Public Information Notice (PIN) No. 11/159
December 19, 2011
On December 2, 2011, the Executive Board of the International Monetary Fund (IMF) concluded the 2011 Article IV consultation1 and discussed the Ex Post Assessment of Longer-Term Program Engagement (EPA)2 with Niger.
Background
The last Article IV consultation with Niger took place in December 2008. Since then, the country experienced a period of political instability, including a military coup in February 2010, followed by a year-long transition to democracy. A democratically elected government took office in April 2011. The new government has announced firm actions to face rising security threats in the region, accelerate economic development, reduce corruption, and improve governance in the mining sector.
The outlook for the medium term is favorable, thanks to large investments in new oil and uranium mining projects. Rising government revenue from these projects represents a significant opportunity to boost development spending and reduce poverty. At the same time, government involvement in the financing of natural resources projects increases risks for public debt sustainability, while rising revenues from natural resources will increase vulnerability to commodity price fluctuations.
Macroeconomic performance was satisfactory in 2010. Thanks to an excellent harvest, economic activity expanded by 8 percent, recovering strongly from the serious food shortages and sluggish growth in the previous year. While fiscal performance remained broadly on track, the composition of expenditure was affected negatively by a reallocation of outlays for capital investment to ill-targeted fuel subsidies.
Notwithstanding the fallout from the Libyan crisis, economic activity remained buoyant in the first eight months of 2011; for the year as a whole, gross domestic product (GDP) growth could reach almost 4 percent. Although the 2011 harvest has been lower than expected in parts of the country, the impact of rising global food prices on inflation has remained modest. Budget implementation was satisfactory during the first eight months of 2011, and progress was made in reducing fuel subsidies.
The economic prospects for 2012 are favorable. Thanks to the coming onstream of a new oil project and its positive effects on the nonresource sectors of the economy, real GDP growth could reach about 14 percent. The government’s budget for 2012 envisages a basic fiscal deficit on the order of one percent of GDP. The projected revenue from a new oil project and an increased domestic revenue effort should create ample fiscal space for considerable increases in outlays for public investment and social spending in 2012.
The Ex Post Assessment (EPA) analyzed the Fund´s involvement in Niger from 2005 through 2010, under the 2005–08 Poverty Reduction and Growth Facility (PRGF) arrangement and the 2008–11 Extended Credit Facility (ECF) arrangement. The EPA concludes that macroeconomic performance in the period under review was generally satisfactory. Despite the many shocks that affected the economy during this period, including weather-related shocks and political instability, macroeconomic stability was maintained, and prudent fiscal policies allowed for steady increases in priority spending. Progress was made in improving public financial management and debt management, though weaknesses remained in budget execution and revenue mobilization.
Executive Board Assessment
Executive Directors welcomed Niger’s economic recovery since mid 2010 and its favorable medium-term outlook underpinned by the coming onstream of new natural resource projects. Notwithstanding the positive prospects, the country faces significant challenges, including a high poverty rate and vulnerability to weather-related and commodity price shocks. To address these challenges and to secure sustainable growth, Directors stressed the need for continued implementation of institutional and policy reforms.
Directors considered that the authorities’ development strategy rightly targets investment in infrastructure, agriculture, health, and education. At the same time, they underscored that improvements in the business climate will be essential to stimulate inclusive growth and employment. Although higher revenue would provide significant space for development spending in the coming years, it will be important to plan public investment programs carefully, taking into account the implications for future current spending, available financing, and implementation capacity constraints.
Directors called for a strengthening of the medium-term fiscal framework to help align the budget with development priorities, while maintaining debt sustainability. They encouraged the authorities to consider creating a fiscal buffer to mitigate the negative effects of exogenous shocks and stabilize expenditure over time. Directors looked forward to continued efforts to further strengthen revenue mobilization and public financial management, and better targeting of subsidies.
Directors noted that Niger’s debt distress indicators had recently shifted from low to moderate risk as a result of public involvement in the financing of natural resources projects. To preserve debt sustainability, they encouraged the authorities to minimize nononcessional borrowing, prioritize the selection of public investments, and further strengthen their debt management.
Directors welcomed the steps taken to increase transparency in the petroleum and mining sectors, including the compliance with the Extractive Industries Transparency Initiative. They encouraged the authorities to continue to strengthen government oversight of the petroleum and mining sectors.
Directors supported the conclusions of the EPA. They agreed that Fund’s engagement in Niger since 2005 has been constructive and contributed to macroeconomic stability. Directors emphasized that continued Fund engagement should be based on key reform priorities which include strengthening public finance management and revenue mobilization; ensuring maximum return to the economy from extractive industries; developing the financial sector in line with Financial Sector Assessment Program (FSAP) recommendations; and improving the incentives for private investment and business activity.
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| Niger: Selected Economic and Financial Indicators, 2009-16 |
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2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
| |
|
Prel. |
Proj. |
| |
| |
(Annual percentage change, unless otherwise indicated) |
|
National income and prices |
|
|
|
|
|
|
|
|
|
GDP at constant prices |
-0.9 |
8.0 |
3.8 |
14.1 |
6.5 |
7.2 |
6.9 |
7.0 |
|
Non-agricultural GDP at constant prices |
5.5 |
0.7 |
7.6 |
17.6 |
6.9 |
7.8 |
7.3 |
72 |
|
Non-oil and mineral GDP |
|
|
|
5.9 |
5.6 |
5.8 |
6.0 |
6.2 |
|
GDP deflator |
4.1 |
1.5 |
4.3 |
2.2 |
1.9 |
2.1 |
2.0 |
2.0 |
|
Consumer price index |
|
|
|
|
|
|
|
|
|
Annual average |
1.1 |
0.9 |
3.7 |
2.0 |
2.0 |
2.0 |
2.0 |
2.0 |
|
End of period |
-0.6 |
2.7 |
3.4 |
2.0 |
2.0 |
2.0 |
2.0 |
2.0 |
|
External sector |
|
|
|
|
|
|
|
|
|
Exports, f.o.b. (CFA francs) |
15.2 |
8.1 |
19.7 |
37.4 |
12.0 |
14.2 |
16.7 |
9.3 |
|
Of which : non-uranium exports |
31.0 |
-3.3 |
15.4 |
54.8 |
21.8 |
3.5 |
3.2 |
11.4 |
|
Imports, f.o.b. (CFA francs) |
40.2 |
4.7 |
19.6 |
17.0 |
-0.3 |
-1.3 |
9.4 |
4.9 |
|
Exports volume |
13.6 |
0.0 |
12.5 |
34.4 |
13.1 |
11.9 |
12.8 |
8.9 |
|
Imports volume |
35.3 |
-10.3 |
23.7 |
26.2 |
-3.0 |
-4.0 |
7.0 |
2.1 |
|
Terms of trade (deterioration -) |
3.9 |
-3.6 |
8.7 |
12.4 |
-2.4 |
1.6 |
0.3 |
0.6 |
|
Government finances |
|
|
|
|
|
|
|
|
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Total revenue |
-17.7 |
6.1 |
15.4 |
36.2 |
13.5 |
11.2 |
13.2 |
10.7 |
|
Total expenditure and net lending |
11.3 |
-4.2 |
32.0 |
29.0 |
15.4 |
10.8 |
9.2 |
6.8 |
|
Of which: current expenditure |
0.0 |
21.8 |
14.8 |
-1.9 |
21.5 |
14.1 |
12.3 |
6.3 |
|
Of which: capital expenditure |
25.1 |
-29.5 |
43.1 |
86.7 |
11.1 |
8.2 |
6.9 |
7.5 |
| |
(Annual change as percent of beginning of period) |
|
Money and credit |
|
|
|
|
|
|
|
|
|
Domestic credit |
41.0 |
9.1 |
11.4 |
13.6 |
10.4 |
13.1 |
10.0 |
9.2 |
|
Credit to the government (net) |
28.9 |
1.4 |
-0.4 |
-4.6 |
1.0 |
1.2 |
-1.5 |
-4.6 |
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Credit to the economy |
12.1 |
7.7 |
11.8 |
18.2 |
9.4 |
12.0 |
11.5 |
13.8 |
|
Net domestic assets |
41.2 |
1.6 |
11.4 |
13.6 |
10.4 |
13.1 |
10.0 |
9.2 |
|
Broad money |
18.3 |
22.6 |
8.2 |
16.6 |
8.5 |
11.8 |
14.0 |
9.1 |
|
Velocity of broad money (in percent) |
5.3 |
4.7 |
4.7 |
4.7 |
4.7 |
4.6 |
4.4 |
4.4 |
| |
(Percent of GDP, unless otherwise indicated) |
|
Government finances |
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|
|
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Total revenue |
14.7 |
14.2 |
15.1 |
17.6 |
18.5 |
18.8 |
19.5 |
19.8 |
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Total expenditure and net lending |
24.6 |
21.5 |
26.2 |
28.9 |
30.8 |
31.2 |
31.2 |
30.5 |
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Current expenditure |
12.1 |
13.5 |
14.3 |
12.0 |
13.4 |
14.0 |
14.4 |
14.1 |
|
Capital expenditure |
12.5 |
8.0 |
10.6 |
16.9 |
17.4 |
17.2 |
16.8 |
16.6 |
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Basic balance (excluding grants)1 |
-4.1 |
-3.0 |
-4.0 |
-0.7 |
-1.5 |
-1.5 |
-0.8 |
-0.1 |
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Overall balance (commitment basis, including grants) |
-5.5 |
-2.5 |
-3.5 |
-3.5 |
-4.7 |
-5.0 |
-4.5 |
-3.8 |
|
Gross investment |
33.0 |
45.9 |
38.9 |
34.9 |
29.1 |
26.7 |
26.4 |
26.3 |
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Of which: non-government investment |
25.2 |
41.1 |
32.6 |
25.4 |
19.0 |
16.4 |
16.4 |
16.4 |
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government |
7.8 |
4.8 |
6.3 |
9.5 |
10.1 |
10.3 |
10.1 |
9.9 |
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Change in stocks |
-0.3 |
0.5 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Gross national savings |
7.9 |
24.9 |
11.4 |
8.5 |
8.6 |
13.2 |
14.0 |
15.9 |
|
Of which: non-government |
1.6 |
19.4 |
5.3 |
0.3 |
0.5 |
5.1 |
6.1 |
7.7 |
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Domestic savings |
5.7 |
17.4 |
7.1 |
6.8 |
8.0 |
12.6 |
14.4 |
16.8 |
|
External current account balance (including grants) |
-25.0 |
-21.0 |
-27.5 |
-26.3 |
-20.5 |
-13.4 |
-12.4 |
-10.4 |
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Debt service ratio as percent of: |
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|
|
Exports of goods and services |
2.5 |
2.6 |
4.1 |
3.0 |
2.8 |
2.6 |
2.3 |
2.0 |
|
Government revenue |
3.5 |
3.9 |
6.2 |
4.4 |
4.2 |
3.9 |
3.6 |
3.1 |
|
NPV of external debt |
10.9 |
11.8 |
25.5 |
23.6 |
23.4 |
23.4 |
23.5 |
23.8 |
|
Foreign aid |
6.1 |
6.1 |
12.1 |
12.9 |
12.9 |
12.9 |
12.7 |
12.3 |
| |
(Billions of CFA francs) |
|
GDP at current market prices |
2,481 |
2,722 |
2,946 |
3,434 |
3,725 |
4,078 |
4,447 |
4,852 |
|
Overall balance of payments |
-89.8 |
99.1 |
-19.4 |
17.9 |
-14.8 |
-11.1 |
34.2 |
-2.2 |
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Sources: Nigerien authorities; and IMF staff estimates and projections.
1Rvenue minus expenditure net of externally-financed capital expenditure. |
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| Niger: Selected Economic and Financial Indicators, 2009-16 |
| |
| |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
| |
|
Prel. |
Proj. |
| |
| |
(Annual percentage change, unless otherwise indicated) |
|
National income and prices |
|
|
|
|
|
|
|
|
|
GDP at constant prices |
-0.9 |
8.0 |
3.8 |
14.1 |
6.5 |
7.2 |
6.9 |
7.0 |
|
Non-agricultural GDP at constant prices |
5.5 |
0.7 |
7.6 |
17.6 |
6.9 |
7.8 |
7.3 |
72 |
|
Non-oil and mineral GDP |
|
|
|
5.9 |
5.6 |
5.8 |
6.0 |
6.2 |
|
GDP deflator |
4.1 |
1.5 |
4.3 |
2.2 |
1.9 |
2.1 |
2.0 |
2.0 |
|
Consumer price index |
|
|
|
|
|
|
|
|
|
Annual average |
1.1 |
0.9 |
3.7 |
2.0 |
2.0 |
2.0 |
2.0 |
2.0 |
|
End of period |
-0.6 |
2.7 |
3.4 |
2.0 |
2.0 |
2.0 |
2.0 |
2.0 |
|
External sector |
|
|
|
|
|
|
|
|
|
Exports, f.o.b. (CFA francs) |
15.2 |
8.1 |
19.7 |
37.4 |
12.0 |
14.2 |
16.7 |
9.3 |
|
Of which : non-uranium exports |
31.0 |
-3.3 |
15.4 |
54.8 |
21.8 |
3.5 |
3.2 |
11.4 |
|
Imports, f.o.b. (CFA francs) |
40.2 |
4.7 |
19.6 |
17.0 |
-0.3 |
-1.3 |
9.4 |
4.9 |
|
Exports volume |
13.6 |
0.0 |
12.5 |
34.4 |
13.1 |
11.9 |
12.8 |
8.9 |
|
Imports volume |
35.3 |
-10.3 |
23.7 |
26.2 |
-3.0 |
-4.0 |
7.0 |
2.1 |
|
Terms of trade (deterioration -) |
3.9 |
-3.6 |
8.7 |
12.4 |
-2.4 |
1.6 |
0.3 |
0.6 |
|
Government finances |
|
|
|
|
|
|
|
|
|
Total revenue |
-17.7 |
6.1 |
15.4 |
36.2 |
13.5 |
11.2 |
13.2 |
10.7 |
|
Total expenditure and net lending |
11.3 |
-4.2 |
32.0 |
29.0 |
15.4 |
10.8 |
9.2 |
6.8 |
|
Of which: current expenditure |
0.0 |
21.8 |
14.8 |
-1.9 |
21.5 |
14.1 |
12.3 |
6.3 |
|
Of which: capital expenditure |
25.1 |
-29.5 |
43.1 |
86.7 |
11.1 |
8.2 |
6.9 |
7.5 |
| |
(Annual change as percent of beginning of period) |
|
Money and credit |
|
|
|
|
|
|
|
|
|
Domestic credit |
41.0 |
9.1 |
11.4 |
13.6 |
10.4 |
13.1 |
10.0 |
9.2 |
|
Credit to the government (net) |
28.9 |
1.4 |
-0.4 |
-4.6 |
1.0 |
1.2 |
-1.5 |
-4.6 |
|
Credit to the economy |
12.1 |
7.7 |
11.8 |
18.2 |
9.4 |
12.0 |
11.5 |
13.8 |
|
Net domestic assets |
41.2 |
1.6 |
11.4 |
13.6 |
10.4 |
13.1 |
10.0 |
9.2 |
|
Broad money |
18.3 |
22.6 |
8.2 |
16.6 |
8.5 |
11.8 |
14.0 |
9.1 |
|
Velocity of broad money (in percent) |
5.3 |
4.7 |
4.7 |
4.7 |
4.7 |
4.6 |
4.4 |
4.4 |
| |
(Percent of GDP, unless otherwise indicated) |
|
Government finances |
|
|
|
|
|
|
|
|
|
Total revenue |
14.7 |
14.2 |
15.1 |
17.6 |
18.5 |
18.8 |
19.5 |
19.8 |
|
Total expenditure and net lending |
24.6 |
21.5 |
26.2 |
28.9 |
30.8 |
31.2 |
31.2 |
30.5 |
|
Current expenditure |
12.1 |
13.5 |
14.3 |
12.0 |
13.4 |
14.0 |
14.4 |
14.1 |
|
Capital expenditure |
12.5 |
8.0 |
10.6 |
16.9 |
17.4 |
17.2 |
16.8 |
16.6 |
|
Basic balance (excluding grants)1 |
-4.1 |
-3.0 |
-4.0 |
-0.7 |
-1.5 |
-1.5 |
-0.8 |
-0.1 |
|
Overall balance (commitment basis, including grants) |
-5.5 |
-2.5 |
-3.5 |
-3.5 |
-4.7 |
-5.0 |
-4.5 |
-3.8 |
|
Gross investment |
33.0 |
45.9 |
38.9 |
34.9 |
29.1 |
26.7 |
26.4 |
26.3 |
|
Of which: non-government investment |
25.2 |
41.1 |
32.6 |
25.4 |
19.0 |
16.4 |
16.4 |
16.4 |
|
government |
7.8 |
4.8 |
6.3 |
9.5 |
10.1 |
10.3 |
10.1 |
9.9 |
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Change in stocks |
-0.3 |
0.5 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Gross national savings |
7.9 |
24.9 |
11.4 |
8.5 |
8.6 |
13.2 |
14.0 |
15.9 |
|
Of which: non-government |
1.6 |
19.4 |
5.3 |
0.3 |
0.5 |
5.1 |
6.1 |
7.7 |
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Domestic savings |
5.7 |
17.4 |
7.1 |
6.8 |
8.0 |
12.6 |
14.4 |
16.8 |
|
External current account balance (including grants) |
-25.0 |
-21.0 |
-27.5 |
-26.3 |
-20.5 |
-13.4 |
-12.4 |
-10.4 |
|
Debt service ratio as percent of: |
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|
|
|
|
|
|
Exports of goods and services |
2.5 |
2.6 |
4.1 |
3.0 |
2.8 |
2.6 |
2.3 |
2.0 |
|
Government revenue |
3.5 |
3.9 |
6.2 |
4.4 |
4.2 |
3.9 |
3.6 |
3.1 |
|
NPV of external debt |
10.9 |
11.8 |
25.5 |
23.6 |
23.4 |
23.4 |
23.5 |
23.8 |
|
Foreign aid |
6.1 |
6.1 |
12.1 |
12.9 |
12.9 |
12.9 |
12.7 |
12.3 |
| |
(Billions of CFA francs) |
|
GDP at current market prices |
2,481 |
2,722 |
2,946 |
3,434 |
3,725 |
4,078 |
4,447 |
4,852 |
|
Overall balance of payments |
-89.8 |
99.1 |
-19.4 |
17.9 |
-14.8 |
-11.1 |
34.2 |
-2.2 |
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Sources: Nigerien authorities; and IMF staff estimates and projections.
1Rvenue minus expenditure net of externally-financed capital expenditure. |
1 Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country’s authorities. An explanation of any qualifiers used in summing ups can be found here: http://www.imf.org/external/np/sec/misc/qualifiers.htm.
2 An EPA is required for all members having longer-term program engagement with the Fund. EPAs are intended to provide an opportunity to step back from continuing program relations to consider an analysis of the economic problems facing the country, review progress under Fund-supported programs, and draw forward-looking lessons for future Fund engagement.
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