## _cr0741 - 1. The Government of Niger has continued to implement its reform agenda for the

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---

### Overview and PRS implementation
- Reform agenda grounded on the four pillars of the Poverty Reduction Strategy (PRS) launched in January 2002.
- Joint Staff Assessment for the PRSP Progress Report for 2003 discussed by Executive Boards of IDA and the IMF on January 27, and 31, 2005, respectively.
- Annual Progress Reports (APRs) for 2004 and 2005 submitted to IDA and IMF staffs in October 2006; the JSAN covers both APRs.
- Delays in preparing APRs attributed to postponed key surveys to 2006 because of the severe food crisis in 2004/05 and time needed to collect data.
- Core Welfare Indicators Questionnaire (CWIQ) completed in 2005 indicated poverty level of 62.1 percent, essentially unchanged from the 63 percent poverty level derived from a 1993 budget and consumption survey.
- 1993 and 2005 survey data are not directly comparable; a complete household survey planned for 2007 is needed to determine poverty levels and trends more accurately.

### Macroeconomic developments
- General progress in PRSP implementation in 2004 and 2005 described as broadly positive despite drought, locust plague in late 2004, and a severe food crisis in Q2–Q3 2005.
- Fiscal outcomes and projections:
  - Overall fiscal deficit limited to 7.5 percent of GDP in 2005 (against 9.2 percent in 2004).
  - Basic budget deficit limited to 2.8 percent of GDP in 2005, and in 2006 is expected to remain at the same level.
  - Overall fiscal deficit projected to increase modestly to 7.8 percent of GDP in 2006.
  - Deficits in 2005 and 2006 financed entirely through grants and highly concessional budgetary loans.
  - Share of domestic expenditure (excluding foreign-financed investments) allocated to health, education, and rural development increased from 2004 to 2006.
- Growth, inflation, and external accounts:
  - GDP growth: downturn of some 1 percent in 2004; recovery to 6.8 percent in 2005; projected growth in 2006 about 3.5 percent.
  - External current account deficit (including grants) increased to 7.4 percent of GDP in 2005 (from 7 percent of GDP in 2004), and expected to remain broadly unchanged in 2006.
  - Inflation: sharp increase during Q3 2005, then significant decline in Q4 2005 and continued in 2006 due to improved food supply.
  - In 2005 the surge of food imports was largely covered by higher humanitarian assistance.
- Structural macro recommendations and debt outlook:
  - Need higher and sustained productivity growth in agriculture and economic diversification to boost growth and reduce vulnerability.
  - Encourage adoption of modern farming techniques via expansion of extension services and increased farmers’ access to financial services; potential to expand irrigation through increased investment in irrigation infrastructure.
  - Full implementation of the rural sector development strategy, with development partner assistance, requires improved capacity to monitor and execute the public investment program.
  - Further reforms needed: streamline regulatory framework, reform transport services, preserve existing road network, reform land tenure system, and strengthen the judicial system.
  - Fiscal sustainability requires raising domestic revenue through expansion of the tax base while pursuing prudent expenditure policies, notably regarding the wage bill.
  - Need to further strengthen budget preparation and execution processes, consistent with sectoral MTEFs recently prepared.
  - Debt relief outcomes: ratio of NPV of external debt to exports declined to about 150 percent in 2004 after HIPC, and fell further to 46 percent in 2006 after additional relief under the MDRI.
  - LIC DSA indicates Niger is at a moderate risk of debt distress given vulnerability to exogenous shocks; projections indicate debt burden will increase over time but remain significantly below policy-based thresholds by 2025.
  - Guidance: new investments should be financed mostly by grants; if grants are insufficient, borrowing should be only at very concessional terms and for highly productive projects to preserve debt sustainability.
  - Export prospects: uranium and gold exports expected to increase in volume and value; rural sector investments should expand agricultural production and exports.
- Medium-term framework:
  - Government’s annual average real GDP growth objective for 2006-07 is 4.2 percent, which would increase per capita income by about 1 percent per year.
  - Main fiscal objective: gradually reduce the overall fiscal deficit to limit long-term reliance on concessional assistance and shift expenditure composition to improve access to key social services.
  - Policy tools: (i) control of the wage bill with incentives for higher productivity; (ii) expansion of the tax base to reduce tax pressure on the formal sector.
  - Need to increase effectiveness of public investments, better targeted on social services and essential infrastructure.

### Sectoral policies and structural reforms
- General:
  - Implementation of sectoral reforms needs strengthening to achieve strong and sustained growth; Niger’s population growth rate is 3.4 percent per year.
- Financial sector:
  - Little progress since establishment of NigerPoste in June 2005; APRs do not specify causes or planned government actions.
  - Critical steps discussed with Government:
    - (i) privatization of Crédit du Niger;
    - (ii) finalization of restructuring of the National Post Office, especially creation and licensing as a commercial bank of FINAPOSTE, the subsidiary of NigerPoste;
    - (iii) establishment of a microfinance institutions’ supervisory body, following submission by a steering committee of a draft decree needing government adoption.
- Electricity and petroleum:
  - Privatization of NIGELEC delayed due to difficulty finding private companies willing to invest US$60-100 million required for expansion and rehabilitation; potential investors prefer management contract schemes where Government continues to assume investment responsibility.
  - Restructuring of NIGELEC underway to increase production and cut costs.
  - Privatization of SONIDEP failed in part because of difficulty finding sound foreign private partners; SONIDEP management strengthened since 2004/05 and operating results improved.
  - Petroleum pricing mechanism (adopted August 2001 — monthly full pass-through of international price changes) was pursued in 2004–first half 2005; in response to international price surges in September-October 2004 and in July-September 2006 the Government allowed some tax deferment that was subsequently recouped.
- Transport and trade:
  - National Transport Strategy: Government pursued repairing and safeguarding existing road network; more efforts required to improve road maintenance management and financing.
  - Trade: APRs emphasize export promotion and diversification; actions include export development programs and regional integration (establishment of a free trade area with all ECOWAS countries).
  - APRs lacked specificity on bottlenecks to export diversification and precise measures and sectors for export gains; ongoing Diagnostic Trade Integration Study (DTIS) will provide recommendations.

### Human development and service delivery
- General:
  - APRs provide comprehensive statistics on health, education, and water sectors and describe progress in service delivery but could have included tables comparing outcomes with 2002 PRSP targets.
  - Forthcoming PRSP II expected to provide more specific development-outcome information and compare PRSP II targets with the MDGs.
  - Data weaknesses have prevented assessment of trends of some social indicators since 2000; strengthening statistical information systems is critical for monitoring and evaluation of next PRSP targets.
- Education:
  - Primary gross enrollment: 44.7 percent in 2003, 45.4 percent in 2004, and 52.4 in 2005 (2002 PRSP target for 2005 was 48 percent).
  - Completion rate rose from 25.6 percent to 36.4 percent over 2001-2005 (PRSP 2005 target was 44 percent).
  - Niger remains far from universal primary education; quality outcomes remain weak compared to sub-regional norms.
  - A post-primary education program is being prepared to define a strategic framework for sustainable expansion of secondary education.
  - Following a June 2006 audit finding mismanagement of funds in donor-financed education programs, Government removed two ministers from office and took remedial actions.
- Health:
  - Government adopted in February 2005 the five-year Health Development Plan (2006-2010); IDA supports through a US$35 million credit approved in January 2006.
  - Program aims: (i) improve coverage and quality of health services; (ii) monitor outcome and impact (e.g., visit rates of the poor, morbidity and mortality rates); (iii) improve human resource management and strengthen budget execution.
  - Infant mortality: 81 per 1,000 in 2006 against 123 per 1,000 in 1998; 2005 PRSP target was 94.5 per 1,000.
  - Under-five mortality: 198 per 1,000 in 2006 against 262 per 1,000 in 1998 and close to 205 per 1,000 target for 2005 in the 2002 PRSP.
  - Projection: If under-five mortality keeps decreasing at the current trend, the indicator will fall to 213 by 2015, far short of the MDG target of 107.
  - National immunization rates increased from 60 percent in 1998 to 83.5 percent in 2006 (2002 PRSP target for 2005 was 37 percent).
  - Staffs recommend sustaining and accelerating implementation of the National Health Development Plan.
- HIV/AIDS:
  - Strategic plan adopted in 2002; eight regional coordination units and 24 sectoral committees created.
  - Access to retroviral therapy started in 2004 but needs scaling up nationwide.
  - HIV/AIDS prevalence decreased from 0.87 percent in 2002 to 0.70 percent in 2006.
  - Staffs recommend sustaining and accelerating implementation of the strategic plan to keep prevalence low.
- Water:
  - Successful implementation of IDA-funded Water Sector Project and Rural Hydraulic Program (President’s Special Program funded on HIPC receipts) led to significant progress in access to safe water.
  - Coverage of drinking water needs in rural areas increased to 59 percent in 2005 from 52 percent in 2000, and exceeds the 2005 PRSP target.

### Governance and public finance management
- Judicial and legal reform:
  - 2004 PRSP Progress Report mentions Judicial Reform Support Program (PARJ) aiming to: (i) training of judges; (ii) equal access to judiciary for all; (iii) design and implementation of a sound penal policy.
  - 2005 PRSP Progress Report is silent on progress in implementing PARJ; both reports do not sufficiently elaborate on actions addressing governance issues and corruption.
  - Niger considered a weak performer on governance as evidenced by several indicators, including those of IDA, CPIA and Kaufmann and Kraay governance indicators.
- Economic governance and budget management:
  - 2006 Budget Law allocations for health and education were based on their respective MTEFs; extension to other priority PRSP sectors starts with the 2007 Budget Law.
  - Government agreed to integrate all HIPC resources into line ministries’ budgets based on performance on budget management and reforms; for 2006 this was done for health and education (amounting to almost 60 percent of 2006 HIPC resources).
  - Budget execution rates in 2005 for current expenditures exceeded 90 percent in each of the three priority sectors: Basic Education, Health, and Rural Development.
  - Government elaborated a poverty-reduction items list for 2005 and 2006; the 2006 list was included in the 2006 Budget Law.
  - Line ministries participate in a cash management system to ensure priority spending is protected.

### Public financial management reforms and budget execution
- Government adopted in July 2005 the Public Expenditure and Financial Accountability Review (PEMFAR) elaborated jointly by the Government, EU and IDA.
- Financial management systems being strengthened through implementation of the Financial Management Information System (FMIS).
- Government reformed the budget classification and the charts of public accounts.
- Treasury-Budget computer interface established in May 2005 allowing better monitoring of commitments and payment orders, hence strengthening monitoring of government expenditures.
- Budget execution rates higher than 90 percent for recurrent spending of priority sectors.

### Reporting, audit, and parliamentary oversight
- Government formalized closing of accounts and regular submission of budget execution laws to the Chambre des Comptes of the Supreme Court.
- Chambre des Comptes allocated human and logistical resources to examine the budget execution laws.
- Annual accounts audits (Budget Review Laws) produced yearly with some delays that are to be eliminated in 2007.
- Support needed to strengthen the capacity of the parliament to ensure proper audit and follow-up.

### Decentralization, capacity building, and institutional modernization
- Local elections successfully held in July 2004.
- Technical assistance provided by France and IDA (through the Community Action Program) to enhance capacity of newly-elected counselors.
- Government trained line ministries’ staff on the MTEF and program-budget elaboration in 2004-2005; program supported by IDA, Japan, and UNDP.
- In 2004, a Niger Chapter of the Africa Capacity Building Foundation was established as CAPED (Analysis and Development Prospective Unit).
  - CAPED organized more than 25 workshops and seminars on macromodelling, public procurement and financial management of projects, negotiation skills, and country policies and institutional assessments.
- Government created in January 2005 the High Commission for the Modernization of the State under the Prime Minister’s Cabinet to design, supervise, coordinate and ensure monitoring and evaluation of administration and territorial collectivities modernization activities.
- Government adopted a modernization program (Programme Integré de modernisation de l’administration du Niger); technical assistance will be necessary to implement the program successfully.

### Debt management
- Department of Debt at the Ministry of Economy and Finance strengthened with donor assistance through training of staff and provision of equipment, including appropriate software.
- Staffs emphasize the importance of pursuing a prudent debt management policy.

### Addressing weaknesses noted in the JSAN of the second PRSP PR
- Identified needs:
  - (i) update the poverty profile and analysis by completing the planned CWIQ survey and conduct a qualitative assessment of poverty and socio-economic vulnerabilities;
  - (ii) implement expeditiously growth-enhancing strategies to strengthen growth;
  - (iii) pursue the reduction of the fiscal deficit in 2005 by expanding the tax base, strengthening revenue collection, and adopting prudent expenditure policies, especially regarding the wage bill;
  - (iv) improve the preparation of budget programs and MTEFs and ensure their use in budget preparation;
  - (v) adopt and implement the priority action plan for improving public finance management in the context of the PEMFAR;
  - (vi) adopt a strong population and reproductive policy; and
  - (vii) continue the integration of the President’s Special Program into sectoral strategies.
- Progress reported:
  - CWIQ survey completed and provided an updated poverty profile and data on access to key social services.
  - Basic fiscal deficit reduced to 2.8 percent of GDP in 2005 from 3.3 percent in 2004, significantly below the program target.
  - Surveys on social indicators and population and health planned in 2005 were postponed to 2006 to avoid potential bias linked to the food crisis.
  - National Household Survey scheduled to be launched in March 2007.
  - Significant progress in preparing sectoral MTEFs: finalized for primary education and health and, importantly, for the rural sector (completed after the review period of 2004-05).

### Population, reproductive health, and human development
- Acceleration of the demographic transition and reduction of the demographic rate of growth highlighted as essential to improve development prospects, ensure food security, and achieve sustainable results in social sectors (especially education and health).
- Government prepared a new Declaration of National Population Policy.
- Staffs encourage Government to define and implement an action plan to improve the legal status of women and re-launch family planning.

### Conclusions and policy recommendations
- APRs describe outcomes achieved in social sectors but do not address in depth shortfalls regarding structural reforms; reports would have benefited from more discussion of weak performance areas and corrective measures.
- Staffs recommend that the second PRSP, expected to be completed by March 2007, address these challenges with emphasis on:
  - Accelerated implementation of growth-enhancing strategies, especially improving the investment climate, promoting export diversification and expansion, and promoting rural development.
  - Expansion of the tax base to help support an increase in priority expenditure, elaboration of MTEF for other line ministries and, ultimately, of a global MTEF, and incorporation of the President’s Special Program into sectoral programs (as was done for education and health in the 2006 Budget Law).
  - Establishment of benchmarks for key quantitative social targets and poverty reduction indicators.
  - Decentralization for more effective service delivery.
  - Population and reproductive health policies to further improve human development outcomes and structural measures needed to address recurrent food crises.
  - Debt management strategies to ensure debt sustainability.

*Source: _cr0741 - JSAN covering the 2004 and 2005 Annual Progress Reports on the PRSP implementation in Niger.*

### 1. The Government of Niger has continued to implement its reform agenda for the

### _cr0741 - 1. The Government of Niger has continued to implement its reform agenda for the

### Overview and PRS implementation
- The reform agenda is grounded on the four pillars of the Poverty Reduction Strategy (PRS) launched in January 2002.
- A Joint Staff Assessment for the PRSP Progress Report for 2003 was discussed by the Executive Boards of IDA and the IMF on January 27, and 31, 2005, respectively.
- Annual Progress Reports (APRs) on the PRSP implementation in 2004 and 2005 were submitted to IDA and IMF staffs in October 2006; this JSAN covers both APRs.
- Delays in preparing the APRs were due to postponed key surveys to 2006 because of the severe food crisis in 2004/05 and time needed to collect data.
- A Core Welfare Indicators Questionnaire (CWIQ) completed in 2005 indicated the poverty level to be 62.1 percent, essentially unchanged from the 63 percent poverty level derived from a 1993 budget and consumption survey.
- Data in the 1993 and 2005 surveys are not directly comparable; a complete household survey planned for 2007 is needed to determine poverty levels and trends more accurately.

### Macroeconomic developments
- Despite drought and locust plague in the second half of 2004 and a severe food crisis in the second and third quarters of 2005, overall progress in PRSP implementation in 2004 and 2005 was broadly positive.
- Fiscal outcomes and projections:
  - Overall fiscal deficit limited to 7.5 percent of GDP in 2005 (against 9.2 percent in 2004).
  - Basic budget deficit was limited to 2.8 percent of GDP in 2005, and in 2006 is expected to remain at the same level.
  - Overall fiscal deficit is to increase modestly to 7.8 percent of GDP in 2006.
  - The deficits in 2005 and 2006 were financed entirely through grants and highly concessional budgetary loans.
  - Share of domestic expenditure (excluding foreign-financed investments) allocated to health, education, and rural development increased from 2004 to 2006.
- Growth, inflation, and external accounts:
  - GDP growth: downturn of some 1 percent in 2004; recovery to 6.8 percent in 2005; projected growth in 2006 about 3.5 percent.
  - External current account deficit (including grants) increased to 7.4 percent of GDP in 2005 (from 7 percent of GDP in 2004), and is expected to remain broadly unchanged in 2006.
  - Inflation: sharp increase during Q3 2005, then significant decline in Q4 2005 and continued in 2006 due to improved food supply.
  - In 2005 the surge of food imports was largely covered by higher humanitarian assistance.
- Structural macro recommendations and debt outlook:
  - To boost growth and reduce vulnerability, higher and sustained productivity growth in agriculture and economic diversification are essential.
  - Need to encourage adoption of modern farming techniques via expansion of extension services and increased farmers’ access to financial services; potential to expand irrigation through increased investment in irrigation infrastructure.
  - Full implementation of the rural sector development strategy, with development partner assistance, is critical and requires improved capacity to monitor and execute the public investment program.
  - Further reforms needed: streamline regulatory framework, reform transport services, preserve existing road network, reform land tenure system, and strengthen the judicial system.
  - Fiscal sustainability requires raising domestic revenue through expansion of the tax base while pursuing prudent expenditure policies, notably regarding the wage bill.
  - Staffs concur with APRs on the need to further strengthen budget preparation and execution processes, consistent with sectoral MTEFs recently prepared.
  - Debt relief outcomes: ratio of NPV of external debt to exports declined to about 150 percent in 2004 after HIPC, and fell further to 46 percent in 2006 after additional relief under the MDRI.
  - LIC DSA indicates Niger is at a moderate risk of debt distress given vulnerability to exogenous shocks; projections indicate debt burden will increase over time but remain significantly below policy-based thresholds by 2025.
  - Guidance: new investments should be financed mostly by grants; if grants are insufficient, borrowing should be only at very concessional terms and for highly productive projects to preserve debt sustainability.
  - Export prospects: uranium and gold exports expected to increase in volume and value; rural sector investments should expand agricultural production and exports.
- Medium-term framework:
  - Government’s annual average real GDP growth objective for 2006-07 is 4.2 percent, which would increase per capita income by about 1 percent per year.
  - Main fiscal objective: gradually reduce the overall fiscal deficit to limit long-term reliance on concessional assistance and shift expenditure composition to improve access to key social services.
  - Policy tools: (i) control of the wage bill with incentives for higher productivity; (ii) expansion of the tax base to reduce tax pressure on the formal sector.
  - Need to increase effectiveness of public investments, better targeted on social services and essential infrastructure.

### Sectoral policies and structural reforms
- General:
  - Implementation of sectoral reforms needs strengthening to achieve strong and sustained growth; Niger’s population growth rate is 3.4 percent per year.
- Financial sector:
  - Financial sector reform recorded little progress since establishment of NigerPoste in June 2005; APRs do not specify causes or planned government actions.
  - Critical steps discussed with Government since review period:
    - (i) privatization of Crédit du Niger;
    - (ii) finalization of restructuring of the National Post Office, especially creation and licensing as a commercial bank of FINAPOSTE, the subsidiary of NigerPoste;
    - (iii) establishment of a microfinance institutions’ supervisory body, following submission by a steering committee of a draft decree needing government adoption.
- Electricity and petroleum:
  - Privatization of NIGELEC delayed due to difficulty finding private companies willing to invest US$60-100 million required for expansion and rehabilitation; potential investors prefer management contract schemes where Government continues to assume investment responsibility.
  - Restructuring of NIGELEC underway to increase production and cut costs.
  - Privatization of SONIDEP failed in part because of difficulty finding sound foreign private partners; SONIDEP management has been strengthened since 2004/05 and operating results improved.
  - Petroleum pricing mechanism adopted in August 2001 (monthly full pass-through of international price changes) was pursued in 2004–first half 2005; in response to international price surges in September-October 2004 and in July-September 2006 the Government allowed some tax deferment that was subsequently recouped.
- Transport and trade:
  - National Transport Strategy: Government pursued repairing and safeguarding existing road network; more efforts required to improve road maintenance management and financing to ensure allocated maintenance resources are effectively available.
  - Trade: APRs emphasize export promotion and diversification; actions taken include export development programs and regional integration (establishment of a free trade area with all ECOWAS countries).
  - APRs lacked specificity on bottlenecks to export diversification and precise measures and sectors for export gains; ongoing Diagnostic Trade Integration Study (DTIS) will provide recommendations.

### Human development and service delivery
- General:
  - APRs provide comprehensive statistics on health, education, and water sectors and describe progress in service delivery, but could have included tables comparing outcomes with 2002 PRSP targets.
  - Forthcoming PRSP II expected to provide more specific development-outcome information and compare PRSP II targets with the MDGs.
  - Data weaknesses have prevented assessment of trends of some social indicators since 2000; strengthening statistical information systems is critical for monitoring and evaluation of next PRSP targets.
- Education:
  - Primary gross enrollment: 44.7 percent in 2003, 45.4 percent in 2004, and 52.4 in 2005 (2002 PRSP target for 2005 was 48 percent).
  - Completion rate rose from 25.6 percent to 36.4 percent over 2001-2005 (PRSP 2005 target was 44 percent).
  - Niger remains far from universal primary education; quality outcomes remain weak compared to sub-regional norms.
  - A post-primary education program is being prepared to define a strategic framework for sustainable expansion of secondary education.
  - Following a June 2006 audit finding mismanagement of funds in donor-financed education programs, Government removed two ministers from office and took remedial actions.
- Health:
  - Government adopted in February 2005 the five-year Health Development Plan (2006-2010); IDA supports through a US$35 million credit approved in January 2006.
  - Program aims: (i) improve coverage and quality of health services; (ii) monitor outcome and impact (e.g., visit rates of the poor, morbidity and mortality rates); (iii) improve human resource management and strengthen budget execution.
  - Infant mortality: 81 per 1,000 in 2006 against 123 per 1,000 in 1998; 2005 PRSP target was 94.5 per 1,000.
  - Under-five mortality: 198 per 1,000 in 2006 against 262 per 1,000 in 1998 and close to 205 per 1,000 target for 2005 in the 2002 PRSP.
  - Projection: If under-five mortality keeps decreasing at the current trend, the indicator will fall to 213 by 2015, far short of the MDG target of 107.
  - National immunization rates increased from 60 percent in 1998 to 83.5 percent in 2006 (2002 PRSP target for 2005 was 37 percent).
  - Staffs recommend sustaining and accelerating implementation of the National Health Development Plan.
- HIV/AIDS:
  - Strategic plan adopted in 2002; eight regional coordination units and 24 sectoral committees created.
  - Access to retroviral therapy started in 2004 but needs scaling up nationwide.
  - HIV/AIDS prevalence decreased from 0.87 percent in 2002 to 0.70 percent in 2006.
  - Staffs recommend sustaining and accelerating implementation of the strategic plan to keep prevalence low.
- Water:
  - Successful implementation of IDA-funded Water Sector Project and Rural Hydraulic Program (President’s Special Program funded on HIPC receipts) led to significant progress in access to safe water.
  - Coverage of drinking water needs in rural areas increased to 59 percent in 2005 from 52 percent in 2000, and exceeds the 2005 PRSP target.

### Governance and public finance management
- Judicial and legal reform:
  - 2004 PRSP Progress Report mentions Judicial Reform Support Program (PARJ) aiming to: (i) training of judges; (ii) equal access to judiciary for all; (iii) design and implementation of a sound penal policy.
  - 2005 PRSP Progress Report is silent on progress in implementing PARJ; both reports do not sufficiently elaborate on actions addressing governance issues and corruption.
  - Niger is considered a weak performer on governance as evidenced by several indicators, including those of IDA, CPIA and Kaufmann and Kraay governance indicators.
- Economic governance and budget management:
  - 2006 Budget Law allocations for health and education were based on their respective MTEFs; extension to other priority PRSP sectors starts with the 2007 Budget Law.
  - Government agreed to integrate all HIPC resources into line ministries’ budgets based on performance on budget management and reforms; for 2006 this was done for health and education (amounting to almost 60 percent of 2006 HIPC resources).
  - Budget execution rates in 2005 for current expenditures exceeded 90 percent in each of the three priority sectors: Basic Education, Health, and Rural Development.
  - Government elaborated a poverty-reduction items list for 2005 and 2006; the 2006 list was included in the 2006 Budget Law.
  - Line ministries participate in a cash management system to ensure priority spending is protected.

*Source: JSAN covering the 2004 and 2005 Annual Progress Reports on the PRSP implementation in Niger.*

### 22. The Government adopted in July 2005 the Public Expenditure and Financial

### 22. The Government adopted in July 2005 the Public Expenditure and Financial

### Public financial management reforms and budget execution
- The Government adopted in July 2005 the Public Expenditure and Financial Accountability Review (PEMFAR) elaborated jointly by the Government, EU and IDA.
- Financial management systems are being strengthened through implementation of the Financial Management Information System (FMIS).
- The Government reformed the budget classification and the charts of public accounts.
- A Treasury-Budget computer interface was established in May 2005 allowing for better monitoring of commitments and payment orders, hence strengthening monitoring of government expenditures.
- Budget execution rates are higher than 90 percent for recurrent spending of priority sectors.

### Reporting, audit, and parliamentary oversight
- The Government formalized the closing of accounts and regular submission of budget execution laws to the Chambre des Comptes of the Supreme Court.
- The Chambre des Comptes has been allocated human and logistical resources to examine the budget execution laws.
- Annual accounts audits (Budget Review Laws) are produced yearly with some delays that are to be eliminated in 2007.
- Support is needed to strengthen the capacity of the parliament to ensure proper audit and follow-up.

### Decentralization and local governance
- Local elections were successfully held in July 2004.
- Technical assistance was provided by France and IDA (through the Community Action Program) to enhance the capacity of the newly-elected counselors.
- The reports described progress in decentralization.

### Capacity building and institutional modernization
- The Government trained line ministries’ staff on the MTEF and program-budget elaboration in 2004-2005; the program was supported by IDA, Japan, and UNDP.
- In 2004, a Niger Chapter of the Africa Capacity Building Foundation was established under the acronym of CAPED (Analysis and Development Prospective Unit).
- CAPED organized more than 25 workshops and seminars on:
  - (i) macromodelling, specifically the impact of aid on growth and poverty reduction;
  - (ii) public procurement and financial management of projects;
  - (iii) negotiation skills; and
  - (iv) country policies and institutional assessments.
- The Government created in January 2005 the High Commission for the Modernization of the State under the umbrella of the Prime Minister’s Cabinet to design, supervise, coordinate and ensure monitoring and evaluation of activities to enhance administration and territorial collectivities.
- The Government adopted a modernization program (Programme Integré de modernisation de l’administration du Niger); technical assistance will be necessary to implement the program successfully.

### Debt management
- The Department of Debt at the Ministry of Economy and Finance was strengthened with donor assistance through training of staff and provision of equipment, including appropriate software.
- Staffs emphasize the importance of pursuing a prudent debt management policy.

### Addressing weaknesses noted in the JSAN of the second PRSP PR
- The JSAN of the second PRSP PR identified needs to:
  - (i) update the poverty profile and analysis by completing the planned Core Welfare Indicators Questionnaire (CWIQ) survey and conduct a qualitative assessment of poverty and socio-economic vulnerabilities;
  - (ii) implement expeditiously growth-enhancing strategies to strengthen growth;
  - (iii) pursue the reduction of the fiscal deficit in 2005 by expanding the tax base, strengthening revenue collection, and adopting prudent expenditure policies, especially regarding the wage bill;
  - (iv) improve the preparation of budget programs and MTEFs and ensuring their use in budget preparation;
  - (v) adopt and implement the priority action plan for improving public finance management in the context of the PEMFAR;
  - (vi) adopt a strong population and reproductive policy; and
  - (vii) continue the integration of the President’s Special Program into sectoral strategies.
- Progress reported:
  - The CWIQ survey was completed and provided an updated poverty profile and data on access to key social services.
  - The basic fiscal deficit was reduced to 2.8 percent of GDP in 2005 from 3.3 percent in 2004, significantly below the program target.
  - Surveys on social indicators and population and health planned in 2005 were postponed to 2006 to avoid potential bias linked to the food crisis.
  - The National Household Survey will be launched in March 2007.
  - Significant progress in preparing sectoral MTEFs: finalized for primary education and health and, importantly, for the rural sector (completed after the review period of 2004-05).

### Population, reproductive health, and human development
- Acceleration of the demographic transition and reduction of the demographic rate of growth are highlighted as essential to improve development prospects, ensure food security, and achieve sustainable results in social sectors (especially education and health).
- The Government prepared a new Declaration of National Population Policy.
- Staffs encourage the Government to define and implement an action plan to improve the legal status of women and re-launch family planning.

### Conclusions and policy recommendations
- The third and fourth APR describe outcomes achieved in social sectors but do not address in depth shortfalls regarding structural reforms; reports would have benefited from more discussion of weak performance areas and corrective measures.
- Staffs recommend that the second PRSP, expected to be completed by March 2007, address these challenges with particular emphasis on:
  - Accelerated implementation of growth-enhancing strategies, especially related to improving the investment climate in Niger, promoting export diversification and expansion, and promoting rural development.
  - Expansion of the tax base to help support a much needed increase in priority expenditure, elaboration of MTEF for other line ministries and, ultimately, of a global MTEF, and incorporation of the President’s Special Program into sectoral programs (as was done for education and health in the 2006 Budget Law).
  - Establishment of benchmarks for key quantitative social targets and poverty reduction indicators.
  - Decentralization for more effective service delivery.
  - Population and reproductive health policies with the aim of further improving human development outcomes and structural measures needed to address recurrent food crises.
  - Debt management strategies to ensure debt sustainability.

*Source: _cr0741 - 22. The Government adopted in July 2005 the Public Expenditure and Financial*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2007/_cr0741.pdf_