million (7.0 percent of GDP) loan in 2008; US$352 million (2.8 percent of GDP) is guaranteed by the government. The outstanding stock of US$30.7 million at end-2023 is included in the baseline stock of debt with repayments continuing until 2024. - SOEs do not directly borrow abroad and instead benefit from on-lending by the central government, which is captured in debt statistics. - Availability of reliable data on domestic SOE debt is limited. - With World Bank support, the authorities published certified financial statements for 2019 and 2020 of the ten largest SOEs on the official website of the Ministry of Finance, but coverage and timeliness should be expanded. - Most external debt is defined on a currency basis due to limitations on the availability of residence information of WAEMU debt holders; exceptions exist where residency can be tracked (e.g., BOAD classified as external debt). ### Contingent liability stress test design and coverage shocks - The contingent liability tailored stress test incorporates coverage gaps and is calibrated as follows (Text Table 1 values preserved): - Other elements of the general government not captured in the baseline stock of debt: 0.0 percent of GDP (coverage shock kept at 0 percent of GDP). - SOE's debt (guaranteed and not guaranteed by the government): 3.0 percent of GDP (default shock of 2 percent of GDP increased to reflect risks; an additional 1 percent of GDP imposed to reflect potential bank recapitalization needs). - PPPs: 0.0 percent of PPP stock (PPPs signed under the current PPP law do not involve government financing; contingent liability stress test for PPPs not currently incorporated). - Financial market contingent liability risks: 5 percent of GDP (default minimum value). - Total of coverage shocks (2+3+4+5) = 8.0 percent of GDP. - Rationale for adjustments: - (i) CNSS strong financial position removes material fiscal risks; (ii) local governments only contract short-term debt with the domestic banking sector, which is small in size. - An extra 1 percent of GDP shock was added to the SOE contingent liabilities shock to reflect bank recapitalization needs from remaining vulnerabilities. - Given relatively low levels of credit to the economy, the default value of 5 percent of GDP for financial market contingent liability risks is considered adequate. ### Recent debt levels, trends, and composition (end-2023) - PPG debt stock at end-2023: 56.6 percent of GDP. - Accumulation of debt service arrears in 2023: around 5.4 percent of GDP (pushed public debt to peak of 56.6 percent of GDP). - PPG external debt share of total debt stock in 2023: 57.4 percent. - Multilateral creditors represent the largest share (around four fifths) of external debt; borrowing mostly from the World Bank (IDA), followed by the IMF and BOAD. - Official bilateral debt: around 12 percent of external debt. - Average effective interest rate on external debt in 2023: 1.06 percent. - Remaining maturity of external debt at end-2023: 19 years. - Domestic debt characteristics: - Consists mostly of short- and medium-term Treasury securities, predominantly held by banks domiciled in Niger or in the rest of WAEMU. - Average remaining maturity of domestic debt: 6 years. - Average weighted interest rate on domestic debt at end-2023: 5.13 percent. - Accumulation of domestic debt service arrears around 4 percent of GDP at end-2023 following loss of access to the WAEMU regional market after the military takeover. - Niger regained access to the regional securities market in April 2024 with issuance close to CFAF 458 billion used to repay overdue domestic debt service obligations. - BCEAO policy rate moved from 2 percent in 2022 to 3.5 percent by December 2023, contributing to higher financing costs. - Private external debt estimation is impeded by data limitations; BCEAO faces challenges compiling private external debt stock statistics; IMF Statistics Department technical support planned. ### Main macroeconomic and fiscal assumptions underlying the baseline - Growth: - 2023 growth estimated at 2.4 percent (down from 7 percent in previous DSA) due to sanctions, political instability, unfavorable agriculture season. - 2024 growth projected at 10.6 percent due to start of crude oil exports and lifting of sanctions. - Growth in early 2030s around 6 percent, gradually falling to 5.5 percent in 2038. - Average growth over 2030-2044 projected at 5.7 percent (previous DSA assumption and pre-pandemic average was 5.9 percent over 2011-19). - Inflation (CPI) paths, primary fiscal balance, revenues, exports, and commodity price assumptions are set in Text Table 2 (values preserved in that table of the source). - Fiscal consolidation: - Assumes reaching the WAEMU deficit convergence criterion of 3 percent of GDP by 2025. - Projected increase in government revenues in 2024 driven by lifting of sanctions, economic recovery, and start of crude oil exports; revenue increase weaker relative to previous DSA but still significant. - Tax administration measures expected to yield only a modest net impact. - Financing terms and borrowing composition: - Short run: tightened financial conditions and military takeover ramifications assumed to deteriorate financing terms. - Over time: foreign borrowing expected to shift towards less concessional sources; domestic financing presumed to move toward longer maturities. - DSA revised upward average interest rates on government bonds in 2024 to 10, 10.2, and 10.6 percent for bonds maturing in 1 to 3, 4 to 7, and over 7 years respectively; interest rate on T-bills set to 9.8 percent. - Debt instruments assumed to gradually shift from T-bills to longer maturity bonds in the medium term. - Resilience and Sustainability Facility (RSF): - DSA includes disbursements related to the RSF with a revised schedule relative to program approval; disbursements contingent on completion of reform measures. - As a Group A country, Niger continues to benefit from the interest rate cap of 2.25 percent. - RSF disbursements rephased to align with the ECF arrangement. ### Arrears clearance and recent arrears data - DSA incorporates authorities’ plan to fully clear debt service arrears by end-2024. - End-December 2023 arrears included in the DSA: - Domestic arrears: CFAF 395.2 billion (3.9 percent of GDP). - External arrears: CFAF 70.5 billion (0.7 percent of GDP). - Arrears as of May 15, 2024: - Domestic arrears: CFAF 108.4 billion (0.9 percent of GDP). - External arrears: CFAF 64.5 billion (0.6 percent of GDP). - Text Table 3 (as of May 15, 2024) external arrears by creditor (In CFAF Billions): - Multilateral: Principal 30.3 | Interest 14.2 | Total 44.5 - Bilateral: Principal 16.1 | Interest 2.4 | Total 18.5 - Paris Club: Principal 5.0 | Interest 0.8 | Total 5.8 - Non-Paris Club: Principal 11.1 | Interest 1.6 | Total 12.7 - Commercial: Principal 4.7 | Interest 2.8 | Total 7.6 - Total: Principal 51.1 | Interest 19.4 | Total 70.5 - Authorities’ estimates as of May 15, 2024; total arrears to the WB (estimated at 27.2 billion CFAF or 0.2 percent of GDP) cleared at end of April 2024. ### Debt dynamics, realism checks, and classification - Drivers of debt dynamics (2019–2023): - Large accumulation of total public debt due to primary fiscal deficits. - Arrears accumulation in 2023 pushed public debt to 56.6 percent of GDP. - From 2024 to 2028, GDP growth contribution to debt dynamics expected to dominate unfavorable primary deficit contribution, supporting a downward trend of public debt to 42.9 in 2044. - External public debt peaked at 33.5 percent of GDP in 2021 and estimated to decline to 22.7 percent in 2044. - Realism of planned fiscal adjustment: - Projected three-year fiscal adjustment in the primary balance of 3 percentage points of GDP lies in the top quartile of past adjustments for a sample of LICs; justified by revenue increases from recovery, lifting of sanctions, and start of crude oil exports. - Spending priorities to focus on security and social spending (health, education, food security, social safety nets). - Consistency checks: - The 2023 low growth rate treated as an outlier; 2024–25 growth path attributed to start of oil exports and spillovers (transport sector), increased agricultural production, irrigation projects, and lifting of sanctions; fiscal consolidation impact on growth likely muted. - Decline in public and private investment shares in GDP relative to previous DSA reflects lower capital expenditure projections linked to tighter financing conditions. ### Country debt-carrying capacity and tailored stress tests - Debt-carrying capacity classification: - Niger classified as “medium” debt-carrying capacity. - Composite Indicator (CI) value: 2.87 (falls within medium thresholds 2.69 < CI ≤ 3.05). - CI components contributions (Text Table 4): CPIA contributes 46 percent; import coverage of reserves contributes 56 percent; country and global real growth rates contribute 6 and 14 percent respectively. - Tailored stress tests applied: - Tailored stress test 1: Contingent liabilities one-time debt shock equivalent to 8 percent of GDP capturing contingent liabilities from SOEs (3 percent of GDP) and a need for bank recapitalization (5 percent of GDP). - Tailored stress test 2: Commodity price shock capturing the impact of a sudden one standard deviation decline in the price of the commodities the country exports. - Commodities accounted for 53 percent of Niger exports of goods and services over 2021-23 (hence subject to the commodity price stress test). *Sources: Nigerien authorities, and IMF staff estimates.* ### 15. External debt is projected to fall sharply in 2024 and continue to decrease gradually, with ### 15. External debt is projected to fall sharply in 2024 and continue to decrease gradually, with ### External debt outlook - PPG external debt-to-GDP ratio: - 32.5 percent in 2023 - 28.7 percent in 2024 - 22.7 percent in 2044 - Total external debt: - Gradually declines to 32.5 percent of GDP in 2044. - Drivers: - Sanctions preventing Niger from borrowing externally in the first quarter of 2024 and a continued funding squeeze contributed to the sharp 2024 decline. - Rebound in GDP growth and assumed clearing of all external arrears in 2024. - Non-interest current account deficit is the main driver of external debt dynamics. - Goods and services deficit expected to be reduced due to oil exports through the new pipeline. - Remaining drivers (other capital account components, reserve accumulation, valuation adjustments, price and exchange rate changes) are subsumed into the residual after accounting for the non-interest current account deficit, net FDI, and endogenous debt dynamics. ### Risk assessment and stress tests - Overall assessment: - Risk of external debt distress: moderate. - Liquidity risk: significant. - Debt present-value indicators: - PV of the debt-to-GDP ratio and PV of the debt-to-exports ratio are expected to slightly increase over the projection period but remain well below thresholds. - Debt service ratios: - Debt service-to-exports ratio: forecast to decline as exports strengthen, particularly with anticipated increase in oil exports. - Debt service-to-revenue ratio: - Projected to remain elevated in 2024, breaching the established threshold (attributed to political crisis, persistent security challenges, large arrears clearance, and delayed revenue reforms). - Falls back under threshold from 2025 onward; the 2024 breach is treated as “single short-lived” and discounted in the analysis. - Stress test results: - Three indicators breach thresholds under export or one-time depreciation shocks. - Export shock: PV of PPG external debt-to-exports ratio and debt service-to-exports ratio exceed thresholds. - One-time depreciation shock: debt service-to-revenue ratio breaches threshold in 2024-2025. - Stress scenarios follow LIC-DSF guidance by subtracting the standard deviation from the lower value of the historical average and baseline projection to avoid over-optimism from projected high export growth (notably crude oil). - Granularity assessment: - Space to absorb shocks is limited. - After excluding short-lived breaches, debt service-to-revenue ratio falls into “limited space” category in 2025; situation improves over the medium term. - Short-term suspension of loans by certain partners may significantly increase liquidity risk and negatively impact the economy. - Possible turn to less concessional financing would increase medium-term debt vulnerabilities. - Niger has resumed access to drawing on WAEMU's pooled external reserves after sanctions were lifted. ### Public debt sustainability - Public sector debt trajectory: - Projected to decline gradually in the medium and long run, reaching 42.9 percent of GDP by 2044. - Supporting factors: - Swift economic recovery in 2024 after lifting of sanctions. - Higher oil revenues following start of oil exports. - Improved domestic revenue mobilization, higher spending efficiency, and better expenditure control. - Export diversification fostered by private sector growth. - Gradual shifts toward lower concessionality and longer maturities will marginally increase interest costs but reduce rollover risks. - PV of public debt-to-GDP: - Remains below the benchmark of 55 percent of GDP in 2023 and is projected to gradually decline under the baseline. - Commodity price shock is the most extreme stress scenario; public debt-to-GDP remains under the threshold even under this scenario. - Specific financing note (classification in DSA): - Niger secured a new loan of US$400 million equivalent from CNPC-NP Niger (a resident corporation, subsidiary of China National Petroleum Corporation). - Loan denominated in CFA francs, with a 12-month maturity (extendable to 16 months) and a 7 percent interest rate. - Repayment tied to oil export proceeds, with CNPC-NP withholding 80 percent of Niger's anticipated share (25.36 percent of total oil exports via the pipeline). - This loan is classified as domestic debt in the DSA. ### Risk rating and vulnerabilities - Risk ratings: - Niger’s risk of external and overall debt: “moderate”. - Debt considered sustainable because most PPG external and public debt indicators do not breach thresholds under the baseline (except the single-year external debt service-to-revenue breach). - External debt service arrears are below 1 percent of GDP, qualifying as a de minimis case and not affecting the risk rating. - Factors supporting sustainability: - Downward trajectories of most debt indicators and solid overall public debt sustainability. - Expected strong rebound in 2024 due to lifting of sanctions and start of crude oil exports. - Regained access to WAEMU’s pooled external reserves, which could delink ability to service foreign debt from exports and keep liquidity risks low. - A debt limit on new PPG external borrowing is embedded in program conditionality under the ECF arrangement to build a buffer and avoid a downgrade. - Key risks that could alter sustainability: - Deterioration of security situation affecting economic activity. - Tightening of global and regional financing conditions compromising fiscal space. - Subdued donor support leading to delays in capital spending, including key investment projects. - Persistence of political tensions with Benin disrupting crude oil production and exports through the port of Seme (Benin). - External risks include commodity price volatility and escalation of regional conflicts (e.g., Gaza-Israel). - Increased reliance on high-cost domestic financing due to external funding squeeze, posing significant rollover risk in short and medium term. - Climate vulnerability: - Niger remains vulnerable to climate change and natural disasters, which exacerbate debt pressures. - The 2023 DSA’s climate alternative scenario conclusions largely remain applicable: lower GDP growth driven by decreased agricultural production, negative effects on exports and government revenue, additional fiscal expenditure for adaptation, larger fiscal deficit than baseline, accumulation of external and domestic debt, and higher debt indicators that nevertheless remain below thresholds. ### Policy recommendations and priorities - Pursue prudent debt policies and review donor financing prospects to regain access to concessional financing and grants. - Fully implement the arrears clearance strategy to ensure fiscal stability, rebuild public trust, and support economic recovery. - Continue efforts to entrench sound macroeconomic policies, implement economic reforms, and enhance debt management practices. - Specific policy measures: - Domestic revenue mobilization: - Enhance revenue administration, reduce tax exemptions, and broaden the tax base. - Do not fully spend additional oil revenues; contribute to fiscal consolidation under an appropriate legal and fiscal framework for oil revenue management. - Implement an oil revenue management strategy. - Fiscal risks and spending quality: - Pursue adequate project evaluation and good governance practices in infrastructure investments. - Increase efficiency of public spending amid limited resources. - Economic diversification: - Implement horizontal policies to foster diversification, develop the local private sector, tackle informality, and accumulate human capital through education. - Financing: - Restore financing capacity and find new financing sources, while avoiding over-reliance on high-cost domestic borrowing given elevated interest rates in the regional market. - Prioritize external financing in the form of concessional and semi-concessional loans and grants. - Execute overall volumes of debt issuance consistently with the annual and quarterly borrowing plan and integrate with the cash flow plan to avoid liquidity shortfalls and minimize financing costs. *Source: International Monetary Fund (excerpt of provided content).* ### 26. The authorities broadly agreed with staff’s assessment of the overall and external debt ### 26. The authorities broadly agreed with staff’s assessment of the overall and external debt distress risk but questioned some of assumptions underlying the DSA exercise ### Authorities’ views and positions - Broad agreement with staff’s assessment of the overall and external debt distress risk. - Questioned some assumptions underlying the DSA exercise: - Argued that since they have already started repaying debt service arrears, liquidity pressures in financial sector were alleviated and therefore they do not consider the additional 1 percent of GDP shock for contingent liabilities as necessary. - Believed that the assumptions regarding high interest rates on local debt issuance in the WAEMU market were overly conservative, while acknowledging assumptions were broadly aligned with recent observed financing costs. - Suggested keeping the long-term real GDP growth projection at 6 percent instead of revising it down to 5.5 percent. - Reiterated commitment to conduct prudent fiscal policies to ensure debt sustainability. ### Key findings from the DSA excerpts and figures - DSA baseline and scenario indicators presented for 2024–35 include: - External debt (nominal): 56.7 (2021), 56.9 (2022), 56.2 (2023), 50.1 (2024), 47.4 (2025), 45.7 (2026), 44.7 (2027), 44.3 (2028), 44.1 (2029), 43.9 (2030), 43.7 (2031), 43.3 (2032), 42.8 (2033), 42.2 (2034), 32.5 (2044). - Public and publicly guaranteed (PPG) external debt: 33.5 (2021), 33.0 (2022), 32.5 (2023), 28.7 (2024), 27.6 (2025), 27.0 (2026), 26.9 (2027), 27.3 (2028), 27.9 (2029), 28.3 (2030), 28.7 (2031), 28.9 (2032), 29.0 (2033), 28.9 (2034), 22.7 (2044). - Change in external debt: 4.5 (2021), 0.1 (2022), -0.7 (2023), -6.1 (2024), -2.7 (2025), -1.7 (2026), -1.0 (2027), -0.4 (2028), -0.2 (2029), -0.2 (2030), -0.2 (2031), -0.4 (2032), -0.5 (2033), -0.6 (2034), -0.8 (2044). - Identified net debt-creating flows: 6.2 (2021), 8.0 (2022), 4.3 (2023), -0.6 (2024), -0.3 (2025), 1.0 (2026), 1.9 (2027), 0.9 (2028), 1.5 (2029), 0.5 (2030), 0.4 (2031), 0.7 (2032), 1.0 (2033), 1.3 (2034), 4.0 (2044). - Gross external financing need (Million of U.S. dollars): 1696.7 (2021), 1792.4 (2022), 1855.7 (2023), 1292.1 (2024), 952.1 (2025), 1141.7 (2026), 1450.4 (2027), 1234.9 (2028), 1513.7 (2029), 1262.5 (2030), 1266.2 (2031), 1474.8 (2032), 1665.1 (2033), 1887.7 (2034), 6266.8 (2044). - Sustainability and ratio indicators (selected): - PV of PPG external debt-to-GDP ratio (selected projection years): 22.3, 18.9, 17.9, 17.3, 17.1, 16.9, 17.1, 17.4, 17.8, 18.1, 18.4, 18.5, 15.9 (sequence as presented). - PV of PPG external debt-to-exports ratio (selected): 187.1, 106.4, 86.7, 86.1, 92.9, 96.5, 102.8, 96.8, 100.7, 103.9, 106.8, 108.9, 113.0. - PPG debt service-to-exports ratio: 9.4 (2021), 15.7 (2022), 19.6 (2023), 14.0 (2024), 8.5 (2025), 7.7 (2026), 7.9 (2027), 8.3 (2028), 8.5 (2029), 7.4 (2030), 6.5 (2031), 6.4 (2032), 6.4 (2033), 6.3 (2034), 8.5 (2044). - PPG debt service-to-revenue ratio: 13.5 (2021), 18.7 (2022), 26.8 (2023), 26.2 (2024), 16.6 (2025), 14.1 (2026), 12.7 (2027), 12.2 (2028), 11.6 (2029), 10.7 (2030), 9.0 (2031), 8.8 (2032), 8.6 (2033), 8.3 (2034), 8.6 (2044). ### Macroeconomic context and recent developments (authorities’ statement excerpts) - Real GDP growth: - 11.9 percent (2022) - 2.4 percent (2023) - Inflation: 7.2 percent in December 2023, from 3.1 percent one year earlier. - Fiscal outcomes: - Deficit narrowed from 6.8 percent of GDP (2022) to 5.4 percent of GDP (2023). - Public sector debt: - Public debt increased to 56.6 percent of GDP in 2023 from 50.6 percent in 2022. - External current account: external current account deficit dropped from 16.2 percent of GDP in 2022 to (text truncated). ### Policy implications and suggestions reflected in the text - Authorities emphasize ongoing repayment of debt service arrears and view this as reducing liquidity stress in the financial sector. - They contest the necessity of an additional 1 percent of GDP shock for contingent liabilities in the DSA. - They request that assumptions on local interest rates and long-term real GDP growth be revisited (retain 6 percent rather than reduce to 5.5 percent). - Authorities reaffirm commitment to prudent fiscal policies to preserve debt sustainability and pursue development programs (PRSP, FSSP, PDGI) to support inclusive growth and food security. *Source: INTERNATIONAL MONETARY FUND (excerpt from the DSA materials and Niger authorities’ statement).* ### 14.4 percent in 2023 given limited imports. The financial system suffered from sanctions as ### 1nerea2024001 - 14.4 percent in 2023 given limited imports. The financial system suffered from sanctions as ### Economic outlook and key projections - Sanctions imposed in 2023 caused liquidity shortages and restrictions on basic economic transactions, affecting public and private sectors and worsening social and humanitarian conditions; acute food insecurity estimated at 3.3 million people (WFP) and internally displaced persons at 1.5 percent of Niger’s population (UNHCR). - Sanctions were lifted in early 2024, improving the outlook. - Oil sector developments and scaling-up of public investments under the PDGI support medium-term growth prospects. - Oil exports pathway: currently 20,000 barrels/day to 90,000 barrels/day once the Niger-Benin pipeline is completed, with total production projected at 110,000 barrels/day in the short-term. - Real GDP growth projections: - 10.6 percent in 2024 - 6.1 percent on average from 2025 onwards - Inflation: - Decline to 3 percent in 2024 - Convergence to the WAEMU target of 3.0 percent by 2026 - Fiscal outlook: - Fiscal deficit projected at 4.1 percent for 2024 - Average fiscal deficit of 3.0 percent over the medium-term - External current account: - Deficit expected to moderate to 5.0 percent in the medium-term - Risks: - Downside: global financial conditions, regional and international security developments, natural disasters - Upside: oil and mining sector developments; reopening discussions with Chad and envisaged alternate oil export route ### Performance under the ECF and RSF programs - Authorities report good program performance before the 2023 interruption and sanctions (including freezing of Treasury assets and border closures). - Met most ECF-related objectives for the review period, but missed: - Performance criteria on accumulation of new external payment arrears and on net domestic financing of the government (without IMF net financing) - Indicative target on cash revenue floor - Structural benchmark on the oil revenue management strategy - Corrective measures in place: an arrears clearance plan and implementation of a prudent debt policy. - RSF arrangement status: - Remains on track but requires adjustments and a six-month extension and rephasing per authorities’ request. - Four planned Reform Measures implemented (three with delay): - RM 7: publication of a guide for analysis of fiscal risks from natural disasters - RM 9: designation of two focal points for carrying out the new DRM law - RM 10: publication of flood and drought risks assessment in key exposed areas - RM 11: creation of a unit within FONAP for supporting SME projects in renewable energy - Sanctions constrained Fund-program implementation and technical assistance provision. ### Fiscal policy and revenue measures - Fiscal consolidation aims to contain the fiscal deficit to 4.1 percent of GDP in 2024 and meet the WAEMU fiscal deficit target of 3 percent of GDP by 2025. - Measures to enhance domestic revenue mobilization: - Simplify the general tax code - Introduce critical fiscal measures - Rationalize tax and customs exemptions - Implement customs administration reforms - Invigorate property tax reform - Strengthen digitalization - Specific tax and customs actions: - New reexport taxes on sugar and oil - New statistical charges on oil, gold and uranium exports - Creation of a rapid intervention special unit (USIR) to increase customs contribution and fight fraud - Implementation of the national plan for fighting fraud in the hydrocarbons sector, a regional inspection program, and an annual plan for customs investigations and risks analysis - Creation of a land registry and improvements in property geo-tracking and registration - Expansion of e-SECEF, SISIC, digital tax payment systems, automation and interconnexion of tax and customs registries ### Expenditure policy and social measures - Expenditure priorities: spending efficiency, national security, rural development, food security, and social spending for vulnerable groups. - Social and public employment targets: - Expand the unified social registry (USR) with the goal of enrolling 800,000 households over the medium-term - Recruitment program to add annually 7,654 public servants from 2024-26 to designated priority departments (national education, tax administration, health ministry) ### Public Financial Management (PFM) reforms - Objectives: improve budgeting procedures, transparency, and efficiency through digitalization. - AE/CP double accounting system rollout: - Effective in pilot ministries; implementation planned for all ministries by 2025 - Measures to improve SOE and public sector performance: enforce performance contracts, financial reporting, implement a Management Information System, strict procedures for approving line ministry budgets - Treasury reforms: - Digitalization of payment systems to reduce transaction costs and ensure traceability and interconnection between banks and the treasury - Treasury Single Account reform to improve cash management and control bank accounts held by public entities - Administrative measures under consideration: guidance notes on budget nomenclature and public spending execution, adoption of decrees for efficient public service management ### Debt management and arrears clearance - Authorities prioritize a moderate level of public debt and a prudent debt policy favoring concessional and semi-concessional financing. - Niger assessed as maintaining a moderate risk of debt distress in the DSA. - As of May 15, 2024: - Stocks of arrears estimated at CFA 172.9 billion - Debt service for 2024 estimated at CFA 456.2 billion - Market action to honor obligations: - Issued securities targeting CFA 419 billion and collected CFA 458 billion (oversubscription of 109.3 percent) - Measures contemplated to ensure arrears clearance success: - Debt-rollover on the regional market - Adoption of a supplementary budget - Reprofiling of CFA 74 billion of market-based debt through initial public offerings - Maintain dialogue with domestic and regional investors - Mobilization of budget support from external partners - Strengthening budgetary regulation to synchronize expenditure and cash flows - Improvement of spending quality to prevent arrears accumulation ### Financial sector policy - Financial system impact from 2023 sanctions: elevated liquidity pressures, weakened capital ratios, and worsening asset quality. - Nonperforming loans (NPLs): - 22.6 percent in December 2023 - 17.0 percent one year earlier - Authorities remain vigilant to reduce vulnerabilities and preserve financial stability as sanctions effects dissipate. ### Oil resources management - Oil revenue management strategy: key program undertaking to be finalized by end-2024. - Measures: - Resume publication of budget execution reports with a section on use of oil resources and advances - Adopt a regulatory text to establish a roadmap for implementation of the oil revenue management strategy before end-2024 - Pre-financing of $400 million from the oil company: - Resources mostly used for clearance of debt - Authorities used oil pre-financing to honor debt obligations despite difficult social and financial conditions ### Structural and governance reforms - Commitments: - Reinstate the supreme audit institution by the next program review; legal texts for the new court of auditors being finalized and financial resources allocated - Fight impunity and strengthen economic governance and financial integrity - Established the Commission for the Fight against Economic, Financial and Fiscal Delinquency (CoLDEFF) - Consider internalization of WAEMU Uniform AML/CFT legislation and implementation of recommendations by the Intergovernmental Action Group Against Money Laundering - Request Fund technical assistance to speed-up governance diagnostic assessment - Private sector and human capital: - Advance competitiveness, reinforce public-private dialogue, increase access to energy - Implement WAEMU regulation in microfinance and ensure sustainability of microfinance institutions and dedicated national funds (FONAP and FDIF) - Education improvements: teacher performance contracts, promote distance learning, build boarding schools for girls, classrooms in sustainable materials, reception centers for displaced populations ### Climate policies and adaptation - Priority given to adaptation to climate change and transitioning to a greener, climate-resilient economy. - Context: recurrent extreme climate events (drought, floods) with devastating impact on households and livestock. - Actions and support: - Strategy for development of carbon markets with partner assistance (World Bank, African Development Bank) - Build capacity of financial institutions to access green funds - Implement a Monitoring Reporting and Verification (MRV) mechanism for the Nationally Determined Contribution (NDC) - Financing and technical assistance needs: - Annual financing required for the NDC from 2021 to 2030 calls for further international coordination to enable access to climate finance - Technical assistance needed to increase number of national bodies accredited to adaptation funds - RSF achievements: progress in renewable energy, management of budgetary risks related to natural disasters, and management of natural catastrophe risks ### Concluding remarks and authorities’ requests - Authorities remain committed to strong policy engagement with the IMF and adherence to ECF- and RSF-supported arrangements. - Requests from authorities: - Completion of the Fourth and Fifth Reviews under the ECF arrangement - Completion of the First Review under the RSF arrangement - Six-month extension and rephasing of the RSF program to complete remaining reforms and adjust to technical assistance *Source: IMF staff report content provided in the supplied PDF chapter.* --- _Source: https://www.imf.org/-/media/files/publications/cr/2024/english/1nerea2024001.pdf_