January 13, 2021
PRESS OFFICER: Meera Louis
Phone: +1 202 623-7100Email: MEDIA@IMF.org
Washington, DC: A team from the International Monetary Fund (IMF), led by Aliona Cebotari, held virtual discussions with the Malian Authorities during December 8-21, 2020 on the second and third reviews under the Extended Credit Facility (ECF). The team met with the Minister of Economy and Finance, Mr. Alousséni Sanou, the National Director of the Central Bank of West African States, Mr. Konzo Traoré, senior officials, and development partners.
At the end of the discussions, Ms. Cebotari issued the following statement:
“The IMF mission held productive discussions with the Malian authorities and reached a staff-level agreement on policies and reforms needed to complete the second and third reviews under the ECF. The agreement is subject to approval by IMF management and the Executive Board. Consideration by the Board is tentatively scheduled for the second half of February 2021. Upon approval of the combined reviews, SDR 40 million (around US$58 million) will be made available to Mali.
“Mali has been adversely affected by the COVID-19 pandemic and the socio-political crisis in 2020, against an already difficult security and humanitarian environment. The pandemic—and for a short period the sanctions that followed the August 2020 coup—have slowed activity in several sectors, including transport, hospitality, agriculture and trade, and weighed heavily on livelihoods and businesses given high poverty rates and weak social safety nets. The economy is estimated to have contracted by 2 percent in 2020, with a gradual recovery to around 4 percent expected in 2021. Weaker demand is containing overall inflation, but food price increases due to supply disruptions will disproportionately affect those worse-off.
“Program implementation has been affected by the shocks, but agreement has been reached on bringing it back on track. Fiscal deficits are expected to widen to 5½ percent of GDP in 2020 and 2021 to accommodate the needed pandemic response and weaker economic environment, but emerging pressures from higher wage demands, increases in public employment, poor performance in a few state-owned enterprises and tight external financing are forcing cuts in investment spending.
“The fiscal position needs to be strengthened gradually to ensure its sustainability. Staff and the authorities agreed that fiscal adjustment will start in 2022, with the deficit targeted to narrow to 4½ percent of GDP that year and further to 3 percent of GDP WAEMU ceiling by 2024. To ensure that the adjustment is sustainable, growth-friendly and pro-poor, the permanent increase in current spending needs to be offset by a permanent increase in the revenue base through tax policy measures, to be put in place in conjunction with the 2022 budget.
“At the same time, deeper reforms are needed to contain further pressures on current non-priority spending. Pressures stemming from state-owned enterprises such as the electricity company (EDM-S.A.) and the cotton company (CMDT) require comprehensive policies to improve their financial position, including through stronger monitoring and their stricter adherence to state procurement rules to reduce costs. More sustainable wage-setting policies are also needed to prevent unsustainable increases in the wage bill on the one hand, and to preserve priority social spending and public investment, on the other hand. Steps to initiate these reforms have been agreed on in the context of the program.
“The mission welcomed the steady progress made on structural reforms, which will be deepened over the coming months. Reforms will focus on carrying through efforts to digitalize public services to improve their efficiency and transparency, including digitalizing tax declarations and payments, and interconnecting public administration systems to enable electronic payments, timely access to revenue collection data and interchange of tax data among government agencies. Additional reforms in revenue administration will include strengthening controls over fuel taxation at customs, implementing the valuation of imports based on transaction value, and operationalizing two tax centers for medium-sized businesses. In public financial management, reforms will also focus on strengthening expenditure commitment controls and improving cash management to prevent domestic spending arrears and on completing the treasury single account.
“The mission encouraged the authorities to redouble efforts in strengthening transparency and governance, elevated as key pillars of the Transition Action Plan, which are critical for achieving stronger and more inclusive growth. Staff welcomed planned legislative changes to broaden the list of senior officials subject to asset declarations and to introduce automatic referrals to the judiciary of identified governance irregularities, while also calling for firm implementation and follow-up on these measures in practice. The mission also welcomed the online publication of monthly reports on COVID-19 spending execution and the commissioning of an audit of all COVID spending by the Auditor General’s office, with results expected to be published in 2021. An IMF-led Governance Assessment mission was requested by the authorities and is expected to take place in early 2021.
“The IMF team would like to thank the Malian authorities, including all the technical teams involved, for the open and constructive discussions.”
