- Christian Josz
- Published Date:
- October 2013
© 2013 International Monetary Fund
Joint Bank-Fund Library
Mali: achieving strong and inclusive growth with macroeconomic stability / Christian Josz.—Washington, D.C.: International
Monetary Fund, c2013.
p.: col. ill.; cm.
Includes bibliographical references.
International Monetary Fund. African Department (Series)
1. Economic development—Mali. 2. Mali—Economic policy. 3. Petroleum products—Prices—Mali. 4. Finance—Mali. 5. Mali—Foreign economic relations. I. International Monetary Fund.
Disclaimer: The views expressed in this book are those of the authors and should not be reported as or attributed to the International Monetary Fund, its Executive Board, or the governments of any of its member countries.
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Background and Overview1
Until the recent security and political crisis, Mali’s economy grew rapidly and poverty decreased. Per capita growth averaged 3.2 percent during 2001–10. Over the same period, the share of poor households has declined from 56 to 44 percent. As poverty in Mali is mainly rural, the expansion of agricultural production in the second half of the decade was particularly beneficial to the very poor. Sustaining these gains and ensuring that growth remains inclusive is critical for national reconciliation following the recent political and security crisis.
Macroeconomic stability has been maintained, but structural impediments to growth remain. Mali’s economic performance has benefited from policies aimed at overall macroeconomic stability. The peg to the euro in the context of the West African Economic and Monetary Union is the centerpiece of the monetary policy framework, providing an anchor for macroeconomic policymaking. Over the last decade, the viability of the peg has been supported by Mali’s prudent fiscal policy, which has kept basic fiscal balance deficits (i.e., the difference between revenue and expenditure under the authorities’ control) at low levels. The public debt has remained low (below 30 percent of GDP after the debt relief under the enhanced Initiative for Heavily Indebted Poor Countries in 2001 and the Multilateral Debt Relief Initiative in 2006). However, there are risks to external stability: with its economy little diversified, Mali’s balance of payments remains vulnerable to commodity price swings and changes in climatic conditions. The underdeveloped financial sector, poor physical infrastructure, structural bottlenecks, and weaknesses in the overall business environment undermine the country’s external competitiveness.
This paper takes a closer look at selected issues that need to be addressed to increase growth, further reduce poverty, and strengthen external stability:
Chapter 1 casts Mali’s recent economic performance and progress in poverty reduction in a medium-term perspective. It identifies lack of diversification, structural bottlenecks, and impediments to labor mobility as factors that need to be tackled to ensure sustained inclusive growth.
Chapter 2 discusses the negative fiscal, distributional, and economic efficiency consequences of the government’s policy of sheltering domestic consumers from changes in international oil prices. It explores two alternative price-adjustment mechanisms for refined petroleum products and complementary measures to reform fuel subsidies.
Fostering sustained growth and reducing financial sector vulnerabilities requires further financial sector development and strengthening of the supervision of bank and nonbank financial intermediaries—the subject of Chapter 3.
Chapter 4 presents an assessment of Mali’s external stability by examining price and nonprice indicators. Although the real exchange rate is broadly in line with fundamentals, lack of diversification and structural bottlenecks need to be tackled by improvements in the business environment to reduce Mali’s external vulnerabilities, strengthen its competitiveness, and bolster its export performance.