## _cr16247 ## Source details **Canonical URL:** [_cr16247](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2016/_cr16247.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2016/_cr16247.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2016/_cr16247.pdf.json) --- ### Spillovers from the Economic Slowdown in Nigeria - Transmission channels: - Long 1,500 kilometers land border with extensive cross-border commerce; CFA franc and Naira accepted on both sides facilitating arbitrage. - Key channels: re-exports of fuel and other goods transiting through Niger to Nigeria (taxed at low rates in the 5-10 percent range); direct exports of domestically-produced merchandise; informal and formal customs flows and associated customs revenue. - Quantitative trade and revenue impacts (2015): - Niger’s conventional exports to Nigeria fell 16 percent in 2015. - Re-exports to Nigeria fell 18 percent in 2015. - Customs revenues from re-exports fell by 17 percent. - Re-exports generated customs revenues equivalent to 1 percent of GDP in 2014. - Merchandise imports from Nigeria increased 38 percent in CFAF terms. ### Macro and fiscal context (recent outcomes) - Population and growth: - Niger population growth: 3.9 percent per annum. - Growth: accelerated to 7 percent in 2014; estimated to have eased to 3.5 percent in 2015. - Inflation and external sector: - Average annual inflation was -0.9 percent in 2014; inflation remained contained below 1 percent through end-April 2016. - External current account worsened by 2.4 percent of GDP to 17.5 percent of GDP in 2015. - External reserves at end-2015 remained equivalent to 4.4 months of projected 2016 imports of goods and services. - Fiscal aggregates and arrears (end-2015): - Total revenue increased by 0.6 percent of GDP compared to end-2014; non-resource revenues increased by 1.7 percent of GDP. - Petroleum and uranium revenues fell by 1 percent of GDP in 2015. - Net stock of domestic arrears at end-2015: CFAF 89.1 billion (2.1 percent of GDP), compared with CFAF 104.5 billion (2.5 percent of GDP) at end-2014. - Government repaid CFAF 83 billion out of CFAF 100.4 billion stock of arrears as of end-2014. ### 2015 fiscal execution and financing specifics - Expenditure and revenues: - Expenditure overruns: domestically financed capital expenditures surpassed projections by about CFAF 72.9 billion (1.7 percent of GDP). - Revenue was CFAF 16.2 billion lower than projected (0.4 percent of GDP); tax resources shortfall almost CFAF 39.7 billion (0.9 percent of GDP). - Exceptional revenue: CFAF 34 billion from sale of a 3G license. - Financing and arrears actions: - Budget support mobilized: projected CFAF 160.4 billion; mobilized CFAF 140 billion. - Securities issued for arrears clearance: CFAF 38.8 billion (0.9 percent of GDP) during 2015. - New arrears accumulated during 2015: CFAF 71.7 billion; unpaid stock of pre-2015 arrears as of end-2015: CFAF 17.4 billion. - Domestic financing: larger-than-expected withdrawal from government deposits with BCEAO: CFAF 32.1 billion (0.8 percent of GDP). ### Arrears clearance and revised 2016 budget - Arrears clearance plan (end-2016 objectives): - Pay entire stock of existing arrears as of end-2015 (CFAF 89.1 billion) and limit float to CFAF 30 billion (fewer than two weeks of domestically financed expenditures). - Net reduction targeted: CFAF 58.4 billion as of end-2016. - Clearance modalities: cash CFAF 17.4 billion (outstanding end-2014 arrears) and securities issuance CFAF 70 billion (CFAF 30 billion regional bonds and FCFA 40 billion securities to local banks). - Revised 2016 budget adjustments (approved June 10, 2016): - Targeted adjustment of 3.7 percent of GDP in the basic balance relative to the 2015 outcome. - Tax revenues projected to improve by 0.8 percent of GDP over 2015 despite lower resource revenues and lower non-tax revenues. - Domestically financed spending envisaged to be 4 percent of GDP lower than in 2015; externally financed capital spending expected to increase by 1.4 percent of GDP. - Financing assumptions include: budgetary assistance of CFAF 118 billion; World Bank budgetary loans CFAF 29.5 billion; African Development Bank CFAF 8.2 billion; net domestic financing assumed at 3.3 percent of GDP including placements of CFAF 170 billion (3.8 percent of GDP) of Treasury bonds. - Net reduction in arrears projected by end-2016: CFAF 58.4 billion. - Net Treasury bond issuances limited to CFAF 137.1 billion, including CFAF 70 billion to pay 2015 arrears. ### Public Financial Management (PFM) and institutional reforms - Key PFM steps and timelines: - Migration to ASYCUDA World on April 11, 2016 in six interconnected customs back offices covering more than 66 percent of customs revenue; extension planned but delayed due to interconnection issues. - Preparation of legal framework and capacity strengthening for a Treasury Single Account (TSA); full implementation envisaged as part of the 2017 budget exercise; TSA to be established by end-September 2016 (implementation capacity constraints noted). - Action plan to implement WAEMU-harmonized 2012 organic budget law in preparation of the 2017 budget; IMF TA assisted preparation of a Medium-Term Expenditure Framework (MTEF). - Creation and functioning of the Secretariat of the Inter-ministerial committee on debt management producing regular reports. - Creation of an expenditure regulation committee under the aegis of the prime minister to strengthen spending control and align releases with available resources (prior action — met). - Preparation of a commitment/cash management plan for the revised 2016 budget (prior action). - Structural benchmarks and prior actions (selected met items in 2016): - Adopt and send draft revised 2016 budget to parliament — Met. - Create interministerial budgetary regulation and cash management committee — Met. - Submit draft report of 2015 budget execution — Met. - Migration to ASYCUDA World (six offices) — Met in April 2016. - Establish steering committee for financial sector development plan — Met in March 2016. - Completion of civil service biometric census — target End-December 2016. ### Revenue administration and customs modernization - Customs priorities and actions: - Reduce cash transactions, strengthen merchandise transit regime, customs value certification, customs payment procedures, electronic interconnection, extension of ASYCUDA World, better management of bonded warehouses. - CPPP awarded to Geo-track in March 2016 to improve customs escort; concession contract for Niamey bonded warehouses with Bolloré; Maradi customs Park construction; reduction in private bonded warehouses in Maradi from 15 to 3. - Extension of electronic transit and interconnection to main customs posts by end-September 2016 (structural benchmark). - Tax administration (DGI) measures: - Extend Tax Office Headquarters’ control to major companies meeting income thresholds; transfer taxpayers with turnover ≥ 500 million CFAF to Large Enterprise Directorate (DGE) starting September 2016. - Operationalize VAT credit refund mechanism: escrow account opened by order of May 6, 2016; operational by end-June 2016; clear VAT credit refund files by end-December 2016. - Complete Computerized Tax and Taxpayer Monitoring System (SISIC); strengthen audit function; publish joint DGI/DGD audit results. - Results: DGE default rate ~2 percent; DME default rates declined from 17.5 percent in 2014 to 12.1 percent in 2015; DME target ~10 percent. ### Civil service wage bill and payroll management - Public employment and wage outcomes: - Public sector employment increased by almost 40 percent in less than five years (2010–2015 figures vary by section: 56.7 percent from 2010 to 2015 in another table); civil servants rose from 48,237 to 75,597 (2010–2015), an increase of 56.7 percent; another note: increase of approximately 26,000 between 2011 and 2015 to total 75,600. - Wage bill rose to 35 percent of fiscal revenues (statement) and from 4.5 percent of GDP in 2011 to 5.9 percent of GDP in 2015 (separate metrics). - Biometric census to support creation of an integrated administrative database of government employees to be undertaken (TA from World Bank). - Authorities to prepare a list of civil service jobs and skills; introduce performance evaluation and forward staffing planning; hiring program reviewed. ### Debt management and vulnerabilities - Public debt dynamics: - Public debt-to-GDP ratio rose from 27.2 percent of GDP at end-2013 to an estimated 44.7 percent of GDP at end-2015. - Chinese master facility loan of US$1 billion signed in September 2013 could add to pressures on debt sustainability. - Stepped up issuance of securities to clear domestic arrears: CFAF 108.8 billion during 2014-15. - Debt management actions: - May 2016 TA mission advised designing a medium-term external borrowing plan to be concluded by end-June 2016. - Interministerial Committee for Debt Management established; need for enhanced coordination and timely information sharing emphasized. ### Financial sector and inclusion - Banking sector indicators (end-2015 / selected): - World Bank Doing Business rank: 160th out of 189 countries in 2015. - Capital adequacy ratios for most banks significantly exceeded the regulatory threshold of 8 percent. - Gross non-performing loans were 17.5 percent of total loans in 2015. - Provisioning rates and other financial soundness indicators presented in tables (e.g., regulatory capital to risk-weighted assets: 13.5, 16.7, 15.5, 14.6, 15.0, 15.0; gross NPLs to total loans: 19.6, 17.1, 16.5, 15.5, 17.5, 16.1). - Risks and reforms: - Deterioration in asset quality and profits in 2015 linked to two banks with state participation undergoing restructuring and slowdown in Nigeria. - Pockets of risk from growing exposures to public sector via holdings of bonds and from domestic arrears affecting clients’ repayment capacity. - Staff encourage speeding implementation of the financial inclusion strategy (NSFI adopted July 2015; cost CFAF 34 billion for 2016–20) and close vigilance on the two weakest banks. ### Oil and resource sector outlook - Oil pipeline and production: - Crude oil exports expected to begin in 2019. - Agadem oil field production potential: 80,000 barrels per day, of which 60,000 barrels per day destined for export over an estimated 25-year horizon. - Work could begin in 2017; construction of the Niger branch connecting to the Chad pipeline slowed, delaying project completion to 2019 in earlier notes. - SORAZ and SONIDEP reforms: - Refining and distributing margins of SORAZ have fallen sharply; input costs rose due to CFAF depreciation. - May 2016: authorities ended SONIDEP’s monopoly on export of refined products; after meeting domestic needs, export of SORAZ’s excess production will be split 50-50 between SORAZ and Sonidep. - Export floor price to be set monthly in line with international prices. - 2015 production: output reached 12,500 barrels per day against a projection of 20,000 barrels per day in the 2015 budget. - Government intends to pursue hiring more Nigerien personnel at SORAZ and refinancing the SORAZ construction loan under less burdensome terms (US$880 million). ### Macroeconomic projections and outlook - Short-term (2016): - Growth projected at 5.2 percent in 2016, supported by agriculture and recovery at SORAZ. - Inflation expected at 1.5 percent in 2016 (other sections expect annual average of less than 2 percent). - Current account projected to stay about the same as in 2015 (-17.8 percent of GDP in one projection; elsewhere 17.8 percent of GDP cited). - Medium-term (2016–21): - Growth projected to average 6.3 percent as oil and mineral extraction projects come on-line in 2019 and 2021 and planned infrastructure projects have catalytic effects. - Exports of goods and services (CFAF billions): 2016: 754.8; 2017: 809.1; 2018: 916.0; 2019: 1124.4; 2020: 1218.5; 2021: 1462.0. - Nominal GDP (CFAF billions): 2016: 4457.6; 2017: 4789.9; 2018: 5152.8; 2019: 5694.9; 2020: 6184.5; 2021: 6746.4. - Risks: - Downside: armed hostilities disrupting production and trade; continued declines in oil and uranium prices delaying projects; political tensions; droughts or floods; lack of policy implementation capacity. - Upside: rebound in uranium and oil prices would significantly increase exports and fiscal space. - Timing: export-led boost not expected before 2019 given current prices and structural problems in oil and uranium sectors. ### Program performance, conditionality, and staff recommendations - Performance summary (end-2015 / Q1 2016): - End-2015: continuous performance criteria on external arrears and non-concessional borrowing met; quantitative PCs on net domestic financing and reduction in domestic arrears not met; indicative targets on revenue and budget balance not met; poverty reduction spending target met. - Q1 2016: end-March 2016 indicative targets on net domestic financing, reduction of domestic arrears, and external debt were met. - Staff recommendation: - "Staff recommends completion of the eighth review. Based on the corrective actions taken to strengthen revenue, clear domestic arrears, and the adoption of a revised 2016 budget that is consistent with program objectives, staff supports the waivers for the nonobservance of the performance criteria on net domestic financing and domestic arrears repayments at end-December 2015 and the modifications of performance criteria on net domestic financing and domestic arrears repayments at end-June 2016." - Quantitative fiscal series (selected from Tables 1–3): - Total revenue (percent of GDP series): 16.6, 17.5, 18.7, 18.1, 18.6, 17.7, 17.8, 18.0, 19.3, 20.2, 22.0. - Total expenditure and net lending (percent of GDP series): 27.2, 31.0, 32.0, 32.7, 31.7, 30.1, 27.6, 26.3, 25.4, 25.7, 25.4. - Basic balance (excluding grants, percent of GDP series): -2.1, -6.4, -5.5, -7.5, -3.7, -3.8, -3.0, -2.1, -0.6, 0.1, 1.5. - Public debt (total public and publicly guaranteed, percent of GDP series): 27.2, 35.3, 43.1, 44.7, 52.1, 53.0, 54.7, 55.1, 52.9, 51.4, 49.3. ### Program monitoring, reporting, and TMU highlights - Reporting requirements (selected): - Monthly: consolidated balance sheet of monetary institutions (End-month + 8 weeks); monetary survey (End-month + 8 weeks); detailed monthly TOFE and data on net nonbank domestic financing (End-month + 6 weeks); monthly data on Treasury balances outstanding and external debt items (End-month + 6 weeks). - Quarterly: banking supervision indicators (End-quarter + 8 weeks); execution of the investment budget (End-quarter + 6 weeks); quarterly budget execution reports and quarterly commitment/cash plans. - Structural reporting: any study or official report on the economy within two weeks of publication; any draft contract in mining and petroleum sectors upon availability. - Quantitative performance criteria and adjustment rules: - Net domestic financing defined as net bank credit plus net nonbank domestic financing (including government securities on WAEMU market not held by Nigerien banks). - Adjustment rule: quarterly ceilings on net domestic financing adjusted pro tanto if external budgetary support disbursements fall short, up to a maximum of CFAF 15 billion per quarter. - Restriction on external non-concessional borrowing: grant element threshold of 35 percent; discount rate for PV calculations: 5 percent. - Fund obligations and capacity to repay (selected: - Fund obligations based on existing credit (SDR millions, principal): 2016: 3.5; 2017: 4.8; 2018: 5.8; 2019: 7.8; 2020: 11.6; 2021: 19.1; 2022: 18.0; 2023: 15.7; 2024: 12.3; 2025: 7.8; 2026: 0.0. - Outstanding IMF credit based on existing and prospective drawings (SDR millions): 2016: 127.5; 2017: 122.7; 2018: 116.9; 2019: 109.1; 2020: 97.5; 2021: 78.4; 2022: 55.6; 2023: 34.9; 2024: 17.7; 2025: 4.9; 2026: 0.0. - Niger’s obligations to the Fund would peak in 2022 at 1.2 percent of tax revenue or 0.3 percent of GDP (Table 13 references). *Source: International Monetary Fund — content unit _cr16247 (staff report excerpts and TMU tables).* ### 1. Spillovers from the Economic Slowdown in Nigeria ____________________________________________ 6 ### 1. Spillovers from the Economic Slowdown in Nigeria ____________________________________________ 6 ### Transmission channels of the slowdown - Long 1,500 kilometers land border with extensive cross-border commerce; CFA franc and Naira accepted on both sides facilitating arbitrage. - Key channels: - Re-exports of fuel and other goods transiting through Niger to Nigeria, taxed at low rates (in the 5-10 percent range). - Direct exports of domestically-produced merchandise (fresh produce, livestock). - Informal and formal customs flows and associated customs revenue. ### Quantitative effects on trade and revenues - Niger’s conventional exports to Nigeria fell 16 percent in 2015. - Re-exports to Nigeria fell 18 percent in 2015. - Customs revenues from re-exports fell by 17 percent. - Re-exports generated non-negligible customs revenues equivalent to 1 percent of GDP in 2014. - Merchandise imports from Nigeria increased 38 percent in CFAF terms as Nigerien importers took advantage of Nigeria’s sharply depreciated currency. - Charted quarterly series (2014Q1–2016Q1) show declines in the value of re-exports to Nigeria and corresponding quarterly customs revenue on re-exports (CFAF Billion). ### Macro and fiscal context related to the slowdown - Niger population growth: 3.9 percent per annum. - Growth: - Accelerated to 7 percent in 2014. - Estimated to have eased to 3.5 percent in 2015 due to lower agriculture, oil, and mining production and contagion effects from Nigeria. - Inflation: - Average annual inflation was negative in 2014 (-0.9 percent). - Inflation remained contained below 1 percent through end-April 2016. - External sector: - External current account worsened by 2.4 percent of GDP to 17.5 percent of GDP in 2015. - External reserves at end-2015 remained equivalent to 4.4 months of projected 2016 imports of goods and services. - Fiscal and arrears: - Total revenue increased by 0.6 percent of GDP compared to end-2014; non-resource revenues increased by 1.7 percent of GDP. - Petroleum and uranium revenues fell by 1 percent of GDP in 2015. - Net stock of domestic arrears at end-2015: CFAF 89.1 billion (2.1 percent of GDP), compared with CFAF 104.5 billion (2.5 percent of GDP) at end-2014. ### Outlook and scenarios linked to Nigeria slowdown - Short-term projection: - Growth projected at 5.2 percent in 2016, supported by agriculture and recovery in the oil sector as the Soraz fuel refinery returns to normal production. - Inflation expected at 1.5 percent in 2016. - Current account projected to stay about the same as in 2015 (-17.8 percent of GDP). - Medium-term projection: - Over 2016-21, growth projected to average 6.3 percent as oil and mineral extraction projects come on-line in 2019 and 2021 and planned infrastructure projects have catalytic effects. - Timing of export-led boost: - Given current prices and structural problems in oil and uranium sectors, a boost from significantly higher exports is not expected before 2019. ### Risks related to the slowdown in Nigeria - Downside risks (mostly tilted to the downside): - Persistence or intensification of armed hostilities disrupting production and trade and aggravating budget pressures. - Continued declines in oil and uranium prices leading to reassessment and delays in commodity sector projects (e.g., oil pipeline construction). - Aggravation of political tensions. - Droughts or floods triggering food insecurity and social instability. - Lack of capacity for policy implementation. - Upside risk: - A rebound in uranium and oil prices would significantly increase Niger’s exports and fiscal space. ### Fiscal implications and policy responses linked to spillovers - 2015 fiscal slippages driven by: - Shortfalls in resource revenues and external financing. - Surge in domestically financed capital spending (accelerated implementation of PDES 2012-15 and additional security-related infrastructure). - Weak capacity of customs and tax administrations contributed to revenue shortfalls. - Government corrective and reform measures: - Strengthening revenue mobilization through customs and tax administration reforms. - Reinforcing expenditure control and settling domestic arrears. - Specific actions taken or planned: - Migration to ASYCUDA World on April 11, 2016 in six interconnected customs back offices covering more than 66 percent of customs revenue; extension delays due to interconnection issues. - Preparation of legal framework and capacity strengthening for a Treasury Single Account (TSA); full implementation envisaged as part of the 2017 budget exercise. - Action plan to implement the WAEMU-harmonized 2012 organic budget law in preparation of the 2017 budget; IMF TA assisted preparation of a Medium-Term Expenditure Framework (MTEF). - Creation and functioning of the Secretariat of the Inter-ministerial committee on debt management producing regular reports on debt management. - 2016 revised budget adjustments (approved June 10, 2016): - Targeted adjustment of 3.7 percent of GDP in the basic balance relative to the 2015 outcome. - Revenue: tax revenues projected to improve by 0.8 percent of GDP over 2015 despite lower resource revenues and lower non-tax revenues. - Spending: domestically financed spending envisaged to be 4 percent of GDP lower than in 2015, mainly via reductions in domestically financed capital spending; externally financed capital spending expected to increase by 1.4 percent of GDP. - Financing assumptions: budgetary assistance of CFAF 118 billion; World Bank budgetary loans CFAF 29.5 billion; African Development Bank CFAF 8.2 billion; net domestic financing assumed at 3.3 percent of GDP including placements of CFAF 170 billion (3.8 percent of GDP) of Treasury bonds. *Source: IMF staff summary of "Spillovers from the Economic Slowdown in Nigeria" (section text and Box 1) as presented in the provided content.* ### 15. The revised 2016 budget also reflects the government’s strong emphasis on clearing ### _cr16247 - 15. The revised 2016 budget also reflects the government’s strong emphasis on clearing ### Arrears and revised 2016 budget - Government cleared during 2015 the remaining stock of the arrears accumulated by end-2014, CFAF 17.4 billion. - The revised budget provisions CFAF 70 billion in bonds issuance program to clear most of the CFAF 71.7 billion new arrears accumulated in 2015. - Staff projects that CFAF 30 billion—representing two weeks of spending—would remain as payments float at end-December 2016 and it was agreed that this would be prioritized for settlement early in the following budget year. ### Measures to strengthen budget implementation - Preparation of a draft budget execution report for 2015 to guide implementation of the 2016 revised budget and preparation of the 2017 budget. - Creation of an expenditure regulation committee under the aegis of the prime minister to: - strengthen spending control; - enhance oversight over the expenditure chain by releasing allocations only in line with available resources. - Preparation of a commitment/cash management plan for the revised 2016 budget to serve as a tool for the regulation committee. ### Medium-Term Fiscal Policy - Fiscal consolidation will be pursued gradually over the medium term while preserving key priority spending for the EDD. - Revenues are projected to improve only modestly in the near-term: "0.2 percent of GDP per year between 2017 and 2018". - With current spending declining by "1 percent of GDP by 2021", and assuming a gradual decline in external funding, capital spending could remain in excess of "10 percent of GDP a year". ### Public Financial Management (PFM) reforms - Comprehensive reform of revenue administration is underway. - Authorities created an Interministerial Budgetary Regulation Committee (MEFP, ¶ 42) to: - regulate the pace at which budgetary appropriations are released consistent with the expenditure commitment plan and the cash flow plan; - review and approve proposals for quarterly releases of budgetary appropriations made by the Minister of Finance. - Accelerated implementation of the 2012 organic budget law and continued commitment to improving management of public projects. ### Civil service wage bill and payroll management - Public sector employment increased by almost "40 percent in less than five years", with the wage bill rising to "35 percent of fiscal revenues". - A biometric census to support creation of an integrated administrative database of government employees will be undertaken (TA provided by the World Bank), replacing the audit of the payroll (Table 10). - Authorities and staff concurred on preparing a list of civil service jobs and skills to align recruitment with real needs. ### Management of natural resources and oil sector - Decline in oil prices has placed Niger’s oil sector under significant pressure and is delaying investments for the envisaged export boost (¶ 52, 53). - Refining and distributing margins of the national refinery (SORAZ) have fallen sharply while the company bears heavy borrowing costs; refining input costs have risen owing to the sharp decline in the value of the CFAF against the U.S dollar. - Construction of the Niger branch connecting to the Chad pipeline has been slowed, delaying project completion to "2019". - In May 2016, authorities ended SONIDEP’s monopoly on the export of refined products; after meeting domestic needs, export of SORAZ’s excess production will be split "50-50 between SORAZ and Sonidep". - An export floor price will be set monthly in line with international prices. ### Revenue mobilization (Box 3) - Customs administration (DGD) modernization underway; priorities include reducing the use of cash transactions, strengthening the merchandise transit regime, customs value certification, customs payment procedures, electronic interconnection of customs offices, extension of ASYCUDA World, and better management of bonded warehouses (MEFP, ¶ 28, 29, 31, 32). - Tax administration (DGI) reforms focus on (MEFP, ¶ 33, 34, 35, 36, 37): - extending Tax Office Headquarters’ control to all major companies meeting income thresholds; - making operational the system of VAT credits reimbursement; - completing the Computerized Tax and Taxpayer Monitoring System (SISIC); - strengthening audit function and publishing joint DGI/DGD audit results. - General Treasury and Public Accounting Directorate (DGTCP) strengthening accounting procedures and recovering potential nontax domestic revenue sources. ### Debt management and vulnerabilities - Public debt-to-GDP ratio rose from "27.2 percent of GDP at end-2013" to an estimated "44.7 percent of GDP at end-2015". - A Chinese master facility loan of "US$1 billion" was signed in September 2013 and earmarked for scaling up public investment; it could add to pressures on debt sustainability. - Stepped up issuance of securities to clear domestic arrears amounted to "CFAF 108.8 billion during 2014-15". - May 2016 TA mission advised designing a medium-term external borrowing plan expected to be concluded by "end-June 2016", including: investment strategy, list of priority investment projects, sources of financing, and debt management strategy. - Institutional improvements: Interministerial Committee for Debt Management established; need for enhanced coordination across ministries and clearer responsibilities and timely information sharing. ### Business environment and financial sector - Niger moved up the World Bank Doing Business Index to rank "160th out of 189 countries" in 2015. - Reforms instituted: presidentially-chaired National Investors Council, a one-stop-shop for new businesses, a new investment code and support office, and a permanent advisory committee on improving the business environment (MEFP, ¶ 61, 62, 63). - Banking system: at end-December 2015, capital adequacy ratios for most banks significantly exceeded the regulatory threshold of "8 percent"; gross non-performing loans were "17.5 percent of total loans in 2015"; banks were on average well provisioned and profitable. - Deterioration in asset quality and profits in 2015 linked to two banks with state participation undergoing restructuring, slowdown in Nigeria, and security-related disruptions. - Pockets of risk from growing exposures to the public sector via holdings of bonds to finance infrastructure and from domestic arrears affecting clients’ repayment capacity. - Staff encourage speeding implementation of the financial inclusion strategy and close vigilance on the two weakest banks. ### Capacity to repay the IMF, implementation risks, and safeguards - Niger’s obligations to the Fund would peak in "2022" at "1.2 percent of tax revenue or 0.3 percent of GDP" (Table 13). - Key implementation risks: - Intensification of armed hostilities inside Niger’s territory that aggravated budgetary pressures and prevented fiscal consolidation under the 2015 program. - Risks from export price volatility, notably the collapse in crude oil prices that could compromise the natural resource based development strategy. - Safeguards: 2013 assessment of the WAEMU regional central bank found a continuing strong control environment; all recommendations implemented, including appointment of an international audit firm for FY 2015-17, reinforcement of the audit committee, and adoption of IFRS starting with the financial year 2015. ### Staff appraisal: main conclusions - Macroeconomic performance remains mixed amid resource sector downturn, slower agricultural activity, security concerns, and regional slowdown; economy continues to grow but slower than the "7 percent annual growth" targeted under PDES. - Fiscal consolidation and PFM reforms are critical given uncertainty of future government revenues from commodity sector investments. - Organizational and governance measures supporting consolidation include improving revenue and customs administrations, creation of interministerial budgetary regulation committee, progress with the TSA, and preparation of a Treasury commitment/cash management plan. - Strengthened management of the civil service wage bill is critical for public service delivery and fiscal sustainability. - Debt and investment management continue as top priorities; consolidation of public debt management functions and improved coordination are recommended. - Development of the financial sector should support inclusive growth; staff urge acceleration of financial inclusion strategy implementation and vigilance regarding the two weakest banks. *International Monetary Fund — Niger: staff report excerpts (selected sections).* ### 35. Staff recommends completion of the eighth review. Based on the corrective actions ### _cr16247 - 35. Staff recommends completion of the eighth review. Based on the corrective actions ### Staff recommendation and conditional waivers - "Staff recommends completion of the eighth review. Based on the corrective actions taken to strengthen revenue, clear domestic arrears, and the adoption of a revised 2016 budget that is consistent with program objectives, staff supports the waivers for the nonobservance of the performance criteria on net domestic financing and domestic arrears repayments at end-December 2015 and the modifications of performance criteria on net domestic financing and domestic arrears repayments at end-June 2016." ### Recent economic developments and outlook (high-level) - Contribution to Broad Money Growth (January 11–March 16) displayed by components: Net foreign assets; Net bank claims on the government; Credit to the economy; Other items, net; Money and quasi-money (growth) (chart present in source). - Credit and Money Growth (January 11–March 16): Money (M2) and Credit to the private sector (YoY percent change) (chart present in source). - Inflation, January 11–April 16: Overall, Food, Non-food (average) (YoY percent change) (chart present in source). - Contribution to Real GDP Growth, 2011–21: Gov. consumption, Priv. consumption, Net exports, Gov. investment, Priv. investment; Real GDP (LHS) (chart present in source). ### Key fiscal developments (figures and trends) - Fiscal aggregates and projections (selected series from Tables 1–3): - Total revenue (percent of GDP): 16.6, 17.5, 18.7, 18.1, 18.6, 17.7, 17.8, 18.0, 19.3, 20.2, 22.0. - Total expenditure and net lending (percent of GDP): 27.2, 31.0, 32.0, 32.7, 31.7, 30.1, 27.6, 26.3, 25.4, 25.7, 25.4. - Current expenditure (percent of GDP): 13.5, 14.6, 15.8, 15.6, 15.1, 15.4, 15.3, 15.1, 14.6, 14.7, 14.4. - Capital expenditure (percent of GDP): 13.7, 16.4, 16.3, 17.1, 16.7, 14.7, 12.3, 11.1, 10.8, 11.0, 11.0. - Basic balance (excluding grants, percent of GDP): -2.1, -6.4, -5.5, -7.5, -3.7, -3.8, -3.0, -2.1, -0.6, 0.1, 1.5. - Basic balance (WAEMU definition; including grants, percent of GDP): -0.6, -4.8, -3.5, -5.7, -2.5, -2.3, -1.7, -1.0, 0.3, 0.8, 2.1. - Overall balance (commitment basis, including grants, percent of GDP): -2.6, -8.0, -7.3, -9.1, -7.5, -6.9, -5.3, -4.1, -2.4, -1.9, -0.5. - Security Spending (billions of CFAF) shown for 2012–2016 (chart present in source). ### Macroeconomic projections and real sector - GDP at constant prices (annual percent changes shown in source): 5.3, 7.0, 4.4, 3.5, 5.0, 5.2, 5.0, 5.3, 8.6, 6.6, 7.0 (series presented in Table 1). - Non-resources GDP at constant prices (annual percent changes shown in source): 4.8, 7.9, 4.7, 4.1, 5.2, 4.9, 4.9, 5.3, 5.8, 6.0, 5.5 (series presented in Table 1). - Oil production (thousand barrels per day): 18, 17, 14, 13, 17, 16, 17, 18, 37, 43, 55 (series presented in Table 1). - GDP deflator and CPI projections (annual and end-of-period) shown in Table 1 (values listed in source). ### External sector and balance of payments (selected figures) - Current account (in percent of GDP): -15.0, -15.1, -17.7, -17.5, -18.6, -17.8, -17.5, -17.2, -14.9, -14.6, -12.2 (Table 5 memorandum items). - Current account excluding grants (percent of GDP): -17.1, -17.3, -19.7, -19.2, -20.0, -19.7, -19.2, -18.6, -16.2, -15.7, -13.1. - Exports, f.o.b. (CFA francs, selected series): 784.6, 715.2, 698.0, 650.2, 748.3, 603.6, 650.0, 748.2, 946.2, 1031.9, 1264.7. - Uranium exports (series): 302.8, 240.5, 237.4, 238.8, 268.2, 168.3, 194.5, 218.4, 221.9, 222.5, 264.8. - Oil exports (series): 198.9, 143.2, 119.1, 88.2, 122.4, 93.2, 97.9, 129.2, 293.5, 352.7, 462.2. - Imports, f.o.b. (CFA francs, series): 996.9, 1066.2, 1206.3, 1117.4, 1304.7, 1134.4, 1198.9, 1304.6, 1421.5, 1520.5, 1627.4. - Gross Official Reserves (in months of next year's imports of goods and services): 4.2, 5.0, 4.4, 4.4, 3.7, 4.6, 4.5, 4.5, 4.5, 4.5, 4.8 (Table 5 memorandum). ### Public debt and financing - Total public and publicly guaranteed debt (percent of GDP): 27.2, 35.3, 43.1, 44.7, 52.1, 53.0, 54.7, 55.1, 52.9, 51.4, 49.3 (Table 1). - Public domestic debt (percent of GDP): 5.2, 8.7, 10.2, 11.5, 10.6, 11.6, 11.8, 11.5, 10.3, 9.1, 7.7. - Debt-service ratio as percent of exports of goods and services (series): 3.3, 4.2, 6.4, 5.5, 6.6, 7.3, 6.8, 6.5, 5.4, 4.9, 5.2. ### Monetary and financial sector indicators - Broad money growth (percent): 10.1, 25.7, 3.6, 13.7, 10.6, 8.9, 11.6, 7.0, 7.1 (Table 4). - Net foreign assets (BCEAO and commercial banks) and Net domestic assets series presented in Table 4 (billions of CFA francs). - Financial soundness indicators (Dec. 2011–Mar. 2016) (selected): - Regulatory capital to risk-weighted assets: 13.5, 16.7, 15.5, 14.6, 15.0, 15.0. - Gross NPLs to total loans: 19.6, 17.1, 16.5, 15.5, 17.5, 16.1. - Net NPLs to total loans: 9.3, 8.6, 6.1, 6.6, 5.0, 5.7. - Provisioning rate: 58.0, 54.6, 67.3, 61.5, 71.4, 64.5. - Total loans to total deposits: 108.8, 104.7, 93.7, 85.3, 92.4, 91.7. ### Central government financial operations (selected levels, billions of CFAF) - Total revenue (billions CFAF): 628.5, 714.2, 784.9, 768.7, 841.0, 791.1, 852.5, 929.4, 1097.0, 1252.3, 1482.6 (Table 2 totals across years shown). - Total expenditure and net lending (billions CFAF): 1030.3, 1263.7, 1347.7, 1387.7, 1433.2, 1341.8, 1321.0, 1354.3, 1447.8, 1587.7, 1715.6. - Overall balance (commitment, billions CFAF): -401.8, -549.6, -562.8, -619.0, -592.2, -550.7, -468.5, -424.9, -350.8, -335.5, -233.0. - Overall balance (commitment including grants, billions CFAF): -97.0, -327.4, -306.1, -386.4, -340.0, -305.6, -255.4, -213.7, -138.6, -118.2, -30.6. - Financing (total, billions CFAF): 424.3, 491.8, 626.6, 632.1, 602.2, 609.1, 478.5, 429.9, 350.8, 335.5, 233.0. - External financing (billions CFAF): 406.9, 342.3, 461.9, 416.3, 485.6, 463.6, 406.2, 386.1, 373.7, 391.8, 363.9. - Grants (billions CFAF): 304.9, 222.1, 256.8, 232.6, 252.2, 245.1, 213.1, 211.2, 212.2, 217.2, 202.4. - Domestic financing (billions CFAF): 17.4, 149.5, 164.7, 215.8, 116.7, 145.5, 72.3, 43.8, -23.0, -56.3, -130.9. ### Quantitative performance criteria (selected) - Net domestic financing of the government (cumulative for each fiscal year, Billions of CFAF): Rev. Prog. 54.5; Actual 129.3; other period entries include 19.6, 44.4, 41.3, 123.9, 201.0, 170.5, 130.7, 188.8 (Table 7 excerpt). - Adjusted criteria (Billions of CFAF) and status: 69.5, 129.3 (Not Met); 32.2, 44.4 (Not Met); 56.3, 123.9 (Not Met); 201.0, 170.5 (Met); 145.7 (table continues in source). ### Notable policy-relevant points and staff judgment - Staff supports waivers and modifications of performance criteria because corrective actions were taken to: - Strengthen revenue. - Clear domestic arrears. - Adopt a revised 2016 budget consistent with program objectives. - Completion of the eighth review is recommended conditional on the above actions and support for the specified waivers and modifications. *Sources: Nigerien authorities; and IMF staff estimates and projections (tables and figures as presented in the source PDF).* ### 188.8 Not Met ### _cr16247 - 188.8 Not Met ### Quantitative performance criteria and indicative targets (March–December 2016; selected outcomes and statuses) - Reduction in domestic payment arrears of government obligations (minimum; negative = reduction): Prog. values and actuals show mixed outcomes. Examples: - Prog. 188.8 — Status: Not Met - Other reported entries: -10.0; 57.7 — Status: Not Met; -1.8; 0.0 — Status: Not Met; -3.5; -38.8 — Status: Met; -38.8; 7.7 — Status: Not met; -63.8; -13.0 — Status: Not Met - Net domestic financing of the government (cumulative for each fiscal year): - Example entries: 67.7 (Prog.), 24.6 (Actual) — Status: Met; 99.7; 89.0; 109.5; 106.6; 100.4; 129.4 (revised projections) - Continuous quantitative performance criteria (all reported as met for the periods shown): - Accumulation of external payments arrears: 0.0 (ceiling), actual 0.0 — Met - New external debt contracted or guaranteed with maturities < 1 year: 0.0 — Met - New non concessional external debt contracted or guaranteed with maturities ≥ 1 year: 0.0 — Met ### Indicative targets and fiscal aggregates (selected figures and statuses) - Basic budget balance (commitment basis, excl. grants) — multiple entries show Not Met: - Examples: -161.6 (Prog.) vs -261.8 (Actual) — Not Met; -25.9 vs -77.2 — Not Met; -55.9 vs -118.0 — Not Met; -155.5 vs -207.6 — Not Met; -224.9 vs -316.8 — Not Met - Basic budget balance (commitment basis, incl. grants) — multiple entries Not Met: - Examples: -78.6 vs -193.9 — Not Met; -17.6 vs -77.2 — Not Met; -38.4 vs -118.0 — Not Met; -149.0 vs -187.2 — Not Met; -142.9 vs -240.3 — Not Met - Total revenue (selected reported points): - 753.3 (Prog.) vs 714.2 (Actual) — Not Met - Periodal entries: 193.9 vs 168.0 — Not Met; 388.9 vs 355.1 — Not Met; 564.6 vs 546.5 — Not Met; 785.7 vs 768.7 — Not Met - Spending on poverty reduction (selected reported points and status): - 507.6 vs 489.9 — Not Met - 114.3 vs 114.4 — Met - 231.4 vs 232.3 — Met - 312.0 vs 314.5 — Met - 442.8 vs 449.5 — Met ### Memorandum item: External budgetary assistance and related ceilings - External budgetary assistance (excluding net financing from the IMF) — sample entries: - Budget support: 116.4; 75.2; 12.6; 0.0; 26.2; 0.0; 6.6; 20.4; 160.4; 140.0 - New external debt contracted or guaranteed by the government on concessional terms (ceiling): - Examples in tables: 520.4; 231.4; other projection: 800.0; 244.5; repeated 800.0 entries across projections ### Structural benchmarks (2015 and 2016 summaries; timetable and progress) - 2015 selected benchmarks (measure, timetable, progress/rationale): - Census of Accounts for the TSA — End-March 2015 — Met — Improve cash flow management - Adopt the design of the TSA — End-September 2015 — Met — Improve cash flow management - One stop shop for the investment code — End-September 2015 — Met — Improve business environment - Limit expenditure not authorized in advance to a maximum of 5 percent of committed expenditure — Quarterly — Met in March, June, September and December — Improve budget and cash management - Operationalize the custom electronic transit — End-September 2015 — Not met — Improve custom revenue collection - Finalize study on introduction of the investment budgeting in commitment authorization and payment credit — End-September 2015 — Met — Improve management of investments - Prepare a comprehensive procurement plan to match a commitment plan and a cash plan — Annually — Not Met — Improve budget management - 2016 selected benchmarks (measure, timetable, progress/rationale): - Adopt and send to the parliament the draft revised budget for 2016 in line with the program — Prior Action — Met — Improve public financial management (PFM) - Create an Interministerial budgetary regulation and cash management committee — Prior Action — Met — Improve budget execution - Submit a draft report of the 2015 budget execution — Prior Action — Met — Improve PFM - Submit the quarterly commitment plan for Q3 consistent with the corresponding cash plan — Prior Action — Met — Improve budget and cash flow management - Migration to ASYCUDA (SYDONIA) World — End January 2016 — Met, in April 2016 — Improve revenue collection - Establish a steering committee for implementation of the financial sector development plan — End February 2016 — Met, in March — Improve the business climate - Introduce quarterly reports on debt management activities to be submitted to the National Public Debt Management Committee — Quarterly — Met — Improve debt management - Limit expenditures executed through exceptional procedures to a maximum of 5 percent of authorized spending — Quarterly — Met — Improve budget and cash flow management - Establish the legal framework for the closure of public accounts to be consolidated under the TSA — End-June 2016 — Improve cash flow management - Prepare a Borrowing Plan — End-June 2016 — Improve debt Management - Completion of the civil service staff biometric census — End-December 2016 — Improve the management of salaries and grants ### Indicators of capacity to repay the Fund, 2016–26 (selected series) - Fund obligations based on existing credit (SDR millions, principal): - 2016: 3.5; 2017: 4.8; 2018: 5.8; 2019: 7.8; 2020: 11.6; 2021: 19.1; 2022: 18.0; 2023: 15.7; 2024: 12.3; 2025: 7.8; 2026: 0.0 - Fund obligations based on existing and prospective credit (principal, SDR millions): - 2016: 3.5; 2017: 4.8; 2018: 5.8; 2019: 7.8; 2020: 11.6; 2021: 19.1; 2022: 22.9; 2023: 20.6; 2024: 17.3; 2025: 12.7; 2026: 4.9 - Total obligations based on existing and prospective credit (SDR millions; CFAF billions shown): - SDR millions (selected): 2016: 3.5; 2017: 4.8; 2018: 5.8; 2019: 8.0; 2020: 11.9; 2021: 19.3; 2022: 23.1; 2023: 20.8; 2024: 17.3; 2025: 12.8; 2026: 5.0 - CFAF billions (selected): 2016: 2.9; 2017: 4.0; 2018: 4.7; 2019: 6.6; 2020: 9.7; 2021: 15.8; 2022: 18.9; 2023: 17.0; 2024: 14.2; 2025: 10.5; 2026: 4.1 - Ratios (selected): - Percent of exports of goods and services: 2016: 0.4; 2017: 0.5; 2018: 0.5; 2019: 0.6; 2020: 0.8; 2021: 1.1; 2022: 1.2; 2023: 1.0; 2024: 0.8; 2025: 0.5; 2026: 0.2 - Percent of quota (total obligations): 2016: 2.7; 2017: 3.7; 2018: 4.4; 2019: 6.1; 2020: 9.0; 2021: 14.7; 2022: 17.5; 2023: 15.8; 2024: 13.2; 2025: 9.7; 2026: 3.8 - Outstanding IMF credit based on existing and prospective drawings (SDR millions): - 2016: 127.5; 2017: 122.7; 2018: 116.9; 2019: 109.1; 2020: 97.5; 2021: 78.4; 2022: 55.6; 2023: 34.9; 2024: 17.7; 2025: 4.9; 2026: 0.0 - Net use of IMF credit (SDR millions, disbursements and repayments): - Net use series: 2016: 16.7; 2017: -4.8; 2018: -5.8; 2019: -7.8; 2020: -11.6; 2021: -19.1; 2022: -22.9; 2023: -20.6; 2024: -17.3; 2025: -12.7; 2026: -4.9 - Disbursements: 2016: 20.2; subsequent years: 0.0 - Repayments and repurchases (SDR millions): 2017: 4.8; 2018: 5.8; 2019: 7.8; 2020: 11.6; 2021: 19.1; 2022: 22.9; 2023: 20.6; 2024: 17.3; 2025: 12.7; 2026: 4.9 ### Key macroeconomic and memorandum items (selected projections) - Exports of goods and services (CFAF billions): 2016: 754.8; 2017: 809.1; 2018: 916.0; 2019: 1124.4; 2020: 1218.5; 2021: 1462.0; 2022: 1589.8; 2023: 1724.7; 2024: 1889.6; 2025: 2048.1; 2026: 2190.2 - External debt service (CFAF billions): 2016: 90.2; 2017: 112.0; 2018: 109.3; 2019: 108.8; 2020: 109.2; 2021: 107.9; 2022: 140.3; 2023: 164.3; 2024: 177.7; 2025: 191.8; 2026: 199.9 - Nominal GDP (CFAF billions): 2016: 4457.6; 2017: 4789.9; 2018: 5152.8; 2019: 5694.9; 2020: 6184.5; 2021: 6746.4; 2022: 7282.4; 2023: 7826.8; 2024: 8398.7; 2025: 8999.9; 2026: 9645.0 - Tax revenue (CFAF billions): 2016: 752.7; 2017: 812.2; 2018: 884.9; 2019: 1007.0; 2020: 1143.4; 2021: 1346.2; 2022: 1530.4; 2023: 1661.9; 2024: 1852.3; 2025: 1973.5; 2026: 2205.8 - Quota (SDR millions): 131.6 (2016–2026 each year) ### Government external borrowing program for 2015–16 (summary) - Total concessional debt signed/utilization (selected): - 2015 signed concessional debt: 520.4; 2016 signed concessional debt: 231.4; 2016 projected total concessional: 568.7 - Concessional debt by creditor type (2015, 2016 signed; 2016 projections): - Multilateral debt: 248.6; 186.8; 293.1 - Bilateral debt: 271.8; 44.5; 275.5 - Utilization of amount borrowed (CFAF billions; selected uses): - Budgetary assistance: 78.5 (2015); 63.4 (2016 signed); 51.7 (2016 projections) - Infrastructure (Road, Bridge,...): 235.8; 11.8; 240.6 - Water and Energy: 22.8; 22.8; 194.6 - Agriculture: 49.6; 50.2; 66.2 - Social (Education, Health, ...): 90.2; 47.4; 6.0 - Others (food security, Women empowerment, ...): 43.5; 35.7; 9.6 ### Disbursements to date and scheduled disbursements under the ECF Arrangement, 2012–16 (selected schedule) - Disbursement tranches (SDR, conditions and dates): - SDR 11.28 — Executive Board Approval of the ECF Arrangement — March 16, 2012 - SDR 11.28 — Observance of June 30, 2012 performance criteria, and completion of the first review — March 28, 2013 - SDR 11.28 — Observance of December 31, 2012 performance criteria, and completion of the second review — March 31, 2014 - SDR 11.28 — Observance of June 30, 2013 performance criteria, and completion of the third review — March 31, 2014 - SDR 5.64 — Observance of December 31, 2013 performance criteria, and completion of the fourth review — December 17, 2014 - SDR 5.64 — Observance of June 30, 2014 performance criteria, and completion of the fifth review — December 17, 2014 - SDR 39.005 — Observance of December 31, 2014 and June 30, 2015 performance criteria, and completion of the combined sixth and seventh reviews — November 30, 2015 - SDR 12.34 — Observance of December 31, 2015 performance criteria, and completion of the eighth review — May 31, 2016 - SDR 12.34 — Observance of June 30, 2016 performance criteria, and completion of the ninth review — November 30, 2016 - Total: SDR 120.085 ### Letter of Intent and MEFP — policy actions, context, and requests (selected points) - Context and macro developments: - The worsening security situation (including Boko-Haram attacks) produced refugee inflows, border trade disruption, lost revenue, and pressure on public spending. - International environment shocks (declining commodity prices; difficult economic situation in Nigeria) negatively impacted budget execution in 2015 and Q1 2016. - Growth fell to 3.5 percent in 2015 (from 7 percent in 2014). - Government corrective measures and commitments: - Adopted corrective measures in a 2016 supplementary budget law to address revenue shortfalls and overruns in wages and capital spending. - Sought technical assistance to strengthen tax and customs administrations. - Strengthening public finance, debt, natural resource management, financial sector, and business climate reforms. - Commitment to settle remaining arrears not paid as of end-2014 and to address arrears accumulated during 2015. - Will prepare commitment and cash flow plans each quarter and create a Treasury regulation committee under the Prime Minister to better supervise the public expenditure chain. - Will implement measures to establish an annual external borrowing plan and strengthen the Inter-Ministerial Committee on Debt Management. - Requests to the IMF: - Authorities request waivers for nonobservance of the end-December 2015 performance criteria, modifications of the PC at end-June 2016, and the completion of the eighth review, citing corrective measures taken. - Government authorizes publication of the Letter of Intent, MEFP, TMU, and IMF staff report following completion of the eighth review. *Sources: Nigerien authorities; IMF staff estimates and projections; Letter of Intent and Memorandum of Economic and Financial Policies (June 24, 2016).* ### 2014. This reflects a smaller increase in agriculture production, a 17.3 percent drop in exports and ### _cr16247 - 2014. This reflects a smaller increase in agriculture production, a 17.3 percent drop in exports and ### Macroeconomic developments (2015) - Growth affected by smaller increase in agriculture production, a 17.3 percent drop in exports and re-exports to Nigeria, and lower mining and oil production in 2015, despite continued strength of non-market services, trade and communication. - Inflation: - Annual average of 1 percent in 2015, reflecting good results of the past two crop seasons and the government program of selling grains at moderate prices. ### Monetary developments - Money supply growth: - Exceeded 25 percent in 2104 (textual source value). - Declined to 3.6 percent in 2015. - Net foreign assets contributions: - BCEAO lower external assets: CFAF 103.6 billion. - Commercial banks lower external assets: CFAF 32.6 billion. - Domestic credit and government net position: - Growth in domestic credit: 38.4 percent. - Deterioration in government’s net position vis-à-vis the banking system: CFAF 115.9 billion. - Credit to the economy: - Up by 13.2 percent, supporting mining and oil companies and businesses in trade and transportation sectors. ### External sector (2015) - Current account (balance of payments): - 2014: 15.1 percent of GDP (deficit). - 2015: deteriorated by 2.4 percentage points to reach 17.5 percent of GDP. - Drivers: decline in prices and volumes of refined oil products and uranium, lower exports and re-exports to Nigeria, and higher imports due to security shocks and infrastructure projects. - Direct foreign investments: - Fell due to suspension of major investments in mining and oil projects. - Overall balance of payments: - Ran a deficit in 2015. - International reserves: - Net accumulation of CFAF 112.7 billion in end-2014. - Fell by CFAF 103.6 billion in 2015. - Net external position covers more than three months (4.5) of imports of goods and services. ### Fiscal performance and budget execution (2015) - Security and investment spending and revenue shortfalls: - Repeated Boko-Haram attacks beginning February 2015 increased spending (wages and bonuses for defense and security forces) and disrupted trade flows. - Increase in domestically financed capital spending and election-related spending: CFAF 34 billion. - Loss of revenue from lower prices and production volumes of oil and uranium and reduced re-exports to Nigeria. - Basic deficit: - Worsened to 7.5 percent of GDP in 2015 against a program target of 5.5 percent of GDP. - Arrears repayment: - Government repaid CFAF 83 billion out of CFAF 100.4 billion stock of arrears as of end-2014. - Wage bill and civil service: - Civil servant numbers increased by approximately 26,000 between 2011 and 2015 to total 75,600 (breakdown: 14,200 education, 2,000 health, 2,000 institutions, 3,500 security excluding military and gendarmerie). - Wage bill rose from 4.5 percent of GDP in 2011 to 5.9 percent of GDP in 2015. - Government intentions: biometric census of civil servants with World Bank support and banking of wages. ### Expenditure overruns and revenue shortfalls (2015) - Expenditure overruns: - Domestically financed capital expenditures surpassed projections by about CFAF 72.9 billion (1.7 percent of GDP). - Overruns explained by underestimated budgetary contribution to external investment projects under uncollected taxes: CFAF 47.4 billion, and accelerated execution of infrastructure, security, education and rural development projects. - Total current expenditures contained despite wage bill overruns (CFAF 8.2 billion — 0.1 percent of GDP — absorbed by national defense forces). - Externally financed capital spending executed slightly below projections. - Revenue variances and composition: - Revenue was CFAF 16.2 billion lower than projected (0.4 percent of GDP). - Tax resources shortfall: almost CFAF 39.7 billion (0.9 percent of GDP) below program target. - Tax revenue from income taxes and taxes on goods and services, particularly from mining and oil sectors, were down by almost CFAF 39.3 billion compared to 2014. - Revenue from operations on outstanding unpaid taxes: CFAF 4.4 billion versus projected about CFAF 12 billion. - Drop in revenue from international trade: CFAF 17.5 billion, reflecting lower fuel exports and difficulties exporting/re-exporting to Nigeria. - Nontax regular revenue down by almost CFAF 10.3 billion (dividends from mining and oil sectors not forthcoming). - Expected privatization revenue (BIA Niger restructuring): CFAF 3.5 billion not collected. - Total loss of tax revenue: CFAF 51.7 billion, partially offset by exceptional revenue of CFAF 34 billion from sale of a 3G license. ### Financing and arrears (2015) - Budget support mobilization: - Projected CFAF 160.4 billion; mobilized CFAF 140 billion. - Efforts to reduce domestic payment arrears: - Securities issued for CFAF 38.8 billion (0.9 percent of GDP). - Unpaid stock of pre-2015 arrears remaining as of end-2015: CFAF 17.4 billion. - New arrears accumulated during 2015: CFAF 71.7 billion. - Domestic financing: - Larger than expected withdrawal from government deposits with BCEAO: CFAF 32.1 billion (0.8 percent of GDP). ### Economic developments in Q1 2016 - Growth and activity: - Election period and security situation slowed economic activity. - Inflation and monetary: - Inflation contained at around 1.1 percent year-over-year as of end-March. - Money supply increased by 3 percent since end-December, i.e. an annual increase of 5.8 percent. - Lending to private sector increased slightly. - Budget execution Q1 2016: - Total revenue mobilized as of end-March 2016: CFAF 146.8 billion, a drop of 12.8 percent (CFAF 21.6 billion) compared to same period in 2015. - Revenue fall breakdown: - CFAF 4.5 billion from customs due to lower import duties and taxes from re-exports to Nigeria. - CFAF 15.9 billion from the DGI due to low collection rates of income tax (ISB), VAT, TIPP, mining royalty, and excise taxes. - Spending pressures: security-related wage pressures and payments for new civil servants in education and health. - Domestically financed capital spending had low execution, limiting basic deficit increase to CFAF 2.3 billion above end-March 2015 level. - Domestic financing was CFAF 20.1 billion below end-March 2015, roughly equal to budget support mobilized during the quarter: CFAF 19.4 billion (CFAF 17.6 billion from Saudi Arabia and the rest from Nigeria). ### Program performance (end-2015 and end-March 2016) - End-2015: - Continuous performance criteria on non-accumulation of external arrears and avoidance of non-concessional loans and guarantees and short-term loans (less than one year) were met. - Quantitative performance criteria on net domestic financing from the government and net reduction in domestic arrears were not met. - Indicative targets on revenue and the budget balance were not met. - Indicative target on poverty reduction spending was met. - Q1 2016 improvements: - End-March 2016 indicative targets on net domestic financing of the government, reduction of domestic arrears, and external debt were met, despite revenue mobilization problems. - Revenue mobilization lower than projected by CFAF 28.1 billion. - Efforts to contain public spending limited deviation of basic deficit to the end-March target to CFAF 6.4 billion. - Structural benchmarks and reforms: - Most structural benchmarks met. - Quarterly debt management reports prepared and submitted to the Inter-Ministerial Committee for Monitoring Debt Policy and Negotiating Budget Aid. - Level of advance payments: 2.1 percent of authorized expenditures as of end-December 2015 and 2.9 percent as of end-March 2016 (target: 5 percent). - Steering Committee for Implementing the Financial Sector Development Plan established by decree of March 9, 2016. - ASYCUDA World migration first phase to six interconnected offices took place on April 11, 2016; opening ceremony on April 13, 2016. - Six centralized offices collect about 66 percent of DGD revenue. - Annual procurement benchmark not met. ### Customs, public financial management, and PFM reforms - Customs administration: - CPPP awarded to Geo-track in March 2016 to improve customs escort and reduce merchandise flow losses. - Strengthening inspections of customs bonded warehouses: concession contract for Niamey bonded warehouses with Bolloré and other bonded warehouses with Chamber of Commerce; construction of Maradi custom Park. - Reduction in number of private bonded warehouses in Maradi from 15 to 3. - Interconnection of customs IT systems with border countries delayed pending ASYCUDA World migration; began interconnecting all customs units via internet and VSAT in April 2016. - Treasury Single Account (TSA) implementation: - Process continuing; two draft agreements prepared (one with BCEAO for bookkeeping and one with commercial banks for “Government Cashier” function). - Audit of civil service and salaries scheduled for end-2016; terms of reference submitted to World Bank to establish biometric file for all government-compensated employees. - Program budget implementation and PFM reforms: - DGB produced a roadmap for implementing program budgets in line with 2009 WAEMU directives and 2012 organic law. - IMF technical assistance (FAD and AFRITAC) continued for preparation of investment budget in 2017. - Government prepared report on PRGFP III and adopted interim action plan for 2016. - PEFA evaluation initiated with EU support; PEFA report to be finalized by July 2016 to inform a new PFM reform strategy before end-2016. ### Economic outlook and fiscal policy (2016 and medium term) A. Economic outlook for 2016 and medium term - Growth projections: - 2016: growth should accelerate to 5.2 percent, reflecting a good harvest, expected production increase at SORAZ, continued implementation of major construction projects, Kao cement factory, and start of power generation at Gorou-Banda thermal power plant. - Medium-term: growth should exceed 6 percent, supported by construction of major road infrastructure projects, resumption of the Imouraren Project, and start of construction on the oil pipeline for crude oil exports expected for 2019. - Inflation: - Expected to remain contained at an annual average of less than 2 percent. - Risks: - Climate shocks, price shocks for oil exports, possible delays in oil pipeline construction project, uranium, and security tensions due to ongoing conflict with Boko-Haram. - Current account (excluding grants): - 2015: 17.5 percent of GDP. - 2016: expected to stay at 17.8 percent of GDP. - Exports to remain low without higher prices for uranium, oil and gold; exports and re-exports to Nigeria expected to be limited. - Imports expected to decrease as some major public investment projects end and major security imports of 2015 are not repeated. - Delays expected in major import-dependent projects: Imouraren uranium mine, Agadem oil field, oil pipeline via Chad, Dosso-Cotonou segment of railway line. - Projected decrease in foreign aid may be offset by resumption of direct foreign investments. - Starting in 2016, balance of payments projected to return to surpluses and net international reserves to increase. B. Fiscal policy for 2016 - Supplementary budget law (Council of Ministers approval on May 29, 2016; forwarded to National Assembly on May 30., 2016) — prior action: - Seeks fiscal consolidation to maintain medium- and long-term financial sustainability. - Provides a basic deficit of 3.8 percent of GDP. - Domestic revenue revised down by CFAF 49.9 billion (1.1 percent of GDP) compared to initial budget law. - Domestically financed spending cut by CFAF 48.7 billion (1.1 percent of GDP) compared to 2016 initial budget law projections. - Revenue projections and financing: - Total tax revenue expected to rise from CFAF 684.8 billion (16.1 percent of GDP) in 2015 to CFAF 752.7 billion (16.9 percent of GDP) in 2016, reflecting measures to strengthen tax and customs administrations. - Non-tax revenues expected to decline by CFAF 47.2 billion in 2016 (exceptional revenue in 2015 not repeated). - Net reduction in arrears projected by end-2016: CFAF 58.4 billion. - Basic budget deficit: CFAF 170.1 billion. - Budget support to finance basic deficit and net decline in arrears: CFAF 118 billion (breakdown includes EU CFAF 38 billion, Saudi Arabia CFAF 17.6 billion, France CFAF 6.5 billion, other donors CFAF 5 billion, World Bank concessional loans CFAF 29.5 billion, French Development Agency CFAF 13.1 billion, African Development Bank CFAF 8.2 billion). - Net Treasury bond issuances limited to CFAF 137.1 billion, including CFAF 70 billion to pay 2015 arrears. - Fiscal consolidation measures: - Control current expenditures and improve investment efficiency while safeguarding priority sectors. - Current expenditures to decrease by 0.2 percentage points of GDP to 15.4 percent of GDP compared to 2015. - Salaries to decline by 0.1 percent of GDP despite an increase in nominal terms. - Subsidy and transfer expenses to increase by 0.3 percent of GDP, largely offset by 0.7 percent of GDP decrease in goods and services. - Domestically financed capital expenditures to fall by 3.8 percent of GDP compared to 2015, a reduction of 1.1 percent of GDP compared to 2016 initial budget law. - Externally financed investments to increase by 1.4 percentage points of GDP. - Budgetary priorities retained (as in the Economic Development Document, EDD): - (i) security of property and persons; - (ii) urban, village and rural water supply systems; - (iii) continuation of the 3N initiative and food security; - (iv) infrastructure and energy; - (v) education and health. *Source: _cr16247 - 2014. This reflects a smaller increase in agriculture production, a 17.3 percent drop in exports and* ### 24. The government continues to emphasize reducing domestic arrears. The new fiscal ### _cr16247 - 24. The government continues to emphasize reducing domestic arrears. The new fiscal ### Domestic arrears clearance plan - Aim: pay the entire stock of existing arrears as of end-2015 (CFAF 89.1 billion) and limit float to CFAF 30 billion, corresponding to fewer than two weeks of domestically financed expenditures. - Net reduction targeted: CFAF 58.4 billion as of end-2016. - Clearance modalities: - Cash: CFAF 17.4 billion (the outstanding arrears of the end-2014 stock) to be paid before end-June 2016. - Securities issuance: CFAF 70 billion, composed of CFAF 30 billion regional bonds and FCFA 40 billion securities issued to the local banking system. ### Monitoring and supervision - A monitoring committee for the clearance of arrears will be set up as part of the operation. - Responsibilities: supervise design of securities emission program, participate in identification of state creditors, ensure effective and timely payment of arrears. - IMF role: observer. ### Strengthening fiscal management to prevent new arrears - Measures already taken and planned: - Strict application of budget execution procedures and meeting budget closeout deadlines, in accordance with the 2014 circular of the Minister of Finance. - Attempt to reduce the supplementary fiscal period from three months to close to one month (2012 organic law). - Specific actions: - (i) Government will prepare a cash commitment plan for the third and fourth quarter (prior action). - (ii) In the 2017 budget the government will begin to budget the investments that authorize commitment and allocate payment credits for four sectors: security, infrastructure, rural development, and education. - (iii) A unit in the DGB centralizes the status of commitments every week and submits it regularly to the Regulation and Treasury Committee. - (iv) An instruction from the Prime Minister indicating the financial responsibility of credit managers who exceed their budgetary appropriations was issued. ### Expenditure control and regulatory committees - Priority: establishment of an effective system for expenditure control via operationalizing the Budgetary Regulation and Treasury Management Committee (CRGT). - Reinforcement: creation of an inter-ministerial regulation committee chaired by the Prime Minister (prior action). - Committee composition: key departments that provide revenue and are beneficiaries of budget allocations; will guide and validate CRGT work. - Operational modalities: - Could meet quarterly before quarterly budgetary allocations are released to determine content and level of credits based on available and expected cash. - If necessary, could meet once a month to readjust commitment and cash flow plans when revenue gaps or new spending priorities emerge. - Expected effects: strengthen regulatory authority of the Minister of Finance, promote better programming of expenditures and payments at the Treasury, limit pressures from line ministries, help solve recurring arrears accumulation and reduce negative effects on provision of critical services. ### Structural reforms — objectives - Purpose: achieve macroeconomic objectives of the Renaissance Act II Program (EDP for 2016-2019) while strengthening resilience to shocks. - Development objectives: promote strong, sustainable and inclusive growth, maintain fiscal sustainability, meet basic needs and eliminate poverty long term. - 2016 structural reform focuses: domestic revenue mobilization, strengthening public financial management, debt and natural resources management, strengthening the financial sector, improving the business climate. ### Domestic revenue mobilization — general measures - Issue: predominance of tax payments in cash creates security and governance vulnerabilities. - Government commitments: - Eliminate requirement for certified checks as a method of paying taxes as quickly as possible. - Facilitate bank teller windows to accept tax payments from taxpayers who prefer to pay in cash (such as the informal sector). - Discuss with BCEAO possibility of collecting funds at revenue agencies and physically transferring them to Public Treasury accounts. ### Customs reforms and modernization - Three major customs governance reforms to be continued: - Significantly reduce time of clearance of customs files; migration to ASYCUDA World and interconnection between main customs posts to facilitate the customs circuit; outlaw practice of delaying clearance. - Strengthen customs cooperation and regular information sharing between customs administrations in the sub-region; conduct monthly control of selected files based on risk. - Require certification of value for customs declarations above CFAF 3 million by placing a blocking field in the information system. - Institutional and organizational reforms underway: - Revision of the General Customs Code awaiting validation and adoption. - Drafting of a manual of procedures finalization after adoption of the General Customs Code by parliament during its second regular session scheduled from September to December 2016. - Adoption in April 2016 of draft law amending and supplementing Law No. 2013-31 of July 4, 2013 on the Autonomous Status of Customs Employees. - Restructuring of the DGD (restructuring order signed in August 2015). - Information systems and process reforms: - Adopt IT development plan with contracts for interconnection and computer equipment to be executed within six months. - Interconnection of other customs offices to the single server starting at end-September 2016. - Extension of electronic transit for customs to main customs posts by end-September 2016 (structural benchmark). - Fully implement migration from ASYCUDA++ to ASYCUDA World; operational in six interconnected offices since April 11, 2016 and to be expanded by end-September 2016. - Operationalize a one-stop shop for vehicle customs formalities through a CPPP beginning in June 2016. - Place in consumption certain products with unlawful transit declarations to limit fraud (rice, vegetable oils, sugar). - Computer monitoring of exemptions and other economic regimes including state budget exemptions; migration to ASYCUDA World to strengthen monitoring; establishment of an inter-ministerial committee to grant exemptions and ensure reflection in the budget. - Customs facilitation and anti-fraud program actions: - Completion of a study on merchandise release process with support of World Customs Organization and MCC; validation workshop organized in July 2015; MCC to assist implementation. - Possibility of advance customs clearance following migration to ASYCUDA World. - Strengthen administrative assistance with Benin and Togo through interconnection before end-2016. - Adopt a risk-based approach in scheduling inspections and strengthen inspection teams before end-December 2016. - Strengthen monitoring of exemptions with migration to ASYCUDA World. - Improve monitoring of re-exports to Nigeria by constructing a 49-hectare parking space in Maradi near the Nigeria border to accommodate trucks in transit and allow better management of customs bonded warehouses in Maradi by the Niger Chamber of Commerce and Industry (CCIN). ### Tax administration reforms (DGI) - Two major reforms to improve tax revenue mobilization: - Expand authority of the DGE (and to some extent the DME) to all businesses eligible for their control regardless of location; from September 2016 analyze tax records of companies in regions and gradually transfer taxpayers who have reached the threshold of 500 million in turnover to the Large Enterprise Directorate (DGE); subsequently transfer businesses of DME size to the DME. - Implement the VAT credit refund mechanism: - Minister of Finance issued an order on May 6, 2016 to open the escrow account for VAT credit refunds. - Government committed to make the system operational by end-June 2016 and to clear VAT credit refund files by end-December 2016, in particular for VAT credits in the mining sector. - Additional DGI measures to simplify and adapt tax law framework: - Implement Computerized Tax and Taxpayer Monitoring System (SISIC). - Make Tax Appeal Arbitration Committee (CARFI) operational; Minister of Finance signed orders implementing CARFI, offices were provided, consultations with private sector led to official launch on May 31, 2016. - Study to strengthen statistical framework and administrative circuit of tax base. - Strengthen territorial coverage by setting up tax services. - Improve taxpayer file and strengthen monitoring; publish results of joint DGI/DGD audit team. - Organizational reforms and results: - Order No. 0157 (April 29, 2015) on organization of central and local DGI offices; November 2015 assignment of 117 professionals to DGI. - Reorganization aims to improve targeting and monitoring of taxpayer categories and align with thresholds established under the 2013 Budget Law. - Results: decline in default rate for all categories of taxes and rise in self-reporting rates, particularly VAT. - Default rate in Large Enterprises Department (DGE): about 2 percent. - DME default rates: declined from 17.5 percent in 2014 to 12.1 percent in 2015. - Target for DME default rate: reduce to around 10 percent compared to 20 percent at end-2015 and 44 percent at end-2014. - DME actions: continue to improve taxpayer file, strengthen monitoring, send more reminders to taxpayers. - Reorganization of tax auditing: - New organization chart to make units more dynamic, establish risk-based auditing. - Joint customs and tax administration team auditing 40 files. - Creation of regional investigation and research teams at eight (8) regional directorates. - Decentralize audits to management units; Tax Audit Department to take strategic management role. - Pilot project launched at DME before generalization. - Full computerization planned via SISIC; company hired in September 2015 to computerize operations and another in March 2016 to train staff. - DGI support from World Bank through Project to Support Competitiveness and Growth (PRAAC). ### Internal control, audit, treasury, and state assets management - Internal control and audit: - Strengthening human resources to improve internal control and audit. - Strengthen partnership between General Treasury and Public Accounting Administration and the Court of Auditor to better monitor collectors and publish procedural manuals. - Pilot internal audit programs in Large Enterprises Unit at Niamey 2 center and Niamey 3 revenue office to be extended to all DGI offices. - General Treasury and Public Accounting Directorate (DGTCP) actions: - Inventory of potential nontax domestic revenue sources; establishment of several revenue authorities to recover funds for state budget. - Update dormant/inactive accounts in view of establishing the Treasury Single Account. - Reduce balances on provisional budget imputation accounts. - Catch up on overdue government annual financial statements (management accounts of senior Treasury accounting officials). - Better monitoring of domestic payment arrears and outstanding balances. - General Administration of Government Assets actions: - Adopt basic decree on physical accounting, order on classification of public assets, order establishing tool for physical accounting. - Establish inter-ministerial committee responsible for on-site inventories. - Recruit firm to prepare procedural manual on physical accounting. - Directorate of Public Enterprises and State Portfolio conducted inventory of all companies in which state holds a stake; government representatives on boards now required to submit reports for better monitoring. ### Public financial management outlook - 2016 and medium term: government will ensure budget execution is strengthened in accordance with relevant regulatory provisions. - Emphasis: match large public spending needs with limited and often highly uncertain resources through rigorous cash flow management. - Fiscal regulation as main instrument to eliminate recurrent slippage in managing public spending and associated accumulation of arrears; stakeholders to put in place a system for strong budgetary regulation. *Content unit: _cr16247 - 24. The government continues to emphasize reducing domestic arrears. The new fiscal* ### 42. Niger already has a fiscal regulation framework that should be strengthened by ### _cr16247 - 42. Niger already has a fiscal regulation framework that should be strengthened by ### Fiscal regulation framework and regulation committee - An inter-ministerial budgetary regulation steering committee was established by Order 11/PM/CAB of February 10, 1999. This order will be updated and the committee will be operational by end-July 2016. - In 2013, Order No. 0041 of February 25, 2013 established a committee for budgetary regulation and treasury management (CRGT). Currently, the committee is addressing cash flow management issues only, and its regulation role should be strengthened. - The regulation committee should: - Improve communication about its activities. - Serve as a technical committee for the inter-ministerial committee. - Prepare realistic commitment and cash flow plans that stakeholders accept and comply with. - Make arrangements that regulate the pace of releasing credits allocations and the pace of commitments and authorizations aligned with available cash and revenue projections and government priorities. ### Government commitments on budget preparation, execution, and presentation - The government is committed to managing public finances rigorously and transparently and to managing slippages observed during budget execution. - Prior actions the government is strongly committed to implementing (listed as prior actions): - Budget review laws (prior action): The government will submit the draft 2015 budget review law to the IMF staff before end-June 2016. - The commitment plan/cash flow plan (prior action): The government will make systematic the preparation of these plans and share them with IMF staff. - Regulation Committee (prior action): Put in place the regulation committee under the Prime Minister to supervise the release of credit allocations and regulate the pace at which funds are released and commitments and authorizations are made in line with revenue projections and government priorities; responsibilities should be restructured and strengthened to supervise and regulate the entire expenditure chain. - The 2016 supplementary budget (prior action): The 2016 supplementary budget will reflect the adjustments described in Section B on the 2016 budget policy and will be shared with IMF staff during preparation and after adoption. ### Public financial management (PFM) action plan and WAEMU directives - Continued implementation of the WAEMU directives of 2009 regarding public financial management. - Roadmap for implementation of the program budget expected to take effect with the 2018 Budget Law: - (i) in 2016, preparation of the 2017 budget to include a traditional format and an experimental program format for all ministries and institutions; - (ii) in 2017, preparation of the 2018 budget in program format; - (iii) execution of the 2018 budget in program format. - Strengthening budgetary procedures in the public expenditure chain and regular publication of budget execution reports: - Public expenditure chain has been deployed in key ministries accounting for roughly 80 percent of public spending. - Quarterly budget execution reports will continue to be produced regularly (structural benchmark for each quarter), as well as the status of the execution of pro-poor expenditures. - The draft 2012, 2013 and 2014 budget laws were adopted in April and submitted to the National Assembly for adoption. - The draft 2015 budget execution report was sent to the IMF before end-June 2016 (prior action). - Limitation of expenditures without prior authorization to a maximum of 5 percent of authorized expenditures (structural benchmark for each quarter). These expenditures are largely tied to missions and medical evacuations. - Measures to accelerate budget execution and improve public investment management: - Decree No. 2015-353 of July 10, 2015, on the institutional framework for evaluation and selection of public investment projects. - Decree No. 2015-226 of April 27, 2015, on standard competencies assigned to study and planning departments of ministries and institutions and definition of profiles for their managers. - Circular No. 01279 of July 10, 2015, of the Prime Minister on the process for loan contracting and agreements. - Additional measures: - Compliance with provisions regarding closing out payments in connection with the supplementary fiscal period will be shortened from 3 months to 1 month in line with the WAEMU directives. - Line ministries to prepare procurement plans and flexible commitment plans to enable the Ministry of Finance to prepare general procurement and commitment plans and a more realistic government cash flow plan. - Regular DGB meetings at the end of each quarter to prepare the release of forthcoming credits allocations. - A commitment plan for the third quarter of 2016, in line with the cash flow plan, was prepared and submitted to the ministries and institutions before July 1, 2016. ### Wage bill control and human resources management - From 2010 to 2015, the number of civil servants rose 56.7 percent, from 48,237 to 75,597. - Measures by the Ministry of Civil Service and Administrative Reforms to manage hiring and control the wage bill: - (i) Establishment of an integrated administrative database of government employees with the aim of bringing staff numbers and the wage bill under control by end-2016. - (ii) Preparation of a list of civil service jobs and skills to ensure better management of human resources and jobs before June 2016. - (iii) Introduction of a performance evaluation system for government employees through a reform of the civil service staff regulations before end-2016. - (iv) Establishment of forward planning of staffing and definition of line managers. - (v) Undertaking a biometric census of government employees before end-2016. - The government is receiving assistance from the World Bank under a capacity-building project covering reform of civil servant management, verifying and auditing the wage bill, and managing contractors. - The hiring program was reviewed in light of new budgetary constraints. ### Treasury Single Account, cash flow management, and IT - Implementation of a new Treasury Single Account (TSA) in accordance with the conceptual plan adopted in September 2015 to establish the TSA by end-September 2016, with capacity constraints. - An IMF expert, financed by the European Union, will be hired to support the committee implementing the TSA. - Strengthen cash flow management: - Quarterly plans will be prepared regularly and sent to the IMF. - “Weekly” cash flow meetings will be held regularly by the cash flow management committee, chaired by the Minister of Finance. - Computerization of the expenditure chain: - Program to adapt computer systems for preparation, management, and execution of the budget and for public accounting. - Technical assistance financed by the European Union to update or redesign the IT system of public finance managed by the Directorate of Financial Information in the Ministry of Finance. - First phase provides eight major deliverables (in terms of budget programming, sectoral program budgets, and public accounting). Aspects pertaining to budgetary execution will be covered following detailed analysis of decentralizing authorization. ### Debt management - Government actions to strengthen institutional measures for better debt management and to improve coordination in preparing loan agreements to eliminate risks of over-indebtedness. - Institutional framework for implementation of the decree of June 18, 2015, on processes for monitoring the government’s debt policy and the negotiation of budgetary support. - In programs supported by the IMF, the government will prepare a medium-term external borrowing plan before end-June 2016 to include: - (i) the investment strategy and a list of investment projects; - (ii) the sources of financing; - (iii) the uses of financing; - (iv) the debt management strategy, taking into account debt viability and fiscal and external sustainability. - Borrowing plan to be prepared with technical assistance from the World Bank for the definition of a national debt policy. - 2015 actions to manage debt stock portfolio: - Cancellation of the SUKUK bond issuance and other non-concessional borrowing from the Islamic Development Bank. - Postponement of loan agreements until funds are obtained to subsidize rates down to concessional levels. - Reinforced National Public Debt Management Committee issues an opinion on any new agreement on government borrowing or guarantees, including financing in the natural resources sector and all CPPP agreements; committee review is a prerequisite for approval by the Council of Ministers. - Government will provide IMF staff with detailed quarterly reports on outstanding public debt, new commitments and borrowing (including disbursements), and public debt service. - Planned restructuring and cleanup of debt stock: - Government plans to restructure certain contracted debts that have not yet been used based on AFRITAC West report findings. - Government is planning to review the US$1 billion loan contracted with the Export-Import Bank of China; the National Assembly approved this loan in June 2014. - Government policy: limit state guarantees, carefully assess impact of any new borrowing on debt sustainability, prioritize concessional resources for investment projects, limit borrowing to high-yield, properly evaluated projects; consult IMF staff if non-concessional borrowing is considered. ### Institutional framework for CPPPs and banking sector risk - Government requested IMF technical assistance to strengthen the institutional framework that governs CPPPs, ensuring consistency with other laws and regulations, in particular the investment code. - Concern that rapid growth in debt obligations and significant borrowing costs could pose major risks to the banking system given the current program for issuing Treasury bonds and Treasury bills. ### Natural resource and oil sector management - Policy to expand the mineral export base by encouraging exploration of mineral resources other than oil and uranium (coal, limestone and gold). - New requirement: operators seeking permits must arrange a bank security deposit with a local bank to secure signing bonus payments; the security deposit will be called as soon as the permit is published in the official journal. - Uranium sector: - Activity depressed due to low price levels. - Principal mines of the AREVA group maintained low production pending Imouraren Project delayed until 2020-2021. - One mining company shut down production in 2015 pending decisions on full liberation and increase of the company’s capital. - Activities of the sector are subject to the 2006 new mining code; new mining agreements based on the new mining code have been signed. - Government requests technical assistance to evaluate project and audit mining revenue; strengthening regulation, negotiation, and enforcement of contracts; SOPAMIN role is being strengthened with World Bank support (Project to Support Competitiveness and Growth (PRAAC)). - Oil sector impacts and measures: - Depreciation of the CFAF against the dollar and drop in oil prices increased input costs for refining and caused additional losses to SORAZ. - Price adjustments from CNPC to SORAZ: from US$70 per barrel to US$57 per barrel in March 2015, to US$50 per barrel as of June 2015, and to US$47 in February 2016. - Technical Committee proposed increasing the transfer price that SONIDEP is charged by SORAZ while reducing SONIDEP distribution margins to keep pump price unchanged. - 2015 production: output reached 12,500 barrels per day, compared to a projection of 20,000 barrels per day in the 2015 budget. - Technical shutdown at SORAZ in July 2015 lasted more than 3 months; exports of petroleum products fell and SONIDEP resorted to imports to meet local demand. - Government intends to pursue hiring more Nigerien personnel at SORAZ and refinancing the SORAZ construction loan under less burdensome terms (US$880 million). - Government is open to negotiations of the terms regulating the export of refined products and to proposals from SORAZ to lower the refinery’s costs. *International Monetary Fund — content unit _cr16247* ### 56. In view of the level of finalization of the negotiations for the construction of the oil ### _cr16247 - 56. In view of the level of finalization of the negotiations for the construction of the oil ### Oil pipeline project and production outlook - Crude oil exports are expected to begin in 2019. - Discovery in the Agadem oil field: production potential of 80,000 barrels per day, of which 60,000 barrels per day would be destined for export over an estimated time horizon of 25 years. - CNPC studies selected a pipeline route via Niger to Chad and Cameroon. - Negotiations with Chad are expected to result in the establishment of NOTCO, responsible for construction and management of the pipeline. - Niger’s arrangements for participation are being worked out with the aim of ensuring the country’s external viability. - Work could begin in 2017. - Discussions are under way regarding the Chad-Cameroon section of the pipeline. ### Energy sector governance and extractive transparency - Government actions: - April 2015: government approved the electricity code; adopted by the National Assembly in May 2016. - Statutes concerning the creation and organization of the Energy Sector Regulatory Authority were adopted. - Extractive Industries Transparency Initiative (EITI) report on tax revenues for fiscal year 2011 was published in November 2013; reports for other years will be produced. - The Ministry of Mines and the ministry in charge of Petroleum will prepare official lists of mining and petroleum registries indicating granted mining and oil permits; these registries will be made public. ### Financial sector: current status and reforms - Financial penetration: - Money supply to GDP ratio: 27 percent in 2015 compared to 37 percent for countries in sub-Saharan Africa. - Banking sector capitalization and actions: - 11 of Niger’s 12 financial institutions fulfill the minimum capital requirement. - The Banking Commission placed the noncompliant bank under close monitoring; its credit operations were restricted until outstanding claims are collected and it is required to increase its capital. - Financial sector development strategy: - Action plan defined in the 2014–2019 financial sector development strategy. - Steering committee established before February 2016 (structural benchmark) to coordinate reforms with the Ministry of the Economy and Finance, BCEAO, and the Professional Association of Banks. - Committee attached to the Ministry of the Economy and Finance. - National Strategy for Financial Inclusion (NSFI): - Adopted in July 2015. - Overall cost: CFAF 34 billion for the five years (2016–20), to be covered in part by donors. - Priority beneficiaries: small economic operators excluded from traditional banking, particularly women, young people, and other poor segments lacking access to basic financing. ### Government disengagement from banking and recent transactions - BOAD acquired 44 percent of BRS; Raban Group (ORAGROUP) acquired 56 percent. - Restructuring of BIA completed through acquisition of the government’s shares by Banque centrale populaire du Maroc (BCP) Group; takeover delayed by negotiation with a private shareholder. - BAGRI provisional administration lifted on April 1, 2014, after nine months; new board and executive director appointed. - Government engaged with BOAD and local/foreign private investors regarding transfer of the 65 percent stake it holds in a portage operation. ### Business climate reforms and measures - Institutional framework created to facilitate public-private dialogue: - National Private Investors Board (CNIP) under the Prime Minister. - Standing Dialogue Committee (CPC) between the Ministry of Commerce and Private Sector Development and the Chamber of Commerce and Industry. - Technical committee and thematic groups to improve Doing Business indicators. - Measures implemented to improve the business climate: - Opening of the Business Center—Maison de l’entreprise—and implementation of an online governance system (e-Regulations). - Decree of July 2014 establishing a standard model of corporate bylaws for limited liability companies; concurrent decree on implementing OHADA Uniform Act provisions. - Adoption in June 2015 of the law governing regulation of credit bureaus for WAEMU countries. - December 2014 orders to facilitate cross-border trade: documents required for imports/exports; public transport of goods; types of roadside inspections; inspection points; mechanisms for redress to minimize irregular practices. - Strengthening legal framework for settling trade disputes: creation and operationalization of the Commerce Court of Niamey and the Mediation and Arbitration Center of Niamey. - Fiscal measures: - DGI arrangements to clear the stock of VAT credits: CFAF 26.1 billion in end-2015, and to avoid accumulating new credits. - Ongoing reform objectives: - Continue reforms to improve Niger’s ranking on the 10 World Bank Doing Business indicators and implement the CNIP Roadmap for Improving the Business Climate. ### Program monitoring, conditionality, and recent requests - Government requests: - Waivers of nonobservance of the performance criteria of end-December 2015. - Approval of the eighth review under the arrangement. - Disbursement of 12.34 million SDRs. - Monitoring framework: - Semi-annual monitoring by the IMF Executive Board based on quantitative monitoring indicators and structural benchmarks as defined in the Technical Memorandum of Understanding (TMU). - Semi-annual reviews based on performance criteria at end-June 2016 and performance indicators at end-September 2016. - Authorities to provide IMF staff with statistical data and information described in the TMU and any additional requested information. - Commitments during program period: - Refrain from introducing or increasing restrictions on payments and transfers related to current international transactions without prior IMF approval. - Refrain from introducing or amending multiple currency practices. - Refrain from entering bilateral agreements that do not comply with Article VIII of the IMF’s Articles of Agreement. - Refrain from introducing or enhancing restrictions on imports for balance of payments reasons. - The ninth semi-annual review of the program will be based on the performance criteria at end-June 2016. *Source: IMF staff report excerpt (content unit: _cr16247 - 56).* ### introduction of the investment ### introduction of the investment ### Prior Actions and Structural Benchmarks (2016) - Adopt and send to the parliament the draft revised budget for 2016 in line with the program — Prior Action — Met. Objective: Improve public financial management (PFM). - Create an interministerial budgetary regulation and cash management committee — Prior Action — Met. Objective: Improve budget execution. - Submit a draft report of the 2015 budget execution — Prior Action — Met. Objective: Improve public financial management (PFM). - Submit the quarterly commitment plan for Q3 consistent with the corresponding cash plan — Prior Action — Met. Objective: Improve budget and cash flow management. - Migration to ASYCUDA (SYDONIA) World — En January 2016 — Met, in April 2016. Objective: Improve revenue collection. - Establish a steering committee for implementation of the financial sector development plan — End February 2016 — Met, in March 2016. Objective: Improve the business climate. - Introduce quarterly reports on debt management activities to be submitted to the National Public Debt Management Committee — Quarterly — Met. Objective: Improve debt management. - Limit expenditures executed through exceptional procedures to a maximum of 5 percent of authorized spending, with the exception of debt service payments and budget expenditure associated with exemptions — Quarterly — Met. Objective: Improve budget and cash flow management. - Establish the legal framework for the closure of public accounts to be consolidated under the TSA — End-June 2016. Objective: Improve cash flow management. - Prepare a Borrowing Plan — End-June 2016. Objective: Improve debt Management. - Completion of the civil service staff biometric census — End-December 2016. Objective: Improve the management of salaries and grants. - Improve the management of investments through the implementation of the program budgeting system; prepare a comprehensive procurement plan to match a commitment plan and a cash plan — End-September 2015 Met / Annually Not Met. Objective: Improve budget management, avoid the pile-up spending toward the end of the year. ### Disbursements to Date and Proposed Scheduled Disbursements under the ECF Arrangement, 2012–16 (Table 5) - SDR 11.28 — Executive Board Approval of the ECF Arrangement — March 16, 2012. - SDR 11.28 — Observance of June 30, 2012 performance criteria, and completion of the first review under the arrangement — March 28, 2013. - SDR 11.28 — Observance of December 31, 2012 performance criteria, and completion of the second review under the arrangement — March 31, 2014. - SDR 11.28 — Observance of June 30, 2013 performance criteria, and completion of the third review under the arrangement — March 31, 2014. - SDR 5.64 — Observance of December 31, 2013 performance criteria, and completion of the fourth review under the arrangement — December 17, 2014. - SDR 5.64 — Observance of June 30, 2014 performance criteria, and completion of the fifth review under the arrangement — December 17, 2014. - SDR 39.005 — Observance of December 31, 2014 and June 30, 2015 performance criteria, and completion of the combined sixth and seventh reviews under the arrangement — November 30, 2015. - SDR 12.34 — Observance of December 31, 2015 performance criteria, and completion of the eighth review under the arrangement — May 31, 2016. - SDR 12.34 — Observance of June 30, 2016 performance criteria, and completion of the ninth review under the arrangement — November 30, 2016. - SDR 120.085 — Total. - Note: For reviews already completed, the date refers to the actual Board date when the review was completed. - Note: In 2015, the disbursement schedule includes a 25 percent quota augmentation of the arrangement under the ECF, proposed to be approved at the completion of the combined sixth and seventh reviews. ### Technical Memorandum of Understanding — Scope, Definitions, and Key Rules - Coverage period: QI 2012 to 2016. Performance criteria and indicative targets for end-June 2016 are set out in Table 2 of the MEFP dated June 24, 2016. - Government definition: central government of the Republic of Niger; excludes political subdivisions, public entities, or central bank with separate legal personality. - Debt definition: follows Guidelines on Public Debt Conditionality in Fund Arrangements (Executive Board Decision No. 15688-(14/107) of December 5, 2014). Debt includes loans, suppliers’ credits, leases (present value at inception), arrears, penalties, and judicially awarded damages arising from failure to make payment under contractual obligations that constitute debt. - External payments arrears: payments due but not paid. Domestic payments arrears: domestic payments owed by the government but not paid, include authorized fiscal year expenditure not paid within 90 days. - Government obligation: any financial obligation of the government accepted as such by the government (including any government debt). ### Quantitative Performance Criteria — Net Domestic Financing and Adjustments - Net domestic financing of the government = (i) net bank credit to the government; (ii) net nonbank domestic financing including government securities issued in CFAF on the WAEMU regional financial market and not held by Nigerien commercial banks, proceeds from sale of government assets, and privatization receipts. - Net bank credit to the government: balance of government claims and debts vis-à-vis national banking institutions; includes cash holdings of the Nigerien Treasury, secured obligations, deposits with the central bank, and deposits of the Treasury with commercial banks (with exclusions for deposits used solely to finance externally financed capital expenditures). - Government debt to the banking system includes lending from the central bank (excluding net IMF financing under the ECF) and the CFAF counterpart of the 2009 General SDR Allocation, lending from commercial banks (including government securities held by the central bank and commercial banks), and deposits with the CCP (postal checking system). - Net nonbank domestic financing components: (i) change in stock of government securities issued in CFAF on the WAEMU regional financial market and not held by Nigerien commercial banks; (ii) change in balance of Treasury correspondents’ deposit accounts; (iii) change in balance of various deposit accounts at the Treasury; (iv) change in stock of claims on the government forgiven by the private sector. - Quarterly targets for 2016 are based on change between end-December 2015 level and the reference date. - Adjustment rule: ceiling on net domestic financing will be adjusted if disbursements of external budgetary support net of external debt service and external arrears payments, including disbursements under the ECF, fall short of program projections. - Specific adjustment: If, at the end of each quarter of 2016, disbursements of external budgetary support fall short of projected amounts, the corresponding quarterly ceilings will be raised pro tanto, up to a maximum of CFAF 15 billion. - Data reporting requirement: detailed data on domestic financing of the government provided monthly, within six weeks after the end of each month. ### Arrears, External Debt, and Concessionality Rules - Reduction of domestic payment arrears: defined as difference between stock of arrears at end-2015 and stock on the reference date; CAADIE and Treasury calculate and record repayments. - Monthly reporting on domestic arrears: provided monthly, within six weeks following the end of each month. - External payments arrears: government undertakes not to accumulate external payments arrears on its debt (including Treasury bills and bonds issued in CFAF on the WAEMU regional financial market), except arrears arising from debt being renegotiated with external creditors, including Paris Club creditors. - Monthly reporting on external arrears: within six weeks following the end of each month. - Restriction on external non-concessional loans: government and listed public enterprises agree not to contract or guarantee external debt with original maturity of one year or more and grant element less than 35 percent. - Concessionality calculation: grant element = (PV of debt subtracted from nominal value) expressed as percentage of nominal value. PV calculated by discounting future debt service using a discount rate of 5 percent. - The performance criterion applies to debt as defined in the Guidelines and to obligations contracted or guaranteed for which no value has been received. Exclusions: financing provided by the IMF and debt rescheduling in the form of new loans. - Guarantee definition: any explicit legal obligation of the government to service a debt in event of nonpayment by the debtor. - External debt definition for criterion: debt denominated, or requiring repayment, in a currency other than the CFA franc; applies to debts contracted among WAEMU countries. - Public sector entities covered by the non-concessional borrowing rule (paragraph 21): - Société Nigérienne d'Electricité (Nigelec) - Société de Construction et de Gestion des Marchés (Socogem) - Société Nigérienne des Produits Pétroliers (Sonidep) - Société Nigérienne des Télécommunications (Sonitel) - Société de Patrimoine des Mines du Niger (Sopamin) - Société propriétaire et exploitante de l’Hôtel Gaweye (SPEG) - Reporting requirement for external public sector debt and guarantees: information monthly, within six weeks after the end of each month. Ministry of Finance to forward list of loans in process of negotiation regularly; prepare semi-annual reports on external debt contracted or in process of negotiation and the borrowing program for the next six months. ### Short-Term External Debt and Quantitative Targets - Performance criterion: government will not accumulate or guarantee new external debt with original maturity of less than one year. Exclusions: short-term loans related to imports and short-term securities issued in CFAF on the regional financial market. - Reporting requirement: information on all external government debt monthly, within six weeks following the end of each month. - Definitions for quantitative targets: - Total revenue (indicative target): includes tax, nontax, and special accounts revenue; excludes proceeds from settlement of reciprocal debts between the government and enterprises. - Basic fiscal deficit: difference between (i) total fiscal revenue as defined above and (ii) total fiscal expenditure excluding externally financed investment expenditure but including expenditure financed under the HIPC. - WAEMU definition of basic fiscal deficit: basic balance plus budgetary grants. - Floor on poverty-reducing expenditure (indicative target): comprises budget lines included in the Unified Priority List (UPL) of poverty-reducing and HIPC-financed expenditures. ### Reporting Requirements and Additional Program Monitoring Information - Monthly reporting (within six weeks of month end) to IMF: - Detailed monthly estimates of revenue and expenditures, including priority expenditures, payment of domestic and external arrears, and breakdown of customs, DGI, and Treasury revenue. - Table of Government Financial Operations (TOFE) with comprehensive monthly data on domestic and external financing, changes in arrears, and Treasury balances outstanding. - Comprehensive monthly data on net nonbank domestic financing: (i) change in stock of government securities issued in CFAF on the WAEMU regional financial market and not held by Nigerien commercial banks; (ii) change in balance of various deposit accounts at the Treasury; (iii) change in stock of claims on the government forgiven by the private sector. - Monthly data on Treasury balances outstanding, by reference fiscal year, with breakdown of maturities of more than and less than 90 days. - Monthly data on effective debt service (principal and interest) compared with the programmed maturities provided within four weeks after the end of each month. - The list of external loans contracted or in process of negotiation and projected borrowing in the next six months, including financial terms and conditions. - Quarterly reporting: - Information on UPL expenditures monthly, within six weeks after the end of each quarter. - Quarterly reports on budget execution, including rate of execution of poverty-reducing expenditures and use of appropriations by line ministries (National Education, Public Health, Equipment, Agriculture and Livestock). - Quarterly data on expenditures for UPL lines (statement of appropriations approved, disbursed, and used). *Source: International Monetary Fund, Attachment II. Technical Memorandum of Understanding and associated tables in _cr16247 - introduction of the investment* ### 32. The authorities will provide the following information each month, within eight weeks ### 32. The authorities will provide the following information each month, within eight weeks ### Monthly monetary and supervisory reporting - Consolidated balance sheet of monetary institutions and, in applicable cases, the consolidated balance sheets of individual banks. (Monthly; End-month + 8 weeks) - Monetary survey (provisional data). (Monthly; End-month + 8 weeks) - Borrowing and lending interest rates. (Monthly; End-month + 8 weeks) - Customary banking supervision indicators for banks and nonbank financial institutions (if necessary, these same indicators for individual institutions may also be provided). (Banking supervision prudential indicators: Quarterly; End-quarter + 8 weeks) ### Balance of payments reporting (Section J) - Any revision of balance of payments data (including services, private transfers, official transfers, and capital transactions) whenever they occur. (Variable; At the time of the revision.) - Preliminary annual balance of payments data, within six months after the end of the reference year. (Annual; End-year + 6 months) - Balance of payments (final). (Annual; End-year + 6 months) ### Real sector reporting (Section K) - Disaggregated monthly consumer price indexes, within two weeks following the end of each month. (Monthly; End-month + 2 weeks) - The national accounts, within six months after the end of the year. (Annual; End-year + 6 months) - Any revision of the national accounts. (Variable; 8 weeks after the revision) ### Structural reforms and other data (Section L) - Any study or official report on Niger’s economy, within two weeks after its publication. - Any decision, order, law, decree, ordinance, or circular with economic or financial implications, upon its publication or, at the latest, when it enters into force. - Any draft contract in the mining and petroleum sectors, including production and sales volumes, prices, and foreign investment. - Any agreement with private sector stakeholders having economic or financial repercussions for the government, including in the natural resources sector. ### Public finance and treasury reporting (selected items from Summary of Data to be Reported) - Net government position vis-à-vis the banking system. (Monthly; End-month + 6 weeks) - Complete monthly data on net nonbank domestic financing, including: - (i) change in the stock of government securities (Treasury bills and bonds) issued in CFAF on the WAEMU regional financial market and not held by Nigerien commercial banks; - (ii) change in the balance of various deposit accounts at the Treasury; and - (iii) change in the stock of claims on the government forgiven by the private sector. (Monthly; End-month + 6 weeks) - Provisional TOFE, including a breakdown of revenue (DGI, monthly DGD, and DGTCP) and expenditure, including the repayment of domestic wage and nonwage arrears as at end-1999, and the change in Treasury balances outstanding. (Monthly; End-month + 6 weeks) - Data on Treasury balances outstanding (RAP), by reference fiscal year (total and RAP at more than 90 days). (Monthly; End-month + 6 weeks) - Monthly statement of Treasury correspondents’ deposit accounts. (Monthly; End-month + 6 weeks) - Execution of the investment budget. (Quarterly; End-quarter + 6 weeks) - Table of fiscal expenditure execution, unified list expenditure, and HIPC-financed expenditure. (Monthly; End-month + 6 weeks) - Treasury accounts trial balance. (Frequency and reporting requirement in source table) - Monthly statement of the balances of accounts of the Treasury and of other public accounts at the BCEAO: provisional (End-month plus 6 weeks) and final (End-month plus 10 weeks). - Petroleum products pricing formula, petroleum products tax receipts, and pricing differentials. (Frequency and reporting requirement in source table) ### External debt reporting (selected items) - Stock and repayment of external arrears. (Monthly; End-month + 6 weeks) - Breakdown of all new external loans contracted and projected borrowing, including financial terms and conditions. (End-month + 6 weeks) - Table on the monthly effective service of external debt (principal and interest) compared with programmed maturities. (Monthly; End-month + 4 weeks) ### Key program and macroeconomic findings (from statement by Niger authorities) - Program context and shocks: - Refugees and displaced persons rose from approximately 137,000 persons (2015) to 335,277 (2016). - Growth slowed from 7 percent in 2014 to 3.5 percent in 2015. - Customs revenues from re-exports fell by 17 percent in 2015; conventional exports fell by 16 percent in 2015; re-exports fell by 18 percent in 2015 (all in value terms). - Average inflation stood at 1 percent at end-April 2016; WAEMU regional convergence criterion cited as "3 percent". - Fiscal outcomes and projections: - Total revenue fell to 18.1 percent of GDP in 2015 (program projection was 18.7 percent of GDP). - Total government spending exceeded program by 0.7 percent of GDP in 2015. - Monetary growth slowed to 3.6 percent in 2015 after accelerating to more than 25 percent in 2014. - Credit to the economy rose by 13.2 percent in 2015. - Current account deficit increased from 15.1 percent of GDP in 2014 to 17.5 percent of GDP in 2015. - The revised 2016 budget projects a fiscal deficit improvement to 3.7 percent of GDP in 2016. - The new Budget projects total revenue at 18.6 percent of GDP in 2016. - Fiscal adjustments in 2016 aim at a decrease of 0.2 percentage points of GDP of current expenditures compared to 2015 and a fall of 3.8 percent of GDP in domestically financed capital expenditures. - Outlook and risks: - 2016 growth projected at 5.2 percent, contingent on no deterioration in the security situation. - Inflation expected to remain at an annual average of less than 2 percent in 2016. - Medium-term growth expected to exceed 6 percent, supported by major road infrastructure projects, the resumption of the Imouranen Uranium project and the start of the Niger-Chad oil pipeline project expected for 2019. - Policy priorities and reforms: - Strengthen revenue mobilization via customs administration modernization, tax administration reforms (including VAT credit refund mechanism), and strengthening the general treasury and public accounting directorate (DGTCP). - Improve public expenditure control via an operational Budgetary Regulation and Treasury Management Committee (CRGT) and an inter-ministerial regulation committee chaired by the Prime Minister. - Debt management actions: restructuring the debt stock portfolio, cleaning up the debt stock, preferring concessional resources for financing investment, and requesting IMF technical assistance for public private partnership contract framework. - Natural resource management reforms: strengthen institutional framework and transparency in the energy sector and extractive industries; review measures to lower SORAZ refinery costs; advance pipeline negotiations; strengthen SOPAMIN; request technical assistance to evaluate projects and audit mining revenue. - Financial sector development: implement financial sector development strategy 2014-2019 and the National Strategy for Financial Inclusion (adopted July 2015); continue government disengagement from banks' capital in favor of foreign private bank participation. - Business climate reforms: open Business Center - Maison d'entreprise; reduce procedures, time, and cost of business creation; adopt law regulating credit bureau (June 2015); facilitate cross-border transactions; strengthen legal framework for settling trade disputes. *Source: _cr16247 - 32. The authorities will provide the following information each month, within eight weeks* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2016/_cr16247.pdf_