## _cr04184

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### Macroeconomic developments and key indicators
- Real GDP growth: 6 percent in 2003, compared with 4.3 percent in 2002.
- Nonmining real GDP growth: 9 percent in 2003, up from 2.3 percent in 2002.
- Output increases in 2003: cereals, rice, and cotton each increased by 30 to 40 percent.
- Cotton production: 612,000 metric tons in 2003 (seed cotton production increased by 38.4 percent; producer prices rose from CFAF 180 to CFAF 200 per kilogram).
- Gold production: fell from 66.1 tons in 2002 to 54.6 tons in 2003.
- Gross domestic saving: 19 percent of GDP in 2003.
- Nongovernment investment: just over 17 percent of GDP in 2003.
- CPI: declined by 5 percent in the 12 months to December 2003; averaged -1.3 percent for 2003.
- CPI (to March 2004): dropped by 5¼ percent in the 12 months to March 2004.
- External current account deficit (excluding official transfers): 6.5 percent of GDP in 2003, up from 4.3 percent in 2002.
- Current account deficit including official transfers: 4 percent of GDP in 2003 (up by 1 percentage point of GDP).
- Balance of payments: overall surplus of $156.2 million in 2003; gross international reserves equivalent to over seven months of imports.

### Fiscal policy, expenditures, and poverty-reducing spending
- PRGF arrangement request: SDR 9.33 million (10 percent of quota); first disbursement SDR 1.33 million (Table 1).
- Projected residual financing needs over next three years: SDR 250 million.
- HIPC completion point: March 2003; total debt relief estimated at US$417 million in NPV terms; Fund committed to provide US$45.2 million (SDR 34.7 million).
- Overall fiscal outturn 2003 (payment order basis, excluding grants):
  - Overall deficit: 5.1 percent of GDP in 2003, compared with budget objective of 8.2 percent.
  - Budgetary loans and grants, together with HIPC assistance: 4.6 percent of GDP.
- Government revenue: 16.6 percent of GDP in 2003, up from 15.9 percent in 2002.
  - Note: revenue would have been ½ of 1 percent of GDP higher but for shortfall in WAEMU transfers and increased ad hoc exemptions.
- Total expenditure: fell from 23.2 percent of GDP in 2002 to 21.7 percent in 2003 (below initial budget projection of 25.4 percent).
  - Investment outlays executed at 65 percent of the budgeted level in 2003.
- Upward pressures on current spending: new civil service salary grid, increased retirement age, delayed civil service census implementation, recruitment in education and health, deficit of CRM retirement fund, social plans for privatization layoffs.
- Compensatory payment related to tariff cuts: CFAF 5.1 billion (0.2 percent of GDP) paid to Énergie du Mali (EDM) at end-December 2003.
- Spending on poverty reduction: 59.7 percent of total expenditure (2004 budget projection).

### Monetary and financial sector developments
- BCEAO discount rate: reduced by 200 basis points to 4.5 percent between July 2003 and March 2004 (including a 50 point reduction on March 22, 2004).
- Broad money growth: 21.3 percent in 2003.
- Net foreign assets of banking system: rose by 18.2 percent of broad money at the beginning of the period.
- Net domestic assets: rose by 4.9 percent of beginning-of-period broad money.
- Credit to the economy: increased by 17.4 percent in 2003; projected to increase by 9.1 percent in 2004.
- Net credit to the government: declined by 7.3 percent in 2003; modest increase projected in 2004.
- Banking system asset quality and prudential ratios:
  - Ratio of nonperforming loans to gross bank credit to the economy: 17.8 percent in 2003 (down 0.9 percentage point).
  - Most banks met minimum risk-weighted capital adequacy ratio of 8 percent; loan concentration ratio not observed by most banks.
- Microfinance preliminary 2003 data:
  - Membership increased by 6.6 percent.
  - Deposits increased by 10.4 percent.
  - Loans increased by 12.4 percent.
  - Nonperforming loans rose from 4.4 percent in 2002 to 6.8 percent in 2003.

### Expenditure classification, public expenditure management (PEM) reforms, and tracking poverty-reducing spending
- Total expenditure share: declined from 23.2 percent of GDP in 2002 to 21.7 percent in 2003.
- 2003 investment budget emphasized social sectors in line with PRSP; actual disbursements constrained by insufficient project preparation, cumbersome procurement for foreign-financed projects, and human resource constraints.
- PEM reforms and actions:
  - New budget classification system implemented to identify social and poverty-reducing spending.
  - Manual of budget execution procedures prepared; treasury now prepares monthly financial statements consolidating central and local governments and main autonomous agencies.
  - Assessment and Action Plan (AAP) mission: Mali complied with 12 out of 16 PEM indicators (up from 8 out of 15 in 2001).
- Box 3 actions (selected updates):
  - Include table showing poverty-reducing expenditures in 2002 and 2003 budget — Updated Status: FI (Implemented with the Budget Law of 2003).
  - Apply COFOG to recurrent and development budget — Updated Status: FI.
  - Include two year projections in 2003 and 2004 budget — Updated Status: FI (annex provides program budgets for 2003-05).
  - Strengthen internal audit — Updated Status: II (Minister of Finance strengthened the audit unit).
  - Finalize terms of reference for public expenditure tracking surveys — Updated Status: II (Draft TOR ready).
  - Create quarterly monitoring reports — Updated Status: FI (treasury producing monthly and quarterly statements since December 2002).
  - Strengthen external audit measures — Updated Status: FI (six additional judges and experts added to accounts section of the Supreme Court; independent Auditor General appointed in March 2004).

### External sector projections and program assumptions
- External current account deficit, excluding grants: projected to narrow from 6.5 percent of GDP in 2003 to 5.1 percent of GDP in 2004, then average 6.2 percent of GDP in 2005-07.
- Achieving current account objectives depends on:
  - steady increase in cotton exports;
  - production from two new gold mines coming onstream in 2006;
  - import volume growth over 2004-07 averaging only slightly above projected real GDP growth;
  - no exogenous adverse terms of trade shocks.
- Mali: Trade indicators (selected entries preserved exactly):
  - Export volume: 31.7 -10.4 3.6 4.6 9.5 2.3
  - of which: nonmining: 47.3 0.2 17.4 1.4 5.5 6.2
  - Import volume: -10.4 3.4 8.3 7.7 8.7 4.5
  - Terms of trade: -9.5 1.5 7.1 1.1 1.8 -0.1
  - Current account balance 1/: -4.3 -6.5 -5.1 -6.3 -6.1 -6.2
  - Openness (X+M): 63.9 56.6 67.1 66.2 57.5 56.0
  - Export (X): 31.9 26.1 26.9 26.2 27.1 26.0
  - Import (M): 32.0 30.5 40.1 40.0 30.4 30.0
  - 1/ Excluding grants

### Debt sustainability, scenarios, and staff assessment
- Revised baseline: GDP growth of around 5½-6 percent projected from 2007 to 2023.
- Baseline sectoral assumptions:
  - decline in gold output after 2006, leveling off at about 50 tons per year from 2014 onward;
  - annual agricultural growth: 6 percent on average;
  - agribusiness, energy, construction, transport and telecommunications growth: 8 to 11 percent a year.
- Baseline outcomes:
  - NPV of debt-to-exports ratio, after debt relief, would remain below the 150 percent threshold over 2004-23.
  - NPV of debt-to-government revenue ratio falls from 202.5 percent in 2004 to less than 150 percent from 2015 onward (assuming government revenue stabilizes at just over 18 percent of GDP from 2006 on).
- Alternative scenarios (summaries):
  - Lower gold production scenario: NPV debt-to-exports rises substantially above 150 percent; debt service to exports deteriorates.
  - Higher-growth scenario: GDP growth 7½ to 8½ percent after 2012 → NPV debt-to-exports rises to just over 150 percent unless grants in external financing are increased to 60 percent.
    - Note: Grants averaged 55 percent of total external financing over 1996-2001 but dropped to 45 percent in 2002.
  - Lower-growth (recurrent droughts) scenario: NPV debt-to-exports reaches over 150 percent by 2009 and averages over 200 percent in 2017-23.
- Staff view: outlook for growth and debt is feasible and prudent but sustaining growth requires stable macroeconomic policies, vigorous structural reforms, and a benign regional and global environment.
- Staff recommendation: increase the grant element in external financing over time to keep debt manageable given vulnerability to shocks.

### Poverty Reduction Strategy (PRSP), MDGs, and social outcomes
- PRSP adopted May 2002; first-year assessment completed March 2004; needs updating and alignment with revised macroeconomic framework and medium-term fiscal projections.
- Social progress:
  - access to education and health improved; regional discrepancies and quality concerns remain due to insufficient personnel, training, and resources.
  - budget preparation process not well aligned with PRSP objectives in education and health.
- Poverty indicators:
  - Official incidence of poverty in 2001: 68 percent (little changed from 1994).
  - Recent survey: around two-thirds of the population lives in poverty; most are rural, with over half in extreme poverty.
- Poverty reduction estimates:
  - under baseline growth scenario: poverty might be reduced by about 25 percent by 2015.
  - under higher-growth scenario: poverty might be reduced by about 30 percent by 2015.
  - Estimates assume elasticity of poverty reduction with respect to growth = 0.5.
- Staff concerns: data quality issues, weak absorptive capacity, and program formulation complicate reaching MDGs; Joint Staff Assessment recommends improving prioritization, linking priorities to budget allocations, and increasing absorptive capacities.

### Program for 2004–05 — macroeconomic projections and fiscal policy
- First annual program under PRGF arrangement: April 1, 2004 to March 31, 2005.
- GDP projected growth: 4.7 percent in 2004 and 6.1 percent in 2005.
- Consumer inflation projected: average 2.5 percent in 2004 and 2005.
- External current account deficit (excluding current official transfers): expected to narrow to 5.1 percent of GDP in 2004.
  - Including current official transfers: deficit would amount to 4.3 percent of GDP (not including grants the government may receive to finance residual financing gap).
- Fiscal projections and policy for 2004:
  - Overall fiscal deficit (payment order basis, excluding grants): projected to reach 7.5 percent of GDP in 2004.
  - Including grants: deficit projected to rise from 0.7 percent of GDP in 2003 to 4.0 percent in 2004.
  - Total government revenue projected: 17.0 percent of GDP in 2004 (from 16.6 percent in 2003).
    - Tax revenue to rise by 0.5 percent of GDP to 14.2 percent, mainly from increased domestic tax on petroleum products and simplified regime for companies with turnover between CFAF 30 million and CFAF 100 million.
    - Nontax revenue to decline slightly due to lower dividend payments by gold-mining companies.
  - Total government spending projected: rise by 2.8 percent of GDP to 24.5 percent in 2004.
    - Over half increase (1.7 percent of GDP) from expansion of investment program.
    - Spending on goods and services rises by 1 percent of GDP, including preparation of 2004 local elections.
  - Health and education expenditures: increase from 5.9 percent of GDP in 2003 budget to 6.3 percent of GDP in 2004.
  - Wage bill projected: rise from 4.2 percent of GDP in 2003 to 4.5 percent of GDP in 2004; wage bill limited to CFAF 122 billion (4.5 percent of GDP).
  - Transfers budgeted at CFAF 87.0 billion, or 3.2 percent of GDP in 2004 (including CRM subsidies CFAF 17.7 billion and industrial subsidies CFAF 9.3 billion).
- Financing assumptions and contingencies:
  - Financing from budget support of 2.8 percent of GDP and HIPC Initiative assistance.
  - Government agreed to draw on unused deposits in banking system from end-2003 external assistance; if financing below expectations, will reduce net domestic liabilities by less than the 1.3 percent of GDP envisaged and will not borrow on local/regional markets except short-term cash-flow management.
  - Authorities agreed to complete overdue audit of HIPC Initiative expenditures by end-May 2004 and review social safety nets by end-June 2004.

### Monetary policy and financial sector reforms (2004)
- 2004 monetary projections:
  - Broad money projected to expand by 9.6 percent.
  - Net foreign assets of banking system to grow by 3.3 percent (relative to beginning-of-period broad money).
  - Net domestic assets to grow by 6.4 percent (relative to beginning-of-period broad money).
  - Credit to the economy to increase by 9.1 percent.
- Financial sector reform program (2004) includes:
  - progress toward completing government withdrawal from equity capital of three commercial banks, notably BIM S.A.;
  - strengthening nonbank financial institutions (CRM and INPS);
  - enhancing development of financially sound microfinance sector.
- Banking sector privatization measures and timelines:
  - End provisional administration of BIM and establish normal management structures for BIM by end-April 2004.
  - Approve strategy and timetable for BIM privatization by end-September 2004; launch bidding by March 2005.
  - Appoint auditors to assess value of shares of BDM and BCS by end-September 2004; aim to complete divestiture in 2005.
  - Finalize capital increase for BHM per feasibility study.

### Structural reforms, cotton sector, privatization, and governance
- 2004 structural agenda: improve public sector management, continue decentralization/devolution, pursue privatization program, reform cotton sector.
- Cotton sector objectives and actions:
  - By 2006: divide CMDT into three or four private enterprises.
  - Hire consultant for CMDT privatization master plan by September 2004.
  - Adopt action plan consolidating cotton sector reforms by end-June 2004.
  - Ensure producer price for seed cotton for 2004/05 campaign set by end-May 2004.
- Privatization priorities:
  - Adopt strategy and timetable for SOTELMA by end-June 2004.
  - Complete concession discussions for airports (ADM) and finalize concession for RCFM; bring Hôtel Azalai and Hôtel Club Sélingué to sale point; open capital of UMPP.
- Governance and PEM strengthening:
  - Establish national committee for monitoring public debt sustainability to issue obligatory opinion on any new debt plan.
  - Strengthen audit and inspection agencies; accounts section of Supreme Court reinforced; independent Auditor General appointed March 2004.

### Program monitoring, conditionality, and quantitative performance criteria
- PRGF disbursement schedule (2004–07): seven equal tranches of SDR 1.333 million on dates between June 1, 2004 and April 15, 2007 (Table 1).
- Proposed access: SDR 9.33 million (10 percent of quota); repayments during program period: SDR 36.4 million.
- Monitoring framework:
  - Quarterly monitoring based on quantitative performance criteria, quantitative benchmarks, and indicators in Table 1 of MEFP.
  - Structural performance criteria and benchmarks in Table 2 of MEFP; coverage summarized in Box 6.
  - First review scheduled to be completed no later than December 15, 2004.
- Key quantitative targets (selected, in billions of CFA francs):
  - Net domestic financing of the government: March 2004: 20.1; June 2004 (indicative): 6.5; September 2004: -10.3; December 2004: -23.9; March 2005: 19.9.
  - Cumulative tax revenue: March 2004: 80.7; June 2004: 167.1; September 2004: 265.7; December 2004: 383.7; March 2005: 94.4.
  - Cumulative wage bill: March 2004: 30.5; June 2004: 61.1; September 2004: 91.5; December 2004: 122.0; March 2005: 33.9.
  - Overall basic fiscal balance: March 2004: 6.6; June 2004: 1.4; September 2004: 6.3; December 2004: -2.6; March 2005: 5.9.
- Performance criteria and prior actions (selected):
  - Prior actions: creation of unit in Ministry of Economy and Finance to monitor macroeconomic program; end provisional administration of BIM SA and establish new management structure.
  - Performance criteria: adoption of operational master plan for CMDT privatization — End-September 2004; adoption of privatization strategy for SOTELMA — End-June 2004; adoption of strategy/timetable for BIM SA privatization — End-September 2004; finalization of actuarial studies on CRM and audit of INPS files — End-December 2004.
  - Benchmarks: completion of an audit of expenditures financed with HIPC resources — End-May 2004.

### Risks, contingencies, and capacity to repay the Fund
- Key risks: resurgence of regional instability; exogenous shocks to agricultural or mining sectors (adverse weather, commodity price drops); crisis in Côte d’Ivoire affecting transport and cotton exports.
- Stress example: a 20 percent fall in world cotton price could widen Mali’s external current account deficit by about 1 percentage point of GDP and reduce Mali’s contribution to BCEAO international reserves by the same extent; if CMDT losses borne by government, overall fiscal deficit and financing requirements could increase by about ½ a percent of GDP.
- Capacity to repay the Fund:
  - Proposed access: SDR 9.33 million (10 percent of quota).
  - Repayments during program period: SDR 36.4 million.
  - Post-debt relief debt service: declining to about 1 percent of exports of goods and services and of total government revenue.
  - Contingency: increase in access under PRGF arrangement could be considered if unexpected balance of payments shocks arise.
- Staff recommendation: Board approval of the authorities’ request for a new three-year PRGF arrangement given strength of proposed policies and measures.

### Selected headline numeric projections and indicators (tables highlights)
- Real GDP (annual percent change): 2000: -3.2; 2001: 12.1; 2002: 4.3; 2003: 6.0; 2004: 4.7; 2005: 6.1; 2006: 6.6; 2007: 5.6.
- Nominal GDP (billions of CFA francs): 2003: 2,540.5; 2004: 2,699.3; 2005: 2,925.1; 2006: 3,180.1; 2007: 3,440.7.
- Consumer price index (annual average): 2003: -1.3; 2004: 2.5; 2005: 2.5; 2006: 2.5; 2007: 2.5.
- Current external balance including official transfers (percent of GDP): 2003: -4.0; 2004: -4.3; 2005: -6.2; 2006: -6.1; 2007: -6.2.
- Overall fiscal balance (payment order basis, excluding grants; percent of GDP): 2003: -5.1; 2004: -7.5; 2005: -7.3; 2006: -6.7; 2007: -6.5.
- Gross international reserves (US$ millions): 2003: 827.5; 2004: 870.0; 2005: 913.0; 2006: 956.8; 2007: 1,000.4.
- Public sector debt (percent of GDP, baseline): 2003: 71.5; 2004: 69.9; 2005: 62.8; 2006: 56.1; 2007: 50.4.
- NPV of public sector debt (percent of GDP): 2003: 43.2; 2004: 41.6; 2005: 39.0; 2006: 36.8; 2007: 35.1.
- Debt-service ratio after debt relief (percent of exports): 2003: 6.0; 2004: 6.4; 2005: 6.9; 2006: 5.8; 2007: 6.6.

*Source: IMF staff report excerpts and tables from the provided PDF content.*

### 1. Total and Poverty-Reducing Expenditures, 2002-04.....................................................7

### 1. Total and Poverty-Reducing Expenditures, 2002-04

### Macroeconomic developments and key macro indicators
- Real GDP growth: 6 percent in 2003, compared with 4.3 percent in 2002.
- Nonmining real GDP growth: 9 percent in 2003, up from 2.3 percent in 2002.
- Output increases: cereals, rice, and cotton each increased by 30 to 40 percent in 2003.
- Cotton production: 612,000 metric tons in 2003 (a 10 percent increase in producer prices noted).
- Gold production: fell from 66.1 tons in 2002 to 54.6 tons in 2003.
- Gross domestic saving: 19 percent of GDP in 2003.
- Nongovernment investment: just over 17 percent of GDP in 2003 (rebuilt mainly by stock buildup).
- Consumer price index (CPI): declined by 5 percent in the 12 months to December 2003, or by 1.3 percent on average for the year.
- CPI (early 2004): CPI dropped by 5¼ percent in the 12 months to March 2004.
- External current account deficit (excluding official transfers): 6.5 percent of GDP in 2003, up from 4.3 percent in 2002.
- Current account deficit including official transfers: 4 percent of GDP in 2003 (up by 1 percentage point of GDP).
- Balance of payments: overall surplus of $156.2 million in 2003; gross international reserves equivalent to over seven months of imports.

### Fiscal policy, expenditures, and poverty-reducing spending
- PRGF arrangement request: SDR 9.33 million (10 percent of quota) with first disbursement SDR 1.33 million (Table 1).
- Projected residual financing needs over next three years: SDR 250 million.
- HIPC completion point: March 2003; total debt relief estimated at US$417 million in NPV terms; Fund committed to provide US$45.2 million (SDR 34.7 million).
- Overall fiscal outturn 2003 (payment order basis, excluding grants):
  - Overall deficit: 5.1 percent of GDP in 2003, compared with budget objective of 8.2 percent.
  - Budgetary loans and grants, together with HIPC assistance: 4.6 percent of GDP.
- Government revenue: 16.6 percent of GDP in 2003, up from 15.9 percent in 2002.
  - Note: revenue would have been ½ of 1 percent of GDP higher but for shortfall in WAEMU transfers and increased ad hoc exemptions.
- Total expenditure: fell from 23.2 percent of GDP in 2002 to 21.7 percent in 2003 (below the initial budget projection of 25.4 percent).
  - Investment outlays executed at 65 percent of the budgeted level in 2003.
- Upward pressures on current spending: new civil service salary grid, increased retirement age, delayed civil service census implementation, recruitment in education and health, deficit of CRM retirement fund, social plans for privatization layoffs.
- Compensatory payment related to tariff cuts: CFAF 5.1 billion (0.2 percent of GDP) paid to Énergie du Mali (EDM) at end-December 2003.

### Monetary and financial sector developments
- BCEAO discount rate: reduced by 200 basis points to 4.5 percent between July 2003 and March 2004 (including a 50 point reduction on March 22, 2004).
- Broad money growth: 21.3 percent in 2003.
- Net foreign assets of banking system: rose by 18.2 percent of broad money at the beginning of the period (driven by foreign banks’ financing of the cotton sector and budgetary assistance).
- Net domestic assets: rose by 4.9 percent of beginning-of-period broad money.
- Credit to the economy: increased by 17.4 percent in 2003.
- Net credit to the government: declined by 7.3 percent in 2003.
- Banking system asset quality and prudential ratios:
  - Ratio of nonperforming loans to gross bank credit to the economy: 17.8 percent in 2003 (down 0.9 percentage point).
  - Most banks met key prudential ratios, including the minimum risk-weighted capital adequacy ratio of 8 percent.
  - No bank observed the risk concentration ratio, attributed to high level of bank financing required by the cotton sector.
- Microfinance institutions (preliminary 2003 data):
  - Membership increased by 6.6 percent.
  - Deposits increased by 10.4 percent.
  - Loans increased by 12.4 percent.
  - Nonperforming loans rose from 4.4 percent in 2002 to 6.8 percent in 2003.

### Expenditure classification and poverty-reducing spending (high-level findings)
- Total expenditure share: declined from 23.2 percent of GDP in 2002 to 21.7 percent in 2003.
- Social-sector emphasis in the 2003 investment budget aligned with PRSP, but actual disbursements were constrained by:
  - Insufficient project preparation.
  - Cumbersome procurement procedures for foreign-financed projects.
  - Human resource constraints.
- Public expenditure management (PEM) reforms:
  - New budget classification system implemented to identify social and poverty-reducing spending.
  - Preparation of a manual of budget execution procedures.
  - Recent Assessment and Action Plan (AAP) mission: Mali complied with 12 out of 16 PEM indicators, compared with 8 out of 15 at the 2001 joint Bank-Fund assessment.

### Structural and programmatic context
- Political developments: democratic transition maintained; presidential election April/May 2002; coalition government formed October 2002; Prime Minister change April/May 2004; local elections scheduled end-May 2004.
- Regional issues: crisis in Côte d’Ivoire continues to affect road transportation and business climate; cotton exports affected by transportation difficulties.
- World Bank engagement: active portfolio of eleven projects spanning rural development, infrastructure and energy, health and education, financial sector, and structural adjustment.
- Program support: authorities requested a PRGF arrangement to support a medium-term program for April 1, 2004 – March 31, 2007.

*Source: IMF staff report excerpts (sections I–II and Boxes 1–2) from the provided PDF content.*

### Box 3. Mali: Status of Actions to Strengthen Tracking of Poverty-Reducing Public Spending

### Box 3. Mali: Status of Actions to Strengthen Tracking of Poverty-Reducing Public Spending

### Budget formulation
- Improve accounting for external disbursements  
  - Timing: S  
  - Status (as reported in IMF Country Report No. 02/157): II  
  - Updated Status: S  
  - Comments: Discussions with development partners continue.
- Include table showing poverty-reducing expenditures in 2002 and 2003 budget  
  - Timing: S  
  - Status: NS  
  - Updated Status: FI  
  - Comments: Implemented with the Budget Law of 2003.
- Apply the classification of functions of government (COFOG) to recurrent and development budget  
  - Timing: M  
  - Status: II  
  - Updated Status: FI  
  - Comments: The COFOG and West African Economic and Monetary Union (WAEMU) classifications are used to book government expenditure.
- Include two year projections in 2003 and 2004 budget  
  - Timing: M  
  - Status: II  
  - Updated Status: FI  
  - Comments: The annex to the 2003 budget provides program budgets for each ministry for the period 2003-05.

### Budget execution
- Strengthen internal audit  
  - Timing: M  
  - Status: NS  
  - Updated Status: II  
  - Comments: The Minister of Finance has strengthened the audit unit.
- Finalize terms of reference for public expenditure tracking surveys  
  - Timing: S  
  - Status: NS  
  - Updated Status: II  
  - Comments: Draft terms of reference are ready.

### Budget reporting
- Set up template for local government reporting  
  - Timing: S  
  - Status: NS  
  - Updated Status: II  
  - Comments: Local governments are required to send monthly balance sheets to a newly created treasury unit.
- Issue circular requiring local government quarterly reports  
  - Timing: S  
  - Status: NS  
  - Updated Status: II  
  - Comments: A new treasury unit centralizes information on budget execution by local governments.
- Establish training and enforcement measures for timely submission of local government reports  
  - Timing: S  
  - Status: NS  
  - Updated Status: II  
  - Comments: A new treasury unit is responsible for strengthening local government accounting capacity.
- Create quarterly monitoring reports  
  - Timing: S  
  - Status: NS  
  - Updated Status: FI  
  - Comments: The treasury unit has been producing monthly and quarterly statements since December 2002.
- Strengthen external audit measures  
  - Timing: M  
  - Status: II  
  - Updated Status: FI  
  - Comments: Six additional judges and experts were added to the accounts section of the Supreme Court.

### Additional governance and fiscal reporting developments noted in the source
- The treasury now prepares a monthly financial statement that consolidates operations of the central and local governments and of the main autonomous administrative agencies.
- Internal audit and inspection have been strengthened; results of an investigation of fraud on value-added tax (VAT) reimbursements were submitted to the Ministry of Justice.
- The audit section of the Supreme Court has been reinforced, and an independent Auditor General was appointed in March 2004.

*Source: _cr04184 - Box 3. Mali: Status of Actions to Strengthen Tracking of Poverty-Reducing Public Spending*

### 32. Under the program, the external

### 32. Under the program, the external

### Current account and external sector projections
- External current account deficit, excluding grants, projected to narrow from 6.5 percent of GDP in 2003 to 5.1 percent of GDP in 2004, and then to average 6.2 percent of GDP in 2005-07.
- Achieving current account objectives depends critically on:
  - a steady increase in cotton exports;
  - production from two new gold mines coming onstream in 2006;
  - import volume growth over 2004-07 that averages only slightly above the projected growth of real GDP;
  - no exogenous adverse shocks to the terms of trade.
- Mali: Trade indicators, 2002-07 (selected entries preserved exactly)
  - Export volume: 31.7 -10.4 3.6 4.6 9.5 2.3
  - of which: nonmining: 47.3 0.2 17.4 1.4 5.5 6.2
  - Import volume: -10.4 3.4 8.3 7.7 8.7 4.5
  - Terms of trade: -9.5 1.5 7.1 1.1 1.8 -0.1
  - Current account balance 1/: -4.3 -6.5 -5.1 -6.3 -6.1 -6.2
  - Openness (X+M): 63.9 56.6 67.1 66.2 57.5 56.0
  - Export (X): 31.9 26.1 26.9 26.2 27.1 26.0
  - Import (M): 32.0 30.5 40.1 40.0 30.4 30.0
  - 1/ Excluding grants

### Debt sustainability and long-term scenarios
- Revised baseline: GDP growth of around 5½-6 percent projected from 2007 to 2023.
- Key sectoral assumptions in the baseline:
  - expected decline in gold output after 2006, followed by assumed leveling off of production at about 50 tons per year from 2014 onward;
  - annual growth of 6 percent on average in the agricultural sector;
  - relatively strong growth of 8 to 11 percent a year in agribusiness, energy, construction, and transport and telecommunications;
  - steady growth in nonmining exports over the longer term to help offset slowdown in export growth triggered by fall in gold production.
- Under baseline scenario:
  - NPV of debt-to-exports ratio, after debt relief, would remain below the 150 percent threshold over 2004-23.
  - Ratio of NPV of debt to government revenue would fall from 202.5 percent in 2004 to less than 150 percent from 2015 onward, assuming government revenue stabilizes at just over 18 percent of GDP from 2006 on.
- Alternative scenarios (summary of outcomes):
  - Lower gold production scenario: no discovery/development of new gold reserves → weaker GDP and export growth → NPV of debt-to-exports ratio rises substantially above 150 percent over the longer term; debt service to exports deteriorates.
  - Higher-growth scenario: GDP growth picks up to 7½ to 8½ percent after 2012 → stronger investment and productivity growth → more rapid increase in exports and domestic sectors; with debt-creating capital inflows, NPV of debt-to-exports ratio would rise to just over 150 percent over the longer term, although ratios of debt service to exports and to government revenue would continue falling. This scenario underscores the importance of increasing grants in external financing to 60 percent to keep external debt manageable.
    - Note: Grants averaged 55 percent of total external financing over 1996-2001 but dropped to 45 percent in 2002.
  - Lower-growth (recurrent droughts) scenario: NPV of debt-to-exports ratio would reach over 150 percent by 2009 and average over 200 percent in 2017-23; ratios of debt service to exports and revenue would also increase.
- Staff view: outlook for growth and debt is feasible and prudent but sustaining growth at this level requires stable and credible macroeconomic policies, vigorous structural reforms, and a benign regional and global environment.

### Poverty Reduction Strategy and MDGs
- PRSP adopted in May 2002; first-year assessment completed in March 2004 highlighted need to update and strengthen PRSP in several areas.
- GDP growth picked up strongly in 2003 but remains below PRSP goal of a 6.7 percent average growth rate during 2002-06; PRSP needs alignment with revised macroeconomic framework and new medium-term fiscal projections and updates on external assistance.
- Social progress mixed:
  - access to education and health improved, but large regional discrepancies and concerns about poor quality due to insufficient personnel, training, and other resources;
  - budget preparation process not well aligned with PRSP objectives in education and health.
- Authorities intend to strengthen and update annually the medium-term expenditure framework and improve coordination among agencies.
- Poverty and MDG projections:
  - Recent survey: around two-thirds of the population lives in poverty; most are rural, with over half in extreme poverty.
  - Official incidence of poverty in 2001: 68 percent (little changed from 1994).
  - Poverty reduction estimates:
    - under baseline growth scenario: poverty might be reduced by about 25 percent by 2015;
    - under higher-growth scenario: poverty might be reduced by about 30 percent by 2015.
  - Estimates assume an elasticity of poverty reduction with respect to growth of 0.5.
- Concerns: data quality issues, measurement of progress, weak absorptive capacity and program formulation complicate reaching MDGs; Joint Staff Assessment recommends improving prioritization, linking priorities to budget allocations, and increasing absorptive capacities.

### Program for 2004 and 2005 — Macroeconomic projections
- First annual program under PRGF arrangement: April 1, 2004 to March 31, 2005.
- GDP projected to grow by 4.7 percent in 2004 and 6.1 percent in 2005.
  - 2004 weaker than 2003 due to assumed fall in agricultural production to longer-term trend and expected decline in gold output.
  - Offsets: large 2003 agricultural gains benefiting downstream industries; strong growth in energy, transport, telecommunications from infrastructure investment.
- Consumer inflation projected to average 2.5 percent in 2004 and 2005.
- External current account deficit (excluding current official transfers) expected to narrow to 5.1 percent of GDP in 2004 due to increase in cotton exports.
  - Including current official transfers, deficit would amount to 4.3 percent of GDP, not including grants the government may receive to finance residual financing gap.
  - Note: increase in cotton exports assumes road link to Abidjan remains open and some exports through other regional ports including Dakar.

### Fiscal policy (2004 outlook)
- Overall fiscal deficit on payment order basis and excluding grants projected to reach 7.5 percent of GDP in 2004.
- Including grants, deficit projected to rise from 0.7 percent of GDP in 2003 to 4.0 percent in 2004.
- Increase mainly due to higher public investment; financing from budget support of 2.8 percent of GDP and HIPC Initiative assistance.
  - Authorities agreed to draw on unused deposits in banking system from end-2003 external assistance; if financing is below expectations, they intend to reduce net domestic liabilities by less than the 1.3 percent of GDP currently envisaged and will not borrow on local/regional markets except for short-term cash-flow management.
- Total government revenue projected to increase from 16.6 percent of GDP in 2003 to 17.0 percent in 2004.
  - Tax revenue to rise by 0.5 percent of GDP to 14.2 percent, mainly from increase in domestic tax on petroleum products and implementation of simplified regime for companies with turnover between CFAF 30 million and CFAF 100 million.
  - Nontax revenue to decline slightly relative to GDP due to lower dividend payments by gold-mining companies.
  - Authorities plan tax administration improvements: staff training, combating tax evasion and fraud, improving large taxpayers’ compliance.
- Total government spending projected to rise by 2.8 percent of GDP to 24.5 percent in 2004.
  - Over half the increase (1.7 percent of GDP) from expansion of investment program (partly due to delays in implementing 2003 projects).
  - Spending on goods and services rises by 1 percent of GDP, including preparation of 2004 local elections.
  - Assumption: slightly less than 80 percent of the public investment program included in the budget will be implemented in 2004, in line with average historical execution level.
- Health and education expenditures to increase from 5.9 percent of GDP in 2003 budget to 6.3 percent of GDP in 2004.
  - Authorities to complete overdue audit of HIPC Initiative expenditures by end-May 2004 and review social safety net mechanisms by end-June 2004.
  - Concerns about social ministries’ capacity to implement increased spending due to weaknesses in program formulation and procurement procedures; staff encouraged improving absorptive capacity and donor coordination and moving toward budgetary support.
- Wage bill projected to rise from 4.2 percent of GDP in 2003 to 4.5 percent of GDP in 2004.
  - Just under 40 percent of increase reflects recruitment for priority sectors (education, health, justice); remainder due to progression up pay scale, recruitment for security forces and other sectors, and impact of civil service reforms 2002-04.
  - Authorities removed from payroll civil servants who did not participate in 2003 civil service census and agreed to streamline nonwage benefits (~20 percent of total wages and salaries).
- Transfer payments budgeted at 3.2 percent of GDP in 2004 (transfers to civil service pension fund, subsidies to water and energy company, subsidies to new textile company).
  - Civil service pension fund deficit: 0.7 percent of GDP; authorities agreed to financial audit and census of retirees; preliminary report due by end-2004 to develop rehabilitation strategy/action plan.
  - Authorities and staff discussed targeting water and energy subsidies on the poor but cited administrative and information constraints; studying concessional long-term loans to EDM to expand electricity grid.

### Monetary policy and financial sector reforms
- 2004 monetary projections:
  - Broad money projected to expand by 9.6 percent.
  - Net foreign assets of banking system to grow by 3.3 percent (relative to beginning-of-period broad money).
  - Net domestic assets to grow by 6.4 percent (relative to beginning-of-period broad money).
  - Credit to the economy to increase by 9.1 percent.
  - Modest increase in net bank credit to government reflecting drawdown of deposits accumulated at end-2003.
- Financial sector reform program for 2004 includes:
  - (i) progress toward completing government withdrawal from equity capital of three commercial banks, notably BIM S.A.;
  - (ii) strengthening nonbank financial institutions, emphasizing pension fund (CRM) and social security agency (INPS);
  - (iii) enhancing development of a financially sound microfinance sector.

### Other structural reforms
- 2004 agenda: improve public sector management, continue decentralization and devolution, pursue privatization program, reform cotton sector.
- Key 2004 measures: adopt strategy and timetable for privatization of SOTELMA; appoint consultant to draw up master plan for CMDT privatization and coordinate actions to deregulate cotton sector.

### Risks to the program and capacity to repay the Fund
- Key risks: resurgence of regional instability; exogenous shocks to agricultural or mining sectors (adverse weather, commodity price drops).
- Example stress: a 20 percent fall in world cotton price could widen Mali’s external current account deficit by about 1 percentage point of GDP relative to baseline and reduce Mali’s contribution to BCEAO international reserves by same extent.
  - If CMDT losses are borne by government, overall fiscal deficit and financing requirements could increase by about ½ a percent of GDP.
- Authorities requested consideration of increasing access under arrangement if unexpected balance of payments shocks arise.

*Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2004/_cr04184.pdf*

### 51. Despite these risks, however, Mali’s capacity to repay the Fund appears sound. As

### _cr04184 - 51. Despite these risks, however, Mali’s capacity to repay the Fund appears sound. As

### Capacity to repay the Fund
- Proposed access: SDR 9.33 million (10 percent of quota).
- Rationale: takes into account Mali’s current indebtedness to the Fund, its excellent record in servicing debt, and its success with program implementation.
- Repayments during program period: SDR 36.4 million.
- Post-debt relief debt service: declining to about 1 percent of exports of goods and services and of total government revenue.
- Contingency: An increase in access under the PRGF arrangement could be considered, should a need arise as a result of unexpected shocks to the balance of payments.

### Prior actions and program monitoring
- Prior actions have been set to ensure conditions conducive to the program’s success by the time of the Executive Board discussion (see Table 2 of the MEFP).
- Monitoring frequency and instruments:
  - Quarterly monitoring on the basis of the quantitative performance criteria, quantitative benchmarks, and indicators shown in Table 1 of the MEFP.
  - Monitoring on the basis of the structural performance criteria and benchmarks shown in Table 2 of the MEFP.
- Coverage of structural conditionality under the proposed arrangement summarized in Box 6.
- Assessment timing: Progress under the program for 2004 will be assessed in the context of the first review, scheduled to be completed no later than December 15, 2004.
- Staff update: The staff will provide an update on the status of implementation of these prior actions before the Board meeting.

### Staff appraisal — macroeconomic developments and outlook
- 2003 performance:
  - Mali’s economic situation improved in 2003, in spite of a difficult regional environment.
  - Higher-than-average rainfall contributed to a sharp increase in agricultural output and a drop in the consumer price index.
- 2004 outlook:
  - Favorable, given anticipated increase in revenue in the agricultural sector, provided the regional environment does not deteriorate further.
- Vulnerabilities:
  - Mali remains very vulnerable to weather conditions, terms of trade shocks, and the volatility of aid flows.
  - Vulnerability exacerbated by the crisis in Côte d’Ivoire.

### Staff appraisal — policy framework and reforms
- Medium-term program:
  - Government’s medium-term program aligned to the PRSP policy agenda.
  - Objectives: implement poverty reduction strategy, pursue fiscal consolidation, continue reform process, diversify the economy, increase competitiveness, achieve higher growth, and make progress toward the MDGs.
- Fiscal policy and revenue mobilization:
  - Further fiscal consolidation and improvement in public resource management are essential.
  - Recent Fund technical assistance on tax policy: Mali’s tax system is broadly adequate.
  - Challenge: increase government revenue substantially over the medium term and attain the corresponding WAEMU convergence criterion.
  - Required measures: broaden the tax base through a reduction in tax exemptions and strengthening of tax administration to combat tax fraud and reduce the size of the informal sector.
  - Devolution policy implication: authorities need to develop tax measures for local authorities so they have sufficient resources for additional responsibilities.
- Expenditure and public resource management:
  - Staff welcomes efforts made in strengthening public resource management and monitoring poverty-reducing outlays.
  - Need: better reflection of PRSP priorities in the budget.
  - Wage policy: given substantial salary increases over the past three years, a tightening of wage policy is essential to remain competitive and to recruit personnel required for education and health.
  - Civil service retirement fund: widening deficit needs to be dealt with rapidly to reduce its budgetary impact.
- Structural reforms and private sector:
  - Staff supports strategy to bolster competitiveness and promote private sector development via:
    - developing infrastructure,
    - strengthening the judicial system and governance,
    - deepening financial intermediation,
    - improving labor skills and productivity.
  - Urged actions: complete the privatization program and liberalization of the cotton sector, and refrain from direct government intervention, tax exemptions, or subsidies that could aggravate distortions, jeopardize fiscal consolidation, and reduce resources for social sectors.

### Structural conditionality (Box 6 summary)
- Objectives: ensure macroeconomic stability, improve competitiveness, and reduce vulnerability to external and domestic shocks; focus areas include core macroeconomic adjustment, cotton sector reform, public expenditure management, promotion of financial intermediation, and the fight against poverty.
- First-year measures include:
  - Liberalization of the banking system and deepening of financial intermediation (cease the provisional administration of the commercial bank BIM SA, and establish the new management structure of the commercial bank BIM SA).
  - Liberalization of the telecommunications sector (adoption of a privatization strategy for the telecommunications company (SOTELMA)).
  - Poverty alleviation and strengthening of internal control of the public expenditure management (completion of an audit of expenditures financed with HIPC resources).
  - Pension fund reform (completion of actuarial studies on civil service pension fund (CRM), and audit of the database on contributions to and beneficiaries from the private social security system (INPS)).
  - Cotton sector reform (adoption of an operational master plan for the privatization of the CMDT).
- Other relevant structural measures:
  - Measures related to energy, financial, transportation, and telecommunications sectors, as well as privatization, covered in specific World Bank-supported programs.
  - Promotion of good governance pursued by most donors; World Bank leading reform of budget execution and management and assisting design of an integrated information system within the Ministry of Economy and Finance.
  - Strengthening of the judicial system addressed through a World Bank technical assistance project.
  - Donors prioritizing fight against poverty; World Bank leading in health and education, rural infrastructure, and strengthening of farmers’ organizations.
  - Donors assisting authorities with decentralization reform; an action plan was recently discussed with social partners.
- Structural areas covered by World Bank lending and conditionality (examples with timing and loan instruments as listed):
  - Cotton sector reform 2001-04 Structural Adjustment Credit (SAC) I, II, III
  - Public expenditure management 2001-04 SAC I, II, III
  - Financial sector reform 2000-06 Financial Sector Development project
  - Education 2000-05 Education Sector Expenditure project
  - Health 1998-05 Integrated Health Sector Invest. proj.
  - Rural infrastructure 2000-05 Rural Infrastructure Project
  - Urban development and decentralization 1996-2003 Urban Dev. and Decentralization
  - Energy 1996-2001 Selingué project; 2004-09 Household Energy & Universal Access
  - Telecommunications 2000-02 Telecommunications Sector project

### Debt sustainability and PRSP implementation
- Debt sustainability analysis:
  - Updated analysis finds that the NPV of debt-to-exports ratio in the baseline scenario would remain below 150 percent over 2004-23, as in the HIPC completion point document.
  - Staff recommendation: increase the grant element in external financing over time to keep debt at a manageable level given vulnerability to exogenous shocks.
- PRSP progress:
  - Staff notes progress as indicated in the first annual progress report.
  - Encouraged actions: set clear priorities, select a narrow set of indicators to assess outcomes, and strengthen institutions to coordinate and monitor PRSP implementation.

*Source: IMF staff report content (excerpts provided in the source PDF).*

### 61. The staff believes that, in view of the strength of the proposed policies and measures,

### _cr04184 - 61. The staff believes that, in view of the strength of the proposed policies and measures,

### Recommendation
- The staff recommends Board approval of the authorities’ request for a new three-year arrangement under the PRGF, noting that “in view of the strength of the proposed policies and measures, the government’s reform program merits the support of the international community.”

### Main economic indicators and projections (select findings)
- Growth in Real GDP (annual percent): series plotted for 1996–2007 with projections (figures shown visually in source).
- Inflation (percentage change in average consumer price index): series plotted for 1996–2007 with projections (figures shown visually in source).
- Government revenue and expenditure (central government, on commitment basis; in percent of GDP): revenue including grants and revenue excluding grants plotted for 1996–2007 with projections (figures shown visually in source).
- External deficit and current account (percent of GDP): trade balance and current account including/excluding official transfers plotted for 1996–2007 with projections (figures shown visually in source).
- Effective exchange rates: nominal effective exchange rate and real effective exchange rate (Index, 1990=100) for January 1993 – January 2004 (Figure 2).

### PRGF Proposed Schedule of Disbursements, 2004-07 (Table 1)
- SDR 1.333 million — June 1, 2004 — Executive Board approval of the three-year PRGF arrangement
- SDR 1.333 million — October 15, 2004 — Observance of the performance criteria for September 30, 2004 and completion of the first review under the arrangement
- SDR 1.333 million — April 15, 2005 — Observance of the performance criteria for March 31, 2005 and completion of the second review under the arrangement
- SDR 1.333 million — October 15, 2005 — Observance of the performance criteria for September 30, 2005 and completion of the third review under the arrangement
- SDR 1.333 million — April 15, 2006 — Observance of the performance criteria for March 31, 2006 and completion of the fourth review under the arrangement
- SDR 1.333 million — October 15, 2006 — Observance of the performance criteria for September 30, 2006 and completion of the fifth review under the arrangement
- SDR 1.333 million — April 15, 2007 — Observance of the performance criteria for March 31, 2006 and completion of the sixth review under the arrangement
- Note: “In addition to the generally applicable conditions under the Poverty Reduction and Growth Facility arrangement.”

### Fund position (Table 2, as of March 31, 2004; select figures)
- Net use of Fund credit (2000): -6.20 (In millions of SDRs)
- Net use of Fund credit (2003 total): -21.68 (In millions of SDRs)
- Disbursements (2000–2003 monthly entries): e.g., 6.75, 18.17, 6.75, 12.90 (In millions of SDRs)
- Repayments (excludes HIPC assistance) (2000–2003 monthly entries): e.g., 12.95, 16.88, 21.01, 21.07 (In millions of SDRs)
- Memorandum: Approved HIPC assistance (2003 total): 0.98 (In millions of SDRs)
- Fund credit at end of period under PRGF (2000): 134.73 (In millions of SDRs)
- Fund credit at end of period under PRGF (2007 projection, Dec.): 44.96 (In millions of SDRs)
- Fund credit at end of period under SAF/PRGF (in percent of quota): 144.41 (2000) down to 48.19 (2007 projection, Dec.)

### Selected economic and financial indicators, 2000-07 (Table 3; select series)
- Real GDP (annual percent change): 2000: -3.2; 2001: 12.1; 2002: 4.3; 2003: 6.0; 2004: 4.7; 2005: 6.1; 2006: 6.6; 2007: 5.6
- Nominal GDP (in billions of CFA francs): 2000: 1,899.2; 2001: 2,212.6; 2002: 2,329.9; 2003: 2,540.5; 2004: 2,699.3; 2005: 2,925.1; 2006: 3,180.1; 2007: 3,440.7
- GDP deflator (percent): 2000: 9.0; 2001: 3.9; 2002: 1.0; 2003: 2.9; 2004: 1.5; 2005: 2.1; 2006: 2.0; 2007: 2.4
- Consumer price index (annual average): 2000: -0.7; 2001: 5.2; 2002: 5.0; 2003: -1.3; 2004: 2.5; 2005: 2.5; 2006: 2.5; 2007: 2.5
- Exports, f.o.b. (annual percent change): 2000: 9.1; 2001: 36.9; 2002: 17.6; 2003: -10.0; 2004: 10.9; 2005: 5.5; 2006: 13.0; 2007: 3.5
- Imports, f.o.b. (annual percent change): 2000: 13.1; 2001: 27.7; 2002: -8.5; 2003: 2.2; 2004: 7.5; 2005: 7.9; 2006: 10.7; 2007: 5.9
- Current external balance, including official transfers (percent of GDP): 2000: -9.6; 2001: -10.3; 2002: -3.0; 2003: -4.0; 2004: -4.3; 2005: -6.2; 2006: -6.1; 2007: -6.2
- Gross international reserves (in millions of U.S. dollars): 2000: 381.3; 2001: 348.9; 2002: 594.5; 2003: 827.5; 2004: 870.0; 2005: 913.0; 2006: 956.8; 2007: 1,000.4
- Exports (percent of GDP): 2000: 24.1; 2001: 29.0; 2002: 31.9; 2003: 26.1; 2004: 26.9; 2005: 26.2; 2006: 27.1; 2007: 26.0
- Imports (percent of GDP): 2000: 34.7; 2001: 38.3; 2002: 32.0; 2003: 30.5; 2004: 40.1; 2005: 40.0; 2006: 30.4; 2007: 30.0
- Debt-service ratio before debt relief (percent of exports of goods and services): 2000: 12.8; 2001: 9.9; 2002: 10.0; 2003: 10.5; 2004: 10.5; 2005: 10.8; 2006: 9.3; 2007: 9.9
- Debt-service ratio after debt relief (percent of exports of goods and services): 2000: 12.2; 2001: 6.3; 2002: 6.3; 2003: 6.0; 2004: 6.4; 2005: 6.9; 2006: 5.8; 2007: 6.6

### Selected national accounts indicators (Table 4; select series)
- Composition of GDP in 2002 (percent): Primary sector: 32.3; Secondary sector: 25.4; Tertiary sector: 34.5; GDP (at market prices): 100.0
- Primary sector GDP growth (annual percent change): 2000: -10.4; 2001: 11.3; 2002: -3.6; 2003: 18.7; 2004: -0.7; 2005: 4.6; 2006: 4.8; 2007: 4.9
- Nonmining real GDP (annual percent change): 2000: -3.9; 2001: 7.5; 2002: 2.3; 2003: 9.0; 2004: 5.9; 2005: 5.9; 2006: 6.0; 2007: 6.2
- Gross national saving (percent of GDP): 2000: 12.8; 2001: 16.7; 2002: 15.6; 2003: 19.4; 2004: 16.5; 2005: 14.8; 2006: 14.4; 2007: 15.1
- Gross domestic investment (percent of GDP): 2000: 22.3; 2001: 27.0; 2002: 18.6; 2003: 23.4; 2004: 20.8; 2005: 21.1; 2006: 20.4; 2007: 21.2
- External current account balance (percent of GDP, including official transfers): 2000: -9.6; 2001: -10.3; 2002: -3.0; 2003: -4.0; 2004: -4.3; 2005: -6.2; 2006: -6.1; 2007: -6.2
- Nominal GDP (in billions of CFA francs): reported as in Table 3 (same series).

### Central government consolidated financial operations (Table 5; select items)
- Revenue and grants (in billions of CFA francs): 2000: 352.3; 2001: 394.9; 2002: 456.7; 2003: 534.1; 2004: 553.0; 2005: 587.5; 2006: 663.1; 2007: 727.0
- Total revenue (in billions of CFA francs): 2000: 262.3; 2001: 311.2; 2002: 370.9; 2003: 421.8; 2004: 459.2; 2005: 507.0; 2006: 575.5; 2007: 632.3
- Tax revenue (in billions of CFA francs): 2000: 225.7; 2001: 272.7; 2002: 306.0; 2003: 349.2; 2004: 383.7; 2005: 427.3; 2006: 486.0; 2007: 536.4
- Total expenditure and net lending (in billions of CFA francs): 2000: 407.9; 2001: 465.9; 2002: 540.6; 2003: 551.4; 2004: 660.4; 2005: 720.1; 2006: 789.4; 2007: 854.9
- Capital expenditure (in billions of CFA francs): 2000: 185.8; 2001: 169.3; 2002: 203.1; 2003: 201.5; 2004: 259.0; 2005: 283.9; 2006: 313.0; 2007: 342.1
- Overall fiscal balance (payment order basis, including grants; percent of GDP): 2000: -2.9; 2001: -3.2; 2002: -3.6; 2003: -0.7; 2004: -4.0; 2005: -4.5; 2006: -4.0; 2007: -3.7
- Overall fiscal balance (payment order basis, excluding grants; percent of GDP): 2000: -7.7; 2001: -7.0; 2002: -7.3; 2003: -5.1; 2004: -7.5; 2005: -7.3; 2006: -6.7; 2007: -6.5
- Basic fiscal balance (percent of GDP, definition noted in source): 2000: -0.6; 2001: -1.7; 2002: -1.3; 2003: -0.2; 2004: -1.2; 2005: -1.1; 2006: -0.6; 2007: -0.3
- Financing: External financing (net) and Domestic financing (net) series reported (select values): External financing (net) 2000: 51.8; 2001: 65.0; 2002: 88.5; 2003: 90.8; 2004: 84.1; 2005: 92.9; 2006: 97.5; 2007: 100.6 (In billions of CFA francs)

### Public sector debt and debt dynamics (Table 6; baseline scenario, select figures)
- Public sector debt (percent of GDP): 2000: 100.8; 2001: 94.4; 2002: 89.1; 2003: 71.5; 2004: 69.9; 2005: 62.8; 2006: 56.1; 2007: 50.4; 2008: 45.3; 2013: 25.5; 2017: 16.0; 2021: 10.2; 2022: 8.9
- NPV of public sector debt (percent of GDP): 2000: 56.4; 2001: 53.8; 2002: 47.6; 2003: 43.2; 2004: 41.6; 2005: 39.0; 2006: 36.8; 2007: 35.1; 2008: 33.4; 2013: 26.6; 2017: 23.3; 2021: 20.6; 2022: 18.8
- Gross financing need (percent of GDP): 2000: 5.2; 2001: 5.3; 2002: 5.8; 2003: 2.5; 2004: 5.8; 2005: 6.2; 2006: 5.5; 2007: 5.4; 2008: 5.4; 2013: 5.2; 2017: 5.1; 2021: 4.5; 2022: 4.3
- Key macro/fiscal assumptions (select):
  - Real GDP growth (percent): 2000: -3.2; 2001: 12.1; 2002: 4.3; 2003: 6.0; 2004: 4.7; 2005: 6.1; 2006: 6.6; 2007: 5.6; 2008: 5.4; 2013: 6.1; 2017: 6.0; 2021: 6.3; 2022: 5.9
  - Inflation rate (GDP deflator, percent): 2000: 9.0; 2001: 3.9; 2002: 1.0; 2003: 2.9; 2004: 1.5; 2005: 2.1; 2006: 2.0; 2007: 2.4
  - Major commodity price (U.S. dollars per ounce of gold): 2000: 279.2; 2001: 271.1; 2002: 310.0; 2003: 340.0; 2004: 425.0; 2005: 437.5; 2006: 445.0; 2007: 450.0; 2008: 455.0; 2013: 500.2; 2017: 539.7; 2021: 582.2; 2022: 582.2

### Monetary survey (Table 7; select items, 2001–2004 projections)
- Money supply (M2, in billions of CFA francs): 2001 Dec.: 487.6; 2002 Dec.: 549.1; 2003 Dec.: 554.2; 2004 Dec. (Proj.): 759.4; 2004 Mar. (Est.): 626.3; 2004 Sep. (Est.): 707.2; 2004 Dec. (Proj.): 759.4; 2004 Dec. (Proj., later) 832.1 (source lists several projection columns).
- Currency outside banks (in billions of CFA francs): 2001 Dec.: 179.0; 2002 Dec.: 212.6; 2003 Dec.: 235.9; 2004 Dec. (Proj.): 306.5
- Bank deposits (in billions of CFA francs): 2001 Dec.: 308.5; 2002 Dec.: 336.5; 2003 Dec.: 318.3; 2004 Dec. (Proj.): 452.9
- Net foreign assets (in billions of CFA francs): 2001 Dec.: 198.1; 2002 Dec.: 242.5; 2003 Dec.: 243.8; 2004 Dec. (Proj.): 387.6
- Credit to the economy (in billions of CFA francs): 2001 Dec.: 338.5; 2002 Dec.: 365.0; 2003 Dec.: 356.3; 2004 Dec. (Proj.): 482.9
- Annual percent change in money supply (M2): 2001: 19.2; 2002: 24.8; 2003: 22.1; 2004 (Mar–Dec entries/projections vary, memorandum items include 9.6 in a projection column).

### Balance of payments (Table 8; select items, 2000–07)
- Exports, f.o.b. (in billions of CFA francs): 2000: 387.8; 2001: 531.1; 2002: 624.6; 2003: 561.8; 2004: 622.8; 2005: 657.2; 2006: 742.5; 2007: 768.5
  - Components (2000): Cotton fiber: 108.9; Gold: 189.4; Other: 89.6 (in billions of CFA francs)
- Imports, f.o.b. (in billions of CFA francs): 2000: -421.5; 2001: -538.4; 2002: -492.8; 2003: -503.8; 2004: -541.8; 2005: -584.8; 2006: -647.3; 2007: -685.4
- Trade balance (in billions of CFA francs): 2000: -33.7; 2001: -7.3; 2002: 131.8; 2003: 58.0; 2004: 81.0; 2005: 72.4; 2006: 95.2; 2007: 83.1
- Services (net, in billions of CFA francs): 2000: -167.9; 2001: -198.1; 2002: -135.6; 2003: -170.4; 2004: -182.2; 2005: -188.6; 2006: -201.4; 2007: -219.7
- Income (net, in billions of CFA francs): 2000: -69.9; 2001: -121.7; 2002: -167.4; 2003: -98.6; 2004: -81.5; 2005: -120.8; 2006: -144.5; 2007: -136.1
- Private transfers (net, in billions of CFA francs): 2000: 44.3; 2001: 51.1; 2002: 71.2; 2003: 45.1; 2004: 44.0; 2005: 53.3; 2006: 55.3; 2007: 58.4
- Official transfers (net, in billions of CFA francs): 2000: 45.7; 2001: 48.4; 2002: 30.8; 2003: 63.8; 2004: 21.7; 2005: 2.2; 2006: 2.3; 2007: 2.5
- Current account balance (in billions of CFA francs):
  - Excluding official transfers: 2000: -227.1; 2001: -276.0; 2002: -100.0; 2003: -165.9; 2004: -138.7; 2005: -183.8; 2006: -195.3; 2007: -214.3
  - Including official transfers: 2000: -181.4; 2001: -227.6; 2002: -69.2; 2003: -102.1; 2004: -117.0; 2005: -181.6; 2006: -193.0; 2007: -211.8
- Capital and financial account (in billions of CFA francs): 2000: 182.6; 2001: 131.1; 2002: 195.7; 2003: 148.8; 2004: 56.9; 2005: 95.0; 2006: 127.1; 2007: 141.3
- Official disbursements (in billions of CFA francs): 2000: 82.4; 2001: 78.4; 2002: 102.6; 2003: 97.5; 2004: 94.8; 2005: 100.9; 2006: 107.9; 2007: 117.9
- Amortization due on public debt (in billions of CFA francs): 2000: -33.2; 2001: -36.4; 2002: -41.6; 2003: -36.8; 2004: -40.3; 2005: -37.7; 2006: -40.1; 2007: -47.2
- HIPC Initiative assistance (in billions of CFA francs): 2000: 2.6; 2001: 23.1; 2002: 27.5; 2003: 30.1; 2004: 29.6; 2005: 29.7; 2006: 29.7; 2007: 29.8
- Overall balance (in billions of CFA francs): 2000: 27.8; 2001: -32.8; 2002: 83.0; 2003: 94.1; 2004: -60.1; 2005: -86.6; 2006: -65.9; 2007: -70.5

### External debt indicators and scenarios (Table 9; select baseline and alternative scenarios)
- Baseline scenario (2004–2011, 2017–23 highlights):
  - NPV of debt-to-exports ratio: 2004: 137.4; 2005: 136.7; 2006: 131.6; 2007: 129.8; 2008: 127.0; 2009: 128.3; 2010: 130.7; 2011-16: 136.2; 2017-23: 135.5
  - NPV of debt-to-revenue ratio: 2004: 202.5; 2005: 193.6; 2006: 179.2; 2007: 172.3; 2008: 165.5; 2009: 162.9; 2010: 162.6; 2011-16: 150.5; 2017-23: 125.9
  - Debt service-to-exports ratio: 2004: 6.0; 2005: 5.6; 2006: 5.0; 2007: 5.4; 2008: 5.2; 2009: 5.1; 2010: 5.0; 2011-16: 5.1; 2017-23: 6.0
  - Debt service-to-revenue ratio: 2004: 9.5; 2005: 8.4; 2006: 7.5; 2007: 7.6; 2008: 7.1; 2009: 6.8; 2010: 6.4; 2011-16: 6.0; 2017-23: 5.9
- First alternative scenario: depletion of gold reserves — shows higher NPV ratios and debt-service pressures (detailed figures in Table 9).
- Second alternative scenario: higher investment and growth — shows differing NPV and debt-service paths (detailed figures in Table 9).
- Third alternative scenario: cyclical droughts — shows materially worse debt indicators and higher NPV and debt-service ratios (detailed figures in Table 9).
- Memorandum items provide NPV of debt and debt service in millions of U.S. dollars under each scenario.

### WAEMU Convergence Criteria compliance (Table 10; select ratios, 2000–07)
- Basic fiscal balance / GDP (target >=0): 2000: -0.6; 2001: -0.2; 2002: 0.1; 2003: 0.3; 2004: 1.1; 2005: -0.1; 2006: -0.1; 2007: 0.4; projections include 0.6
- Inflation (annual average, target <=3): 2000: -0.7; 2001: 5.2; 2002: 5.0; 2003: 3.8; 2004: -1.3; 2005: 2.5; 2006: 2.5; 2007: 2.5
- Total nominal debt / GDP (target <=70): 2000: 99.2; 2001: 90.8; 2002: 90.0; 2003: 78.8; 2004: 76.3; 2005: 77.9; 2006: 70.5; 2007: 63.2
- Wages / fiscal revenue (secondary criterion, target <=35): 2000: 32.4; 2001: 31.5; 2002: 30.6; 2003: 28.3; 2004: 30.4; 2005: 31.8; 2006: 31.5; 2007: 30.1; projection: 29.5
- Domestically financed investment / fiscal revenue (target >=20): 2000: 23.2; 2001: 19.4; 2002: 20.5; 2003: 23.5; 2004: 22.4; 2005: 23.4; 2006: 24.0; 2007: 18.1; projection: 18.6
- Current account deficit, excluding current official transfers / GDP (target <=5): 2000: 12.0; 2001: 12.5; 2002: 4.3; 2003: 8.2; 2004: 6.5; 2005: 5.1; 2006: 6.3; 2007: 6.1; projection: 6.2
- Fiscal revenue / GDP (target >=17): 2000: 11.9; 2001: 12.3; 2002: 13.1; 2003: 15.7; 2004: 13.7; 2005: 14.2; 2006: 14.6; 2007: 15.3; projection: 15.6

### Indicators of Fund credit and debt servicing (Table 11; select ratios, 2000–07)
- Outstanding Fund credit/quota (percent): 2000: 144.4; 2001: 145.8; 2002: 130.5; 2003: 121.9; 2004: 98.4; 2005: 78.9; 2006: 63.6; 2007: 46.4
- Outstanding Fund credit/GDP (percent): 2000: 7.2; 2001: 6.1; 2002: 5.2; 2003: 4.5; 2004: 3.4; 2005: 2.5; 2006: 1.9; 2007: 1.3
- Outstanding Fund credit/exports of goods and services (percent): 2000: 26.7; 2001: 21.2; 2002: 16.4; 2003: 17.2; 2004: 12.6; 2005: 9.6; 2006: 6.9; 2007: 4.8
- Debt service to the Fund/exports of goods and services (percent, before relief): 2000: 2.8; 2001: 3.0; 2002: 3.1; 2003: 3.6; 2004: 3.8; 2005: 3.0; 2006: 2.1; 2007: 2.1
- Total debt service before rescheduling (percent of exports): 2000: 12.8; 2001: 9.9; 2002: 10.0; 2003: 10.5; 2004: 10.5; 2005: 10.8; 2006: 9.3; 2007: 9.9
- Total debt service after debt relief (percent of exports): 2000: 12.2; 2001: 6.3; 2002: 6.3; 2003: 6.0; 2004: 6.4; 2005: 6.9; 2006: 5.8; 2007: 6.6
- Memorandum items (in millions of SDRs): Exports of goods and services: 2000: 504.5; 2001: 601.1; 2002: 693.0; 2003: 598.3; 2004: 603.9; 2005: 635.4; 2006: 713.7; 2007: 740.3
- Government revenue (millions of SDRs): 2000: 245.6; 2001: 290.4; 2002: 334.7; 2003: 350.3; 2004: 380.6; 2005: 420.0; 2006: 476.2; 2007: 522.2

*Source: International Monetary Fund staff report and accompanying tables and figures as provided in the source content.*

### 1. Population below US$1 a day (percent)

### _cr04184 - 1. Population below US$1 a day (percent)

### Millennium Development Goals indicators (selected)
- 1. Population below US$1 a day (percent): 72.8
- 2. Poverty gap at US$1 a day (percent): 37.4
- 3. Share of income or consumption held by poorest 20 percent (percent): 4.6
- Target 2: Halve between 1990 and 2015 the proportion of people suffering hunger
  - 4. Prevalence of child malnutrition (percent of children under 5): 26.9
  - 5. Population below minimum level of dietary energy consumption (percent): 25.. 20..
- Goal 2: Achieve universal primary education
  - Net primary enrollment ratio (percent of relevant age group): 21.331.3..
  - Percentage of cohort reaching grade 5 (percent): 72.28494.5..
  - Youth literacy rate (percent of ages 15-24): 27.631.737.138
- Goal 3: Promote gender equality
  - Ratio of girls to boys in primary and secondary education (percent): 5762.1.. ..
  - Ratio of young literate females to males (percent ages 15-24): 44.748.75454.9
  - Share of women employed in the nonagricultural sector (percent): .. .. .. ..
  - Proportion of seats held by women in national parliament (percent): .. 21212
- Goal 4: Reduce child mortality
  - Under 5 mortality rate (per 1,000): 254243231..
  - Infant mortality rate (per 1,000 live births): 152147141135.1
  - Immunization, measles (percent of children under 12 months): 435437..
- Goal 5: Improve maternal health
  - Maternal mortality ratio (modeled estimate, per 100,000 live births): .. 630.. ..
  - Births attended by skilled health staff (percent of total): .. 23.7.. ..
- Goal 6: Combat HIV/AIDS, malaria and other diseases
  - Prevalence of HIV, female (percent ages 15-24): .. .. 2.1..
  - Contraceptive prevalence rate (percent of women ages 15-49): .. 7.. ..
  - Number of children orphaned by HIV/AIDS: .. .. 70,000.00..
  - Incidence of tuberculosis (per 100,000 people): .. .. 267.1..
  - Tuberculosis cases detected under DOTS (percent): .. 2017..
- Goal 7: Ensure environmental sustainability
  - Forest area (percent of total land area): 11.6.. 10.8..
  - Nationally protected areas (percent of total land area): .. 3.73.73.7
  - CO2 emissions (metric tons per capita): 000..
  - Access to an improved water source (percent of population): 55.. 65..
  - Access to improved sanitation (percent of population): 70.. 69..
- Goal 8: Develop a Global Partnership for Development
  - Fixed line and mobile telephones (per 1,000 people): .. 2.18.2..
  - Personal computers (per 1,000 people): .. 0.31.2..
- Table notes:
  - 2015 target = net enrollment to 100
  - 2005 target = education ratio to 100
  - 2015 target = reduce 1990 under 5 mortality by two-thirds
  - 2015 target = reduce 1990 maternal mortality by three-fourths
  - 2015 target = halt, and begin to reverse, AIDS, etc.
  - 2015 target = various (see notes)

### General indicators (selected years: 1990, 1995, 2001, 2002)
- Population (millions): 8.5 9.6 11.1 11.3
- Gross national income (billions of U.S. dollars): 2.3 2.4 2.5 2.8
- GNI per capita (U.S. dollars): 270 250 230 240
- Adult literacy rate (percent of people ages 15 and over): 18.8 22 26.4 27.2
- Total fertility rate (births per woman): 6.9 6.7 6.2 6.1
- Life expectancy at birth (years): 45 44 41.5 40.9
- Aid (percent of GNI): 20 22.4 13.9 ..
- External debt (percent of GNI): 102.6 122.3 115 ..
- Investment (percent of GDP): 23 22.9 21.1 21.3
- Trade (percent of GDP): 50.9 57.3 73.8 ..
- Source: World Development Indicators database, April 2002
- Note: In some cases the data are for earlier or later years than those stated.

### External Debt Sustainability Framework, 2004–2023 (selected baseline projections)
- External debt (nominal, percent of GDP) by year:
  - 2004: 66.2
  - 2005: 59.8
  - 2006: 53.3
  - 2007: 47.9
  - 2008: 43.0
  - 2013: 25.0
  - 2017: 15.7
  - 2021: 10.1
  - 2023: 9.2
- Change in external debt: -7.2 -6.3 -6.5 -5.4 -4.9 -3.1 -2.0 -1.0 -0.5
- Identified net debt-creating flows: -8.1 0.3 0.5 1.6 2.4 4.4 5.5 6.0 6.9
- Current account deficit, excluding interest payments: 4.0 5.9 5.9 6.1 6.3 6.8 7.0 7.0 7.0
- Exports (percent of GDP): 2004: 26.9; 2005: 26.1; 2006: 26.9; 2007: 25.7; 2008: 24.9; 2013: 20.6; 2017: 18.8; 2021: 17.5; 2023: 17.5
- Imports (percent of GDP): 30.7 30.2 30.4 30.0 29.6 27.5 26.6 25.8 25.8
- Net current transfers (negative = inflow): -2.4 -1.9 -1.8 -1.8 -1.7 -1.9 -2.1 -2.3 -2.3
  - Of which: official: -0.8 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1
- Net FDI (negative = inflow): -0.8 -0.8 -0.9 -0.9 -0.8 -0.5 -0.4 -0.3 -0.3
- Endogenous debt dynamics: -11.3 -4.8 -4.4 -3.7 -3.1 -1.9 -1.1 -0.7 0.2
- NPV of external debt: 32.8 31.4 29.7 28.5 27.0 23.1 21.1 20.3 23.5
- In percent of exports (NPV): 121.9 120.4 110.7 111.0 108.6 112.1 112.4 115.7 134.0
- Debt service-to-exports ratio (in percent): 5.8 5.6 5.0 5.7 5.5 5.2 5.9 5.7 6.4
- Total gross financing need (billions of U.S. dollars): 0.2 0.4 0.4 0.4 0.5 0.8 1.1 1.6 1.6
- Noninterest current account deficit that stabilizes debt ratio: 11.2 12.3 12.4 11.5 11.2 9.9 9.0 8.0 7.5

### Key macroeconomic and external baseline assumptions (selected)
- Nominal GDP (billions of U.S. dollars): 5.2 5.7 6.2 6.7 7.2 10.6 14.7 20.7 20.7
- Real GDP growth (in percent): 4.7 6.1 6.6 5.6 5.3 6.0 6.0 6.2 0.0
- GDP deflator in U.S. dollar terms (change in percent): 13.6 2.4 2.0 2.5 2.5 2.3 2.3 2.7 0.0
- Nominal effective interest rate (percent): 0.7 0.7 0.8 0.8 0.9 1.2 1.6 2.0 2.1
- Growth of exports of G&S (U.S. dollar terms, in percent): 22.8 5.1 12.1 3.4 4.8 5.9 6.6 7.2 0.0
- Growth of imports of G&S (U.S. dollar terms, in percent): 19.6 6.8 9.7 6.6 6.6 7.6 7.8 8.5 0.0
- Net transfers: 2.4 1.9 1.8 1.8 1.7 1.9 2.1 2.3 2.3
- Net FDI: 0.8 0.8 0.9 0.9 0.8 0.5 0.4 0.3 0.3
- Nominal exchange rate depreciation (percent): -12.0 -0.2 -0.1 0.0 0.0 0.0 0.0 0.0 0.0

### Averages and standard deviations (historical)
- Deviation 2003-08
  - Non-interest current account balance (in percent of GDP): 2.5 -5.3
  - Real GDP growth: 4.1 5.7
  - GDP deflator in U.S. dollars: 13.6 8.3
  - Export growth (US dollar terms, in percent): 15.5 9.7
  - Net transfers-to-GDP ratio: 5.9 2.3
  - Net non-debt creating flows (FDI)-to-GDP ratio: 2.2 1.0

### Memorandum / Government requests and program context (selected excerpts)
- Program context and request:
  - Government adopted PRSP in May 2002 as framework for economic policies and development partners’ support.
  - Government requests a new three-year arrangement under the PRGF in an amount equivalent to SDR 9.33 million (or 10.0 percent of the quota).
  - For the first year under this facility, an amount equivalent to SDR 2.666 (2.86 percent of quota) is requested.
  - Government requests IMF willingness to consider increasing access under the PRGF arrangement at the first or subsequent reviews should unexpected shocks arise (e.g., sharp drop in cotton prices).
- Summary assessment of 1994–2003 reforms and outcomes:
  - Successive programs and the 1994 CFA franc devaluation led to acceleration of growth, continuing low inflation, strengthening of public finances, and progress in reforming the economy.
  - Many challenges remain to achieve the Millennium Development Goals.
- Macroeconomic situation and program implementation in 2003:
  - Agricultural production estimated to have risen by 32 percent in 2003.
  - Real GDP growth of 6 percent in 2003, following 4.3 percent in 2002.
  - Seed cotton production increased by 38.4 percent, reaching 612,000 metric tons after producer prices rose from CFAF 180 to CFAF 200 per kilogram.
  - Consumer price index declined by an average of 1.3 percent during 2003.
  - External current account deficit, excluding official transfers, deteriorated from 4.3 percent of GDP in 2002 to 6.5 percent in 2003.
  - Export volumes declined by 10.4 percent in 2003 due to lower gold production and shipping problems for cotton.
  - Overall balance of payments was in surplus due to high levels of foreign aid.
- Fiscal performance in 2003:
  - Overall deficit on a payment order basis and excluding grants reduced by 2.2 percent of GDP to 5.1 percent of GDP (forecast was 8.3 percent).
  - Basic fiscal deficit was 0.2 percent of GDP and financed with external budget assistance and HIPC Initiative resources.
  - Government was able to service foreign debt and reduced domestic liabilities by 1.5 percent of GDP.
  - Total government revenue increased by 13.7 percent, reaching 16.6 percent of GDP.
    - Mining sector contribution represented 15.8 percent of total revenue.
  - Total expenditure and net lending fell by 1.5 percent of GDP to 21.7 percent in 2003.
- Monetary and banking developments in 2003:
  - Net foreign assets of monetary institutions increased by CFAF 116 billion.
  - Broad money grew by 21.3 percent.
  - Credit to the economy rose by 17.4 percent; net lending to government fell by 7.3 percent of beginning-of-period broad money.
  - Ratio of net nonperforming loans to credit to the economy declined by 0.8 percentage point to 8.4 percent.
  - Banks generally comply with WAEMU prudential ratios except for loan concentration, where four banks did not satisfy the limit.
- Structural reforms and privatization progress:
  - CMDT cut workforce by one-fourth; severance package partially financed through national budget.
  - Government decided to split CMDT into three or four private firms by 2006; timetable adopted in November 2003.
  - Privatization of HUICOMA: talks with successful bidder broken off in March 2004 due to inadequate guarantees; process to be relaunched with development partners.
  - Concession awarded for Malian Railway Company (RCFM); concessionaire began activities on October 1, 2003.
  - Negotiations under way with successful bidder for concession to operate Malian Airport Company (Aéroports du Mali).
- Program reviews and publication:
  - First review of the 2004/05 program to be completed no later than end-November 2004; second review by end-May 2005.
  - Government authorizes publication of the memorandum of economic and financial policies and the related staff report, including on the IMF Internet site.

*Source: _cr04184 - 1. Population below US$1 a day (percent), IMF staff report content as provided.*

### 10. Public expenditure management has been strengthened significantly with

### 10. Public expenditure management has been strengthened significantly with

### Public expenditure management — reforms and technical assistance
- Technical assistance from the IMF and other development partners strengthened public expenditure management.
- New budget classification system:
  - Resulted in greater transparency in government expenditure.
  - Improved identification of social spending, poverty reduction, and HIPC Initiative-financed expenditures.
  - Improved consistency between the budget classification system and the government chart of accounts.
- New manual harmonizes procedures for execution, monitoring, and control of the government budget.
- An official price list will help avoid overinvoicing.
- Training seminars were organized for personnel of government financial departments to learn the new procedures.

### Poverty reduction and social sectors (PRSP implementation)
- Important steps taken toward reducing poverty in Mali during first-year PRSP implementation.
- Education:
  - Substantial progress in increasing basic education enrollment.
  - Narrowing the gap between girls and boys, though wide gaps persist among regions.
- Health:
  - Mixed results; steps being taken to increase reliability of statistics needed to measure progress and to improve health coverage.
  - Health system constraints: despite 624 community health centers, insufficient human and material resources at national and regional levels in quantity and quality.
- Resource and capacity constraints:
  - Limited human resources and large disparity between financial needs and budget appropriations make achieving some MDGs by 2015 difficult.

### Medium-term macroeconomic framework (government strategy and targets)
- PRSP is sole frame of reference for medium-term policies and strategies.
- Strategy to attain strong sustainable growth and poverty reduction:
  - Maintain a stable macroeconomic environment.
  - Pursue structural reforms based on PRSP priority areas: (i) institutional development and improved governance and participation; (ii) human development and expanded access to basic social services; and (iii) infrastructure development and support for productive sectors.
  - Deregulate and diversify the economy; develop private sector.
- Macroeconomic objectives for 2004−07:
  - Annual real GDP growth rate of over 5 percent on average.
  - Annual inflation of less than 3 percent.
  - Current account deficit (excluding official transfers) of less than 7 percent of GDP.

### A. Fiscal policy — objectives and measures
- Fiscal policy objectives:
  - Maintain stable macroeconomic framework.
  - Increase government resources for poverty reduction.
  - Develop private sector.
- Deficit target:
  - Limit budget deficit, on a payment order basis and excluding grants, to less than 7 percent in the medium term.
- Revenue mobilization measures:
  - Expand tax base by reducing exemptions, strengthening tax administration, and better control over the tax base.
  - Develop a property tax system.
  - Aim to move tax revenues/GDP closer to WAEMU convergence criterion.
- Expenditure management:
  - Improve management and prioritization of public expenditure to increase allocation to PRSP priority programs.
  - Wage policy: contain wage bill of government, broadly defined, to less than 5 percent of GDP while ensuring recruitment needs in social sectors.
  - Ensure local governments have resources through transfers and development of local tax system; accompany decentralization and downsizing of central administration.
- Budget procedures and aid coordination:
  - Continue to improve procedures for designing, executing, and monitoring budget operations.
  - Strengthen controls and audits to improve governance and quality of public spending.
  - Seek bilateral and multilateral partners’ budgetary support and use of a common set of procedures to improve absorptive capacity and loan disbursement rate.

### B. Monetary policy and financial system reform
- Monetary stability:
  - Maintain monetary stability within BCEAO policy; endeavor to keep inflation at less than 3 percent, consistent with CFA franc parity with the euro.
- Financial sector reform (Financial Sector Development Project — FSDP) main measures:
  - (i) Complete divestiture of government and branches’ equity in commercial banks: Banque Internationale pour le Mali (BIM), Banque de Développement du Mali (BDM), Banque Commerciale du Sahel (BCS).
  - (ii) Continue regional discussions on BCEAO withdrawal from bank equity.
  - (iii) Improve implementation of banking commission recommendations to ensure commercial banks’ compliance with prudential ratios.
  - (iv) Continue review of legal and regulatory framework.
  - (v) Increase and improve training of judicial personnel to enhance bank debt recovery.
  - (vi) Create land registries for urban and mining areas to enable broader use of real property as bank collateral.
- Nonbank financial institutions measures:
  - (i) Restructure National Social Security Institute (INPS) and Civil Service Retirement Fund (CRM) to restore financial viability over medium term.
  - (ii) Strengthen regulatory framework and capacity of insurance sector.
  - (iii) Improve supervision and monitoring capabilities for microfinance sector.

### C. Structural policy — competitiveness, diversification, and infrastructure
- Objective: achieve strong and sustainable growth by increasing economy’s resilience and flexibility; base policy on sector growth potential and impact on poverty reduction; draw on integrated framework for trade recommendations.
- Strategy elements:
  - Enhance competitiveness and diversification to foster private sector development.
- Priority reforms:
  - (i) Simplify administrative procedures, including unique identifying number for enterprises.
  - (ii) Establish fair, transparent, simple, and stable regulatory and tax framework.
  - (iii) Continue judicial system improvements.
  - (iv) Comply with regional legislation on indirect taxation and investment support.
  - (v) Pursue liberalization, including in the cotton sector.
  - (vi) Improve coverage and efficiency of basic infrastructure; accelerate transport sector development; expand water and electricity distribution networks.
- Utilities regulation:
  - Water and Electricity Regulatory Commission (CREE) to ensure public utilities’ rate structures compatible with enterprise viability and sector financing/development needs.
- Human capital:
  - Prioritize development of skilled human resources.
  - Pursue education and health reforms via ten-year development programs: PRODEC (education) and PRODESS (health and welfare).
  - Develop vocational and continuing education; reduce labor market constraints; ensure pay structure incentivizes education and training.
- Privatization and divestiture priorities:
  - Accelerate privatization with emphasis on cotton and telecommunications.
  - Finalize concession negotiations for the Malian Airport Company (Aéroports du Mali).
  - Complete privatization of Malian Pharmaceutical Company (Usine Malienne de Produits Pharmaceutiques–UMPP).
  - Reduce government equity to 20 percent in SUKALA SA and COMANAV.

### D. Debt sustainability
- Mali reached completion point under enhanced HIPC Initiative in March 2003, enabling reduction of NPV of external debt below 150 percent of exports of goods and services.
- Risk:
  - Macroeconomic projections show ratio of NPV of debt to exports may rise near sustainability threshold by 2015 if current trends continue.
- Government strategy to maintain debt sustainability:
  - Diversify economy to increase exports.
  - Ensure new debt is on concessional terms and favor grants over loans for investment financing.
  - Seek to increase share of grants in external financing from 40 percent currently to 60 percent over the medium term.
  - Strengthen mobilization of domestic resources (see fiscal policy).

### E. Improvement of economic statistics
- Continue improving reliability of economic statistics with IMF (including West AFRITAC) and other partners.
- Budget appropriations for National Statistics Agency to be increased sufficiently in 2005 to enable surveys for:
  - Industrial production index.
  - National consumer price index.
  - Various basic statistics to improve national accounts.
- Mining statistics:
  - Government, mining companies, and partners will seek to improve information on actual and projected production, sales, and payments through offshore accounts—whose scope or existence could be subject to review.

### IV. Program for 2004 — macroeconomic outlook and institutional arrangements
- Macroeconomic outlook for 2004:
  - Real GDP growth: 4.7 percent.
  - Inflation: average 2.5 percent.
  - External current account deficit, excluding official transfers: remain below 7 percent of GDP.
- Institutional arrangements:
  - By end of April 2004, government to set up a unit in the Ministry of Economy and Finance to monitor the macroeconomic program.
  - Secretary of the unit will run Secretariat of Interministerial Committee responsible for monitoring macroeconomic policies.
  - Unit will consolidate and disseminate financial and macroeconomic information regularly; Ministry studying possibility of creating a website to publish this information.

### A. Fiscal policy for 2004 — targets, measures, and key figures
- Objective: restrict overall deficit of government financial operations to a level compatible with macroeconomic stability and debt sustainability, while responding to priority sectors.
- Strengthen efficiency of tax and customs administration and public expenditure management.
- Overall budget deficit (payment order basis, excluding grants) expected to be contained at 7.5 percent of GDP in 2004:
  - Represents an increase of about 2.4 percent of GDP compared with 2003.
  - Increase mainly reflects higher execution rate of public investment program following strengthened project management.
- Financing:
  - Budget deficit to be financed by foreign financial assistance, including enhanced HIPC Initiative resources.
  - Financing gap before financial assistance: CFAF 76 billion, of which CFAF 19.5 billion has already been mobilized.
  - If mobilized resources insufficient, government intends to issue bonds to refinance part of domestic debt falling due in 2004; if still insufficient, government would discuss additional measures with the IMF.
- Revenue and tax measures:
  - Total government revenue expected: 17.0 percent of GDP (compared with 16.6 percent in 2003).
  - Specific tax measures:
    - Increase domestic tax rate on petroleum products.
    - Introduce simplified arrangement for enterprises with turnover between CFAF 30 million and CFAF 100 million by May 2004.
  - Strengthen tax and customs administration:
    - First phase of computerization upgrade achieved; joint computerized database for tax and customs to become operational in June 2004.
    - Better use of import verification program to cross-check import information.
    - Improve border inspections of sensitive products: tobacco, matches, flour.
    - Customs to set up a one-stop window in Bamako to clear car imports.
    - Strengthen staffing and training of tax inspectors and auditors.
    - Continue improving relations between tax services and taxpayers.
  - Limit exemptions to those provided under externally financed investment project agreements, international and regional conventions, investment code, and mining code.
  - Submit draft law by end-June 2004 to abolish exemptions granted to Banque Nationale de Développement Agricole (BNDA).
- Expenditure:
  - Total government expenditure projected to rise from 21.7 percent of GDP in 2003 to 24.5 percent in 2004.
    - Increase reflects improved implementation of investment projects, higher transfers due to growing deficit of Caisse de Retraite du Mali, and financing of 2004 local elections.
  - Spending on poverty reduction: 59.7 percent of total expenditure.
- Wage bill:
  - Limited to CFAF 122 billion, or 4.5 percent of GDP.
  - Includes civil service salaries and contractual employees’ pay, including those financed with HIPC Initiative resources.
  - Increase reflects harmonization of wage scale and new hires planned in 2004 budget.
  - By end-September 2004, government to complete study on allowances and bonuses to simplify, contain cost, and improve transparency.
  - Recruitment consistent with priorities in education, health, justice:
    - Recruitment of 1,452 permanent staff and 4,073 contractual staff (financed with HIPC Initiative resources), total cost CFAF 4 billion.
    - For other ministries, recruitment limited to 500 employees, total cost CFAF 500 million.
  - By end of April 2004, government will remove from civil service staffing list and payroll any employees and contractual staff who did not take part in February 2003 census or November 2003 physical audit.
- Subsidies and transfers:
  - Estimated at CFAF 87.0 billion, or 3.2 percent of GDP in 2004.
  - Include subsidies to CRM (CFAF 17.7 billion) and industrial enterprises (CFAF 9.3 billion), and severance packages related to privatizations.
  - Government will audit expenditures financed with HIPC Initiative resources by end-May 2004, and review criteria for disbursing social safety net funds by end-June 2004.
- Public debt sustainability governance:
  - Set up national committee for monitoring public debt sustainability to issue obligatory opinion on any new government plan to raise foreign or domestic debt.

### B. Monetary position and financial system reform — 2004 projections and actions
- Monetary aggregates:
  - Money supply projected to expand by 9.6 percent in 2004, in line with nominal GDP growth.
  - Credit to government expected to increase slightly.
  - Credit to the economy expected to rise by 9.1 percent.
- Financial system reform components for 2004:
  - (i) Restructuring and privatizing the banking sector.
  - (ii) Strengthening nonbank financial institutions.
  - (iii) Strengthening the microfinance sector.
- Banking sector restructuring and privatization measures:
  - (i) End provisional administration of BIM and establish normal management structures for BIM by end-April 2004.
  - (ii) Approve strategy and timetable for BIM privatization by end-September 2004, so bidding process can be launched by March 2005.
  - (iii) Appoint auditors to assess value of shares of BDM and BCS by end-September 2004, aiming to complete divestiture of government equity in those institutions in 2005.
  - (iv) Finalize capital increase for BHM in conformity with feasibility study recommendations.
  - (v) Support implementation of banking commission recommendations.
- Strengthening nonbank financial institutions measures:
  - (i) Submit draft law updating CRM legislation to Council of Ministers by end-July 2004.
  - (ii) Prepare 2003 financial accounts for CRM and INPS, to be approved by statutory auditors by end-June 2004.
  - (iii) Prepare preliminary report of CRM’s position, begin actuarial studies on the fund, and audit INPS contribution and beneficiary files by end-2004.

*Source: IMF staff report content (chapter section)._cr04184 - 10. Public expenditure management has been strengthened significantly with*

### APPENDIX I

### _cr04184 - APPENDIX I

### Microfinance
- Government commitment:
  - Continue to promote development of the microfinance sector.
  - Measures envisaged:
    - Strengthen supervisory capability of the Decentralized Financial Systems Support and Monitoring Unit (CAS/SFD).
    - Assess the legal framework for microfinance in Mali to suggest improvements to relevant legislation.

### Structural reforms (2004)
- Focus areas:
  - Reform of the financial system.
  - Continuing the privatization program.
  - Reforming the cotton sector.
  - Improving public expenditure management.
  - Continuing the devolution/decentralization program.

- Privatization program measures:
  - Adopt a privatization strategy for the Malian Telecommunications Company (SOTELMA) and a timetable for its implementation by end-June 2004.
  - Complete discussions with the winning bidder for the concession contract for the company managing the airports (ADM).
  - Submit a draft law to the National Assembly for the legal dissolution of the railroad company (RCFM).
  - Bring two hotels (Hôtel Azalai and Hôtel Club Sélingué) to the point of sale.
  - Adopt an action plan for opening up the capital of the pharmaceutical company (UMPP) through a tender offer.

### Cotton sector reform
- Objectives:
  - Boost producers’ revenues.
  - Reduce poverty in production areas.
  - Increase the sector’s contribution to Mali’s economy by cutting production costs, setting prices based on world market prices, and, in the medium term, deregulating the sector.

- Key measures and timelines:
  - By 2006: divide the CMDT into three or four private enterprises; encourage farmers’ organizations to play a greater role; strengthen private sector, producers, and local government involvement.
  - Hire a consultant for privatization of the CDMT to draw up an operational master plan by September 2004.
  - Consultant to oversee a study on creation of a trade association for the cotton sector, to be completed by end-June 2004; trade association to play an essential role in deregulation.
  - Prepare and adopt an action plan consolidating all reform measures for the cotton sector by end-June 2004.
  - Ensure producer price for seed cotton for the 2004/05 campaign is set by end-May 2004 using the agreed price mechanism.

### Public expenditure management
- Planned actions:
  - Establish a computer network linking departments of the Ministry of Economy and Finance with help from development partners to harmonize databases and improve the integrated public finance management system.
  - Strengthen financial and administrative departments of individual ministries to improve budget preparation and monitoring of budget execution at department level and at the Ministry of Economy and Finance.
  - Strengthen the medium-term expenditure framework; update annually to reflect revised PRSP objectives and integrate budget preparation into a rolling, medium-term expenditure program.
  - Strengthen monitoring of the public investment program by:
    - Implementing computerized procedures for programming, monitoring, and assessing public investment at the National Directorate for Development Planning.
    - Strengthening services responsible for programming and monitoring public investment at sectoral ministry level, and instituting a quarterly review of development projects and programs.
  - Extend coverage of the government flow of funds table (TOFE) to include central government financial operations and those of other public administrative entities and local governments.

### Governance
- Actions taken and planned:
  - Accounts section of the Supreme Court allocated additional staff resources.
  - Appointment of a General Government Auditor (Vérificateur Général de l’État).
  - Further strengthen government audit and inspection agencies in 2004.

### Devolution/decentralization
- Context and actions:
  - Process began in 1995 to devolve responsibilities to local authorities to improve public sector effectiveness and involve the population in policy-making.
  - Local elections scheduled for May 2004; an action plan prepared to make devolution effective over 2003-05.
  - Ongoing discussions on transfer of resources to local authorities to enable them to accomplish devolved tasks.
  - Devolution to be accompanied by strengthening central government departments at the local level and application of sound management, transparency, and accountability at the local government level.
  - Strengthen national and regional departments of central government financial agencies.
  - Provide training to local government staff to take over responsibilities in the health, education, and water sectors.

### Improvement of economic statistics
- Actions:
  - Continue implementing recommendations of the Fund’s Statistics Department mission (2003).
  - Draw on results of the Malian survey on poverty to update the poverty profile and better guide social and economic policies.
  - Use survey results to revise the base year of the national accounts and the weights for the consumer price index.

### Quantitative performance criteria and indicative targets (March 2004 – March 2005) — key figures (in billions of CFA francs)
- Net domestic financing of the government:
  - March 2004: 20.1
  - June 2004 (indicative targets): 6.5
  - September 2004: -10.3
  - December 2004: -23.9
  - March 2005: 19.9
- Net domestic financing, adjusted / Cumulative change in government external payments arrears:
  - March, June, September, December 2004 and March 2005: 0.0 (continuous monitoring)
- New external borrowing at terms of one year or more contracted or guaranteed by the government on nonconcessional terms:
  - March, June, September, December 2004 and March 2005: 0.0
- New short-term external debt (less than one year) contracted or guaranteed by the government:
  - March, June, September, December 2004 and March 2005: 0.0
- Financial performance indicators:
  - Cumulative tax revenue:
    - March 2004: 80.7
    - June 2004: 167.1
    - September 2004: 265.7
    - December 2004: 383.7
    - March 2005: 94.4
  - Cumulative wage bill:
    - March 2004: 30.5
    - June 2004: 61.1
    - September 2004: 91.5
    - December 2004: 122.0
    - March 2005: 33.9
  - Overall basic fiscal balance:
    - March 2004: 6.6
    - June 2004: 1.4
    - September 2004: 6.3
    - December 2004: -2.6
    - March 2005: 5.9
- Memorandum items:
  - External budgetary assistance during the year:
    - March 2004: 4.9
    - June 2004: 19.5
    - September 2004: 19.5
    - December 2004: 19.5
    - March 2005: 0.0
  - HIPC Initiative debt relief:
    - March 2004: 6.2
    - June 2004: 15.6
    - September 2004: 20.8
    - December 2004: 29.6
    - March 2005: 6.6
  - Expenditure financed with HIPC Initiative resources:
    - March 2004: 5.3
    - June 2004: 14.0
    - September 2004: 19.8
    - December 2004: 29.6
    - March 2005: 6.3
  - Balance of HIPC Initiative resources:
    - March 2004: 1.7
    - June 2004: 1.6
    - September 2004: 1.0
    - December 2004: 0.0
    - March 2005: 0.3

### Structural measures: Prior actions, performance criteria, benchmarks (April 2004 – March 2005)
- Prior Actions:
  - Creation of a unit in the Ministry of Economy and Finance to monitor the macroeconomic program.
  - End the provisional administration of BIM SA and establish the new management structure for BIM SA.
- Performance Criteria:
  - Adoption by the government of an operational master plan for the privatization of the CMDT — End-September 2004.
  - Adoption by the government of a privatization strategy for the Telecommunications Company (SOTELMA) and a timetable for its implementation — End-June 2004.
  - Adoption by the government of a strategy and timetable for the privatization of BIM SA — End-September 2004.
  - Finalization of actuarial studies on CRM and of audit of the files on INPS contributions and beneficiaries — End-December 2004.
- Benchmarks:
  - Completion of an audit of expenditures financed with HIPC resources — End-May 2004.

### Technical Memorandum of Understanding (May 20, 2004) — selected definitions and rules
- Government definition:
  - "Government" means the central administration of the Republic of Mali and does not include local administrations, the central bank, or any other public entity with autonomous legal personality not included in the TOFE.
- Debt definitions:
  - Debt defined per point 9 of the Guidelines on Performance Criteria with Respect to Foreign Borrowing (Executive Board decisions cited).
  - Forms of debt include loans, suppliers' credits, and leases (present value at inception for leases).
  - Arrears, penalties, and judicially awarded damages arising from failure to make payment under contractual obligation that constitutes debt are also debt.
  - Debt is concessional if present value at contract signature divided by nominal value is less than 65 percent (grant element exceeding 35 percent), using OECD CIRRs; for maturities exceeding 15 years use ten-year reference rate, for shorter maturities use six-month market reference rate.

### Quantitative performance criteria details (net domestic financing)
- Net domestic financing of the government defined as sum of:
  - Net bank credit to government (as defined by BCEAO).
  - Other government claims and debts vis-à-vis national banking institutions.
  - Nonbank financing, including government bills and bonds held outside national banking institutions and proceeds from sale of government assets (proceeds recognized when effectively received; multi-year payments scheduled annually).
- Net bank credit scope:
  - Uses BCEAO definition; includes government claims such as CFA franc cash balance, postal checking accounts, secured liabilities (obligations cautionnées), and deposits with BCEAO and commercial banks of public entities (excluding EPICs and public enterprises).
  - Excludes deposits of the cotton stabilization fund and government securities held outside the Malian banking system.

### Adjustment factors for ceilings
- External budgetary assistance adjustment:
  - Ceiling on change in net domestic financing adjusted if external budgetary assistance exceeds or falls short of programmed amount.
  - Budgetary assistance excludes project loans and grants, IMF resources, and debt relief under the Initiative for Heavily Indebted Poor Countries.
  - Ceilings set at:
    - CFAF 15 billion at end-June 2004;
    - CFAF 15 billion at end-September 2004;
    - CFAF 25 billion at end-December 2004;
    - CFAF 15 billion at end-March 2005.
  - Programmed cumulative external budgetary assistance expectations:
    - CFAF 4.9 billion on March 31, 2004;
    - CFAF 19.5 billion for end-June to end-December 2004;
    - For end-March 2005, no external budgetary assistance is forecast.
- HIPC resources adjustment:
  - Ceiling on change in net bank credit to government and net domestic financing will be adjusted by the difference between programmed and actually spent HIPC Initiative resources.

### Performance criteria, reporting, and monitoring
- Ceilings on cumulative change in net domestic financing:
  - CFAF 6.5 billion at June 30, 2004 (indicative target).
  - CFAF -10.3 billion at September 30, 2004 (performance criterion).
  - CFAF 23.9 billion at end-December 2004 (indicative target).
  - CFAF -10.5 billion at March 31, 2005 (performance criterion).
- Reporting deadlines:
  - Provisional monthly data on net bank credit to government position, including detailed list of bank account balances of other public entities, to be transmitted within four weeks following the end of the month.
  - Final data to be provided within an additional four weeks after provisional data have been reported.

### Nonaccumulation of external public payments arrears
- Definition:
  - External payments arrears = sum of external payments due and unpaid for external liabilities of the government and foreign debt held or guaranteed by the government (per paragraph 3(a) debt definition).
- Performance criterion:
  - Government will not accumulate external payments arrears, except arrears arising from debt under renegotiation or being rescheduled.
  - Applied continuously throughout the program period.

### Ceiling on nonconcessional external debt (maturity ≥ one year)
- Scope:
  - Applies to debt as defined in point 9 of the Guidelines on Performance Criteria with Respect to Foreign Borrowing and to commitments contracted or guaranteed for which no value has yet been received.

*Source: APPENDIX I, ATTACHMENT I and ATTACHMENT II, _cr04184 - APPENDIX I (IMF technical memorandum and program documents).*

### 14. The concept of government for the purposes of this performance criterion includes

### 14. The concept of government for the purposes of this performance criterion includes

### Scope and definitions
- Government for the purposes of these performance criteria includes:
  - government as defined in paragraph 2;
  - administrative public institutions (EPAs);
  - scientific and/or technical public institutions;
  - professional public institutions;
  - industrial and/or commercial public institutions (EPICs);
  - local governments.

### Performance criterion: Nonconcessional external borrowing
- From program approval by the Executive Board of the IMF, a ceiling of zero is set for nonconcessional borrowing.
- Monitoring: continuous.
- Constraint: The government undertakes not to contract or guarantee external debt with:
  - a maturity of one year or more; and
  - a grant element of less than 35 percent (calculated using the reference interest rates corresponding to the borrowing currencies provided by the IMF).
- Applicability:
  - Applies to debt as defined in point 9 of the Guidelines on Performance Criteria with Respect to Foreign Borrowing (adopted August 24, 2000) and to commitments contracted or guaranteed for which no value has yet been received.
  - Does not apply to:
    - financing granted by the IMF;
    - treasury bills and bonds issued in CFA francs on the West African Economic and Monetary Union (WAEMU) regional market.
- Reporting deadline:
  - Information on any borrowing (terms and creditors) contracted or guaranteed by the government and/or the above-mentioned public enterprises shall be transmitted each month within four weeks following the end of the month.

### Performance criterion: Ceiling on Short-Term External Debt Newly Contracted or Guaranteed
- Definitions:
  - Definitions in paragraphs 13 also apply.
  - Short-term external debt = debt with a contractual term of less than one year.
  - Exclusions: import-related credit; CMDT foreign borrowing secured by the proceeds of cotton exports; debt-relief operations; treasury bills issued in CFA francs on the WAEMU regional market.
- Performance criterion:
  - The government and public enterprises will not contract, or guarantee, short-term external debt.
  - Monitoring: continuous.

### Quantitative indicators (government fiscal and related)
- The program includes indicators on government tax revenues, the civil service wage bill, and the basic fiscal balance.

A. Floor for Tax Revenues
- Definition: Government tax revenues as reported in the Table on government financial operations (TOFE).
- Performance indicators (floors):
  - CFAF 167.1 billion at June 30, 2004
  - CFAF 265.7 billion at end-September 2004
  - CFAF 383.7 billion at end-December 2004
  - CFAF 106.8 billion at end-March 2005
- Reporting: government shall report tax revenues to IMF staff each month in the context of the TOFE.

B. Ceiling on the Wage Bill
- Definition: Wage bill includes all public expenditure on wages, bonuses, and other benefits or allowances for civil servants, military, security forces, special contracts, and other permanent or temporary employment with the government.
- Performance indicators (ceilings):
  - CFAF 61.1 billion at June 30, 2004
  - CFAF 91.5 billion at end-September 2004
  - CFAF 122.0 billion at end-December 2004
  - CFAF 33.7 billion at end-March 2005
- Reporting: government shall report the wage bill monthly to IMF staff in the context of the TOFE.

C. Floor on the Basic Fiscal Balance, Excluding HIPC Initiative-Related Expenditure
- Definition: Basic fiscal balance = total revenues, excluding grants and privatization receipts, minus total expenditure plus net lending, excluding capital expenditure financed by foreign donors and lenders and HIPC Initiative-related expenditures.
- Performance indicators (floors):
  - CFAF -1.5 billion at June 30, 2004
  - CFAF 8.7 at end-September 2004
  - CFAF -2.6 billion at end-December 2004
  - CFAF 20.8 billion at end-March 2005
- Reporting:
  - Authorities will report provisional data on the basic fiscal balance monthly to IMF staff (from treasury account balances).
  - Final data will be provided as soon as final balances are available, but not later than four weeks after reporting of the provisional data.

### Structural measures and reporting on implementation
- Table 2 of the memorandum of economic and financial policies identifies structural measures as prior actions, performance criteria, and structural benchmarks for 2002 and 2003, including implementation dates.
- Data on the introduction of structural benchmarks and performance criteria will be sent to Fund staff within two weeks of their scheduled implementation.

### Additional information for program monitoring — reporting requirements

A. Government Finances (timing highlights)
- TOFE with breakdown of fiscal revenue and expenditure, including priority expenditure and separate report on HIPC Initiative-related expenditure:
  - Monthly; TOFE within six weeks following end of previous month; HIPC breakdown within twelve weeks.
- Disaggregated data for government administrative agencies and special budgets (including CRM and INPS):
  - Starting end-March 2004; first data cover January 2004; forwarded monthly within eight weeks following end of previous month.
- Quarterly data on public investment program implementation, including financing breakdown:
  - Within eight weeks following end of quarter.
- Monthly data on debt service (breakdown of principal, interest, and relief obtained under HIPC Initiative):
  - Within four weeks following end of month.

B. Monetary Sector (monthly unless indicated)
- Summary accounts of the BCEAO (within four weeks).
- External assets and liabilities of the BCEAO (within eight weeks).
- Summary accounts of the banks; summary accounts of the banking system (within four weeks).
- Lending and deposit interest rates, BCEAO intervention rates and reserve requirements (within four weeks).
- Prudential ratios for bank and nonbank financial institutions (within six weeks), and, if necessary, for individual institutions.

C. Balance of Payments
- Any revisions of balance of payments data (including services, private transfers, official transfers, and capital transactions) as soon as the revisions are made.
- Preliminary annual balance of payments data within 12 months of the end of the year concerned.

D. Real Sector
- Harmonized monthly consumer price index disaggregated by category of consumption:
  - Every month within two weeks after the end of the month.
- National accounts:
  - Within nine months after the end of the year.
- Any revision of the national accounts.

E. Information Regarding the Implementation of the PRSP
- Share of poverty-reducing expenditure (payment order and cash basis) in total budgetary outlays, with breakdown by social sectors, ministries, and regions — retrieved using the extended budget classification.
- Quarterly data on share of primary education outlays in total outlays of the education sector:
  - Forwarded within four weeks following end of previous quarter.
- Annual data on gross enrollment ratio in primary education, with breakdown between girls and boys:
  - Preliminary estimate within two months following end of academic year; final data within one month after beginning of next academic year.
- Annual data on percentage of population having access to health care facilities within a radius of 15 kilometers:
  - Submitted within two months following end of year.
- Annual data on rate of assisted births:
  - Submitted within two months following end of year.
- Annual data on DTCP3 immunization rate for children below 1 year:
  - Submitted within two months following end of year.

### Summary of selected reporting time frames (examples)
- National accounts: Annual — End of year + 9 months.
- Disaggregated consumer price indexes: Monthly — End of month + 2 weeks.
- TOFE (provisional/final): Monthly — End of month + 3 weeks (provisional); end of month + 6 weeks (final).
- Breakdown of fiscal revenue and expenditure in TOFE: Monthly — End of month + 6 weeks.
- Execution of capital budget: Quarterly — End of quarter + 8 weeks.
- Summary accounts of the BCEAO, banks, banking system: Monthly — End of month + 4 weeks (provisional); end of month + 8 weeks (final).
- Debt service (including HIPC relief): Monthly — End of month + 4 weeks.
- PRSP share of poverty-reducing expenditure: Quarterly — End of quarter + 4 weeks.

### Mali — Relations with the Fund (selected financial figures as of March 31, 2004)
- Membership: Joined: September 27, 1963; Article VIII.
- Quota: 93.30 (SDR Million) — 100.00 percent.
- Fund holdings of currency: 84.39 — 90.45 percent.
- Reserve position: 8.91 — 9.55 percent.
- SDR Department net cumulative allocation: 15.91 — 100.00 percent; holdings: 0.56 — 3.52 percent.
- Outstanding Purchases and Loans: PRGF Arrangements: 111.08 — 119.06 percent of quota.

Latest financial arrangements (selected lines)
- PRGF, Approval Date Apr 10, 1996 — Expiration Date Aug 05, 1999 — Amount Approved 62.01 (SDR Million) — Amount Drawn 62.01 (SDR Million).
- PRGF, Approval Date Aug 06, 1999 — Expiration Date Aug 05, 2003 — Amount Approved 51.32 (SDR Million) — Amount Drawn 51.32 (SDR Million).

Projected Payments to Fund (without HIPC Assistance) — Forthcoming (SDR Million)
- Principal: 2004 19.17; 2005 18.17; 2006 14.07; 2007 13.57; 2008 12.49.
- Charges/Interest: 2004 0.70; 2005 0.66; 2006 0.58; 2007 0.51; 2008 0.44.
- Total: 2004 19.88; 2005 18.83; 2006 14.65; 2007 14.07; 2008 12.93.

Projected Payments to Fund (with Board-approved HIPC Assistance) — Forthcoming (SDR Million)
- Principal: 2004 12.12; 2005 10.09; 2006 8.82; 2007 9.58; 2008 9.87.
- Charges/Interest: 2004 0.70; 2005 0.66; 2006 0.58; 2007 0.51; 2008 0.44.
- Total: 2004 12.82; 2005 10.75; 2006 9.40; 2007 10.08; 2008 10.30.

### Implementation of HIPC Initiative (selected figures)
- Decision point date: Sep 1998 (Original framework); Sep 2000 (Enhanced framework).
- Assistance committed by all creditors (US$ Million): Original 121.00; Enhanced 417.00.
- Of which IMF assistance (US$ million): Original 14.00; Enhanced 45.21.
  - (SDR equivalent in millions): Original 10.80; Enhanced 34.74.
- Completion point date: Original Sep 2000; Enhanced Mar 2003.
- Disbursement of IMF assistance (SDR Million):
  - Assistance disbursed to the member: Original 10.80; Enhanced 34.74; combined line shows 45.54.
  - Interim assistance: 9.08 (Enhanced).
  - Completion point balance: Original 10.80; Enhanced 25.66; combined 36.46.
  - Additional disbursement of interest income (under enhanced framework): 3.73.
  - Total disbursements: Original 10.80; Enhanced 38.47; combined 49.27.

### Safeguards assessment — BCEAO (summary)
- An on-site safeguards assessment of the Central Bank of the West African States (BCEAO) identified vulnerabilities and proposed remedies.
- Financial reporting framework:
  - Fund staff recommended formal adoption of International Accounting Standards (IAS) and publication of a complete set of financial statements with detailed explanatory notes.
  - Agreement: BCEAO will strive to improve financial and accounting reporting by aligning practices with IAS as adopted internationally by other central banks.
- Internal controls system:
  - Fund staff noted absence of external oversight of governance, financial reporting, and internal controls as a significant risk.
  - Agreement: After seeking the opinion of the external auditor (Commissaire Contrôleur), BCEAO staff will propose that the BCEAO Board of Directors adopt a resolution requiring the external auditor to apprise the Board, during its annual review and approval of financial statements, of the state and quality of internal controls within the bank.

*Source: _cr04184 - 14. The concept of government for the purposes of this performance criterion includes (IMF PDF).*

### 62. Based on the 2002 financial statements, the staff noted that the BCEAO has improved

### _cr04184 - 62. Based on the 2002 financial statements, the staff noted that the BCEAO has improved

### BCEAO financial statements and safeguards monitoring
- Findings:
  - The BCEAO has improved the explanatory notes to the financial statements based on the 2002 financial statements.
  - Further changes are scheduled for the next fiscal year with a view toward a graduate alignment with IAS accounting to the extent applicable to central banks by 2005.
  - The external auditor apprised the Board of Directors of the BCEAO of the quality of internal controls in June 2003.
  - The financial statements for the year 2002 were published on the bank's website.
- Follow-up:
  - The staff will continue follow-up on the progress of the BCEAO in implementing the proposed recommendations as part of the ongoing safeguards monitoring process.

### Exchange rate arrangements
- Mali is a member of the West African Economic and Monetary Union (WAEMU).
- The exchange system common to WAEMU members is free of restrictions on the making of payments and transfers for current international transactions.
- Historical and official parities:
  - CFA franc pegged to the French franc at the rate of CFAF 50 = F 1 from 1948 until early 1994.
  - Effective January 12, 1994, the new parity was set at CFAF 100 = F 1 following devaluation.
  - Effective January 1, 1999, the CFA franc was pegged to the euro at a rate of CFAF 655.96 = EUR 1.
  - On April 12, 2004, the rate of the CFA franc in terms of the SDR was SDR 1 = CFAF 799.3.
- Fund obligations:
  - As of June 1, 1996, and in conjunction with its WAEMU partners, Mali accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund's Articles of Agreement.

### Article IV consultations
- Mali’s Article IV consultation cycle is governed by the provisions of the July 2002 decision on consultation cycles.
- The 2003 Article IV consultation was completed by the Executive Board on December 15, 2003 (IMF Country Report No. 04/11).

### ROSC/AAP (Fiscal ROSC and HIPC AAP)
- Mission details:
  - An FAD mission visited Bamako during July 17–31, 2001 to assist with the fiscal module of a ROSC and to prepare a HIPC Initiative Assessment and Action Plan (AAP).
- ROSC findings:
  - Important steps taken to improve fiscal transparency since early 1990s and the withdrawal of the state from many industrial activities.
  - The Finance Commission of Parliament plays an active role in examining program budgets.
  - Internal control and audit considered solid: reports of the Controller General and the Inspection des Finances have been followed up at the presidential level, leading to arrests and imprisonments of former high-ranking officials.
- Main weaknesses relative to the Code of Good Practices on Transparency in Monetary and Financial Policies:
  - (i) an unclear legislative basis for budget making;
  - (ii) the lack of formal dissemination to the public of quarterly budget reports;
  - (iii) incomplete coverage of the budget;
  - (iv) the lack of a medium-term budget framework;
  - (v) a dysfunctional external audit agency.
- HIPC tracking and PEM capacity:
  - Using a HIPC Initiative tracking questionnaire, mission and authorities agreed on the capacity of the present public expenditure management (PEM) system to track poverty-reducing public expenditures; results similar to late 2000 assessment.
  - Mali strengths: budget execution (internal audit effective), no expenditure arrears, government ledger accounts reconciled with bank accounts.
- Proposed three-year action plan (main points):
  - integrating the program budgets into the annual budget (loi de finances);
  - monitoring expenditures by function (immediate) and by program (for 2002);
  - identifying poverty-reducing expenditures by line item (so far done only for HIPC Initiative-related expenditures);
  - introducing a medium-term budget framework;
  - preparing more timely monthly treasury balances and deriving the consolidated monthly report of government operations (TOFE) from treasury balances;
  - improving timeliness of preparation of final accounts by the Malian Treasury and their audit by the Section des Comptes (the external audit agency);
  - further computerizing the PEM system.

### Technical assistance (excerpt)
- Selected assistance entries (Department, Type of Assistance, Time of Delivery, Purpose):
  - FAD, Staff, Jan 2004: Assisting the authorities in improving revenue mobilization, especially as regards revenue from the mining sector.
  - FAD, Staff, July 2001: Assisting in completion of the fiscal module of ROSC, drafting an Assessment and Action Plan (AAP), and assessing PEM capacity to track/report uses of HIPC Initiative assistance and all poverty-reducing expenditures.
  - FAD, Staff, February - March 2002: Assisting the authorities in improving the existing expenditure classifications.
  - STA, Expert, May 2002: Assessing government finance statistics under the General Data Dissemination System (GDDS) West Africa project.
  - STA, Expert, June-July 2002: Providing government finance statistics technical assistance under the GDDS West Africa project.
  - STA (AFRISTAT), Expert, August 2002: Assessing real sector statistics under the GDDS West Africa project.
  - STA, Expert, September 2002: Providing government finance statistics technical assistance under the GDDS West Africa project.
  - STA (AFRISTAT), Expert, September 2002: Providing national accounts statistics technical assistance under the GDDS West Africa project.
  - STA, Staff and experts, April 2003: Undertaking a multisector statistics mission.

### Resident Representative
- Mr. Tazi, the current Resident Representative, took up this assignment in September 2002.
- Historical presence:
  - Resident representative stationed in Bamako between 1982 and 1991, from October 1993 until October 1995, from July 1996 to August 1998, and from September 1998 to September 2002.

### Mali: Relations with the World Bank Group (as of May 2004) — Partnership and strategy highlights
- Development strategy and PRSP:
  - Mali’s PRSP approved by the government in May 2002; joint Bank/IMF assessment approved by Boards in March 2003, along with Completion Point under the Enhanced HIPC Initiative.
- IMF role:
  - IMF typically leads on macroeconomic and financial sustainability via quantitative targets under the Poverty Reduction Growth Facility (PRGF).
  - The last PRGF in place since August 1999 expired in August 2003; authorities requested a new PRGF arrangement; Fund reviewing its future role in Mali.
- World Bank role:
  - Leads policy dialogue on structural, social and institutional reforms; implements SAC III and preparing SAC IV.
  - Proposed SAC III Supplemental Grant (US15 million equivalent) to mitigate impact of the Côte d’Ivoire crisis was to be discussed by Bank Board on December 11, 2003.
  - Bank operations address private sector development, financial sector development, education, health; progress variable due to capacity and implementation challenges.
- Integrated Framework for Trade:
  - World Bank leads diagnostic trade study under the IF, in collaboration with USAID, aiming to enhance Mali’s integration into world economy and promote export-led growth centered around selected agro-industries and traditional knowledge industries (music and handicrafts).
  - Diagnostic report to be discussed during a Mali Round Table for Trade tentatively anticipated in the first quarter of 2004.
- Country Assistance Strategy (CAS) (Board discussed July 31, 2003; IDA/R2003-0160):
  - CAS focuses on: (i) promotion of growth; (ii) human resources development; (iii) public finance management and governance.
  - CAS instruments include programmatic support to social sectors, community-driven development, targeted lending for growth/infrastructure, and non-lending analytical work.
  - Expected that 29 percent of Mali’s FY04-06 lending program could be financed by IDA grants.
  - By end of CAS period in FY06, programmatic lending anticipated to comprise about a third of the portfolio.
- Active portfolio composition:
  - Eleven projects: three in rural development, three in infrastructure and energy, three in health and education, one in financial sector (including judicial reform and micro-finance), and one on structural adjustment.
  - Performance satisfactory overall in terms of development objectives and implementation progress.
- Social sector funding and MTEFs:
  - Social sector resources: CFAF 80 billion in 2002; CFAF 102 billion in 2003; CFAF 118.5 billion in the proposed 2004 Budget.
  - As of 2003 Budget, authorities prepare multi-year budget allocations for all sectors, prioritizing social sectors then productive sectors (notably infrastructure, agriculture).
  - With World Bank assistance, authorities prepared MTEFs for health and education and started MTEFs for public works/transport and agriculture/livestock/fisheries.
- Pro-poor growth focus:
  - Bank aims to help Mali develop/diversify growth, improve financial/business environment for private sector (including micro, small, medium enterprises), build and maintain infrastructure, and involve decentralized government and local populations.
  - Operations under preparation include a growth project (telecommunications, mining, private sector), an agricultural diversification project, two transport projects, and a community-based development program.
- Human resources development:
  - Core programs: ten-year sector-wide reforms in health and education supported by donors including the World Bank.
  - Challenges: attracting staff outside the capital; limited supply of qualified staff.
  - Responses: decentralizing health and education training to regions to attract regional residents.
- Public finance and governance:
  - Continued support for capacity building in public financial accountability and openness.
  - Bank support for a proposed Fourth Structural Adjustment Credit (FY05) to develop MTEFs for two additional sectors (rural development and public works/transport) and strengthen links between budget formulation and the macroeconomic framework through the global MTEF.
  - Support for implementation of actions in the Country Fiduciary Accountability Assessment (CFAA) finalized in August 2003; positioning Mali for potential PRSC assistance toward end of CAS period.
- Regional integration and Bank regional activities:
  - Mali included under the World Bank’s 2001 Regional Integration Assistance Strategy (RIAS).
  - Regional activities supporting Mali include:
    - West African Power Project (WAPP) – transmission line between Côte d’Ivoire and Mali and regulatory framework development for regional power trade within ECOWAS;
    - Harmonization of telecommunications policy and establishment of regional regulatory framework (component of Sources of Growth Project (FY05));
    - Support to regional water management via AAA work and regional Institutional Development Fund to OMVS;
    - Proposed transport operations designed within regional framework to strengthen/diversify transport corridors in western Africa;
    - Bank’s AAA focusing on fast-tracking integration between Mali, Senegal and Guinea;
    - A Regional Payments System Credit to the BCEAO seeking to establish payment systems adapted to WAEMU market needs and internationally acceptable;
    - Support to implementation of the WAEMU Agricultural Policy (adopted December 2001);
    - Proposed Institutional and Financial Development Project for the West African Development Bank to promote integrated financial marketing in western Africa.

*Source: _cr04184 - 62. Based on the 2002 financial statements, the staff noted that the BCEAO has improved (PDF).*

### 12. The IMF and World Bank staffs maintain a collaborative relationship in supporting

### 12. The IMF and World Bank staffs maintain a collaborative relationship in supporting

### Cotton sector reforms
- Objective: safeguard an important source of growth and income generation of the rural population.
- Vulnerabilities: sector exposed to external shocks, notably the continued decrease of cotton prices on the international markets.
- Government reform strategy objectives:
  - (i) the improvement of the flexibility and responsiveness of the institutional structure of the cotton sector;
  - (ii) the reduction of the risks associated with having only one operator;
  - (iii) the establishment of a higher visibility (transparency and capacity to anticipate) in the management of the sector.
- Reform measures: redefine the parastatal company’s role in core cotton production activities; increase participation of producers and the private sector; liberalize cotton and cottonseed oil markets and enterprises.
- Bank–Fund collaboration: Bank takes lead in policy dialogue and program implementation under the Third Structural Adjustment Credits (SAC); proposed Fourth SAC and proposed Agriculture Diversification and Competitiveness project will also support reforms.
- Status and recent actions:
  - SAC III-supported cotton reform program is on track.
  - Privatization and liberalization efforts to continue over the next three years.
  - Sale of shares in HUICOMA (the cottonseed oil processing company) has been provisionally awarded; provisional purchaser invited for final negotiations to start November 10, 2003.
  - IFC prepared an advisory services proposal for steering the CMDT privatization over the coming 2-3 years; government intends to engage the IFC by the end of the first quarter 2004.

### Public expenditure management
- Reform objectives:
  - (i) improving the budget preparation process to link public resource allocation with poverty reduction objectives;
  - (ii) improving efficiency and effectiveness of public expenditure execution;
  - (iii) improving financial transparency and managerial accountability via effective expenditure monitoring and information reports on budget execution.
- Bank support under SAC III includes:
  - better integration of various budget documents;
  - improving classification of expenditures for poverty-oriented monitoring (including decentralized level);
  - automation of budget execution through an integrated information system;
  - actions to improve timeliness of government account preparation;
  - strengthened internal and ex-post audit functions;
  - preparation of a medium-term expenditure framework (MTEF) globally and at key sector levels (initially social sectors, subsequently rural development and public works/transport).
- Implementation status:
  - Program is on track.
  - New integrated information system (linking the treasury, budget and financial audit departments) being prepared for implementation in the first quarter of 2004 as scheduled in the SAC III letter of development policy.
  - Government now prepares and distributes a quarterly note on the economic and financial conditions of the country, in addition to the monthly treasury balance statement.
  - Progress made on tracking poverty-reducing public spending; next phase to be supported under a proposed fourth SAC.
- Bank–Fund collaboration and diagnostics:
  - Joint review of Mali’s PEM performance via sharing SAC III mission documents and Fund FAD documents, yielding a comprehensive action plan for PEM reforms (ROSC AAP).
  - Fund FAD provided technical assistance on classification of poverty and HIPC expenditures.
  - 2002-03 Country Financial Accountability Assessment (CFAA) highlights key policy measures for strengthening financial management; CFAA recommendations incorporated in forthcoming CAS and will be monitored.

### Privatization program
- World Bank-supported private sector reforms include: telecommunications support program; transport and railway support program; financial sector development project; structural adjustment credits (cotton sector); Private Sector Assistance Project (closed mid 2002, included support to judicial reform).
- Program objectives:
  - (i) reduction of state ownership of the banking sector to less than 20 percent;
  - (ii) divestment of the state from ten non-bank enterprises (sale of shares, liquidation, or concession contracts);
  - (iii) continuation of private sector development initiatives to enhance competition and improve the business environment in key sectors.
- 2003 outcomes:
  - Railway privatization concluded with Bank support; concession contract awarded and became effective in September 2003.
- Mutual Bank–Fund concern: privatizations’ associated retrenchment programs (particularly railway and cotton), their potential impact on the government budget, and implications for future privatizations (notably telecommunications).
- Bank role: leading evaluation of retrenchment plans during supervision of sector programs.
- Note on enterprises remaining in government portfolio (majority and minority holdings listed in source).

### World Bank Operations in Mali (As of November 16, 2003, in US$ millions)
- Credits listed (number, year, sector, IDA, Undisbursed):
  - C26170-ML 1994 Transport Sector: IDA 65.0, Undisbursed 4.5
  - CN0040-ML 1997 Urban Devt. & Decentralization: IDA 80.0, Undisbursed 23.4
  - C29700-ML 1997 Regional Power: IDA 17.1, Undisbursed 1.8
  - CN0370-ML 1998 Grassroots Hunger/Poverty: IDA 21.5, Undisbursed 9.8
  - C31550-ML 1999 Integrated Health Sector Investment: IDA 40.0, Undisbursed 22.9
  - C33180-ML 2000 Improving Learning in Primary Schools: IDA 3.8, Undisbursed 1.8
  - C33940-ML 2000 Finance Sector Development: IDA 21.0, Undisbursed 18.6
  - C33930-ML 2000 Rural Infrastructure: IDA 115.1, Undisbursed 93.9
  - C34490-ML 2001 Education Sector Expenditure Prog.: IDA 45.0, Undisbursed 35.8
  - C35830-ML 2002 Agricultural & Producer Organizations: IDA 43.5, Undisbursed 40.3
  - C35820-ML 2002 SAC III: IDA 70.0, Undisbursed 0.0
  - C38280-ML 2004 Household Energy & Universal Access: IDA 35.6, Undisbursed 35.6
- Totals (number of credits=12): IDA 557.6, Undisbursed 288.8
- Source: World Bank.

### Mali: Statistical Issues (As of April 2004)
- General assessment:
  - Statistical database broadly comprehensive and sufficient for program monitoring, but weaknesses exist in national accounts and industrial production data.
  - Authorities making efforts to improve quality, timeliness, and availability of economic and financial data.
  - Mali participating in the General Data Dissemination System (GDDS) since September 2001; metadata posted on DSBB; fiscal sector metadata last updated in 2001 and need updating.
- Real sector:
  - Significant weaknesses in accuracy, coverage, and timeliness of national accounts data.
  - STA resident expert in national accounts (May 1995 to August 1996); STA completed two follow-up missions; AFRISTAT provided short-term assistance.
  - April 23-May 6, 2003 multisector statistics mission considered national accounts data unreliable due to underfunding of the National Directorate of Statistics and Data Processing (DSDP).
  - DSDP compiles and publishes a harmonized consumer price index (CPI) for Bamako monthly since early 1998; mission recommended revising index weights based on the 2001 household survey and conducting a national household budget survey to update national CPI covering Bamako and five other regional capital cities.
- Government finance statistics:
  - Early 2003: Ministry of Economy and Finance began compiling monthly statistics covering general government operations on a pilot basis (inputs from customs, tax, debt, and treasury directorates); data available on request with a one- to two-month lag.
  - Progress in aligning fiscal data with WAEMU harmonized table of government financial operations (TOFE) but timeliness needs improvement.
  - Authorities plan to step up monitoring of public investment expenditure financed from abroad via increased training of project managers and preparation of a semiannual report on implementation of the special investment budget (BSI).
  - External debt statistics prepared by National Public Debt Directorate; domestic debt by National Directorate of the Treasury and Government Accounting; improving coordination recommended.
  - Mali does not report annual statistics for the Government Finance Statistics Yearbook nor subannual government finance statistics for IFS; both could be compiled from TOFE.
  - Multisector mission recommended Ministry of Economy and Finance accept WAEMU Commission proposal to post member states’ data on its website (IZF) as an interim solution.
- Monetary data:
  - Preliminary monetary data prepared by national agency of BCEAO and released by BCEAO headquarters.
  - Collection of monetary data from BCEAO can be delayed up to eight weeks.
  - Monetary and financial statistics mission visited BCEAO headquarters in May 2001; action plan agreed for implementation of the Monetary and Financial Statistics Manual (MFSM) and introduction of a WAEMU page in IFS; WAEMU page published for the first time in January 2003.
  - Regional seminar on monetary and financial statistics organized by BCEAO in Dakar during April 22-25, 2003; participants agreed to set up a working group of BCEAO national agencies and headquarters to follow up implementation of MFSM recommendations.
- Balance of payments data:
  - Since December 1998, responsibility for compiling and disseminating balance of payments statistics assigned to BCEAO by area-wide WAEMU legislation.
  - BCEAO national agency in Bamako compiles and disseminates balance of payments statistics; BCEAO headquarters in Dakar delineates methodology and calculates international reserves managed on behalf of participating countries.
  - Full transition to Balance of Payments Manual, Fifth Edition (BPM5) achieved; STA statistical advisor posted at BCEAO headquarters in Dakar from July 1996 through July 1999 contributed to improved reporting and backward revision to 1988, creating a consistent series for 1988–2001.
  - BCEAO national agency disseminates balance of payments statistics with a seven months lag; BCEAO compiles and disseminates annual international investment position data with 18 months lag.
  - Trade data: customs computer system (SYDONIA) upgraded in 1999 improving import and informal trade monitoring; gaps remain in trade data for mining products due to undercoverage of gold exports.
  - Services and transfers data (especially workers’ remittances) need improvement via intensified contact with reporting bodies.
  - Private nonbank foreign assets not well covered in financial accounts; assets of WAEMU residents obtained through partial surveys; annual survey for foreign direct investment transactions still preliminary.
  - BCEAO implemented compilation system for commercial banks to report data on payments involving nonresidents; these data are not used to produce annual balance of payments statistics.
  - External debt data produced by General Directorate for Public Debt (DGDP) using CS-DRMS software.
  - April 22-May 6, 2003 multisector mission found balance of payments compilation system generally sound and encouraged integration of banking settlement sources and dissemination within GDDS-recommended timeliness.

### Mali: Core Statistical Indicators (As of April 17, 2004) — selected metadata and reporting features
- GDDS participation: since September 2001 (metadata posted on DSBB).
- Exchange Rates: Date of latest observation — Current; Date received — 03/04; Frequency of data — Daily; Frequency of reporting — Monthly; Source of update — EIS/FIN 1/; Mode of reporting — On-line; Confidentiality — No; Frequency of Publication — Monthly.
- International Reserves: Date of latest observation — 09/03; Date received — 03/04; Frequency of data — Monthly; Frequency of reporting — Monthly; Source of update — BCEAO 2/; Mode of reporting — Staff/e-mail; Confidentiality — 3/; Frequency of Publication — Monthly.
- Central Bank Balance Sheet, Reserve Base Money, Broad Money: Date of latest observation — 09/03; Date received — 03/04; Frequency of data — Monthly; Frequency of reporting — Monthly; Source of update — BCEAO 2/; Mode of reporting — Staff/e-mail; Confidentiality — 3/; Frequency of Publication — Monthly.
- Interest Rates: Date of latest observation — 12/03; Date received — 03/04; Frequency of data — Variable; Frequency of reporting — Weekly; Source of update — BCEAO 2/; Mode of reporting — Staff/e-mail; Confidentiality — No; Frequency of Publication — Monthly.
- Consumer Price Index: Date of latest observation — 12/03; Date received — 12/03; Frequency of data — Monthly; Frequency of reporting — Monthly; Source of update — Ministry of Finance; Mode of reporting — Staff; Confidentiality — No; Frequency of Publication — Monthly.
- Exports/Imports: Date of latest observation — 2002; Date received — 02/04; Frequency of data — Annual; Frequency of reporting — Annual; Source of update — BCEAO 2/; Mode of reporting — Staff; Confidentiality — 3/; Frequency of Publication — Annually.
- Current Account Balance: Date of latest observation — 2001; Date received — 02/04; Frequency of data — Annual; Frequency of reporting — Annual; Source of update — BCEAO 2/; Mode of reporting — Staff; Confidentiality — 3/; Frequency of Publication — Annually.
- Overall Government Balance, GDP/GNP, External Debt: Date of latest observation — 08/03 (Overall Government Balance), 2002 (GDP/GNP), 2002 (External Debt); Date received — 02/04 (Overall Government Balance), 02/04 (GDP/GNP), 02/04 (External Debt); Frequency of data — Monthly (Overall Government Balance), Annual (GDP/GNP), Annual (External Debt); Frequency of reporting — Monthly (Overall Government Balance), Annual (GDP/GNP), Annual (External Debt); Source of update — Ministry of Finance (Overall Government Balance, GDP/GNP, External Debt); Mode of reporting — Staff; Confidentiality — 3/; Frequency of Publication — Semi-annually (Overall Government Balance), Annually (GDP/GNP), Annually (External Debt).
- Notes:
  - 1/ IMF, Economic Information System (EIS); and IMF, Finance Department.
  - 2/ Central Bank of West African States (BCEAO).
  - 3/ Preliminary data for staff use only; actual data unrestricted.

*Source: _cr04184 - 12. The IMF and World Bank staffs maintain a collaborative relationship in supporting*

### 1.     First PRGF review, joint staff assessment, and discussion on

### First PRGF review, joint staff assessment, and discussion on budget for 2005

### Timeline and missions
- Mission: August 2004 (First PRGF review, joint staff assessment, discussion on budget for 2005).
- Executive Board Meeting: October 2004 (First PRGF review).
- Mission: January 2005 (Second PRGF review and discussion of the second annual program).
- Executive Board Meeting: March 2005 (Second PRGF review).

### Prior actions (staff statement, June 23, 2004)
- Prior action met on March 23, 2004: creation of a unit in the Ministry of Economy and Finance to monitor the macroeconomic program.
- Second prior action (end of provisional administration of BIM SA and establishment of a new management structure):
  - Authorities provided document to staff on June 18, 2004 indicating selection of the current manager of BIM SA to become its new President.
  - Staff view: selection represents the last important step toward setting a new management structure; sufficient progress made for the Executive Board to consider the government’s request for a new three-year PRGF arrangement.

### Utility tariffs (staff statement, June 23, 2004)
- At end-May 2004, the electricity and water regulatory agency announced tariff reductions retroactive to January 1, 2004:
  - Electricity: reductions averaging 8.6 percent.
  - Water: reductions averaging 1.1 percent.
- The 2004 government budget includes a subsidy for water and electricity equivalent to 0.3 percent of GDP.
- Staff action: at the time of the first review under the new PRGF arrangement, staff will assess the impact of the cut in tariffs on government financial operations in 2004 and long-term implications.

### IMF approval of PRGF arrangement (Press Release No. 04/125, June 23, 2004)
- IMF Executive Board approved a three-year arrangement under the PRGF for Mali:
  - Amount equivalent SDR 9.33 million (about US$13.7 million).
  - First disbursement: SDR 1.33 million (about US$1.9 million) available immediately.
- PRGF loan terms noted:
  - Annual interest rate: 0.5 percent.
  - Repayment: over 10 years with a 5 ½-year grace period on principal payments.
- Fund summary of program focus (Agustín Carstens, Deputy Managing Director and Acting Chair):
  - Objectives: diversify the economy, bring the country to a higher growth path, maintain macroeconomic stability, and strengthen social policies.
  - Fiscal consolidation via increasing government revenue through improved tax administration and policy; strengthen public expenditure management.
  - Access under the arrangement set at 10 percent of quota under the Fund’s standardized access level for low-income countries with limited balance of payments needs but continued vulnerability to shocks.
  - Emphasis on aligning budgetary allocation with PRSP priorities, reforming the cotton sector, privatization of key parastatal enterprises, strengthening the financial system, and reforming the pension fund.
  - Mali expected to remain heavily dependent on foreign financial assistance; government should encourage donors to increase the grant element of external financing and urge creditors to provide debt relief on agreed terms at HIPC completion point.

### Recent economic developments and macro performance (Annex)
- Growth and output:
  - Economic growth (estimated): 6 percent in 2003 versus 4.3 percent in 2002.
  - Growth of non-mining real GDP: 9 percent in 2003 from 2.3 percent in 2002.
  - Cereal production: 34 percent higher in 2003 than in 2002.
  - Cotton crop: 46 percent higher in 2003 than in 2002.
- Prices and external sector:
  - Consumer price index: declined by 1.3 percent on average for 2003.
  - External current account deficit: estimated 6.5 percent of GDP in 2003 from 4.3 percent in 2002.
- Fiscal performance (2003):
  - Overall deficit: fell to 5.1 percent of GDP (objective was 8.2 percent).
  - Government revenues: rose to 16.6 percent of GDP in 2003 from 15.9 percent in 2002.
  - Total expenditure: fell from 23.2 percent of GDP in 2002 to 21.7 percent in 2003.
- Program objectives and projections (2004–07):
  - Key macroeconomic objectives: annual real GDP growth of over 5 percent; annual inflation under 3 percent; external current account deficit of under 7 percent of GDP.
  - Revenue strategy: increase tax revenue to 17 percent of GDP over time (WAEMU convergence criterion).
  - Total expenditure projected to remain stable at slightly less than 25 percent of GDP over 2004-07.
- Specific projections and program figures:
  - GDP projected growth: 4.7 percent during the first annual program under the new PRGF arrangement; 6.1 percent in 2005.
  - Overall fiscal deficit projected: 7.5 percent of GDP in 2004.
  - Total government revenue projected: increase to 17 percent in 2004 from 16.6 percent of GDP in 2003.
  - Total spending projected: rise by 2.8 percent of GDP to 24.5 percent in 2004.
  - Total expenditure on health and education projected: increase to 6.3 percent of GDP in 2004 from 5.9 percent in 2003.
- Structural reform agenda for 2004:
  - Improve public sector management.
  - Continue decentralization and devolution of public sector activities.
  - Advance privatization program.
  - Reform the cotton sector.
- IMF membership and quota (Annex):
  - Mali became a member of the IMF on September 27, 1963.
  - Quota: SDR 93.30 million (about $136.5 million).
  - Outstanding use of IMF resources: SDR 103.56 million (about US$151.5 million).

### Selected economic and financial indicators (highlights from tables)
- Real GDP (annual percent change): 2000: -3.2; 2001: 12.1; 2002: 4.3; 2003: 6.0; 2004: 4.7; 2005: 6.1; 2006: 6.6; 2007: 5.6.
- Nominal GDP (in billions of CFA francs): 2000: 1,899.2; 2001: 2,212.6; 2002: 2,329.9; 2003: 2,540.5; 2004: 2,699.3; 2005: 2,925.1; 2006: 3,180.1; 2007: 3,440.7.
- Consumer price index (annual average): 2000: -0.7; 2001: 5.2; 2002: 5.0; 2003: -1.3; 2004–07: 2.5 (each year).
- External current account balance, including official transfers (percent of GDP): 2000: -9.6; 2001: -10.3; 2002: -3.0; 2003: -4.0; 2004: -4.3; 2005: -6.2; 2006: -6.1; 2007: -6.2.
- Overall fiscal balance (payment order basis, including grants, percent of GDP): 2000: -2.9; 2001: -3.2; 2002: -3.6; 2003: -0.7; 2004: -4.0; 2005: -4.5; 2006: -4.0; 2007: -3.7.
- Overall fiscal balance (payment order basis, excluding grants, percent of GDP): 2000: -7.7; 2001: -7.0; 2002: -7.3; 2003: -5.1; 2004: -7.5; 2005: -7.3; 2006: -6.7; 2007: -6.5.
- Basic fiscal balance (percent of GDP): 2000: -0.6; 2001: -1.7; 2002: -1.3; 2003: -0.2; 2004: -1.2; 2005: -1.1; 2006: -0.6; 2007: -0.3.
- Total revenue (percent of GDP) (table row “Total revenue”): 2000: 13.8; 2001: 14.1; 2002: 15.9; 2003: 16.6; 2004: 17.0; 2005: 17.3; 2006: 18.1; 2007: 18.4.
- Total expenditure and net lending (percent of GDP): 2000: 21.5; 2001: 21.1; 2002: 23.2; 2003: 21.7; 2004: 24.5; 2005: 24.6; 2006: 24.8; 2007: 24.8.
- Gross international reserves (millions of US dollars): 2000: 381.3; 2001: 348.9; 2002: 594.5; 2003: 827.5; 2004: 870.0; 2005: 913.0; 2006: 956.8; 2007: 1,000.4.
- Reserves (in months of next year's imports): 2000: 3.8; 2001: 4.2; 2002: 6.4; 2003: 7.1; 2004: 7.0; 2005: 6.7; 2006: 6.6; 2007: 6.4.
- Exports (percent of GDP): 2000: 24.1; 2001: 29.0; 2002: 31.9; 2003: 26.1; 2004: 26.9; 2005: 26.2; 2006: 27.1; 2007: 26.0.
- Imports (percent of GDP): 2000: 34.7; 2001: 38.3; 2002: 32.0; 2003: 30.5; 2004: 40.1; 2005: 40.0; 2006: 30.4; 2007: 30.0.
- Debt-service ratio (in percent of exports of goods and services), after debt relief: 2000: 12.2; 2001: 6.3; 2002: 6.3; 2003: 6.0; 2004: 6.4; 2005: 6.9; 2006: 5.8; 2007: 6.6.

*Source: _cr04184 - 1. First PRGF review, joint staff assessment, and discussion on budget for 2005 (IMF staff statement and press release), June 23, 2004.*

### 25.4 percent, while outlays for social sectors increased. This performance reflected the

### _cr04184 - 25.4 percent, while outlays for social sectors increased. This performance reflected the

### Fiscal performance and public expenditure management
- Current expenditure dipped in 2003 as a share of GDP.
- Government measures limited non-essential spending and kept the investment budget within the PRSP framework.
- Outlays for social sectors increased.
- Auditor General position created to assess public policies and control the use of public resources by the government and public institutions.
- Public expenditure management reforms included implementation of a new budget classification and preparation of a manual of budget execution procedures.
- Strengthened collaboration between the Treasury and the Central Bank through monthly financial statement preparation; fiscal information coverage improved.
- Government will seek to maintain the wage bill to less than 5 percent of GDP and contain recruitment to the needs of the social sectors and to other fiscal objectives.

### Monetary policy and financial sector soundness
- The regional Central Bank (BCEAO) implemented a tight monetary policy consistent with the CFA franc’s fixed exchange rate with the Euro and maintaining inflation under control.
- Non-performing loans have been declining.
- Most banks have complied with the key prudential ratios.
- Microfinance institutions recorded significant progress in terms of membership, deposits and loans.
- Financial sector reform measures include:
  - Divestiture of government and the BCEAO from the capital of three commercial banks (Banque Internationale pour le Mali, Banque de Développement du Mali, and Banque Commerciale du Sahel).
  - Ensuring compliance of banks with all prudential ratios following the banking commission’s recommendations.
  - Pursuing the legal and regulatory framework of the financial system.
  - Improving human capacity in the judicial recovery of bank debt and encouraging further use of real property as bank collateral.
  - Improving supervisory capabilities for the microfinance sector, strengthening the regulatory framework and capacity of the insurance sector, and restoring financial viability of social security and civil service retirement institutions through restructuring.

### Structural reforms, privatization, and competitiveness
- Substantial progress: new budget classification, manual of budget execution procedures, strengthened Treasury–Central Bank collaboration.
- Privatization progress:
  - Timetable agreed with partners to create three or four private companies to replace the cotton company CMDT under cotton sector reform.
  - Management of the railroad company successfully privatized.
  - Efforts to reach an agreement on privatization of the cottonseed-oil-company HUICOMA are still underway.
- Structural reform priorities:
  - Simplification of administrative procedures for enterprises and regulatory and tax framework.
  - Continuation of enhancement of the judicial system.
  - Compliance with regional legislation on indirect taxation and support for investments.
  - Further liberalization of the cotton sector and other sectors.
  - Expansion and increased efficiency of basic economic infrastructure.
- Privatization emphasis also on telecommunications, completion in the pharmaceutical sector, reduction of government equity in sugar and river transport companies, and granting a concession to operate the Malian airport company.

### External sector, reserves, and debt
- Current account deteriorated in 2003 due to the increase in transport costs and the falling of tourism revenues, negatively impacting the services account.
- Exports increased.
- Debt relief under the enhanced HIPC initiative and external budgetary support contributed to a significant overall balance of payments surplus.
- Gross international reserves of the regional Central Bank have risen to more than seven months of imports.
- New private investments: a new spinning factory established; new gold mines scheduled to operate in 2005 and 2006.
- Debt service ratio has declined, owing to higher export earnings.
- Donors at a Roundtable Conference in Geneva pledged USD 2.4 billion in assistance to support the authorities’ medium-term economic and financial program.
- To maintain debt sustainability beyond 2015, authorities plan to:
  - Intensify economic diversification to boost exports.
  - Seek concessional terms in any new debt.
  - Favor grants over loans for financing investment needs to bring the share of grants in external financing from 40 percent currently to 60 percent over the medium term.

### Medium-term framework and macroeconomic objectives (2004-07)
- PRSP adopted in May 2002 is the sole frame of reference.
- PRSP annual progress report: important progress in strengthening institutions and governance, increasing access to health, education and other social services, and advancing infrastructure development (electricity, railways, roads, airport).
- Macroeconomic objectives for 2004-07:
  - Achieve an average annual real GDP growth rate of at least 5 percent.
  - Achieve an annual inflation of less than 3 percent.
  - Maintain a current account deficit (excluding official transfers) of less than 7 percent of GDP.
- Fiscal policy objectives:
  - Increase government resources and improve management and prioritization of public expenditure while favoring private sector development.
  - Expand the tax base by reducing exemptions, strengthening tax administration, and developing a property tax system.
  - Reallocate funds towards priority programs in the PRSP and ensure adequate human and financial resources for local governments using the central budget and developing a local tax system.
  - Broader decentralization and downsizing of central administration to reduce expenditure inefficiencies and wastes.
  - Continue efforts to improve procedures for the design, execution and monitoring of budget operations and strengthen public spending controls and audits.
- Monetary policy aim: keep inflation below 3 percent, consistent with the parity of the CFA franc with the euro.

### Human capital, social sectors, and poverty reduction
- Strategy emphasizes institutional, human capital and physical infrastructure development to achieve strong and sustainable growth conducive to poverty reduction.
- Development of skilled human resources, particularly in education and health, with ten-year programs in each sector.
- Vocational and continuing education programs to respond to sectoral demands and permanent human capacity improvement.
- Measures to reduce labor market constraints and ensure pay structure incentives for investment in education and health.
- PRSP progress (2002-2003) highlighted commendable achievements in health and education sectors as well as governance, institutional and infrastructure development.
- Authorities will continue to use the PRSP framework as the main guide for policies and actions and pursue poverty reduction through private sector and rural area-led growth.

### Technical assistance, external support, and program requests
- Limited capacities induce authorities to request continuation of technical assistance from the Fund and other development partners to improve the reliability of economic statistics in virtually all areas.
- Authorities request a new three-year arrangement under the PRGF with limited access.

*Source: _cr04184*

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