## Statement by Alexandre Barro Chambrier

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### Introduction
- Authorities express appreciation to Fund management and staff for continuous assistance and to the international community for support in the fight against poverty.
- Mali recorded positive real GDP per capita growth since 1995 and reduced inflation to very low levels, but faces structural constraints and a heavy debt burden that impede growth and poverty reduction.
- About three quarters of the population live below the absolute poverty line; large parts lack access to basic social services (education, health, drinking water, decent housing).
- High illiteracy (notably among females) and child malnutrition are cited as serious constraints to human capital development and labor productivity.
- Economy remains highly dependent on the cotton sector.
- Authorities focus on maintaining a stable macroeconomic environment, deepening structural and social reforms, and seek substantial debt relief under the HIPC Initiative.

### Recent economic developments
- Real activity negatively affected by: weak export prices for cotton, poor management at CMDT, increase in world oil prices, acute electricity shortages.
- Real GDP growth for 1999 is estimated at 52, relative to a program objective of some 62 percent.
- Growth drivers: buoyant food production (abundant rainfall) and gold production; cotton production stabilized at around 520,000 metric tons.
- Terms of trade deteriorated by 11 percent.
- External current account deficit (excluding current official transfers) widened to 102 percent, exceeding the program target by 2 percentage points of GDP.
- Consumer price index declined by some 13 percent, compared with a projected 1 percent increase under the program.
- Budgetary contribution of the cotton sector dropped considerably; revenue shortfalls from CET introduction were higher than forecast.
- Government introduced VAT at a single rate of 18 percent with minimum exemptions.
- Strengthened revenue collection led to government savings stabilizing at about 92 percent of GDP, or some 0.8 percentage point of GDP over program target.
- Core government expenditures were within program limits, but total expenditures exceeded program targets by some 2.3 percentage points of GDP.
- Allocations to health and education were maintained at 28 percent of current spending.
- Outstanding audited domestic payments arrears were eliminated as planned.
- Overall fiscal deficit widened by 0.7 percentage point to 9 percent of GDP, or 1.4 percentage point above program target.
- Most quantitative performance criteria and benchmarks for September 1999, December and March 2000 were met, except net bank credit for end-September and end-December 1999, which was slightly exceeded.
- Structural implementation slippages: none of the four structural performance criteria set for end-November 1999 and end-March 2000 were met; only two out of seven structural benchmarks were observed.
- Progress noted in privatization and private sector promotion.

### Corrective actions and policies for the rest of 2000
- New Government (mid-February 2000) set commitment to program in Prime Minister’s Policy Declaration.
- Petroleum retail prices adjusted by 12-18 percent (above the 10 percent proposed by Fund staff); plan to introduce automatic mechanism to reflect world oil price changes.
- Structural reform acceleration in cotton, electricity, telecommunications, and social security sectors.
- Cotton sector actions:
  - Financial audit of CMDT completed in mid-July 2000.
  - Efficiency-enhancement studies initiated.
  - New three-year performance contract expected by end-December 2000.
  - Management restructuring and measures to improve CMDT’s financial position implemented.
- Electricity sector actions:
  - Pre-qualification bids for privatization of 60 percent of EDM issued on April 28, 2000.
  - Final call for bids launched in early August 2000.
- Telecommunications sector actions:
  - Suspension of MALITEL-SA operations that were not consistent with World Bank-agreed policy.
  - Legal and regulatory framework adopted in April 2000.
  - Open call for bids for at least one cellular license to private operators to be launched by end-November 2000.
- Financial sector:
  - Action plan under preparation with the World Bank, envisaging phased divestiture of government interests in banking sector.
- Social security:
  - Audits for CRM and INPS underway; rehabilitation plans to be adopted by end-October 2000.
- Macroeconomic projections and policy targets for 2000:
  - Authorities expect real activity to expand by only 3 percent in 2000, reflecting a projected 11 percent reduction in cotton production and continued high world oil prices.
  - Preparations for CAN 2002 expected to increase government spending by some 1 percentage point of GDP, complemented by private sector contribution.
  - Target to stabilize government revenue at 17 percent of GDP in 2000.
  - Total expenditure to be kept at 26 percent of GDP, stabilizing overall budget deficit at 9 percent of GDP.
  - Government committed to raising share of health and education in current expenditures from 28 percent to 32 percent.
  - Bank credit to the private sector is to expand by some 172 percent.
  - Broad money expected to expand by some 4 percent.
  - Inflation to be contained at below 3 percent.

### The fight against poverty
- 1996: Observatory for Human Development and Poverty Reduction established.
- National Strategy for the Fight Against Poverty (SNLP) prepared with UNDP; presented at donor Roundtable in Geneva on September 16-17, 1998.
- Household consumption surveys conducted in 1988/89, 1994 and 1996 to establish poverty line and profile.
- Poverty incidence estimated to have declined from 71.6 percent in 1996 to 69 percent in 1998 (after increase following 1994 devaluation).
- Poverty concentrated in rural, large families, with elderly or illiterate heads; female population more vulnerable; strong regional disparities.
- Authorities prepared an Interim PRSP outlining preliminary poverty analysis and medium-term policies; comprehensive poverty surveys envisaged in 2000/01.
- Full PRSP to be developed in consultation with government levels, civil society, media, Parliament and donors; full PRSP expected by end-June 2001.
- Authorities emphasize judicial development, improved governance, transparency, administrative decentralization, civil service modernization, privatization, and regional integration.
- Ten-year sectoral strategies developed for health (PRODESS) and education (PRODEC); PRSP will include social indicators monitored regularly.
- Steering committee coordinated by the Ministry of Finance established to monitor the PRSP process.
- Authorities share Joint Staff Assessment concerns: need to establish priorities, evaluate risks carefully, and better account for gender issues.

### Debt Relief under the HIPC Initiative
- Mali reached the decision point under the original HIPC Initiative on September 15, 1998; completion point was set for end-December 1999 conditional on structural reform program remaining on track.
- Midterm review could not be completed before end-1999 due to policy slippages.
- Authorities consider that corrective actions in 2000 and wide-ranging reforms meet conditions for the completion point under the original HIPC Initiative.
- Authorities also consider they have met conditions for the decision point under the enhanced HIPC Initiative given solid track record and high-quality Interim PRSP.
- Expect rapid benefit from interim assistance from the Fund and the World Bank and are determined to meet conditions for the completion point rapidly.

### Conclusion
- Request to the Board to grant waivers for the quantitative performance criterion and the four structural performance criteria that were not observed.
- Request to conclude the first review under the PRGF.
- Request colleagues' support for approval of the decision point under the enhanced HIPC to enable rapid delivery of interim debt relief.

*Statement by Alexandre Barro Chambrier, Executive Director for Mali, September 6, 2000.*

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_Source: https://www.imf.org/-/media/websites/imf/imported-publications/external/np/a4pilot/2000/_stm00126.pdf_