## Niger—Assessment Letter for the World Bank and the European Union (June 2, 2011)

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### Macroeconomic performance, 2010
- GDP growth is estimated to have reached 8 percent in 2010, buoyed by an excellent 2010–11 harvest.
- Inflation remained low following abundant agricultural production in the second half of the year.
- The fiscal deficit improved in 2010, narrowing by 3 percentage points to about 2½ percent of GDP.
- The current account deficit remained large, reflecting large FDI-financed oil and mining imports related to:
  - the opening of a new uranium mine in 2011, and
  - the development of an oil field and a refinery set to begin production in early 2012.

### Outlook and 2011 fiscal framework
- Assuming normal rains in 2011 and the full normalization of relations with development partners, Niger’s economy could grow by 5½ percent in 2011.
- The rectified 2011 budget foresees a sizeable increase in total expenditure, reflecting the expected pick-up in external financing.
- Excluding foreign-financed investment, expenditure is projected to increase by about 1 percent of GDP, reflecting inter alia:
  - the wage increase for the civil service granted in January 2011, and
  - increased allocations for priority sectors, including the recruitment of doctors and nurses.
- Revenue mobilization efforts are expected to yield a revenue increase of about one-half of a percent of GDP.
- The fiscal deficit is projected to widen slightly to 3 percent of GDP, expected to be fully covered by external concessional borrowing.

### Fuel-subsidy reform
- The government adopted a two-pronged strategy to gradually phase out poorly targeted fuel subsidies:
  - starting June 1, international oil price variations will be passed through to domestic prices; and
  - the subsidy component will be gradually unwound over the next 12-18 months.
- As a result, the fiscal cost of the subsidy for 2011 is expected to remain contained to its 2010 level.

### Public financial management and transparency
- Enhancing efficiency and transparency of public financial management is crucial to leverage oil and mineral scaling up for growth and poverty reduction.
- Key PFM reforms include:
  - improving budget execution by limiting expenditure executed under exceptional procedures;
  - enhancing fiscal reporting by timely provision of information on the financial operations of the central government; and
  - strengthening the medium-term budget framework (MTBF) and the medium-term expenditure framework (MTEF).
- Niger’s new constitution mandates that all natural resource contracts be published.
- In March 2011, the Council of the Extractive Industries Transparency Initiative (EITI) declared Niger to be a compliant country.

### Medium-term prospects and sectoral developments
- Medium-term prospects are positive, driven by expansion of the oil and mining sectors.
- Two large projects expected to enter production in the next few years:
  - an integrated oil project (oil field, refinery, and pipeline), and
  - a new uranium mine that will make Niger the second world’s largest uranium producer.
- As a result, oil and mining output and exports are projected to double between 2012 and 2016, while total revenue would increase by about 5 percent of GDP.

### Risks and vulnerabilities
- Short-term vulnerabilities:
  - weather-related shocks remain significant;
  - regional context remains fluid and could adversely affect security.
- Domestic risks:
  - fiscal implications of an accelerated inflow of Nigerien refugees fleeing the Libyan crisis;
  - failure to rein in fuel subsidies.

### IMF engagement and program prospects
- Following expiration of the ECF-supported program on June 1, the authorities expressed interest in discussions on a new three-year economic program potentially supported under the ECF.
- Staff proposed that these discussions take place after completion of the 2011 Article IV consultation, tentatively scheduled for IMF Board consideration in September.
- In the interim, Fund staff will work with Nigerien authorities in the context of Article IV consultation discussions expected in the coming weeks.

### Key numerical indicators (selected from Table 1)
- GDP at constant prices: 2009 -0.9; 2010 5.2; 2011 8.0; 2012 5.5; 2013 13.2; 2014 6.1
- Non-agricultural GDP at constant prices: 2009 5.5; 2010 5.3; 2011 0.7; 2012 5.7; 2013 16.6; 2014 6.4
- Consumer price index, annual average: 2009 1.1; 2010 2.3; 2011 0.9; 2012 4.0; 2013 2.0; 2014 2.0
- Total revenue (percent of GDP): 2009 14.7; 2010 13.8; 2011 14.2; 2012 14.6; 2013 17.2; 2014 18.1
- Total expenditure and net lending (percent of GDP): 2009 24.6; 2010 22.0; 2011 21.5; 2012 24.8; 2013 23.6; 2014 24.0
- Overall balance (commitment basis, excluding grants, percent of GDP): 2009 -9.9; 2010 -8.2; 2011 -7.3; 2012 -10.2; 2013 -6.4; 2014 -6.0
- Overall balance (commitment basis, including grants, percent of GDP): 2009 -5.5; 2010 -4.1; 2011 -2.5; 2012 -3.0; 2013 -0.9; 2014 -0.6
- External current account balance excluding official grants (percent of GDP): 2009 -25.7; 2010 -24.2; 2011 -29.2; 2012 -30.7; 2013 -19.8; 2014 -12.8
- GDP at current market prices (CFA francs billions): 2009 2,481; 2010 2,736; 2011 2,714; 2012 2,994; 2013 3,464; 2014 3,746
- Gross national savings (percent of GDP): 2009 7.9; 2010 15.0; 2011 23.5; 2012 12.0; 2013 14.3; 2014 15.2
- Gross investment (percent of GDP): 2009 33.0; 2010 38.6; 2011 46.0; 2012 38.8; 2013 31.4; 2014 25.3
- Debt-service ratio as percent of exports of goods and services: 2009 2.5; 2010 2.3; 2011 2.6; 2012 3.9; 2013 2.8; 2014 2.9
- NPV of external debt (percent of GDP): 2009 10.9; 2010 11.8; 2011 11.8; 2012 17.7; 2013 17.4; 2014 17.7
- Foreign Aid (percent of GDP): 2009 6.1; 2010 6.0; 2011 6.1; 2012 11.2; 2013 8.4; 2014 8.3
- Overall balance of payments (CFA francs billions): 2009 -89.8; 2010 -40.6; 2011 99.1; 2012 -8.3; 2013 -26.2; 2014 -25.2

*Source: Niger—Assessment Letter for the World Bank and the European Union, June 2, 2011.*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2011/_060211.pdf_