Mali: Supporting Growth in the Face of Security Challenges

IMF News, September 4, 2019

Source details

Mali faces an intense security crisis dating back to 2012 that has long-lasting economic and humanitarian impacts.
Security spending is consuming an increasing share of overall public spending, complicating the preservation of spending on social services and development investment.
The difficult security situation weighs on economic activity and development prospects and constrains the government’s ability to restore state presence across the country.

The IMF approved financial assistance under the Extended Credit Facility (ECF) amounting to about $200 million to be disbursed over three years in support of the government’s efforts to achieve higher and more inclusive growth, economic diversification, and greater resiliency.
Broad objective: support the government’s medium-term development strategy (CREDD) focused on inclusive job creation, economic diversification, and greater resiliency.

The program focuses on three key areas to address immediate challenges:
- creating fiscal space to safeguard priority social and infrastructure spending, while accommodating necessary security expenditures and preserving macroeconomic stability;
- reforming the energy sector; and
- supporting reforms to improve governance and transparency.

Creating fiscal space is critical to allow investment, security, and social spending.
Immediate priority: improve domestic revenue mobilization.
Government’s ECF-supported program includes corrective measures to:
- address the sharp decline in tax revenue collection experienced in 2018;
- modernize the tax administration;
- enforce taxpayer compliance;
- improve the effectiveness of mining sector taxation;
- further streamline tax exemptions.
Performance during the first half of the year indicates that the government’s efforts are already beginning to bear fruit and that collections are broadly as targeted, but the reforms need to be continued.
Reinforcing public financial management is highlighted to ensure that public spending is more effective.

Urgent objective: put the country’s electricity company (EDM) on a sound financial footing so it can provide electricity to Malian businesses and households in an efficient and cost-effective manner.
Reliable and cost-effective electricity is considered a crucial ingredient of economic development.

Governance, including corruption, is identified as a critical issue that the government recognizes must be addressed to anchor macroeconomic stability and support inclusive growth.
Key governance measures include:
- strengthening tax and customs administration;
- further improvement in public financial management;
- better follow-up of governance issues flagged by the Office of the Auditor General;
- pursuing the revision of the law against unlawful enrichment to widen the scope of officials that are subject to the asset declaration obligation.

The implementation of the ECF-supported policies aims to create fiscal space for restoring state presence over the entire country.
The government has already allocated resources to improve delivery of social services, notably in health care and education, to the center and the north.
A comprehensive peace plan, involving fiscal transfers to regions, was reached in 2015 but its implementation has been challenging.

Source: IMF news article "Mali: Supporting Growth in the Face of Security Challenges", September 4, 2019.