Press Release No. 09/254

Press Release: IMF Executive Board Completes Second Review Under PRGF Arrangement for Mali

July 6, 2009

The Executive Board of the International Monetary Fund (IMF) today completed the second review of Mali’s economic performance under a program supported by the Poverty Reduction and Growth Facility (PRGF), opening the way for the government to request a further disbursement amounting to SDR 2 million (about US$3.08 million) under the three-year arrangement. As a result, total disbursements to Mali will amount to SDR 19.99 million (about US$30.79 million).

The Executive Board also approved the authorities' request for waivers of nonobservance of two structural performance criteria concerning the restructuring plan of a bank and the continuous quantitative performance criterion on new external credits.

The PRGF arrangement with Mali was approved on May 28, 2008 (see Press Release No. 08/126) for an amount of SDR 27.99 million (about US$43.11 million).

Following the Executive Board's discussion of Mali's performance, Mr. Takatoshi, Deputy Managing Director and Acting Chair, said:

“The Malian authorities are to be commended for their recent economic achievements despite a difficult global environment. Overall performance under the PRGF-supported program has been broadly satisfactory. The authorities have taken corrective measures to reduce the payment float and restore the track record of structural reforms.

“While the global crisis has had a limited impact on Mali, it nevertheless poses a new set of challenges. Growth projections have been revised downward, on account of lower-than-expected remittances, declining private foreign investment, and a cautious stance of both consumers and businesses. Notwithstanding the improved terms of trade, which reflect buoyant gold prices and declining world oil and food prices, the external position remains vulnerable to shocks. The banking sector, though having limited exposure to troubled credit markets elsewhere, could be affected negatively by a protracted economic slowdown.

“The authorities remain committed to prudent macroeconomic policies. The revised fiscal stance for 2009 appropriately targets a reduction in the payment float and the elimination of value-added-tax credit arrears, while maintaining a strong fiscal impulse to support economic growth. It also responds prudently to new expenditure pressures in support of the agricultural and banking sectors. The higher recourse to regional bank financing linked to the elimination of value-added-tax credit arrears puts pressures on the budget and will have to be repaid over the medium term. Ongoing reforms to increase revenue mobilization and improve debt and public financial management will help alleviate these pressures and strengthen public finances.

“Raising the growth path and reducing poverty require a new impetus to structural reforms. The program for the second half of 2009 focuses not only on fiscal and budgetary reforms but also on a strengthening of the banking and cotton sectors. The authorities remain committed to deepening the reform program with the support of the donor community, and to proceeding with the privatization of key parastatals, including the cotton parastatal CMDT, the Housing Bank of Mali, and the telecommunication company SOTELMA”, added Mr. Kato.