Journal Issue
Share
Article

Mali

Author(s):
International Monetary Fund
Published Date:
March 2010
Share
  • ShareShare
Show Summary Details

I. Background

1. Mali’s fifth PRGF/ECF arrangement was approved in mid-2008 in the context of the 2008 food and fuel crisis. It aims at achieving further fiscal consolidation and setting the stage for sustained poverty reduction through higher growth rates. Previous arrangements had sought to develop the country’s public finances and to support a broad range of structural reforms. Considerable progress was made: the tax to GDP ratio rose from 9 percent in 1995 to nearly 15 percent in 2006; public financial management capacity improved apace; and fiscal consolidation took place while implementing the country’s poverty reduction strategy. Many public enterprises were shifted to private ownership, and advances were made in various other areas. Yet, progress toward the Millennium Development Goals remained uneven, and the economy is still highly vulnerable to exogenous shocks.

2. Implementation of the ECF-supported program has been challenged by the global financial crisis and the ensuing global slowdown. The new program aims to continue prudent fiscal policies and complementary reforms. In particular, it aims to bring reforms of previous programs to their conclusion; to strengthen growth prospects, notably through appropriate policy decisions regarding public financial support to agriculture; and to provide an enabling policy framework to address the external and climatic shocks to which Mali remains highly vulnerable. The 2008 food and oil crisis challenged program implementation, but performance was broadly satisfactory (Tables 1 and 69, Box 1). While annual inflation surged to 13 percent in 2008, a good harvest yielded growth of 5 percent, and buoyant gold exports prevented a greater deterioration of the external current account balance. The basic fiscal deficit (overall deficit excluding grants and foreign-financed capital and HIPC spending) was limited to 1 percent of GDP, but accompanied by a significant buildup in the domestic payment float by the end of 2008.

Box 1.The 2008 Progress Report on the Poverty Reduction Strategy (PRSP)

On September 3, 2009, the Council of Ministers approved the 2008 PRSP progress report. The report noted the difficulties presented first by the food and fuel shocks and later by the global financial crisis, yet acknowledged that some of the measures taken to attenuate their impact—notably tax exemptions—were not well targeted and had a limited effect to protect the poor. The report recognizes the importance of the excellent 2008 harvest in avoiding stronger impacts from these shocks, and attributes much of the strong rise in production to the government’s Rice Initiative. Going forward, the report makes a range of recommendations, including further efforts to develop social protection programs, provided that they are well targeted; measures to reduce Mali’s vulnerability to external shocks; and acceleration of the statistics master plan.

3. The sharp rise in the payment float and the emergence of domestic arrears in 2008 needed to be addressed in the context of the program for 2009. To this effect, the government revised its fiscal program, identified lower-priority spending items that could be frozen, and implemented a strict regulation of spending. The basic fiscal deficit target for 2009 was revised accordingly, from 2 percent to 1½ percent of GDP at the time of the second ECF review.

II. Recent Economic Developments and 2009 Program Implementation

4. Economic performance in the first three quarters of 2009 has been relatively good (Letter of Intent—LOI, paras. 2-7). Mali has not been directly affected by the financial crisis, and the unwinding of the 2008 fuel and food shocks has played an important role in offsetting the negative effects of the global downturn. Inflation has declined to less than 2 percent; growth projections have been revised upward to 4.3 percent; and the balance of payments has been robust, buoyed by increasing gold export prices (Table 1, Figure 1). All quantitative performance criteria and benchmarks through end-June were observed (Table 2). The authorities have continued to make adequate progress on the structural reform agenda, and observed all of the structural benchmarks for the third program review (though logistical problems delayed the opening of the medium taxpayer office from September to November, Table 4). Preliminary data suggest the end-September quantitative benchmarks were also observed with comfortable margins. Moreover, the privatization of the state telecom firm SOTELMA was completed in July, bringing in some US$0.4 billion (4 percent of GDP). Together with the Fund allocations of SDR 74 million in August, this had a strongly positive impact on the balance of payments through the third quarter.

Table 1.Mali: Quantitative Performance Criteria and Indicative Targets for 20091
2009
MarchJuneSept.Dec.
Indic. TargetsAdjustedActualRev. Perf. CriteriaAdjustedActualRev. Ind. TargetsAdjustedPrel.Perf. CriteriaRev. Crit
Quantitative performance criteria1(CFAF billions)
Net domestic financing of the Government (ceiling)210.011.813.1745.040.1−5.050.032.9−4.333.449.4
Of which: Bank and market financing215.016.822.3780.075.155.190.072.9−136.962.5−101.5
Cumulative increase in external payments arrears (ceiling)30.00.00.00.00.00.00.00.00.00.00.0
New external borrowing at terms of one year or more contracted or guaranteed by the government on nonconcessional terms3, 40.00.017.580.00.00.00.00.00.00.00.0
New short-term external credits (less than one year) contracted or guaranteed by the government (ceiling)30.00.00.00.00.00.00.00.00.00.00.0
Net tax revenue140.0140.0143.5290.0290.0319.9430.0430.0451.3603.0603.0
Financial indicators (floors)
Basic fiscal balance−10.0−10.017.1−20.0−20.066.1−40.0−40.023.7−62.0−78.0
Underlying basic fiscal balance5−62.0
Memorandum items:
External budgetary assistance during the year1620.06.438.513.052.053.292.092.0
HIPC Initiative debt relief11.01.86.39.48.110.811.211.2

Cumulative figures from the beginning of each year. Noncontinuous performance criteria at end-March and end-September 2009 are quantitative benchmarks. See technical memorandum of understandings for definitions.

These quantitative targets are before payment of VAT credits in arrears. The revised targets for the end-June, end-September, and end-December 2009 reflect the recapitalization of the Housing Bank of Mali (BHM) for CFAF 19.1 billion in May 2009 and net projected reductions of the payment float by CFAF 45 billion at end-June and end-September 2009, and CFAF 30 billion at end-December 2009 (the program includes an adjustor for any deviations from the targets on the reduction of the payment float).

These performance criteria will be monitored on a continuous basis.

Grant component equal to or higher than 35 percent.

Excluding expenditures financed with funds from the privatization of SOTELMA.

General budget support only.

The nonobservance of the quantitative indicators for net domestic financing and bank and market financing results from a bond issue that was initiated in December 2008 but effective on January 2, 2009, leading to a downward correction of CFAF 12.3 billion at end-December 2008 and an upward revision of the same amount at end-March 2009 in market financing.

Part of two CFAF syndicated loans that were signed in April and May 2009 for a total of CFAF 38 billion for the payment of VAT credit arrears and that involved non-Malian banks in the WAEMU and CEMAC CFA franc zones; subsequently resold to Malian ba

Cumulative figures from the beginning of each year. Noncontinuous performance criteria at end-March and end-September 2009 are quantitative benchmarks. See technical memorandum of understandings for definitions.

These quantitative targets are before payment of VAT credits in arrears. The revised targets for the end-June, end-September, and end-December 2009 reflect the recapitalization of the Housing Bank of Mali (BHM) for CFAF 19.1 billion in May 2009 and net projected reductions of the payment float by CFAF 45 billion at end-June and end-September 2009, and CFAF 30 billion at end-December 2009 (the program includes an adjustor for any deviations from the targets on the reduction of the payment float).

These performance criteria will be monitored on a continuous basis.

Grant component equal to or higher than 35 percent.

Excluding expenditures financed with funds from the privatization of SOTELMA.

General budget support only.

The nonobservance of the quantitative indicators for net domestic financing and bank and market financing results from a bond issue that was initiated in December 2008 but effective on January 2, 2009, leading to a downward correction of CFAF 12.3 billion at end-December 2008 and an upward revision of the same amount at end-March 2009 in market financing.

Part of two CFAF syndicated loans that were signed in April and May 2009 for a total of CFAF 38 billion for the payment of VAT credit arrears and that involved non-Malian banks in the WAEMU and CEMAC CFA franc zones; subsequently resold to Malian ba

Figure 1.Mali: Macroeconomic Developments, 2007-12

Source: Malian authorities; and IMF staff estimates

Table 2.Mali: Quantitative Performance Criteria and Indicative Targets for 20101
2010
MarchJuneSep.Dec.
Indic. TargetsPerf. CriteriaIndic. TargetsIndic. Targets
Quantitative performance criteria1(CFAF billions)
Net domestic financing of the Government (ceiling)0.00.010.030.0
Of which: Bank and market financing0.00.010.030.0
Cumulative increase in external payments arrears (ceiling)20.00.00.00.0
New external borrowing at terms of one year or more contracted or guaranteed by the government on nonconcessional terms2,30.00.00.00.0
New short-term external credits (less than one year) contracted or guaranteed by the government (ceiling)2, 30.00.00.00.0
Net tax revenue130.0300.0470.0670.0
Financial indicators (floors)
Basic fiscal balance−30.0−40.0−70.0−75.0
Basic fiscal balance, adjusted410.00.0−20.0−50.0
Memorandum items:
External budgetary assistance during the year120.050.080.0125.3
HIPC Initiative debt relief13.16.29.312.4

Cumulative figures from the beginning of each year. Noncontinuous performance criteria at end-March and end-September 2009 are quantitative benchmarks. See technical memorandum of understandings for definitions.

These performance criteria will be monitored on a continuous basis.

Grant component equal to or higher than 35 percent.

Excluding expenditures financed with funds from the privatization of SOTELMA.

Cumulative figures from the beginning of each year. Noncontinuous performance criteria at end-March and end-September 2009 are quantitative benchmarks. See technical memorandum of understandings for definitions.

These performance criteria will be monitored on a continuous basis.

Grant component equal to or higher than 35 percent.

Excluding expenditures financed with funds from the privatization of SOTELMA.

Table 3.Mali: Structural Benchmarks for the Third and Fourth Reviews Under the PRGF Program
MeasuresStatus
For end-September 2009 (in the context of the 3rd program review)
1Put in place the tax center for medium-sized enterprises (CIME) and start up its activities.Observed at end-November 2009
2Prepare a government cash flow plan consistent with budget nomenclature (section, economic code) to facilitate (i) quarterly monitoring of budget execution in terms of commitment, validation, payment authorization, and payment of expenditure, and (ii) better alignment of budget execution with available resources.Observed at end-September 2009
3Regarding monitoring of the cotton sector and in consultation with the IMF, prepare a monthly financial plan for the 2009/10 crop season of the financial operations (revenue, commitments, payment, debt, amounts unpaid) of the various participants in the sector (producers, CMDT, suppliers, banks, the government).Observed at end-September 2009
4Regarding government support for the agricultural sector and preparation of the 2010 budget, put in place a dedicated, targeted input subsidization system for grain and cotton crops, including modalities for implementation, follow-up, and assessment.Observed at end-September 2009
For end-December 2009 (in the context of the 4th program review)
1On the basis of the evaluation of the budgetary payment float at end-March 2008 by the Auditor General and the evaluation of the payment float at end-March 2009 by the Controller General’s Office and the Inspectorate General of Finance, put in place a system to monitor budgetary float supported by improvements in the Treasury’s accounting, cash flow management, and information systems, in consultation with IMF staff.
2By government decision, adopt a strategy and timeframe for government divestment of the Banque de l’Habitat du Mali (BHM).
3Finalize the government study on the macroeconomic impact of the gold mining sector (balance of payments, growth, employment, budget) and its medium-term prospects.
4In conjunction with the BCEAO, prepare (i) an exhaustive inventory of the bank accounts taken into account in the net government position, and (ii) an appropriate methodology for recording movements on these accounts, based on an accepted classification (such as projects, correspondents, etc.) in the government flow of funds table (TOFE).
Table 4.Mali: Structural Benchmarks for the Fifth Review Under the PRGF Program
Measures
For end-June 2010
1Implement the new expenditure management software PRED5.
2Introduce new reporting on the financial operations of the State (the “TOFE” table) which conforms to best international practices, including for the presentation of domestic financing.
3Create an interministerial committee for treasury management planning under the authority of the Minister of Economy and Finance, with a permanent technical secretariat provided by Treasury
4Prepare a draft policy paper on the role that the State is likely to play in the cotton sector after the privatization of the CMDT.

5. Fiscal performance has been largely as envisaged. Collections though October suggest that the revenue target for the year will be met. The basic deficit and domestic financing targets (excluding any uses of SOTELMA’s privatization receipts, see below) are also expected to be met, as the authorities have maintained a tight grip on expenditure, overperforming substantially in the first half in order to aggressively settle obligations from 2008. Moreover, the program objective of reducing the domestic payment arrears and float by the equivalent of 2 percent of GDP is likely to be overshot as a result of additional financing provided by the regional central bank (BCEAO) for that purpose in an amount equivalent to the general SDR allocation.12 The reduction of the domestic payment float has been reported to have a positive impact on the stock of nonperforming loans in the banking sector. This deleveraging of the private sector is expected to minimize the inflationary impact of the large inflow of funds, while supporting business activity.

III. Program Issues

A. The Macroeconomic Framework for the Medium-Term

6. The global recovery is expected to translate slowly into improved prospects for Mali. Despite a challenging international environment, real growth is projected to rise in 2010 to 4.8 percent.3 The primary sector will benefit from a gradual turnaround of the cotton industry and a continuation of limited government subsidies on agricultural inputs. A buoyant construction sector supported by public investment and a short-term expansion of the mining sector will engineer a slight recovery of the secondary sector. Sluggish economic activity and external demand will, however, result in a slower recovery of the services sector.

7. The main policy challenge over the medium term is to address the projected decline of the mining sector. The mines that make Mali the third largest gold exporter in Africa will see a substantial decline in output over the next five to ten years as known reserves become depleted. Recent exploration has shown considerable promise for future production of gold and other minerals, such as bauxite, iron, and other minerals. The commercial potential of these deposits, however, as well as the willingness of investors to develop them, has not yet been demonstrated. The projected decline of the sector over the medium term will constrain economic growth, put pressure on the balance of payments, exacerbate the poverty reduction objectives, and complicate fiscal policy.

8. Maintaing prudent macroeconomic policies and accelerating the structural reform program to unleash private sector development will have to be a priority. Improved economic governance and the creation of an enabling business environment are required for the success of this economic transition. Fiscal policy will play a key role in supporting the economic adjustment process and the government poverty reduction objectives, but it will have to remain sustainable and keep Mali’s indebtedness under control. To this end, it will be important that Mali’s underlying basic fiscal balance (that is, excluding use of privatization revenue) be contained to levels that draw little or no financing from the domestic private sector, that public financial management continue to be improved to ensure greater quality of spending, and that external debt management be strengthened. Particular attention will be needed to control the wage bill, despite the recruitment of new teachers and health personnel.

9. In the short term, Mali benefits from the availability of SOTELMA privatization receipts that the authorities intend to use wisely to promote their growth and poverty reduction objectives. These receipts provide additional fiscal space and add an additional cushion to international reserves, but will need to be managed carefully. The authorities intend to use these exceptional resources (net of SOTELMA’s severance payments made in 2009) over 2010-12 on non-recurrent spending aimed at raising economic growth. Not all details have yet been worked out, but funds are being allocated to the eight priority areas of President Touré’s 2007-12 Economic and Social Development Plan. About one-fourth of the money is destined for infrastructure, agriculture, and the social sectors; one-fourth for counterpart funds to co-finance public investment with donors; another one-fourth for paying down domestic debt; and the balance for housing construction, decentralization, support to small enterprises, and other uses. SOTELMA’s privatization receipts have been deposited in a special account at the BCEAO and the authorities have committed to full budgeting of their uses. Over the next three years, these expenditures are expected to add on average 1 percent of GDP per year to the fiscal deficit.

B. The 2010 Program and Fiscal Policy

10. For 2010, the authorities envisage a moderate fiscal expansion through the use of SOTELMA’s privatization revenue, with a view to supporting economic growth of nearly 5 percent (LOI paras. 14-17). The extent of this fiscal impulse is still under discussion as final decisions on the use of privatization revenue in 2010 have not been made. Thus, although the authorities currently target a basic fiscal deficit that is comparable to the expected 2009 outcome, they are considering further uses of SOTELMA resources that could add up to 1 percentage point of GDP to the deficit. These revisions of the fiscal program would be compatible with the absorption capacity of the economy and would not threaten macroeconomic stability. Average inflation is targeted to decline below 1½ percent and the external current account deficit would deteriorate slightly as a result of a higher energy bill and stable gold exports.

11. The 2010 finance bill submitted to Parliament aims at supporting economic recovery and offsetting the negative effects of the global recession. It includes exceptional one-off expenditure financed by SOTELMA resources, equivalent to ½ percent of GDP, and limits the basic deficit to 1.6 percent of GDP (LOI paras. 17-19, Text Table 1). The revenue side will benefit from recent reforms of the tax and customs administration, as well as the authorities’ commitment to more flexible domestic fuel prices. The authorities have delayed an envisaged cut (from 35 to 30 percent) in the profit tax rate and other revenue-reducing measures (mostly in the context of recent WAEMU directives), with a view to considering these measures in the context of a broader tax reform that will minimize revenue losses. On the expenditure side, prudent policies are maintained so that current spending remains stable as a ratio to GDP (excluding the 2009 payment of SOTELMA severance program). Notable initiatives include the recruitment of some 5,000 contractual teachers and the establishment of a health insurance scheme for the formal sector and a medical assistance program for the indigent. Appropriate budgetary allocations have been posted for the restructuring of the Housing Bank of Mali and the 2009/2010 agricultural subsidy program, but budgeting of the 2010/11 subsidy program and support of the cotton sector had to be postponed pending decisions on these policies.

Text table 1:Mali, Fiscal Impulse Resulting for the Use of Privatization Revenue, 2007-2013
2007200820092010201120122013
(in percent of GDP)
Basic fiscal balance1−0.9−1.0−1.8−1.6−2.0−1.8−1.2
Underlying basic fiscal balance2−0.9−1.0−1.4−1.1−1.1−1.1−1.1
including budgetary grants−0.1−0.3−0.30.1−0.1−0.1−0.1

Revenue minus total expenditure excluding foreign-financed projects and HIPC spending

Basic fiscal balance excluding expenditure financed by SOTELMA’s privatization revenue

Revenue minus total expenditure excluding foreign-financed projects and HIPC spending

Basic fiscal balance excluding expenditure financed by SOTELMA’s privatization revenue

12. In light of their upcoming decisions regarding additional use of SOTELMA resources and agricultural sector policies, the authorities plan to introduce a revised budget law by end-June 2010 (LOI para. 21). However, although the basic fiscal deficit could increase within a ceiling of 2½ percent of GDP, the authorities have committed to keep the underlying basic deficit (excluding SOTELMA financing) to 1.1 percent of GDP. Budgetary pressures on the underlying fiscal balance will be accommodated through a reallocation of existing budgetary authorizations. The revised budget law will be drawn along these lines and considered in the context of the fourth program review. Staff will closely monitor how the SOTELMA resources are used, with a view to ensuring their earmarking to one-off non-recurrent spending with limited, if any, indirect recurrent spending in the future.

C. Debt Sustainability

13. Mali reached the HIPC completion point in 2003 and received debt relief under the Multilateral Debt Relief Initiative (MDRI) in January 2006, and was assessed as having a low risk of debt distress in the last Debt Sustainability Analysis (DSA) conducted in 2008 (IMF Country Report No. 08/283, August 2008). Since then, borrowing has been relatively heavy, including from nontraditional donors at or just above the 35 percent concessionality threshold. In addition, the government has increasingly drawn on private domestic financing.

14. The new DSA, conducted on the basis of end-2008 data, confirms Mali’s low risk of debt distress, subject to certain caveats (Supplement 1 of this report, December 28, 2009). The DSA baseline scenario reflects the medium term macroeconomic framework mentioned above, including a projected decline in gold exports. Under this scenario, as well as under the alternative scenarios of the standard sensitivity analysis, all key indicators remain within the thresholds of debt sustainability. Alternative scenarios do highlight some vulnerability stemming from the profile of gold exports, whose share in total exports is projected to decline from 75 percent to about 25 percent by 2030. However, only the ratio of the net present value of debt to exports, when subject to a shock in the form of substantial nonconcessional borrowing, would approach (without exceeding) the threshold of 150 percent by 2029. Moreover, in the context of Mali’s membership in the CFA franc area, the debt to exports ratio for individual member countries takes on less importance than would otherwise be the case, and the staff consider the risk of eventual debt distress to be low.

15. The preparation of the DSA did reveal weaknesses in the public debt office. In particular, the recording of debts canceled through debt relief had not, in several cases, been properly expunged from the debt data (the initial debt stock is, as a result, lower than in the 2008 DSA). However, a Debt Management Performance Assessment (DeMPA) was recently done for Mali, and both Bank and Fund staffs are working to provide the necessary technical assistance to address identified weaknesses, some of which, like the publication of debt data, could be implemented in the short term.

D. Structural Reforms and the Management of State-Owned Enterprises

16. Structural reforms under Fund-supported arrangements have been slower than programmed, but substantial advances have been made over the years in a range of areas. For 2010, program-linked reforms are concentrated in the areas of public financial management (PFM), particularly with regard to treasury operations, and the reform of macrocritical state-owned enterprises, particularly in the financial sector. With regard to PFM, a broad reform program is set out in paragraphs 12-13 and 23-27 of the LOI.

17. Given the privatization of the International Bank of Mali in 2008 and SOTELMA in 2009, only three major commercial enterprises remain fully in state hands: CMDT (cotton ginning, LOI para. 10); BHM (housing bank, LOI para. 11) and EDM (power and water). CMDT is set to be privatized in 2010, BHM’s privatization is under consideration, and EDM is to remain in state hands following a failed private management contract some years ago. State involvement in the operation, financing, and price-setting of all three is extensive, with each one imposing substantial costs on the budget through subsidies, tax breaks, and operating losses.

18. Reforms are underway in all three companies, with the heavy involvement of the World Bank, most notably in the privatization of CMDT. Consequently, the ECF program focuses more narrowly on providing a framework for major strategic decisions to be made, particularly with regard to policies aimed at limiting the fiscal and quasi-fiscal cost of these companies. This is reflected in the structural benchmarks under the program: the pending decision by the authorities on a privatization strategy for BHM will be discussed at the time of the fourth review, and a follow-up benchmark established; the framework for public support to the cotton industry will be decided by mid-2010. The reform agenda of the energy sector, including subsidy and tariff policy is supported by the Bank under its Poverty Reduction Support Credit (PRSC) and an investment operation supporting the sector.

E. Program Modalities

19. Program monitoring will be carried out on the basis of the quantitative performance criteria and benchmarks in Tables 25. To better ensure that the SOTELMA privatization receipts do not prevent the underlying fiscal consolidation, the program will be subject to an additional quantitative benchmark on the underlying basic fiscal balance, that is, the basic fiscal balance excluding expenditures financed by SOTELMA resources. For end-December 2009, the basic fiscal deficit will be increased by CFAF 16 billion to reflect the severance payments to SOTELMA employees and the underlying basic deficit will be the original target.

20. While the underlying objectives of the program remain unchanged, it has become necessary to modify the performance criteria on domestic financing of the budget for end-December 2009. As CFAF 16 billion of the SOTELMA money was used for severance pay for SOTELMA workers, the authorities have requested a corresponding increase in the overall limit on domestic financing. However, because the SOTELMA privatization receipts have been saved in a government account at the BCEAO, the authorities have also proposed to lower the sublimit on bank and market financing by the net amount of SOTELMA receipts (CFAF 164 billion). Staff supports these requests.

IV. Staff Appraisal

21. The 2009 program remains on track. All quantitative targets were met at end-June and, based on preliminary information, end-September. All of the four structural benchmarks of the review were observed, though one with a delay.

22. The global crisis has only had a limited impact on Mali. Real GDP growth benefited from good rains, and average inflation has declined sharply. Buoyant gold exports have led to a greater-than-projected improvement of the external current account deficit. Moreover, the balance of payments has benefited from 5½ percent of GDP in exceptional external resources: US$400 million from the privatization of the telecommunications parastatal SOTELMA, and US$100 million from the SDR allocations. Nevertheless, Mali remains highly vulnerable to climatic and other external shocks.

23. Given the overperformance at end-September, the 2009 program objectives are likely to be met. Domestic arrears and pending bills should also be reduced as programmed. Given the large fiscal impulse implied for the last quarter, the staff has advised that a prudent budgetary management be maintained to prevent a large re-accumulation of pending bills at year-end.

24. The draft 2010 budget provides an adequate foundation for the 2010 program. Maintaining prudent macroeconomic policies and strengthening the structural reform program will buttress program objectives of an economic growth close to 5 percent and a further decline of inflation to 1½ percent. The structural reform program for 2010 will continue to focus on public financial management and the banking sector.

25. It will be important to ensure that the SOTELMA resources are used on non recurrent expenditures that promote poverty reduction and growth. The authorities intend to prepare a supplementary budget law by mid-2010 that will reflect upcoming decisions on key policy issues and a likely increase in SOTELMA-financed projects. In this regard, it will be important that the underlying basic fiscal deficit be kept to 1.1 percent of GDP.

26. On the basis of the authorities’ satisfactory record so far, staff recommends completion of the third review of the current ECF arrangement.

Attachment I

Program of the Government of Mali Supported by an Arrangement under the Extended Credit Facility

Letter of Intent for the 3rd Review

Bamako, December 23, 2009

Minister of Economy and Finance

Mr. Dominique Strauss-Kahn

Managing Director

International Monetary Fund

Washington D.C. 20431 U.S.A.

Dear Mr. Strauss-Kahn:

1. As indicated in the Letter of Intent dated June 19, 2009, the Malian government has continued to implement its economic program satisfactorily in a challenging international environment. Our efforts to maintain macroeconomic stability and continue the implementation of important structural reforms were supported by strong gold prices and the ongoing assistance of our technical and financial partners (TFPs).

A. Implementation of the program in 2009

2. As anticipated during the 2nd program review, the effects of the international crisis have remained limited. The economic and financial objectives of the 2009 program are expected to be met by yearend. Additionally, we took advantage of the situation to strengthen public financial management and our structural reform program. Moreover, our external position has been strengthened by the Fund’s allocation of Special Drawing Rights (SDRs) and by the sale of 51 percent of the shares in the national telecommunications company (SOTELMA) to a foreign operator for CFAF 180.4 billion. Apart from CFAF 16 billion already used for severance pay, as provided for in the tender offer, the proceeds of the sale have been deposited in a special account at the Central Bank of West African States (BCEAO). As publicly announced on November 6, 2009, by the President of the Republic, these exceptional resources will be used by 2012 to finance the implementation of a list of activities that support our growth strategy, reflecting the vision set out in the Economic and Social Development Program (PDES). An interministerial committee has been set up under the authority of the Prime Minister to monitor the use of these resources.

2009 Macroeconomic Framework

3. Our real GDP growth for 2009 is projected at 4.3 percent, given the sound performance of rice, cereal, and cotton production as a result of good rainfall and budget support for agriculture. However, the buoyancy of the primary sector was somewhat offset by the decline in value added of the secondary sector as gold production, food processing, and textiles dipped slightly.

4. Year-on-year inflation fell to 0.4 percent in October 2009 following the reversal in international food and fuel prices from their upward spiral in 2008. In this context, the Central Bank of West African States (BCEAO) has loosened monetary conditions at the regional level, reducing the repo and discount rates from 4.75 percent to 4.25 percent and from 6.75 percent to 6.25 percent, respectively, and pursuing liquidity injections operations. Moreover, the required reserve ratio was lowered in many countries of the Union, including Mali, where it was cut from 9 percent to 7 percent. Furthermore, in order to preserve the stability of the regional banking system, the Central Bank of West African States (BCEAO) has supported Member States’ efforts to reduce domestic arrears through the on-lending, over ten years, of the CFAF equivalent of the SDR allocations by the IMF in August 2009, including CFAF 49.3 millions for Mali.

5. We expect a slight reduction of the 2009 current account deficit in the balance of payments. The positive impact of the substantial improvement in our terms of trade on our external position will only be partially offset by lower tourism receipts and transfers from migrants. The capital and financial account balance improved significantly in 2009, driven mainly by the partial privatization of SOTELMA and by the SDR allocations, resulting in a marked increase in Mali’s contribution to the international reserves of the West African Economic and Monetary Union (WAEMU).

Fiscal policy

6. The government’s basic fiscal balance recorded a surplus of CFAF 66.1 billion (1.6 percent of GDP) at end-June 2009, instead of the CFAF 11.7 billion (0.3 percent of GDP) deficit forecast during the 2nd program review. This performance, which was sustained during the 3rd quarter, mirrors both the solid performance of fiscal revenue and our consistent efforts to moderate spending by putting a freeze on the least urgent expenditures. The improvement in the basic fiscal balance made it possible to achieve a reduction in the government’s pending payments due to suppliers and Treasury correspondents, down from CFAF 145.7 billion at end-2008 to CFAF 122 billion at end-September 2009. Further, the government reduced its VAT credit arrears to mining companies by CFAF 37.3 billion in the first half of the year. As a result, we have met all the performance criteria for end-June as well as the quantitative benchmarks for end-September 2009 (Table 1).

7. In light of the satisfactory performance in the first three quarters of the year, we saw no need to modify the end-of-year budget objectives except to take account of severance pay for SOTELMA included in the supplementary budget for 2009 submitted to the National Assembly. Hence, the objective for the basic deficit for 2009 is set at CFAF 78 billion (1.8 percent of GDP), instead of the CFAF 62 billion (1.5 percent of GDP) set at the second program review.

8. For the fourth quarter, the budget allocations frozen over the first nine months of the year were only partially lifted, and the closing of budget commitments on November 30 was enforced. Moreover, we implemented a flexible price fixing policy for petroleum products, considering the recent oil price increases in the world market. These policies, with the raising of CFAF 33 billions on the regional financial market, should allow the attainment of fiscal program objectives for 2009, including the reduction of the payments float to CFAF 66.4 billions by end-year.

Structural reforms

9. With regard to structural reform, we met the following three benchmarks for end-September 2009: (i) alignment of the government’s cash flow plan with the budget nomenclature; (ii) preparation of a monthly financial road map for the cotton sector for 2009/10, and (iii) the establishment of a dedicated, targeted subsidy system for agricultural inputs. Some unforeseen logistical problems delayed the start-up of the new tax directorate for medium-sized enterprises (DME), which was also a structural benchmark for end-September. These difficulties have been resolved and the DME has been operational since end-November 2009.

10. Regarding the cotton sector, the tender offer for the privatization of the Malian Textile Development Company (CMDT) will be issued by end December 2009. Negotiations are underway on severance benefits for employees leaving the company.

11. On the restructuring of the national housing bank (BHM), as provided for in our previous Letter of Intent, the government has assumed responsibility for the arrears due to the interbank syndicate (CFAF 0.916 billion). The projected cost of an employee reduction plan aimed at reducing personnel costs by 25 percent, estimated at CFAF 0.8 billion, has been included in the 2009 budget law. Further, on the basis of the restructuring finalized in accordance with the views of the Banking Commission and the BCEAO, the government aims to finalize a strategy and timetable for divestiture of the BHM by the end of the year.

12. In addition, the government continues to strengthen the monitoring of the payment float in the context of improvements in the Treasury’s accounting and information systems. Our ongoing efforts to improve our government finance statistics include, in collaboration with the BCEAO, (i) an inventory of the bank accounts included in the net government position and (ii) an improved methodology for recording movements on these accounts, to ensure the appropriate classification in the government accounts summary table (TOFE). These measures should be completed by the end of the year as programmed, by which time we also expect the macroeconomic impact study of the gold mining sector (balance of payments, employment, growth, budget) and its medium-term prospects to be finalized.

13. Furthermore, the government has also taken steps to strengthen the institutional framework for public debt management. In that regard, by decree of September 24, 2009, a national public debt committee was established under the authority of the Minister of Finance with responsibility for coordinating the government’s borrowing and public debt management policy with its fiscal and monetary policies. All planned domestic or external debt commitments as well as requests for guarantees from the government or its constituent parts must be submitted for comment to this committee. We continue also our efforts to improve the quality of public debt database.

B. Outlook for 2010

14. The priority of the government remains to promote sustainable economic growth, while preserving macroeconomic stability, so as to continue to improve the living standards of the population and reduce poverty. In that context, we will continue to focus on prudent fiscal management and the deepening of key structural reforms with a view to achieving the objectives contained in our Poverty Reduction Strategy Paper (PRSP). The support of our technical and financial partners remains essential to the pursuit of our efforts in this regard.

15. Real GDP growth is expected to be around 5 percent in 2010, propelled by a good crop season and an upturn in business activity in the secondary and tertiary sectors accompanying a global recovery. The BCEAO will continue to conduct prudent monetary policy at the regional level, with a view to anchoring expectations and stabilizing inflation at around 1.5 percent in Mali in 2010.

16. There is a risk that our external position may deteriorate slightly in 2010 owing mainly to a possible worsening of our trade deficit reflecting a tapering off of export revenues from gold and a rise in our oil bill. We also expect a decline in foreign direct investments from the exceptionally high levels recorded in 2009 arising from the privatization of SOTELMA. Furthermore, our economy remains heavily dependent on good rainfall and is vulnerable to new external shocks, including on terms of trade.

Fiscal policy

17. The government will pursue prudent fiscal policies in 2010. The 2010 draft Budget Law submitted to the National Assembly emphasizes pro-growth investments, while also providing for an increase in current spending in the health and education sectors with a view to achieving the Millennium Development Goals. The draft budget includes a basic fiscal deficit target, exclusive of HIPC, of CFAF 73.2 billion (1.6 percent of GDP). In keeping with the recent announcement by the President of the Republic, an allocation of CFAF 25 billion (0.5 percent of GDP) from the proceeds of the privatization of SOTELMA has been earmarked for financing selected investment projects from the medium-term program. Thus, the underlying basic budget deficit target, that is, excluding the expenses financed from the SOTELMA privatization receipts, is equivalent to 1.1 percent of GDP for 2010.

18. Total revenue is projected to reach CFAF 772 billion, that is, 16.9 percent of GDP versus 16.6 percent of GDP programmed for 2009. This slight increase in the tax burden reflects our firm intention to pass through changes in international oil prices to domestic prices and continue our efforts to improve tax administration, including through the new DME.

19. Total expenditure and net lending is projected at CFAF 1,132 billion, or 24.6 percent of GDP, versus 24.4 percent of GDP programmed for 2009. Within this envelope, current spending is expected to decline by 0.2 percent of GDP from 2009, while capital spending is set to increase significantly, driven mainly by the CFAF 25 billion allocation from the SOTELMA privatization receipts. The 2010 draft Budget Law also takes on board certain structural reform costs, such as the CFAF 11.4 billion needed to strengthen the capital and operating account of the BHM.

20. The overall budget deficit (excluding grants) in the draft budget law for 2010 is 7.7 percent of GDP, and is mainly financed through external grants or concessional loans and the use of SOTELMA privatization receipts. We therefore plan to limit our borrowing from the domestic banking system and the regional financial market to 1 percent of GDP, to ensure debt sustainability in line with the debt sustainability analysis undertaken recently by Fund and Bank staffs.

21. However, the draft Budget Law submitted to the National Assembly does not take account of some foreseeable expenditures whose estimates hinge on decisions or policies that will only be finalized in 2010. This is the case, for instance, of the agricultural input subsidy policy for the 2010/11 crop season, to be defined by the High Council for Agriculture in early 2010; of some employee reduction plans like that of the CMDT; and of possible budget support to relaunch the cotton sector. Moreover, there is a possibility that the deliberations of the committee established to monitor the use of the SOTELMA privatization receipts could lead to an increase in 2010 budget expenditures financed using these exceptional resources.

22. Before the conclusion of the fourth program review, the government will submit a supplementary budget to the National Assembly reflecting these items currently in abeyance, while limiting the underlying basic deficit to 1.1 percent of GDP, and the basic deficit including expenditures financed from the proceeds of the privatization of SOTELMA to 2.5 percent of GDP.

Structural reforms

23. The government intends to deepen its public financial management reforms. The preparation of a new series of reforms is underway with the support of the TFPs so as to consolidate the significant progress made under the government’s action plan to improve and modernize public financial management (PAGAM). The new program (PAGAM 2) will focus on ensuring compliance of the legislative and regulatory framework with the new WAEMU directives in order to strengthening budget preparation and execution processes; improve cash management; and increase the transparency and reliability of the accounting and financial data of the government and its constituent parts. The implementation of this new series of reforms will be overseen by a committee chaired by the Minister of Economy and Finance under the authority of the Prime Minister.

24. In the context of the transition to results-based budgeting, we will also seek by end-June 2010 to (i) put in place the PRED5 expenditure management software (structural benchmark); and (ii) adopt a decree regulating inventory accounting in order to improve the effectiveness of service delivery controls and to improve the computerization of this type of accounting.

25. In addition, the government intends to put in place the necessary tools for forward-looking cash management. At the institutional level, an interministerial cash flow committee will be created under the authority of the Minister of Economy and Finance, and a cash flow committee within the Ministry of Economy and Finance; the National Directorate of the Treasury and Government Accounting (DNTCP) will serve as the permanent technical secretariat (structural benchmark). Furthermore, starting in 2010, commitment plans consistent with the cash flow plan will be prepared to facilitate effective use of the financial instruments available on the regional financial market. We are also committed to improving our government finance statistics and plan to introduce, by end-June 2010, a new government accounts summary table (TOFE) in which the presentation of domestic financing (bank and nonbank) will be consistent with international best practices (structural benchmark).

26. Lastly, in 2010 and over the medium-term we intend to step up our efforts aimed at streamlining public expenditure and strengthening the link between the government’s priorities, as outlined in the Poverty Reduction Strategy Paper, and the national budget. This will be done by improving the quality of program budgets and extending the MTEF approach to all departments and sectors. In that context, by end-June 2010, in consultation with the TFPs, we will refine the budget nomenclature for the definition of poverty-reducing spending, which will serve a basis for the monitoring of an upcoming structural benchmark.

27. With regard to tax revenue, the objectives of increasing the overall revenue performance and implementing a tax system conducive to private sector development would require a broadening of the tax base and a review of the exemption regimes. In that context, we are pursuing efforts to modernize our corporate income tax and tax incentive systems with the aim of implementing an in-depth reform that is neutral with respect to revenue. Those measures will be presented to the Government Council by end-September 2010. Further, to ensure more orderly management of VAT credit reimbursements, the government intends to develop an effective and efficient mechanism for such reimbursements, in consultation with Fund staff.

28. Regarding agricultural policy, particular emphasis will be placed on the monitoring and evaluation of the use of input subsidies. Efforts will be made, in 2010, to improve the census of farmers and land areas, as well as strengthen extension and outreach services aimed at improving compliance with technical procedures and proper and regular supplies of inputs. The government will also adopt, by end-June 2010, a policy paper on the support to the cotton sector after the privatization of the CMDT (structural benchmark).

Modalities for monitoring the program

29. Discussions on the fourth program review will focus on the implementation of the program and the structural reforms for end-December 2009, as well as on the draft supplementary budget law for 2010. Performance under the current program will be evaluated on the basis of Tables 1 to 4 and the attached Technical Memorandum of Understanding. In that context, we request an additional quantitative benchmark on the basic fiscal balance excluding spending financed by the SOTELMA privatization receipts, with effect from December 2009. The fourth program review is expected to be completed by end-June 2010, based on the performance criteria for end-December 2009 and the fifth review is expected to be completed by end-2010, based on the performance criteria for end-June 2010.

30. The Government believes that the policies described in this Letter of Intent are sufficient to achieve program objectives, but stands ready to take any additional measures that may prove necessary for this purpose. Mali will consult with the Fund on the adoption of such measures and prior to any change in the policies set out in this Letter of Intent, in accordance with IMF policies on such consultations. The government is prepared to provide Fund staff with any information required to monitor the implementation of economic and financial policies, including the data set out in the Technical Memorandum of Understanding on progress made in implementing this program. During the program, the Government will not introduce or intensify any exchange restrictions, multiple currency practice, or import restriction for balance of payments purposes, nor conclude any bilateral payment agreements that are inconsistent with Article VIII of the Fund’s Articles of Agreement. The government authorizes the Fund to publish this Letter of Intent and the IMF staff report related to this review.

Sincerely yours,

/s/

Sanoussi Touré

Minister of Finance and Economy

Attachment I—Annex I Technical Memorandum of Understanding

1. This technical memorandum of understanding defines the performance criteria and benchmarks for the program supported by the Poverty Reduction and Growth Facility (PRGF) arrangement. It also sets out the frequency and deadlines for data reporting to the staff of the International Monetary Fund (IMF) for program-monitoring purposes.

I. Definitions

2. Unless otherwise indicated, the Government is defined as the central administration of the Republic of Mali and does not include local administrations, the central bank, or any other public entity with autonomous legal personality that is not included in the table of Government financial operations (TOFE).

3. The definitions of “debt” and “concessional loans” for the purposes of this memorandum of understanding are as follows:

  • (a) Debt is defined in point 9 of the Guidelines on Performance Criteria with Respect to Foreign Debt (see Decision of the Executive Directors of the IMF No. 12274-00/85, August 24, 2000).

  • (b) A loan is considered concessional if, on the date the contract is signed, the ratio of the present value of the debt, based on the reference interest rates, to the nominal value of the debt is less than 65 percent (i.e., a grant element exceeding 35 percent). The reference interest rates used in this assessment are the commercial interest reference rates (CIRRs) established by the Organization for Economic Cooperation and Development (OECD). For debts with a maturity exceeding 15 years, the ten-year reference interest rate published by the OECD is used to calculate the grant element. For shorter maturities, the six-month market reference rate is used.

II. Quantitative Performance Criteria and Financial Indicators

Except as noted, the following financial variables shall constitute performance criteria at end-June and End-December and financial indicators otherwise. The basic fiscal balance is a financial indicator at all test dates.

A. Ceiling on Net Domestic Financing of the Government; Subceiling on Net Domestic Bank and Market Financing of the Government

4. Net domestic financing is defined as the sum of (i) net bank credit to Government, as defined below, (ii) other Government claims and debts vis-à-vis national banking institutions, and (iii) nonbank financing of the Government.

5. Figures on net bank credit to Government are calculated by the BCEAO. Figures on nonbank financing are calculated by the public treasury, and are final in the context of the program.

6. Net bank credit to Government is defined as the balance between Government debts and Government claims vis-à-vis the central bank and commercial banks, excluding deposits at the BCEAO of the receipts from the sale of SOTELMA. The scope of net bank credit to Government is that used by the Central Bank of West African States (BCEAO) and is consistent with established Fund practice in this area. It implies a broader definition of Government than that specified in paragraph 2 by also including local governments, and selected autonomous government agencies and projects. Government claims include the CFA franc cash balance, postal checking accounts, secured liabilities (obligations cautionnées), and all deposits with the BCEAO and commercial banks of public entities, with the exception of industrial or commercial public institutions (EPICs) and public enterprises, which are excluded from the calculation. Government debts to the banking system include all debts to these same financial institutions. Deposits of the cotton stabilization fund and Government securities held outside the Malian banking system are not included in the calculation of net bank credit to Government.

7. Nonbank financing of the Government is defined as nonbank market financing and other nonbank financing. Nonbank market financing includes sales net of repayments of Government bills and bonds held outside national banking institutions. Other nonbank financing of the Government includes proceeds from the sale of Government assets, repayments on domestic debt to nonbank creditors, and other net claims on the treasury. The receipts from sale of Government assets are defined as the proceeds from the sale, effectively received by the Government during the fiscal year, of all or part of the shares held by the Government in privatized enterprises. In the event that payments in respect of these sale transactions are expected to extend beyond the fiscal year, the residual will be included in the calculation of nonbank financing of the Government in each of the subsequent years, in accordance with the annual scheduling of the expected payments.

8. Net domestic bank and market financing of the Government is defined as the sum of (i) net bank credit to Government, as defined above, (ii) other Government claims and debts vis-à-vis national banking institutions, and (iii) nonbank financing of the Government through the issuance of securities to nonbanks or to nonresident banks domiciled within the West African Economic and Monetary Union.

Adjustment factors

9. The ceiling on the change in net domestic financing of the Government will be adjusted down (up) if external budgetary assistance exceeds (falls short of) the program amount. Budgetary assistance is defined as grants, loans, and debt relief (excluding project loans and grants, IMF resources, and debt relief under the Initiative for Heavily Indebted Poor Countries, but including both general and sectoral budget support). Adjustment will be made at a rate of nil percent for amounts up to CFAF 10 billion; 50 percent for amounts from CFAF 10 billion up to CFAF 25 billion; and 75 percent for amounts in excess of CFAF 25 billion.

10. The ceiling on the change in net domestic financing of the Government and the sub-ceiling on bank and market financing in 2009 will be adjusted up in the amount of the face value of the securities issued relating to VAT and duty refund payments accrued during 2006 and 2007 up to a maximum of CFAF 62 billion.

11. The ceiling on the change in net domestic financing of the Government and the sub-ceiling on bank and market financing in 2009 will be adjusted up (down) if the actual net reduction of the payment float exceeds (falls short) of the programmed amounts (CFAF 45 billion at end-June and end-September 2009, and CFAF 30 billion at end-December 2009.

B. Nonaccumulation of External Public Payments Arrears

12. External payments arrears are defined as the sum of external payments due and unpaid for external liabilities of the Government and foreign debt held or guaranteed by the Government. The definition of external debt provided in paragraph 3(a) applies here.

13. Under the program, the Government will not accumulate external payments arrears, with the exception of arrears arising from debt under renegotiation or being rescheduled. The performance criterion on the nonaccumulation of external payments arrears will be applied on a continuous basis throughout the program period.

C. Ceiling on Nonconcessional External Debt with a Maturity of One Year or More Newly Contracted or Guaranteed by the Government and/or Public Enterprises

14. This performance criterion applies not only to debt as defined in point 9 of the Guidelines on Performance Criteria with Respect to Foreign Borrowing (Executive Board Decision No. 6230-(79/140), amended by Executive Board Decision No. 12274-(00/85) (8/24/00)), but also to commitments contracted or guaranteed for which no value has yet been received.

15. The concept of Government for the purposes of this performance criterion includes Government as defined in paragraph 2, administrative public institutions (EPAs), scientific and/or technical public institutions, professional public institutions, industrial and/or commercial public institutions (EPICs), and local governments.

16. Starting on the date of program approval by the Executive Board of the IMF, a ceiling of zero is set for nonconcessional borrowing. This performance criterion is monitored on a continuous basis.

17. The Government undertakes not to contract or guarantee external debt with a maturity of one year or more and a grant element of less than 35 percent (calculated using the reference interest rates corresponding to the borrowing currencies provided by the IMF). This performance criterion applies not only to debt as defined in point 9 of the Guidelines on Performance Criteria with Respect to Foreign Borrowing, adopted by the Executive Board on August 24, 2000, but also to commitments contracted or guaranteed for which no value has yet been received. However, the criterion does not apply to (i) financing granted by the IMF, (ii) debt rescheduling transactions of debt existing at the time of the approval of the PRGF arrangement, and (iii) CFA franc debt contracted or guaranteed by the Government with West African Economic and Monetary Union (WAEMU) residents (including CFA debt initially contracted or guaranteed by the Government with WAEMU residents and subsequently acquired by nonresidents).

D. Ceiling on Short-Term External Debt Newly Contracted or Guaranteed by the Government and/or Public Enterprises

18. The definition in paragraph 2 and 3 of this TMU applies to this performance criterion. Short-term external debt is debt with a contractual term of less than one year. Import- related credit, CMDT foreign borrowing secured by the proceeds of cotton exports, and debt-relief operations are excluded from this performance criterion. Treasury bills issued in CFA francs on the WAEMU regional market are also excluded. In the context of the program, the Government and public enterprises will not contract, or guarantee, short-term external debt. This performance criterion is monitored on a continuous basis.

E. Floor on Cumulative Net Tax Revenues

19. Government tax revenues are defined as those that figure in the Table on Government financial operations (TOFE), and include all tax revenues accruing to the ordinary budget. Net tax revenues are gross tax revenues less tax refunds, notably on VAT. The Government shall report cumulative tax revenues from the start of each year to IMF staff each month in the context of the TOFE. Performance criteria and quantitative performance indicators for cumulative net tax revenues are set in Table 1 attached to the Letter of Intent.

F. Floor on the Basic Fiscal Balance, Excluding HIPC Initiative-Related Expenditure

20. The basic fiscal balance is defined as the difference between total revenues, excluding grants and privatization receipts, and total expenditure plus net lending, excluding capital expenditure financed by foreign donors and lenders and HIPC Initiative-related expenditures. The floors for the performance indicators for the basic fiscal balance, excluding HIPC Initiative-related expenditure, are set in Table 1 attached to the Letter of Intent.

G. Floor on the Basic Fiscal Balance, Excluding HIPC Initiative-Related Expenditure and Expenditures Financed with SOTELMA Privatization Receipts

21. The basic fiscal balance, excluding HIPC Initiative-related expenditure and expenditures financed with SOTELMA privatization receipts is defined as in section II.F, with SOTELMA privatization revenues drawn from the special account at the BCEAO deducted.

III. Structural Measures

22. Information relating to the introduction of the measures constituting structural benchmarks and performance criteria will be sent to Fund staff within two weeks of the date of their scheduled implementation.

IV. Additional Information for Program Monitoring

23. The Government will provide IMF staff with information as set out in the following summary table in order to assist in the monitoring of the program.

Summary of Data to be Reported

Data TypeTablesFrequencyTime Frame
Real sectorNational accountsAnnualEnd of year + 9 months
Revisions of the national accountsVariable8 weeks following the revision
Disaggregated consumer price indexesMonthlyEnd of month + 2 weeks
Government financesNet Government position (including the list of accounts of other public entities with the banking system) and breakdown of nonbank financingMonthlyEnd of month + 3 weeks (provisional); end of month + 6 weeks (final)
Balance of SOTELMA privatization receipts on deposit at the BCEAOMonthlyEnd of month + 3 weeks
Treasury general ledgerMonthlyEnd of month + 4 weeks
TOFE of the central Government and consolidated TOFEMonthlyEnd of month + 3 weeks (provisional); end of month + 6 weeks (final)
Budget execution through the expenditure chain asMonthlyEnd of month + 2 weeks recorded in the automated system
Breakdown of fiscal revenue and expenditure in the context of the TOFEMonthlyEnd of month + 6 weeks (TOFE)
Separate report on outlays financed with HIPC resourcesMonthlyEnd of month + 6 weeks
Execution of capital budgetQuarterlyEnd of quarter + 8 weeks
Execution of SOTELMA spendingQuarterlyEnd of quarter + 8 weeks
Tax revenues in the context of the TOFEMonthlyEnd of month + 6 weeks
Wage bill in the context of the TOFEMonthlyEnd of month + 6 weeks
Basic fiscal balance in the context of the TOFEMonthlyEnd of month + 6 weeks
Regulatory order setting prices of petroleum products, tax revenues from petroleum products, products, and subsidies paidMonthlyEnd of month
Imports of petroleum products by type and point of entryMonthlyEnd of month + 2 weeks
Customs exemptionsMonthlyEnd of month + 4 weeks
Treasury operations of the CMDTMonthlyEnd of month + 4 weeks
Monetary and financial dataSummary accounts of the BCEAO, summary accounts of banks, and accounts of the banking systemMonthlyEnd of month + 4 weeks (provisional); end of month + 8 weeks (final)
Foreign assets and liabilities and other items net of the BCEAO and the commercial banks.MonthlyEnd of month + 8 weeks
Lending and deposit interest rates, BCEAO intervention rates, and BCEAO reserve requirementsMonthlyEnd of month + 4 weeks
Bank prudential ratiosMonthlyEnd of month + 6 weeks
Balance of paymentsBalance of paymentsAnnualEnd of year + 12 months
Revisions of balance of paymentsVariable8 weeks following each revision
External debtBreakdown of all new external borrowing termsMonthlyEnd of month + 4 weeks
Debt service, indicating amortization, interest payments, and relief obtained under the HIPC InitiativeMonthlyEnd of month + 4 weeks
PRSPShare of poverty-reducing expenditureQuarterlyEnd of quarter + 4 weeks
Share of primary education in total education outlaysQuarterlyEnd of quarter + 4 weeks
Gross enrollment ratio in primary education, by genderAnnualBeginning of the next academic year +1 month (final)
Percentage of the population having access to health care facilities within a radius of 15 kilometersAnnualEnd of year + 2 months
Rate of assisted birthsAnnualEnd of year + 2 months
Data on immunization rate DTCP3 of child below 1 yearAnnualEnd of year + 2 months
Table 1.Mali: Selected Economic and Financial Indicators, 2007-12
200720082009201020112012
Est.Prog.Proj.Prog.Proj.Proj.
2nd Review
(Annual percentage change)
National income and prices
Real GDP4.34.94.14.34.85.15.3
GDP deflator2.68.62.74.32.61.82.0
Consumer price inflation (average)1.59.12.52.21.21.62.0
External sector (percent change)
Terms of trade (deterioration −)0.05.035.027.2−8.4−1.0−0.5
Real effective exchange rate (depreciation −)0.58.0
Money and credit (contribution to broad money growth)
Credit to the government0.5−3.210.2−7.65.33.93.3
Credit to the economy4.65.20.25.66.93.63.6
Broad money (M2)9.30.59.915.310.55.75.8
(In percent of GDP, unless otherwise stated)
Investment and saving
Gross domestic investment21.020.819.318.419.720.921.7
Of which: government8.55.77.76.87.27.57.4
Gross national savings13.312.911.412.211.712.313.2
Of which: government2.91.83.01.20.51.41.4
Gross domestic savings12.09.910.510.79.910.911.9
Central government finance
Revenue16.615.516.716.616.917.017.2
Grants4.73.45.04.93.83.73.7
Total expenditure and net lending24.521.225.824.724.624.824.9
Overall balance (payment order basis, excluding grants)−7.9−5.7−9.1−8.0−7.7−7.8−7.7
Basic fiscal balance2−0.9−1.0−1.6−1.4−1.1−1.2−1.1
External sector
Current external balance, including official transfers−7.7−7.8−7.9−6.1−8.0−8.6−8.5
Current external balance, excluding official transfers−9.5−9.5−9.7−8.2−10.2−10.6−10.5
Exports of goods and services26.628.424.627.526.826.326.5
Imports of goods and services−35.6−39.3−33.5−35.2−36.6−36.3−36.3
Debt service to exports of goods and services3.43.84.54.04.02.62.6
External debt (end of period)19.419.125.020.222.224.226.1
Memorandum items:
Nominal GDP (CFAF billions)3,4253,9064,1834,2484,5644,8935,251
Overall balance of payments (US$ millions)−21.2−10.3−3.1419.6−90.9−60.7−41.7
Gross international reserves (US$ millions)
Central Bank of African States (BCEAO)10,65810,494
in percent of broad money57.856.0
in months of imports5.96.4
BCEAO Mali (estimate)31,0611,0331,2581,6371,5751,5071,443
in percent of broad money46.948.645.364.456.351.346.8
in months of imports4.73.94.63.75.54.64.2
US$ exchange rate (end of period)449.9481.5477.3464.5
Sources: Malian authorities; and IMF staff estimates and projections.

2006 data after adjustment for MDRI.

Revenue (excluding grants) less total expenditure (excl. foreign financed investment projects and HIPC Initiative spending). The projected overshooting of the 2009 program target reflects the cost of SOTELMA’s social plan linked to its privatization.

For 2009, reflects new SDR allocation and privatization receipts of SOTELMA.

Sources: Malian authorities; and IMF staff estimates and projections.

2006 data after adjustment for MDRI.

Revenue (excluding grants) less total expenditure (excl. foreign financed investment projects and HIPC Initiative spending). The projected overshooting of the 2009 program target reflects the cost of SOTELMA’s social plan linked to its privatization.

For 2009, reflects new SDR allocation and privatization receipts of SOTELMA.

Table 2.Mali: Quantitative Performance Criteria and Indicative Targets for 20091
2009
MarchJuneSept.Dec.
Indic. TargetsAdjustedActualRev. Perf. CriteriaAdjustedActualRev. Ind. TargetsAdjustedPrel.Perf. CriteriaRev. Perf. Crit
Quantitative performance criteria1(CFAF billions)
Net domestic financing of the Government (ceiling) 210.011.813.1745.040.1−5.050.032.9−4.333.449.4
Of which: Bank and market financing215.016.822.3780.075.155.190.072.9−136.962.5−101.5
Cumulative increase in external payments arrears (ceiling) 30.00.00.00.00.00.00.00.00.00.00.0
New external borrowing at terms of one year or more contracted or guaranteed by the government on nonconcessional terms 3,40.00.017.580.00.00.00.00.00.00.00.0
New short-term external credits (less than one year) contracted or guaranteed by the government (ceiling)30.00.00.00.00.00.00.00.00.00.00.0
Net tax revenue140.0140.0143.5290.0290.0319.9430.0430.0451.3603.0603.0
Financial indicators (floors)
Basic fiscal balance−10.0−10.017.1−20.0−20.066.1−40.0−40.023.7−62.0−78.0
Underlying basic fiscal balance5−62.0
Memorandum items:
External budgetary assistance during the year 1620.06.438.513.052.053.292.092.0
HIPC Initiative debt relief11.01.86.39.48.110.811.211.2

Cumulative figures from the beginning of each year. Noncontinuous performance criteria at end-March and end-September 2009 are quantitative benchmarks. See technical memorandum of understandings for definitions.

These quantitative targets are before payment of VAT credits in arrears. The revised targets for the end-June, end-September, and end-December 2009 reflect the recapitalization of the Housing Bank of Mali (BHM) for CFAF 19.1 billion in May 2009 and net projected reductions of the payment float by CFAF 45 billion at end-June and end-September 2009, and CFAF 30 billion at end-December 2009 (the program includes an adjustor for any deviations from the targets on the reduction of the payment float).

These performance criteria will be monitored on a continuous basis.

Grant component equal to or higher than 35 percent.

Excluding expenditures financed with funds from the privatization of SOTELMA.

General budget support only.

The nonobservance of the quantitative indicators for net domestic financing and bank and market financing results from a bond issue that was initiated in December 2008 but effective on January 2, 2009, leading to a downward correction of CFAF 12.3 billion at end-December 2008 and an upward revision of the same amount at end-March 2009 in market financing.

Part of two CFAF syndicated loans that were signed in April and May 2009 for a total of CFAF 38 billion for the payment of VAT credit arrears and that involved non-Malian banks in the WAEMU and CEMAC CFA franc zones; subsequently resold to Malian ba

Cumulative figures from the beginning of each year. Noncontinuous performance criteria at end-March and end-September 2009 are quantitative benchmarks. See technical memorandum of understandings for definitions.

These quantitative targets are before payment of VAT credits in arrears. The revised targets for the end-June, end-September, and end-December 2009 reflect the recapitalization of the Housing Bank of Mali (BHM) for CFAF 19.1 billion in May 2009 and net projected reductions of the payment float by CFAF 45 billion at end-June and end-September 2009, and CFAF 30 billion at end-December 2009 (the program includes an adjustor for any deviations from the targets on the reduction of the payment float).

These performance criteria will be monitored on a continuous basis.

Grant component equal to or higher than 35 percent.

Excluding expenditures financed with funds from the privatization of SOTELMA.

General budget support only.

The nonobservance of the quantitative indicators for net domestic financing and bank and market financing results from a bond issue that was initiated in December 2008 but effective on January 2, 2009, leading to a downward correction of CFAF 12.3 billion at end-December 2008 and an upward revision of the same amount at end-March 2009 in market financing.

Part of two CFAF syndicated loans that were signed in April and May 2009 for a total of CFAF 38 billion for the payment of VAT credit arrears and that involved non-Malian banks in the WAEMU and CEMAC CFA franc zones; subsequently resold to Malian ba

Table 3.Mali: Quantitative Performance Criteria and Indicative Targets for 20101
2010
MarchJuneSep.Dec.
Indic. TargetsPerf. CriteriaIndic. TargetsIndic. Targets
Quantitative performance criteria1(CFAF billions)
Net domestic financing of the Government (ceiling)0.00.010.030.0
Of which: Bank and market financing0.00.010.030.0
Cumulative increase in external payments arrears (ceiling)20.00.00.00.0
New external borrowing at terms of one year or more contracted or guaranteed by the government on nonconcessional terms2,30.00.00.00.0
New short-term external credits (less than one year) contracted or guaranteed by the government (ceiling)2, 30.00.00.00.0
Net tax revenue130.0300.0470.0670.0
Financial indicators (floors)
Basic fiscal balance−30.0−40.0−70.0−75.0
Basic fiscal balance, adjusted410.00.0−20.0−50.0
Memorandum items:
External budgetary assistance during the year 120.050.080.0125.3
HIPC Initiative debt relief13.16.29.312.4

Cumulative figures from the beginning of each year. Noncontinuous performance criteria at end-March and end-September 2009 are quantitative benchmarks. See technical memorandum of understandings for c

These performance criteria will be monitored on a continuous basis.

Grant component equal to or higher than 35 percent.

Excluding expenditures financed with funds from the privatization of SOTELMA.

Cumulative figures from the beginning of each year. Noncontinuous performance criteria at end-March and end-September 2009 are quantitative benchmarks. See technical memorandum of understandings for c

These performance criteria will be monitored on a continuous basis.

Grant component equal to or higher than 35 percent.

Excluding expenditures financed with funds from the privatization of SOTELMA.

Table 4.Mali: Structural Benchmarks for the Third and Fourth Reviews Under the ECF Program
MeasuresMacroeconomic rationaleStatus
For end-September 2009 (in the context of the 3rd program review)
1Put in place the tax center for medium-sized enterprises (CIME) and start up its activities.Strengthen revenue mobilization.Observed at end-November 2009
2Prepare a government cash flow plan consistent with budget nomenclature (section, economic code) to facilitate (i) quarterly monitoring of budget execution in terms of commitment, validation, payment authorization, and payment of expenditure, and (ii) better alignment of budget execution with available resources.Strengthen public financial management, budget execution, and treasury management.Observed at end-September 2009
3Regarding monitoring of the cotton sector and in consultation with the IMF, prepare a monthly financial plan for the 2009/10 crop season of the financial operations (revenue, commitments, payment, debt, amounts unpaid) of the various participants in the sector (producers, CMDT, suppliers, banks, the government).Improve governmence and transparency in the cotton sector with the view to ensuring smooth cottn campaign in 2009-2010 and limit budgetary risks.Observed at end-September 2009
4Regarding government support for the agricultural sector and preparation of the 2010 budget, put in place a dedicated, targeted input subsidization system for grain and cotton crops, including modalities for implementation, follow-up, and assessment.Increase effectiveness and transparency of agricultural policy, prevent open-ended budgetary contributions and ensure monitoring and evaluation of subsidies.Observed at end-September 2009
For end-December 2009 (in the context of the 4th program review)
1On the basis of the evaluation of the budgetary payment float at end-March 2008 by the Auditor General and the evaluation of the payment float at end-March 2009 by the Controller General’s Office and the Inspectorate General of Finance, put in place a system to monitor budgetary float supported by improvements in the Treasury’s accounting, cash flow management, and information systems, in consultation with IMF staff.Improve transparency, measurability and management of domestic debt, and prevent occurance of domestic payment arrears.
2By government decision, adopt a strategy and timeframe for government divestment of the Banque de l’Habitat du Mali (BHM).Increase confidence in and resilience of the banking system, and avoid more costly rescue packages.
3Finalize the government study on the macroeconomic impact of the gold mining sector (balance of payments, growth, employment, budget) and its medium-term prospects.To help policy and decision making in the context of a declining sector (known reserves are equivalent to 10 years of exploitation).
4In conjunction with the BCEAO, prepare (i) an exhaustive inventory of the bank accounts taken into account in the net government position, and (ii) an appropriate methodology for recording movements on these accounts, based on an accepted classification (such as projects, correspondents, etc.) in the government flow of funds table (TOFE).Improve public finance statistics.
Table 5.Mali: Structural Benchmarks for the Fifth Review Under the ECF Program
MeasuresMacroeconomic rationale
For end-June 2010 (in the context of the fifth program review)
1Implement the new expenditure management software PRED5.To improve budgetary management.
2Introduce new reporting on the financial operations of the State (the “TOFE” table) which conforms to best international practices, including for the presentation of domestic financing.To strengthen government statistics and reporting.
3Create an interministerial committee for treasury management planning under the authority of the Minister of Economy and Finance, with a permanent technical secretariat provided by Treasury.To improve treasury management and its coordination with budgetary management.
4Prepare a draft policy paper on the role that the State is likely to play in the cotton sector after the privatization of the CMDT.To set the business environment in the cotton sector in a post-privatization of the state monospony CMDT.
Table 6.Mali: National Accounts, 2007–12
200720082009201020112012
Est.Prog.Proj.Prog.Proj.Proj.
2nd review
(Annual percentage change, at constant prices)
Primary sector2.513.25.85.95.35.15.3
Agriculture1.020.26.56.75.95.75.8
Food crops, excluding rice6.414.46.16.14.05.05.0
Rice2.648.56.66.08.06.06.0
Industrial agriculture, excluding cotton8.022.011.99.09.55.05.0
Cotton−41.1−16.85.017.315.015.015.0
Livestock4.64.04.24.24.34.04.0
Fishing and forestry4.53.75.75.34.64.34.0
Secondary sector−4.6−4.60.93.44.75.55.9
Mining−8.4−6.4−2.4−0.62.63.24.3
Industry−12.0−14.4−4.24.43.45.96.3
Agrobusiness0.7−20.0−5.07.42.05.56.0
Textile−19.9−34.0−10.5−1.51.63.03.5
Others−19.116.20.75.06.08.08.0
Energy9.710.09.07.88.88.07.0
Construction and public works8.74.57.56.07.07.07.0
Tertiary sector10.44.14.23.34.14.85.2
Transportation and telecommunications20.910.07.33.05.06.56.5
Trade12.04.43.53.54.55.56.0
Financial services5.02.04.53.53.55.05.0
Other nonfinancial services7.91.05.15.14.75.04.0
Public administration2.11.21.82.01.91.73.5
GDP (factor cost)3.95.54.24.34.75.15.3
Indirect taxes9.5−2.03.04.06.06.06.0
GDP (market prices)4.34.94.14.34.85.15.3
Nonmining real GDP5.55.94.64.74.95.35.4
(Percentage of GDP, unless otherwise indicated)
Aggregate demand
Consumption88.090.189.589.390.189.188.1
Private consumption73.977.675.475.576.375.274.0
Public consumption14.112.614.113.813.813.914.2
Gross investment21.020.819.318.419.720.921.7
Government8.55.77.76.87.27.57.4
Non-government12.515.111.611.512.513.414.3
Net investment10.311.59.59.510.511.512.5
Changes in inventories2.23.62.12.02.01.91.8
Net foreign balance−9.0−10.9−8.9−7.7−9.8−10.1−9.8
Gross national saving13.312.911.412.211.712.313.2
Of which: domestic saving12.09.910.510.79.910.911.9
Memorandum items:
External current account balance1−7.7−7.8−7.9−6.1−8.0−8.6−8.5
Nominal GDP (CFAF billions)3,4253,9064,1834,2484,5644,8935,251
GDP deflator (annual percent change)2.68.62.54.32.61.82.0
Sources: Malian authorities; and IMF staff estimates and projections.

Including official transfers.

Sources: Malian authorities; and IMF staff estimates and projections.

Including official transfers.

Table 7.Mali: Balance of Payments, 2007–121
200720082009201020112012
Est.Prog.Proj.Prog.Proj.Proj.
2nd review
(CFAF billions)
Current account balance
Excluding official transfers−324.5−370.9−405.7−349.0−463.4−519.7−552.3
Including official transfers−262.2−305.7−331.9−259.9−363.4−421.8−447.3
Trade balance−113.6−201.0−135.8−76.1−174.0−209.8−205.3
Exports, f.o.b.733.7895.2845.1978.41,010.31,065.91,164.5
Cotton fiber109.665.660.760.955.260.273.8
Gold545.9656.1679.8737.2752.3790.4850.0
Other78.2173.4104.6180.3202.9215.3240.7
Imports, f.o.b.−847.2−1,096.2−980.9−1,054.5−1,184.4−1,275.7−1,369.8
Petroleum products−188.1−259.6−180.3−182.0−230.1−253.6−273.5
Foodstuffs−125.5−152.5−144.0−143.8−147.7−153.9−158.9
Other−533.6−684.1−656.6−728.7−806.6−868.2−937.4
Services (net)−193.7−224.8−235.2−250.2−272.8−282.0−309.1
Credit176.5214.0184.3191.5211.2218.9228.2
Debit−370.2−438.8−419.5−441.7−484.0−500.8−537.3
Of which: freight and insurance−188.6−265.5−237.6−255.4−286.9−294.4−316.1
Income (net)−143.2−109.2−146.5−155.4−160.3−181.9−184.0
Of which: interest due on public debt−11.1−12.5−12.5−12.5−14.8−10.0−11.3
Transfers (net)188.3229.3185.6221.8243.7251.9251.1
Private transfers (net)126.0164.1111.8132.7143.6154.0146.0
Official transfers (net)62.365.273.889.1100.097.9105.0
Of which: budgetary grants27.925.046.646.654.448.952.5
Capital and financial account252.0308.3330.3460.3320.9393.5427.6
Capital account (net)141.7139.5181.2158.2140.6152.5164.4
Capital transfers141.7139.5181.2158.2140.6152.5164.4
Debt forgiveness0.00.00.00.00.00.00.0
Project grants134.2109.2163.6140.1120.7131.2141.5
Financial account104.4168.8149.1302.1180.3240.9263.3
Private (net)217.197.2−3.0125.541.775.784.3
Direct investment (net)78.781.931.6206.360.768.471.4
Portfolio investment private (net)−1.02.44.44.44.44.75.1
Other private capital flows−60.612.9−39.0−85.2−23.52.67.8
Official (net)87.371.6152.1176.6138.7165.3179.0
Disbursements118.799.9186.0158.0172.6188.3203.1
Budgetary18.029.145.945.929.934.336.8
Project related100.770.8140.1112.1142.7154.1166.4
Monetary authority0.00.00.052.50.00.00.0
Amortization due on public debt−31.4−28.3−33.9−33.9−33.9−23.1−24.1
Other0.00.00.00.00.00.00.0
Errors and omissions5.9−7.20.00.00.00.00.0
Overall balance−10.1−4.6−1.5200.4−42.3−28.4−19.6
Financing10.14.61.5−200.442.328.419.6
Foreign assets (net)−0.6−6.3−10.0−211.930.028.419.6
Of which: IMF (net)2.013.42.61.54.31.1−0.9
HIPC Initiative assistance10.710.911.511.512.40.00.0
Financing gap0.00.00.00.00.00.00.0
Memorandum items:(Annual percentage changes, unless otherwise specified)
External trade
Export volume index−10.8−3.4−3.5−0.83.73.77.6
Import volume index6.47.616.011.13.47.45.6
Export unit value3.426.315.510.1−0.41.71.5
Import unit value3.420.3−14.5−13.48.62.72.1
Terms of trade0.05.035.027.2−8.4−1.0−0.5
(in percent of GDP)
Current account balance
Excluding official transfers−9.5−9.5−9.7−8.2−10.2−10.6−10.5
Including official transfers−7.7−7.8−7.9−6.1−8.0−8.6−8.5
Trade balance−3.3−5.1−3.2−1.8−3.8−4.3−3.9
Exports, f.o.b.21.422.920.223.022.121.822.2
Cotton fiber3.21.71.51.41.21.21.4
Gold15.916.816.317.416.516.216.2
Other2.34.42.54.24.44.44.6
Imports, f.o.b.−24.7−28.1−23.5−24.8−26.0−26.1−26.1
Petroleum products−5.5−6.6−4.3−4.3−5.0−5.2−5.2
Foodstuffs−3.7−3.9−3.4−3.4−3.2−3.1−3.0
Other−15.6−17.5−15.7−17.2−17.7−17.7−17.9
Services (net)−5.7−5.8−5.6−5.9−6.0−5.8−5.9
Credit5.25.54.44.54.64.54.3
Debit−10.8−11.2−10.0−10.4−10.6−10.2−10.2
Of which: freight and insurance−5.5−6.8−5.7−6.0−6.3−6.0−6.0
Income (net)−4.2−2.8−3.5−3.7−3.5−3.7−3.5
Of which: interest on public debt−0.3−0.3−0.3−0.3−0.3−0.2−0.2
Transfers (net)5.55.94.45.25.35.14.8
Private transfers (net)3.74.22.73.13.13.12.8
Official transfers (net)1.81.71.82.12.22.02.0
Of which: budgetary grants0.80.61.11.11.21.01.0
Capital and financial account7.47.97.910.87.08.08.1
Capital account (net)4.13.64.33.73.13.13.1
Capital transfers4.13.64.33.73.13.13.1
Debt forgiveness0.00.00.00.00.00.00.0
Project grants3.92.83.93.32.62.72.7
Financial account3.04.33.67.14.04.95.0
Private (net)20.52.5−0.13.00.91.51.6
Direct investment (net)2.32.10.84.91.31.41.4
Portfolio investment private (net)0.00.10.10.10.10.10.1
Other private capital flows−1.80.3−0.9−2.0−0.50.10.1
Official (net)2.61.83.64.23.03.43.4
Disbursements3.52.64.43.73.83.83.9
Budgetary0.50.71.11.10.70.70.7
Project related2.91.83.32.63.13.13.2
Monetary authority0.00.00.01.20.00.00.0
Amortization due−0.9−0.7−0.8−0.8−0.7−0.5−0.5
Other0.00.00.00.00.00.00.0
Errors and omissions0.2−0.20.00.00.00.00.0
Overall balance−0.3−0.10.04.7−0.9−0.6−0.4
Financing0.30.10.0−4.70.90.60.4
Foreign assets (net)0.0−0.2−0.2−5.00.70.60.4
Of which: IMF (net)0.10.30.10.00.10.00.0
HIPC Initiative assistance0.30.30.30.30.30.00.0
Financing gap0.00.00.00.00.00.00.0
Sources: Malian authorities; and IMF staff estimates and projections.

Presented according to the Balance of Payments Manual (5th edition); 2006–2010 data after adjustment for MDRI.

Reflects mainly investments in the gold sector; includes short-term capital flows.

Sources: Malian authorities; and IMF staff estimates and projections.

Presented according to the Balance of Payments Manual (5th edition); 2006–2010 data after adjustment for MDRI.

Reflects mainly investments in the gold sector; includes short-term capital flows.

Table 8.Mali: Central Government Consolidated Financial Operations, 2007-12
200720082009201020112012
Prog.Proj.Prog.Proj.Proj.
2nd review
(CFAF billions)
Revenue and grants730.3741.5907.3917.0947.51,011.31,096.6
Total revenue569.9607.3697.1706.8772.5831.2902.6
Budgetary revenue509.4540.6625.6635.3701.0754.5819.6
Tax revenue487.2519.4599.6609.3674.1725.5788.1
Direct taxes142.8149.7175.4181.4187.7196.3212.6
Indirect taxes344.4369.7424.2427.9486.3529.1575.5
VAT194.4200.8230.2232.1275.7298.0322.3
Excises on petroleum products36.635.237.737.722.524.626.9
Import duties62.464.386.587.691.0100.8111.3
Other indirect taxes85.191.977.377.399.1105.7115.1
Tax refund−34.1−22.5−7.5−6.8−2.0−2.0−2.1
Nontax revenue22.221.226.026.026.929.131.5
Special funds and annexed budgets60.566.771.571.571.576.783.0
Grants160.4134.2210.2210.2175.1180.1194.0
Projects79.654.6117.594.079.886.293.0
Sectoral50.654.646.146.140.944.948.5
General27.925.046.646.654.448.952.5
MDRI grants2.30.00.00.00.00.00.0
Total expenditure and net lending839.0828.21,077.11,047.41,122.61,212.91,306.2
Budgetary expenditure826.1753.9994.6966.91,039.81,140.21,227.1
Current expenditure437.1459.1562.4581.1602.3650.0711.3
Wages and salaries162.9186.0217.1217.1235.8256.5277.3
Goods and services161.3164.7179.1201.3214.1226.2253.9
Transfers and subsidies99.194.3135.7146.9133.4152.1163.6
Interest13.914.114.815.819.915.216.5
Of which: domestic2.71.62.33.35.15.15.1
Capital expenditure389.0294.9432.2385.9437.5490.2515.8
Externally financed227.6172.8303.7252.2263.3285.2307.8
Domestically financed161.4122.1128.5133.7174.2205.0208.0
Special funds and annexed budgets60.566.771.571.571.576.783.0
Net lending−47.67.611.09.011.3−4.0−4.0
Overall fiscal balance (excl. grants)−269.1−220.9−380.1−340.6−350.2−381.7−403.6
Overall fiscal balance (incl. grants)−108.7−86.7−169.9−130.4−175.1−201.6−209.6
Adjustment to cash basis5.249.2−87.6−93.8−3.510.45.3
Overall balance (cash basis, incl. grants)−103.5−37.5−257.5−224.2−178.6−191.2−204.3
Financing103.537.5257.5224.3178.6191.2204.3
External financing (net)98.082.5163.6135.6151.0165.3179.0
Loans118.799.9186.0158.0172.6188.3203.1
Project loans100.770.8140.1112.1142.7154.1166.4
Budgetary loans18.029.145.945.929.934.336.8
Amortization−31.4−28.3−33.9−33.9−33.9−23.1−24.1
Debt relief10.710.911.511.512.40.00.0
Domestic financing (net)5.5−45.093.988.727.625.925.3
Banking system11.5−32.6104.6−77.962.950.945.3
Net credit to the government11.5−32.6104.6−77.962.950.945.3
IMF (net)1.912.53.03.02.11.5−0.9
Central bank credit (net)−1.1−2.3−2.446.9−2.5−5.0−4.9
Other10.6−42.8104.0−127.863.354.451.1
Other domestic financing0.00.00.00.00.00.00.0
Privatization receipts0.739.113.0180.43.30.00.0
Other financing−6.7−51.5−23.7−13.8−38.6−25.0−20.0
Financing gap0.00.00.00.00.00.00.0
Memorandum items56.665.0104.0104.096.783.289.3
Basic fiscal balance−30.8−37.3−65.0−77.0−74.5−96.5−95.7
Underlying basic fiscal balance−30.8−37.3−65.0−61.0−49.5−56.5−58.7
Domestic government saving72.381.563.154.298.7104.5108.3
External budgetary assistance45.954.192.592.584.383.289.3
Wage bill over tax revenue33.435.836.235.635.035.435.2
(in percent of GDP)
Revenue and grants21.319.021.721.620.820.720.9
Total revenue16.615.516.716.616.917.017.2
Budgetary revenue14.913.815.015.015.415.415.6
Tax revenue14.213.314.314.314.814.815.0
Direct taxes4.23.84.24.34.14.04.0
Indirect taxes10.19.510.110.110.710.811.0
VAT5.75.15.55.56.06.16.1
Excises on petroleum products1.10.90.90.90.50.50.5
Import duties1.81.62.12.12.02.12.1
Other indirect taxes2.52.41.81.82.22.22.2
Tax refund−1.0−0.6−0.2−0.20.00.00.0
Nontax revenue0.60.50.60.60.60.60.6
Special funds and annexed budgets1.81.71.71.71.61.61.6
Grants4.73.45.04.93.83.73.7
Projects2.31.42.82.21.71.81.8
Sectoral1.51.41.11.10.90.90.9
General0.80.61.11.11.21.01.0
MDRI grants0.10.00.00.00.00.00.0
Total expenditure and net lending24.521.225.824.724.624.824.9
Budgetary expenditure24.119.323.822.822.823.323.4
Current expenditure12.811.813.413.713.213.313.5
Wages and salaries4.84.85.25.15.25.25.3
Goods and services4.74.24.34.74.74.64.8
Transfers and subsidies2.92.43.23.52.93.13.1
Interest0.40.40.40.40.40.30.3
Of which: domestic0.10.00.10.10.10.10.1
Capital expenditure11.47.510.39.19.610.09.8
Externally financed6.64.47.35.95.85.85.9
Domestically financed4.73.13.13.13.84.24.0
Special funds and annexed budgets1.81.71.71.71.61.61.6
Net lending−1.40.20.30.20.2−0.1−0.1
Overall fiscal balance (excl. grants)−7.9−5.7−9.1−8.0−7.7−7.8−7.7
Overall fiscal balance (incl. grants)−3.2−2.2−4.1−3.1−3.8−4.1−4.0
Adjustment to cash basis0.21.3−2.1−2.2−0.10.20.1
Overall balance (cash basis, incl. grants)−3.0−1.0−6.2−5.3−3.9−3.9−3.9
Financing3.01.06.25.33.93.93.9
External financing (net)2.92.13.93.23.33.43.4
Loans3.52.64.43.73.83.83.9
Project loans2.91.83.32.63.13.13.2
Budgetary loans0.50.71.11.10.70.70.7
Amortization−0.9−0.7−0.8−0.8−0.7−0.5−0.5
Debt relief0.30.30.30.30.30.00.0
Domestic financing (net)0.2−1.22.22.10.60.50.5
Banking system0.3−0.82.5−1.81.41.00.9
Net credit to the government0.3−0.82.5−1.81.41.00.9
IMF (net)0.10.30.10.10.00.00.0
Central bank credit, net0.0−0.1−0.11.1−0.1−0.1−0.1
Other0.3−1.12.5−3.01.41.11.0
Other domestic financing0.00.00.00.00.00.00.0
Privatization receipts0.01.00.34.20.10.00.0
Other financing−0.2−1.3−0.6−0.3−0.8−0.5−0.4
Financing gap0.00.00.00.00.00.00.0
Memorandum items
Basic fiscal balance−0.9−1.0−1.6−1.8−1.6−2.0−1.8
Underlying basic fiscal balance−0.9−1.0−1.6−1.4−1.1−1.2−1.1
Domestic government saving2.12.11.51.32.22.12.1
External budgetary assistance1.31.42.22.21.81.71.7
Sources: Ministry of Finance; and IMF staff estimates and projections.

Total revenue less current noninterest spending and net lending, excluding grants, externally financed capital expenditures, and HIPC-financed spending.

Sources: Ministry of Finance; and IMF staff estimates and projections.

Total revenue less current noninterest spending and net lending, excluding grants, externally financed capital expenditures, and HIPC-financed spending.

Table 9.Monetary Survey, 2007-12
200720082009201020112012
DecDecSeptDecDecDec.Dec.Dec.
PrelProg.Proj.Prog.Proj.Proj.
2nd review
(In billions of CFA francs)
Net Foreign Assets526.4496.2699.5516.2718.1698.1674.7660.1
BCEAO460.5466.8636.6476.8678.7648.7620.4600.7
Commercial Banks65.929.462.939.439.449.454.459.4
Net Domestic Assets491.9527.4388.8609.2461.9605.8703.7798.5
Credit to the government (net)−123.5−156.2−319.3−51.6−234.1−171.2−120.2−74.9
BCEAO, net−0.15.5−206.6
Commercial banks−122.9−161.7−112.7
Other−0.50.00.0
Credit to the economy618.3671.2738.4673.7728.9809.9856.8906.3
Other items (net)−2.912.4−30.3−12.9−32.9−32.9−32.9−32.9
Money supply (M2)1,018.31,023.61,088.31,125.41,180.01,303.91,378.41,458.6
Currency outside banks323.9317.1291.4348.6354.0391.2413.5437.6
Bank deposits694.4706.6796.9776.8826.0912.7964.91,021.0
Memorandum item:
Base Money (M0)467.5491.1443.5515.2540.2596.9631.0667.7
Gross international reserves BCEAO477.4497.3666.8510.0760.1734.6707.3682.6
in percent of broad money46.948.661.345.364.456.351.346.8
(In percent of beginning-of-period broad money)
Contribution to the growth of broad money
Money supply (M2)9.30.56.39.915.310.55.75.8
Net foreign assets0.3−3.019.92.021.7−1.7−1.8−1.1
BCEAO0.10.616.61.020.7−2.5−2.2−1.4
Commercial banks0.2−3.63.31.01.00.80.40.4
Net domestic assets9.03.5−13.58.0−6.412.27.56.9
credit to the central government0.5−3.2−15.910.2−7.65.33.93.3
Credit to the economy4.65.26.60.25.66.93.63.6
Other items net3.91.5−4.2−2.5−4.40.00.00.0
(Variation in percent, unless otherwise specified)
Memorandum items:
Money supply (M2)9.30.56.39.915.310.55.75.8
Base money (M0)4.05.0−9.74.910.010.55.75.8
Credit to the economy7.58.510.00.48.611.15.85.8
Velocity (GDP/M2)3.43.83.93.73.63.53.63.6
Money Multiplier (M2/M0)2.22.12.52.22.22.22.22.2
Currency outside banks/M231.831.026.831.030.030.030.030.0
Sources: BCEAO; and Fund staff estimates and projections.
Sources: BCEAO; and Fund staff estimates and projections.
Table 10.Mali: WAEMU Convergence Criteria, 2007-12
Criterion200720082009

Prog.
2009

Prog.
2010

Prog.
2011

Prog.
2012

Prog.
(Ratios in percent, unless otherwise indicated)
Primary criteria
Basic fiscal balance / GDP>=0−0.9−1.0−1.6−1.4−1.1−1.2−1.1
Inflation (annual average percentage change)<=31.59.12.52.21.21.62.0
Total nominal debt / GDP<=7019.421.638.722.523.825.326.9
Domestic arrears accumulation (CFAF billions)<=00.00.00.0−87.60.00.00.0
External arrears accumulation (CFAF billions)<=00.00.00.00.00.00.00.0
Secondary criteria
Wages / fiscal revenue<=3533.435.836.235.635.035.435.2
Domestically financed investment / fiscal revenue>=2031.722.620.521.024.927.225.4
Current account deficit, excl. current official transfers /<=5−9.5−9.5−9.7−8.2−10.2−10.6−10.5
Tax revenue / GDP>=1714.213.314.314.314.814.815.0
Sources: Malian authorities; and IMF staff estimates and projections.
Sources: Malian authorities; and IMF staff estimates and projections.
Table 11.Mali: Schedule of Disbursements Under the ECF Arrangement, 2008–11
AmountAvailable dateDisbursement dateConditions for disbursement1
SDR 12.99 millionMay 28, 2008June 18, 2008Executive Board approval of the three year ECF arrangement.
SDR 5.00 millionDecember 10, 2008December 22, 2008Observance of the performance criteria for June 30, 2008, and completion of the first review under the arrangement
SDR 2.00 millionJuly 6, 2009July 13, 2009Observance of the performance criteria for December 31, 2008, and completion of the second review under the arrangement
SDR 2.00 millionJanuary 11, 2009February 1, 2010Observance of the performance criteria for June 30, 2009, and completion of the third review under the arrangement
SDR 2.00 millionMay 15, 2010June 1, 2010Observance of the performance criteria for December 31, 2009, and completion of the fourth review under the arrangement
SDR 2.00 millionNovember 15, 2010December 1, 2010Observance of the performance criteria for June 30, 2010, and completion of the fifth review under the arrangement
SDR 2.00 millionMay 15, 2011June 1, 2011Observance of the performance criteria for December 31, 2010, and completion of the sixth review under the arrangement
Source: International Monetary Fund.

In addition to the generally applicable conditions under the Extended Credit Facility arrangement.

Source: International Monetary Fund.

In addition to the generally applicable conditions under the Extended Credit Facility arrangement.

The BCEAO loan has an interest rate of 3 percent and a maturity of ten years.

The additional arrears clearance is with regards to non-budgetary payment arrears on deposits at the Treasury and recorded in domestic financing. It was not envisaged under the program as a result of financing constraints.

Population growth of 3.6 percent is taking a heavy toll on per capita economic income growth.

Other Resources Citing This Publication