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Press Release: IMF Approves Second Annual ESAF Loan for Niger
July 28, 1997
The International Monetary Fund (IMF) today approved the second annual loan under the Enhanced Structural Adjustment Facility (ESAF)1 for Niger in an amount equivalent to SDR 19.32 million (about US$26 million) to support the government’s 1997/98 economic program. The loan is available in two semiannual installments, the first of which is available immediately.
Background
Since mid-1995, Niger has strengthened its adjustment efforts and is making progress in reducing macroeconomic imbalances. These efforts are beginning to bear fruit as evidenced by a resumption of growth, a decline in inflation, a sharp reduction in the overall consolidated deficit, and an attendant increase in government savings.
Despite a difficult domestic and external environment, the Nigerien authorities implemented the 1996/97 program supported by ESAF loans with determination, and economic developments generally have been encouraging. Although real GDP growth remained somewhat subdued in 1996, inflation was further reduced; and the budgetary outturn was broadly in line with program expectations, owing to strengthened revenue collection efforts, combined with tight control over expenditure, and notably a reduction by one-third in payments for wages and salaries. The government also pressed ahead with its structural reform, developing a privatization strategy for public enterprises, and establishing a privatization agency.
Medium-Term Strategy and the 1997/98 Program
The authorities’ medium-term strategy seeks to further reduce financial imbalances, establish conditions conducive to sustainable economic growth, and significantly reduce poverty. The economic objectives for 1997/98 are to raise real GDP growth to 4-5 percent a year, thereby allowing real per capita income to increase by at least 1 percent a year; reduce inflation to 3 percent by the end of 1997; and contain the external current account deficit (excluding official transfers) at 11.1 percent of GDP in 1997, and lowering it to 10.5 percent of GDP in 1998.
To these ends, the government is determined to improve its financial position by reducing the overall budget deficit to 7.3 percent of GDP by 1998 through enhanced revenue mobilization and a very cautious expenditure policy. The program aims at raising budgetary revenue from the equivalent of 7.8 percent of GDP in 1996 to 9.3 percent of GDP in 1997, and to 10.7 percent of GDP in 1998. The broadening of the tax base and improvements in the efficiency of revenue collection will play a key role in the achievement of these objectives. Expenditure policies willcontinue to ensure that wages and salaries do not crowd out other essential expenditures, especially those on maintenance and key social services.
Structural Reforms
The main reforms planned under the 1997/98 program will address the public enterprise sector and civil service, as well as education, health, and the environment. The government is also taking steps to streamline the regulatory framework and to reduce its involvement in those areas of interest to the private sector. It intends to continue efforts to strengthen legal provisions governing commercial transactions and, in particular, the recovery of commercial bank loans.
Addressing Social and Environmental Issues
The government plans to undertake family planning initiatives and other programs aimed at promoting the quality of life for women. The government is committed to increasing the elementary school enrollment rate to 35 percent in 1999 from 29 percent in 1996, and current budgetary expenditures allocated to health and education will be increased by 10 percent a year in real terms over the period 1997-2000. As the authorities are convinced that an efficient agricultural sector is the key to effective and durable poverty reduction, the government will identify the most ecologically threatened locations and implement priority measures with respect to environmental planning for sustainable development.
The Challenge Ahead
Notwithstanding the adjustment effort undertaken thus far, Niger’s economic and financial situation remains fragile, and steadfast implementation of further actions is needed to improve prospects for growth. Efforts should focus primarily on reducing the budget deficit and fostering private sector development, while supporting key social sectors with a view to establishing the basis for durable growth and the alleviation of poverty.
Niger joined the IMF on April 24, 1963, and its quota [A member ’s quota in the IMF determines, in particular, the amount of its subscription, its voting weight, its access to IMF financing, and its share in the allocation of SDRs.] is SDR 48.3 million (about US$66 million). Niger’s outstanding use of IMF financing currently totals SDR 42 million (about US$57 million).
1 The ESAF is a concessional IMF facility for assisting eligible members that are undertaking economic reform programs to strengthen their balance of payments and improve their growth prospects. ESAF loans carry an interest rate of 0.5 percent a year and are repayable over 10 years, with 5½-year grace period. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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