Mali
Recent Economic Developments
Author:
International Monetary Fund
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Publication Date:
15 Mar 1994
eISBN:
9781451826180
Language:
English
Keywords:
ISCR; CR; CFA franc; discount rate; money market; Malian authorities; debt service; consumer goods
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This paper reviews economic developments in Mali during 1990–94. In the tertiary sector, trade continued to be the leading source of value added; its share in GDP increased continuously, from 17 percent in 1989 to 18.5 percent in 1993. This was compensated by a marked decline of the share of public administration, reflecting the containment of the wage bill and the streamlining of the civil service. The consumption share in GDP averaged a little less than 95 percent during 1989–93.

Abstract

This paper reviews economic developments in Mali during 1990–94. In the tertiary sector, trade continued to be the leading source of value added; its share in GDP increased continuously, from 17 percent in 1989 to 18.5 percent in 1993. This was compensated by a marked decline of the share of public administration, reflecting the containment of the wage bill and the streamlining of the civil service. The consumption share in GDP averaged a little less than 95 percent during 1989–93.

MALI - Basic Data 1/

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Data may not add up because of rounding.

Starting in 1991, six special funds and annexed budgets have been integrated into the central government budget.

Excluding SDR allocations and medium- and long-term liabilities.

MALI- Basic Data 1/ (concluded)

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Data may not add up because of rounding.

In percent of exports of goods and nonfactor services; after debt cancellation; before debt relief; excluding debt service due to the People’s Republic of China and the former U.S.S.R.

Mali: Selected Social and Demographic Indicators 1/

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Sources: World Bank, Social Indicators of Development, 1994; and staff estimates.

1987-92 average, unless otherwise indicated.

I. Introduction 1/

Mali is a vast landlocked country in the western Sahel, covering an area of 1.24 million square kilometers. The northern half of the country forms part of the Sahara Desert and, at present, contributes little to the gross domestic product (GDP). The southern half, irrigated by the Niger and the Senegal rivers, supports a variety of cash and subsistence crops. The country’s mineral resource base is more important than previously estimated, and important gold deposits are beginning to be exploited. Mali’s infrastructure, however, is sparse. The vast majority of Mali’s inhabitants, estimated at 8.6 million at end-1993, live in rural areas and depend on food crops and livestock for their livelihood. Agricultural production suffers from recurrent droughts, poor and fragile soils, the encroachment of the desert, and inadequate management of natural resources. The landlocked position of the country, its distance from foreign markets, the vulnerability of the economy to the weather, and a loss of competitiveness have hindered economic growth. A persistently high population growth rate of 3.5 percent per annum has absorbed most of the real economic growth during the past two decades. Mali’s capital base remains underdeveloped and inefficient, owing in part to insufficient investment and poor maintenance. In 1993, Mali ranked among the poorest countries of the world in terms of basic development indicators such as per capita income (US$306), life expectancy (47.9 years), and literacy rate (32 percent).

Despite the obstacles facing the Malian economy, the 50 percent devaluation of the CFA franc–the currency for the West African Monetary Union to which Mali belongs–that occurred on January 12, 1994, together with adequate macroeconomic and structural policies, is providing a window of opportunity for improving the country’s economic conditions. The attendant gains in competitiveness, together with fresh inflows of external assistance, are helping Mali to regain the ground that was lost during the last half of the 1980s and the early 1990s, as is described in the remainder of this report. Also, to the extent possible, the first effects of the devaluation are assessed.

II. Income and Production

1. Gross domestic product and expenditure, 1989-93

National income accounts data indicate that economic growth during the last five years was extremely unstable, with rates of real GDP growth ranging from 11.8 percent in 1989 to minus 2.5 percent in 1991 (Table 1). The primary reason for these large swings is the economy’s strong dependence on food and export crops, which are heavily influenced by yearly variations in the weather. On average, real GDP grew by 3.2 percent per annum during the period 1989-93, a rate lower than that of population growth. There are several reasons for these developments: unfavorable agroclimatic conditions, a weak external competitive position, and civil disturbances accompanying Mali’s transition to democracy and a free market system.

Table 1.

Mali: Gross Domestic Product at Constant 1987 Prices, 1989-93 1/

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Source: Data provided by the Malian authorities; and staff estimates.

Data may not add up because of rounding.

Includes cotton, groundnuts, tobacco, fruits, vegetables, and other.

The composition of nominal GDP remained roughly constant over the last few years (Appendix I, Table I). The primary sector accounts for some 46 percent of Mali’s GDP, while the secondary sector constitutes about 16 percent and the tertiary sector 38 percent. In years of negative overall growth, the primary sector’s share temporarily dropped. During the past five years the secondary sector gained more importance, owing to increasing output in the mining sector. In the tertiary sector, trade continued to be the leading source of value added; its share in GDP increased continuously, from 17 percent in 1989 to 18.5 percent in 1993. This was compensated by a marked decline of the share of public administration, reflecting the containment of the wage bill and the streamlining of the civil service.

As can be seen in Table 2, the consumption share in GDP averaged a little less than 95 percent during 1989-93, after having been well beyond 100 percent in the aftermath of the droughts of the mid-1980s. The share of investment rose to about 22 percent. Investment was increasingly financed by domestic savings, particularly from the private sector. This reflects an improvement in domestic resource mobilization, brought about by the adjustment efforts initiated during the late 1980s. From a peak in 1991, the importance of the public sector had diminished by 1993, in terms of the share in GDP of both public savings and public consumption. In spite of the increased share of investment financed by domestic saving, dependence on foreign financing remained high and the resource gap failed to narrow.

Table 2.

Mali: Origin and Use of Resources, 1989-93 1/

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Sources: Data provided by the Malian authorities; and staff estimates.

Data may not add up because of rounding.

2. The agropastoral sector

Agriculture is by far the most important sector in the Malian economy; it accounts for almost half of real GDP and employs about two thirds of the population. Agricultural land encompasses only 26.3 percent of the total area. Almost all value added in this sector is created in the south of the country, which is favored by the Niger and Senegal rivers, higher rainfall (over 500 millimeters per annum), and better infrastructure. Since the devastating draughts in the mid-1980s, economic activity, especially in livestock raising, has tended to shift away from the northern regions. In recent years, a deterioration of the security situation has enforced this trend. 1/

a. Agroclimatic conditions

The agricultural sector is highly dependent on the weather, in particular the amount, timing, and distribution of annual rainfall. The cultivation of cereals is primarily rainfed; irrigation is available only for rice cultivation. Yearly rainfall is irregular and varies from region to region (Appendix I, Table II). In recent years, the crop season 1989/90 was hit hardest by the recurrent droughts, especially in the millet, sorghum, and rice cultivation areas, where the rainfall level was near 20-year record lows. That season’s output, however, was only slightly affected (Appendix I, Table III). The poor weather conditions continued in 1990/91, leading to a reduction in the production of all major food crops. Since then agroclimatic conditions have improved. The crop season for 1992/93 benefited from satisfactory rainfall. Based on preliminary data, the 1993/94 crop season is also better than average.

b. Food crops

Food crops account for most of the value added of the primary sector. While the output of dry cereals (millet, sorghum, maize) remained on average practically constant over the past five years, rice production increased considerably (Chart 1). In 1992/93, output fell short of prior years’ performance for the whole range of cereals, but production seems to have recovered somewhat in the 1993/94 crop season. On the whole, the outputs of food crops during the last five years remained below their potential, but this cannot fully be explained by poor agroclimatic conditions.

The performance of the food crops sector occurred against a background of reform measures and considerable efforts made to establish appropriate incentive systems and expand the role of market mechanisms in Mali’s agricultural sector. Since the 1988/89 crop season, all producer prices have been liberalized. Most state-owned rural production companies and marketing agencies have been privatized, notably in the rice sector. The main irrigation compound, the Office du Niger (ON), lost its rice marketing monopoly in the late 1980s and stopped buying paddy from producers in 1994. The newly-restructured Office du Niger is considerably reduced in size and scope, concentrating mainly on water management. Similarly, since 1990, the role of the Office des Produits Agricoles du Mali (OPAM) has been confined to the maintenance of the food security stock, the management of food aid, and the supply of food in areas experiencing shortages. Restructuring and privatization of various rural development organizations is also under way.

There is, however, strong evidence that a loss of competitiveness in the 1980s hindered the cereal sector from fully reaping the benefits of these structural reforms. The overvaluation of the CFA franc made cereal imports relatively cheap. This is particularly true for rice, where imports from Southeast Asia covered any difference between domestic demand and supply. As a consequence, producer prices remained low. The authorities tried to maintain the competitiveness of domestic cereal production through ad hoc protective measures, including a protective tariff on rice and sugar.

CHART 1
CHART 1

MALI: AGRICULTURAL PRODUCTION INDICES, 1985/86-1992/93 1/

(1985/86 = 100)

Citation: IMF Staff Country Reports 1994, 011; 10.5089/9781451826180.002.A001

Source: Data provided by the Malian authorities.1/ Crop year: April-March.2/ Millet, sorghum, and maize.

Preliminary data indicate that the January 1994 devaluation has induced a favorable response from producers. In the first few months of 1994, import substitution led to increased demand for domestic cereals, and Malian rice became sufficiently competitive that it could be exported to neighboring countries. Owing to ample domestic supply, cereal prices did not pick up significantly in the first quarter of 1994 (Appendix I, Table IV). The authorities consider that rice will benefit most from the improvement in competitiveness following the January 1994 exchange rate adjustment. Rice cultivation is well organized, and the restructured Office du Niger is now offering rice farmers an opportunity to produce entirely on their own account; also, there have been great improvements in productivity through better resource management (Appendix I, Table V).

c. Cash crops

Mali’s traditional export crops are cotton and groundnuts. Cotton is by far Mali’s most important export commodity. Raw cotton is grown by independent farmers, mainly in the area around the Niger River and in the southwestern part of the country. Seed cotton is then sold to the Compagnie Malienne pour le Développement des Textiles (CMDT), which carries out its processing and marketing. The CMDT’s monopsony power vis-à-vis producers is controlled by the Government, which is also the majority shareholder. Producers receive a floor price for their seed cotton determined each year in consultation between the CMDT, the producers, and the Government, and taking into account export prices. The producers also receive a share of the CMDT’s profits. In the late 1980s and early 1990s efforts were made to increase productivity in the cotton sector. A restructuring program, supported by the World Batik and other donors, was launched in November 1989. It introduced measures to improve competitiveness by increasing ginning yields, growing new varieties, and containing cost. Cotton output increased markedly, from 229,000 metric tons in 1988/89 to 305,000 tons in 1992/93. However, in spite of its cost-cutting measures, the CMDT could not match the sharp decline in world cotton prices since 1991 (chart 2). By 1992/93 the CMDT’s cumulative deficit reached CFAF 11.9 billion. The only resources available to cover these losses came from bilateral financial assistance, as well as from the cotton stabilization fund built up in earlier years; by late 1993, however, the latter had been depleted. The financial difficulties resulted in a slowdown of investment, as no new processing factories were built during the period from 1990 to 1993, and repairs of existing facilities were delayed. Being a price taker in the world market, the cotton sector responded by reducing output. For 1993/94 the CMDT corrected its output objective downward to 260,000 tons of raw cotton, some 15 percent below the previous crop year’s result. Given the fixed producer price, cotton farmers’ incomes would have fallen accordingly.

CHART 2
CHART 2

MALI: COTTON EXPORT PRICE INDICES, 1985-94

(US Dollars and CFA Francs per kilogram; 1985=100)

Citation: IMF Staff Country Reports 1994, 011; 10.5089/9781451826180.002.A001

Sources: Data provided by the Malian authorities; and staff estimates.

The cotton sector is benefiting considerably from the devaluation of the CFA franc. The CMDT regained its financial viability, as cotton sale receipts doubled in CFA franc terms, while production costs increased by only about 30 percent. As a result, the CMDT recorded a gross surplus of CFAF 18.4 billion (before distribution to producers and stabilization fund) for the 1993/94 crop year, instead of an estimated pre-devaluation loss of CFAF 3.6 billion. The changed conditions in the cotton sector coincided with the signing of a new performance contract between the Government, producers, and the CMDT on June 30, 1994, covering the period from October 1994 to September 1998. The prior performance contract’s strategy of output expansion has been resumed, and the processing facilities are to be modernized so as to increase the ginning yield (that is, the marketable percentage of raw cotton). In addition, the CMDT intends to improve the quality of cotton through (i) a stronger producer price differentiation between first and second quality cotton; (ii) controlling seeds, fertilizers, and insecticides available to farmers; and (iii) enhanced training and information. The producer floor price has been augmented from CFAF 85 per kilo to CFAF 125 per kilo for high quality cotton as of the 1994/95 crop year, and the share of CMDT’s net profits distributed to cotton farmers has been increased from 33 percent to 35 percent. The stabilization fund is also being replenished.

In recent years, groundnuts, Mali’s second largest export crop, suffered from problems similar to those of the cotton sector. Farming is still rather extensive, although the public marketing agency, Office de Développement Industrial Mali Ouest (ODIMO), made some progress in improving its services for seeds, equipment, and fertilizers. Until 1991/92 production increased, although at a rather slow pace. In 1992/93 it dropped sharply, and almost the entire production is now consumed domestically. Output declined in part because cultivation was not profitable at the prevailing world market prices in CFA franc terms. Another element explaining the fall in output is the strong incentive to switch to cotton cultivation, which offers higher producer prices and, within the CMDT framework, is better organized. An undesirable consequence, however, has been a further development of monoculture, and from an environmental point of view, a deterioration in soil quality. Groundnut production is also expected to benefit from the devaluation.

Fruit and vegetable production has traditionally been designated for the domestic and–to a limited extent–the regional market. Fruits and vegetables from Mali, especially mangos, are of high quality; their cultivation, however, is still extensive and on a very small scale. Since the devaluation of the CFA franc, exploration of processing and marketing possibilities has been actively pursued as part of a broad-based export diversification strategy, which is receiving support from the donor community, including the World Bank.

d. Livestock 1/

In the early 1990s livestock herds recovered from the devastating droughts of the mid-1980s. The total stock of cattle, sheep, and goats has been growing at a fairly constant rate of about 2 percent per annum. Offtake rates are usually inversely related to cereal output. In bad years more animals are slaughtered than in good years, as auto-consumption increases (Appendix I, Table VI). Livestock farming in Mali remains very traditional, relying mainly on extensive grazing and natural pastures. In the past few years, many herds moved away from the north, where the expanding desert made pasture sparse. This led to the development of an agropastoral sector in the south, especially in the areas irrigated by the CMDT and the ON, where cotton and rice farmers are now keeping some livestock. This agropastoral sector is expanding and seems to be more open to modern methods of meat production. The diversification in the agricultural sector is supported by international aid organizations and donors.

Livestock has always been an important export commodity in Mali, ranking second after cotton. Traditionally, one of the most important importers of Malian meat is Côte d’lvoire. In the past few years, however, Côte d’lvoire switched to relatively cheaper meat from outside the region, mainly subsidized meat from the European Community. This process seems to have been reversed by the devaluation of the CFA franc, as indicated by the rapid increase of meat exports since January 1994. In the first half of 1994, formal exports of cattle alone amounted to about 120,000 animals, compared with 200,000 (formal and informal) in all of 1993. As livestock farmers were reluctant to increase the offtake ratio, meat supply on the domestic market fell. Consequently, meat prices, especially in Bamako, which had been remarkably stable immediately after the devaluation, started to increase. There are indications, however, that the agropastoral sector is reacting to this price hike by slaughtering more animals, especially goats and sheep.

Mali has recently spearheaded efforts to promote regional livestock trade. In April 1994 the Ministry of Rural Development organized a conference–the Segou Forum–in which government officials and donors, as well as livestock producers and traders from Burkina Faso, Côte d’lvoire, Ghana, Mali, and Senegal developed a common strategy to promote regional livestock trade in the aftermath of the devaluation. The envisaged measures include special tax breaks and credit lines to promote investment in transportation and processing facilities, easier access to export licenses, and a general disengagement of the Government from the livestock sector (for example, privatization of mandatory vaccination). In addition, a program to improve statistics is being supported by various donors.

3. Industry and manufacturing

Mali’s modest Industrial base (about 6 percent of GDP) is largely based on the processing of agro-Industrial products. Growth performance in this sector is therefore linked to growth in the primary sector, especially export crop and meat production. In 1990/91, when agricultural output decreased because of a bad harvest, the index of Industrial production declined by 14 percent (Appendix I, Table VII). The stagnation of overall Industrial activity during the past five years has been due to structural problems. Many enterprises suffered from poor management, comparatively high unit wages, and the overvaluation of the CFA franc. The textile industry is a prime example. By 1993, both major companies (COMATEX and ITEMA) had gone out of business because they were not able to keep up with foreign competition. In an effort to revitalize Industrial activity, a number of formerly state-owned companies were privatized. In the short run, however, liquidations and restructurings under the Public Enterprise Sector Adjustment Program (PESAP) induced a significant narrowing of the Industrial base, thus further exacerbating the slump in Industrial activity.

In spite of its reduced size, the Industrial sector appears well positioned to take advantage of the gain in competitiveness acquired through the devaluation. Textiles, machinery, and construction materials are among the sectors to benefit from import substitution and exports on a regional level. Nevertheless, preliminary information shows that the overall slump of Industrial activity continued in the first quarter of 1994. So far, the private sector’s wait-and-see attitude has prevented a rebound in activity. This is aggravated by an extremely prudent credit policy on the side of commercial banks. However, encouraging signs are already visible: in Bamako, in particular, a significant number of small-scale businesses are opening, including dairies, food processing plants, and soap manufacturers.

4. Mining

In the past several years, mining has become one of Mali’s most promising sectors. Compared with its potential, the mining sector is presently underdeveloped. This is particularly true for gold. Mali has known reserves of 305 tons of gold, according to a recent survey conducted by the Ministry of Mining with the help of international donors and investors. Until 1990, Industrial gold mining production rarely exceeded 1 ton a year. With the opening of the Syama site, which is operated by the Société des Mines d’Or de Syama (SOMISY), output increased to about 3 tons a year. SOMISY is a joint venture of the U.S.-Australian consortium BHP Minerals (65 percent of capital), the Malian Government (20 percent), and the World Bank (15 percent). Mali’s second Industrial mine–Kalana–was closed in 1991, owing to flooding and a lack of maintenance of the physical plant. The former owner, the Soci6te des Mines d’Or de Kalana (a joint venture between the Malian Government and the former U.S.S.R.) is in liquidation. The Malian authorities are actively looking for investors to resume production in Kalana, expand Syama, and exploit further sites. In September 1991, a revised Mining Code was adopted, limiting the Government’s equity interest in new operations to 20 percent, ensuring uniform treatment of tax exemption, and simplifying the procedures for obtaining prospecting and mine-operation licenses.

After the devaluation, prospects for increased use of Mali’s extensive mineral resources have brightened, with gold exploitation and mining becoming particularly attractive for foreign investors. The Syama mine will reach its second expansion phase in late 1994; this is expected to increase total output to about 4 tons in 1994 and 5 tons in later years. The most advanced new project is Sadiola. A joint venture consisting of a South African consortium (78 percent of capital), the Malian Government (18 percent), and the World Bank (4 percent) plans to start production in September 1997. The mine has a planned yearly capacity of 8 tons, and it is expected to be fully operational after 1998. A further site attracting foreign investors is Loulo, which is scheduled to start operation in 1998 with a yearly production of 3 tons. Small-scale gold production has a long tradition in Mali and is quite significant in terms of volume; estimates are in the range of 2-4 tons yearly, a large part of which is exported through informal channels. A study prepared by the mining industry, assessing known reserves of other mineral resources, shows that Mali has significant stocks of iron ore, bauxite, magnesium, limestone, phosphate, and marble; presently, only the latter two are being exploited.

III. Prices, Wages, and Employment

1. Prices

Since 1986, the Government had pursued a policy of liberalizing prices and marketing. With the elimination, on July 1, 1992, of the price controls on petroleum products, all prices became market-determined, with the exception of those for water, electricity, and telecommunications.

In 1988 a new monthly consumer price index (CPI) was introduced. 1/ The CPI for Bamako increased slightly in the late 1980s and early 1990s, and dropped in 1992 and 1993 (Chart 3 and Appendix I, Table VIII). These deflationary developments are due mainly to a cautious monetary policy, the overvaluation of the CFA franc, and two good cereal harvests.

CHART 3.
CHART 3.

MALI: BAMAKO CONSUMER PRICE INDEX JULY 1987-MAY 1994

(Period average 1980=100)

Citation: IMF Staff Country Reports 1994, 011; 10.5089/9781451826180.002.A001

Source: Data provided by the Malian authorities.

The development of consumer prices following the January 1994 devaluation can be roughly divided into an initial adjustment phase (from the announcement of the devaluation of the CFA franc on January 11 until about mid-March), and a consolidation phase thereafter. In the week immediately following the devaluation, there was an overreaction in the markets and prices of most commodities rose substantially, even those of domestically produced products. In response to this overreaction, the Government announced a general temporary price freeze on January 16, 1994; although it was based solely on moral persuasion, as there was no legal basis for effective enforcement, the price freeze was widely observed. The actual price level adjustment took place one week later, when the Government lifted the price freeze and announced the accompanying measures laid out in the Government’s adjustment program. 2/ The price index (based on December 1993 - 100) rapidly increased from about 103 index points in the last week of January to about 117 in the second week of February. After the level adjustment in the first two weeks of February, prices continued to climb, although at a slower pace; this, however, reflects the normal demand-pull effect during the Ramadan period (mid-February to mid-March). Compared with prior years, the 1994 Ramadan period’s price increase was rather moderate, amounting to less than 4 percent (9.9 percent in 1992, 6.6 percent in 1993, compared with previous months), as part of the demand-pull effect had already been included in the post-devaluation price adjustment in the first weeks of February. Moreover, a temporary customs exemption for sugar imports contributed to the moderate increase of the price index.

After the end of the Ramadan period, consumer prices essentially returned to their yearly pattern. For more than two months the index remained stable. By May 1994, the index rose by 23 percent compared to December 1993. The public sector wage increase of 10 percent, which became effective in April, had a negligible immediate effect on inflation. In early June prices resumed their seasonal climb, as food stocks from the last harvest started to run low. Two devaluation-related effects may have some what aggravated the seasonal price increase. First, stocks of import commodities purchased before the devaluation were used up, forcing many importers for the first time to buy at the new exchange rate. Second, rice, a key cereal, was becoming scarce, since parts of the domestic harvest had been sold to neighboring CFA franc zone countries soon after the devaluation.

Overall, the relatively moderate inflation following the devaluation are due to several factors: (i) the 1993/94 harvest for key cereals like rice, millet, and sorghum was quite good; (ii) consumers reacted to the initial surge in prices by making their choices more carefully, squeezing profit margins of importers; (iii) import substitution in favor of cheaper domestic products was quite strong; and (iv) the authorities have been following very prudent income and financial policies.

2. Wages

The Government sets salaries in the civil service and establishes minimum wages for unskilled agricultural workers (SMAG) and unskilled workers outside agriculture (SMIG). Labor pressures increased in early 1991, contributing to the events of March 22-26, 1991, and the installation of a transitional Government on April 5. During this period of political turmoil the SMIG and the SMAG were increased by more than 50 percent through payment of a solidarity allowance (CFAF 6,500 per month). This allowance was also granted to the lowest grades in public administration, representing a 25 percent wage raise (Appendix I, Table IX). An allowance of CFAF 2,000 per month was also granted to higher grades. After this increase, the wage structure in the public sector remained unchanged and no merit increases and no cost of living adjustments were granted. Information on wages in the nonpublic sector is not available; traditionally, nongovernment employees enjoy higher salaries but lower nonsalary benefits on average than public servants. In recent years the gap between public and private sector wages is estimated to have widened, owing to the above-mentioned freeze on public salaries.

On March 10, 1994 a wage contract was signed by the Government and the Malian trade union association–Union Nationale des Travailleurs Maliens (UNTM). As of April 1, 1994, public servants’ base salaries, as well as the SMIG and the SMAG, were increased by up to 10 percent in order to mitigate the social impact of the devaluation. In general, the private sector has followed the public sector wage increase. In real terms, however, most wages decreased substantially after the devaluation.

3. Employment

Information on Mali’s overall employment situation remains very limited. The Ministry of Employment, Public Administration and Labor is in charge of monitoring the employment situation; however, its activities are essentially confined to the public sector.

The total civil service (excluding military and justice) has diminished steadily during the last five years; in 1993 employment in the public sector of 36,055 was about 30 percent lower than in 1989 (see Appendix I, Table X). This is the result of a deliberate policy to streamline the civil service, which was based on a thorough review of redundant staff positions performed on the basis of so-called cadres organiques in the early 1990s. The cadres organiques had identified a surplus of about 20 percent of total staff (1,700 civil servants and 6,500 contractual employees). The Government took several measures to downsize public sector employment: (i) a cautious recruitment policy was pursued; (ii) a voluntary departure program was enacted to assist government employees to leave the civil service and establish themselves in the private sector; between 1991 and 1993, some 5,100 civil servants participated in the program; (iii) several public enterprises were privatized, in the context of the PESAP, with their staff being converted from public to private employees; and (iv) in 1990, the number of administrative units was reduced from 127 to 97 and the payroll was computerized.

To enhance the flexibility of the labor market, the Government abolished in 1991 the monopoly exercised by the national labor and employment agency, and authorized the creation of private employment offices. Moreover, in order to promote investment and job creation in the private sector, the Government adopted in 1992 a new Labor Code, aimed at providing greater flexibility in hiring and firing procedures, as well as a revised Commercial Code to further simplify the regulation of private firms.

IV. Development Panning

Mali’s development planning process has undergone important changes during the last five years. Until 1991, the then Ministry of Planning elaborated five-year development plans. Initial overall targets and priorities were set and financial ceilings of sectoral development expenditure were defined. The Ministry of Planning and the technical ministries then decided which projects were to be adopted in view of the availability of financing. This process, however, suffered from a lack of involvement of donors, poor coordination between the different partners, and weakness in the preparation of feasibility studies. As a result of these problems, implementation rates of yearly public investment programs were rather low (Table 3).

Table 3.

Mali: Implementation of the Public Investment Program, 1989-93 1/

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Source: Data provided by the Malian authorities.

Data may not add up because of rounding.

Beginning in 1988, the annual investment budget has been set within the framework of a three-year rolling public investment program, which is expected to provide more flexibility. Further changes in public investment programming, aimed at ameliorating the public investment planning process, were introduced in recent years. They include: the setting up of planning units within key ministries to improve the appraising and selecting of investment projects; the closer review of medium- and large-scale projects in cooperation with the World Bank; the quarterly reporting on the physical and financial implementation of the program; the shortening of the administrative circuit so that the sectoral ministries are directly responsible for reporting on projects; and simplified reporting forms.

The investment program for 1994-96 (Appendix I, Table XI) reflects the significant increase in the cost of imported goods and services resulting from the devaluation; a higher project implementation ratio, and increased domestic provisions for counterpart funds. As a result, total development expenditures is projected to more than double between the 1993 realization (CFAF 67.3 billion) and the 1994 investment budget (CFAF 136.4 billion). The new public investment program gives priority to rural development expenditures and to infrastructure, together comprising about 60 percent of the three-year program. Compared with previous years more resources are to be devoted to the secondary sector (especially mines, water, and energy).

V. Government Finance

1. Structure of the government sector

The government sector in Mali consists of the Central Government, a number of specialized institutions that carry out specific functions for the Central Government, and several regional and local authorities. The Central Government includes the Presidency, the National Assembly, the Economic and Social Council, the Supreme Court, the Office of the Prime Minister, and 15 ministries, which are covered by the national budget. There are 9 regional authorities, including the district of Bamako, 13 local authorities (municipalités), and 6 specialized institutions with their own budgets, the most important of which is the social security fund (Institut National de Prévoyance Sociale–INPS). 1/ The consolidated government operations comprise those recorded in the national budget, the regional budgets, and the special funds and annexed budgets of the 6 specialized institutions, as well as extrabudgetary operations. Since 1991, normal budget procedures have been extended to the spending of the armed forces. In addition, in order to improve monitoring and financial management, since 1989 the investment budget has been fully integrated into the budgetary process of the Central Government.

The Treasury executes all financial transactions of the government budget, and controls various special accounts that cover a wide range of operations, including cash accounts of local authorities. The special accounts cover both current and investment outlays, which are financed through earmarked revenue and budgetary transfers, as well as external assistance. The Treasury maintains deposits at the Central Bank of West African States (BCEAO) and also with commercial banks, in particular at the Banque de Développement du Mali (BDM-SA) and the Banque Nationale de Développement Agricole (BNDA). The extension of central bank credit to the Central Government is subject by statute to a ceiling of 20 percent of the tax revenue in the previous complete fiscal year.

2. Overall fiscal developments

Following an interruption of the adjustment process from mid-1986, the Government of Mali resumed its adjustment efforts in mid-1988. As a result, Mali’s fiscal position improved during 1989-90, and the overall fiscal deficit, on a commitment basis and excluding grants, fell from 10.5 percent of GDP in 1988 to 8.5 percent in 1990 (Table 4). This improvement reflected both increased efforts to mobilize revenue and the implementation of a tight expenditure policy. Total government revenue during this period increased by 35.6 percent to reach CFAF 116.1 billion in 1990. At the same time, the growth of total expenditure was limited to 17.9 percent. The wage bill was maintained at about its 1986 level, mainly reflecting a continued freeze on wages. Development expenditure rose in line with the expanding public investment program, while the externally financed expenditure on the public enterprise reform program, including the rehabilitation of the BDM, increased considerably. Domestic payments arrears were sharply reduced, all external payments arrears were eliminated by end-1989, and the Government continued to reduce its net indebtedness to the banking system. Mali also benefited from considerable disbursements of external budgetary assistance, and debt rescheduling.

Table 4.

Mali: Consolidated Government Operations, 1989-93 1/

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Source: Data provided by the Malian authorities.

Data may not add up because of rounding.

Starting in 1991, six special funds and annexed budgets have been integrated into the central government budget.

Budgetary grants include a contribution of CFAF 2.0 billion from the cereal market restructuring project (PRMC), and exclude a grant of CFAF 1.6 billion from STABEX.

Scheduled; after debt cancellation.

Starting in 1991, interest payments are shown under current budgetary expenditure because of the integration of the debt servicing agency (CAA) into the central government budget.

PESAP, Public Enterprise Sector Adjustment Program, financed by the world Bank and cofinanciers; BDM, Banque de Développement du Mali.

Expenditure by the Ministry of Rational Defense.

The improvement in the overall fiscal position in 1989-90 was not, however, sustained in 1991. Following the events of early 1991, the fiscal deficit rose markedly to 12.3 percent of GDP. The destruction of administrative facilities and enterprises and a decline in economic activity led to sizable revenue losses, while total expenditure rose significantly. In order to limit the revenue losses caused by the destruction during the events of March 1991, the Government made an effort to rebuild the tax and customs administrations and to improve revenue mobilization. As a result, the decline in total government revenue was limited to 5.6 percent. In spite of cutbacks in low-priority spending, total expenditure rose by 10.7 percent, reflecting an increase in the wage bill and in scholarships, the high costs of the voluntary departure and public enterprise reform programs, and spending devoted to reconstruction. The wage bill rose by 11 percent, as the granting of a bonus and three of the five automatic promotions that had been frozen since 1986 was only partially offset by a reduction of 2,818 civil servants and military personnel under the voluntary departure program. External payments arrears of CFAF 1.1 billion were accumulated. At the same time, foreign budgetary assistance enabled the Government to abolish the practice of paying salaries one month late and to further reduce its net domestic indebtedness.

As soon as it took office in June 1992, the new democratically elected Government decided to regain the adjustment momentum. The measures introduced helped to reduce the fiscal deficit to 11.2 percent of GDP in 1992 and to 9.6 percent in 1993, but there were some policy slippages after the promising start of the adjustment program. In 1992, there was a further drop in total government revenue by 8.1 percent as a result of the tax relief measures taken in the beginning of the year and the mounting difficulties encountered in the enforcement of tax recovery, particularly in the last quarter. However, total expenditure fell by 4.6 percent, mainly as a result of a reduction in the wage bill, delays in the implementation of some development projects, and declining expenditures for the voluntary departure and public enterprise reform programs, as well as for reconstruction. The decrease in the wage bill resulted from the impact of 1,835 additional voluntary departures and the efforts undertaken to verify the number of government employees and to rectify the salary files. On the other hand, spending on scholarships increased, primarily because the envisaged measures to reduce them could not be implemented at the beginning of the new school year in October 1992, and the Government incurred significant extrabudgetary outlays, notably related to public works and reconstruction. The Government reduced its domestic payments arrears, but accumulated external payments arrears, as the expected external budgetary assistance was not received in full.

In 1993, the fiscal position improved further, as total government revenue increased somewhat and total expenditure continued to decline. In spite of the various revenue-enhancing measures taken by the Government throughout the year, total revenue grew only by 4 percent, indicating continuing problems with regard to tax recovery. Total spending fell by 3.3 percent, mainly on account of the phasing out of the voluntary departure and public enterprise reform programs, and of the completion of the reconstruction efforts. The wage bill was also further reduced to CFAF 40.9 billion, partly as a result of 450 voluntary departures. At the same time, spending on scholarships proved hard to contain, and further extrabudgetary outlays were incurred, contributing to the accumulation of new domestic payments arrears. These developments, and a decline in external budgetary assistance, led to an accumulation of external payments arrears, as well as a significant deterioration in the Government’s net position vis-à-vis the banking system instead of the improvement of previous years.

In early 1994, the authorities decided to strengthen their adjustment efforts. Soon after the devaluation of the CFA franc in January 1994, the authorities implemented a package of accompanying fiscal measures aimed at ensuring that the positive effects of the devaluation will not be eroded by inflationary pressures. The Government adopted specific measures aimed at increasing revenues and limiting spending in order to contain the overall fiscal deficit to the equivalent of 15 percent of GDP in 1994, in spite of the impact of the devaluation on expenditures, especially external debt services. Fiscal developments during the first half of the year have been encouraging. Government revenue exceeded the projected amount, despite a shortfall in customs revenue, and spending remained strictly controlled.

3. Trends in revenue 1/

During 1989-93, total government revenue increased at an average annual rate of 4.1 percent. There was a strong growth in revenue in 1989-90, but a considerable decline during 1991-92, followed by a modest pickup in 1993 (Table 5; Appendix I, Table XII). The ratio of total government revenue to GDP during this period averaged 15.6 percent, with a peak of 17.2 percent in 1990 and a trough of 13.7 percent in 1992. Since 1991, the level of tax revenue has increased considerably, reflecting the integration of six specialized institutions into the national budget.

Table 5.

Mali: Government Revenue Performance, 1989-93 1/

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Source: Data provided by the Malian authorities.

Data may not add up because of rounding.

Beginning in 1991, tax revenues included in this category, which were previously earmarked for special funds, have been consolidated in the budget.

Despite the various discretionary measures introduced between 1989 and 1993 to improve revenue performance, the tax and customs administrations have remained rather weak and the difficulties in the enforcement of tax recovery have persisted. In 1989, a comprehensive tax reform was introduced, including the assessment of non-oil import duties on actual values instead of administrative values (valeurs mercuriales); the contracting of the Sociéeté Générale de Surveillance (SGS) to verify the value of imported goods; the reduction of ad hoc exemptions; the opening of eight new collection centers in Bamako; the subjection of the removal of goods from customs to the prior securing of adequate payments means; and the improvement in monitoring tax obligations and payments. In early 1991, additional reforms to enhance the elasticity of the tax system were implemented, notably: the replacement of the previous sales tax by a value-added tax (VAT) and a special tax on services (TPS), which is similar to the VAT; the rationalization of customs duties; and the replacement of most of the domestic tax on petroleum products by a customs levy. However, in the beginning of 1992, measures were taken to reduce certain customs duties and VAT rates, and to extend the scope of exemptions. From the last quarter of 1992, tax collection difficulties increased, as the commercial sector resisted paying the VAT on retail sales, and the poll tax on persons had to be abolished. Moreover, during 1993, there was a significant delay in the intended reorganization and strengthening of the tax and customs administrations, and early in the year certain customs tariffs were lowered and harmonized. On the other hand, to increase revenue, the Government imposed a 5 percent withholding tax on imports and government contracts, raised the motor vehicle tax, and strengthened the VAT collection procedures. In the last quarter of 1993, additional measures were taken to enhance collection of the tax on hydrocarbons, raise a number of customs tariffs, intensify the collection of tax arrears, and step up the fight against tax evasion.

During 1989-93, the composition of tax revenue became even more heavily weighted toward indirect taxes, in particular taxes on international trade. Thus, by 1993, taxes on international trade represented some 57 percent of tax revenue, and just over 50 percent of budgetary revenue, with taxes on net income and profits, and taxes on domestic goods and services each representing about 14 percent of tax revenue. Since 1991, revenue of the special funds and annexed budgets has decreased, reflecting the integration of six special institutions into the national budget, and the transformation in 1992 of the Office de Stabilisation et de Régulation des Prix (OSRP) into the Office National des Produits Pétroliers (ONPP), which is responsible for the regulatory framework of the petroleum subsector and is incorporated in the national budget (Appendix I, Table XIV).

Following the devaluation of the CFA franc, the authorities have put in place measures to broaden the tax base, strengthen collections, and reduce tax evasion. At the same time, to limit the increases in domestic costs and prices resulting from the devaluation, the authorities decided to reduce certain customs duties and tax rates, effective January 30, 1994. The measures included in particular: a reduction of the maximum cumulative import tariff rate to 36 percent and setting the minimum cumulative rate at 6 percent; the suspension of the variable tax on imports (TCI) and the declining protection tax (TDP); the reduction of the corporate income tax from 45 percent to 35 percent, the tax on individual entrepreneurs from 25 percent to 15 percent, and the tax on craftsmen from 15 percent to 10 percent; and the reduction of the normal VAT rate from 17 percent to 15 percent.

4. Trends in expenditure

During 1989-93, total government expenditure, including foreignfinanced investment, increased at an average annual rate of 3.8 percent; as a ratio to GDP, it fell from 26.7 percent in 1989, with an interruption in 1991, to 23.5 percent in 1993 (Appendix I, Table XIII). Budgetary expenditure–which includes foreign-financed investment and expenditures on the voluntary departure and public enterprise reform programs, but excludes the spending of the special funds and annexed budgets, as well as extrabudgetary outlays–increased significantly in 1991, largely as a result of the integration of the six specialized institutions in the national budget. During the period 1989-93 as a whole, however, budgetary expenditure grew at an average annual rate of not more than 6.2 percent, while its ratio to GDP declined slightly from 22.1 percent in 1989 to 21.4 percent in 1993. The surplus of the special funds and annexed budgets declined over the period, reflecting the above-mentioned integration, the transformation of the price stabilization fund (OSRP), and, since 1991, the dwindling surplus of the social security fund (INPS).

Current expenditure increased at an average annual rate of 7.6 percent during 1989-93; its share in total budgetary expenditure rose from about 47 percent in 1989 to almost 55 percent in 1993, reflecting the diminishing outlays on the voluntary departure and public enterprise reform programs. The share of outlays on personnel was reduced from 56.9 percent of current expenditure in 1989 to 46.4 percent in 1993 (Appendix I, Table XV). The decline in the share of the wage bill reflected the salary freeze in 1989-90 and 1992-93, the impact of the voluntary departure program, as well as the curtailment of gross recruitment. In February 1993, the Government adopted a new salary grid to reflect wages effectively paid, and decided to replace the existing system of automatic promotions with one based essentially on merit. Expenditure on supplies, which grew at an annual average rate of 6.9 percent in 1989-93, increased its share in current outlays from 8.6 percent in 1989 to 10 percent in 1993. The share of education in total government expenditure rose from 11 percent in 1989 to some 13 percent in 1993. However, more than 20 percent of spending on education was on scholarships. During this period, the share of expenditure for the health sector remained around 5 percent.

Development expenditure continued to be mainly externally financed, through highly concessional loans and grants. As a share of budgetary expenditure it remained virtually unchanged, at around 42 percent. At the same time, the share of foreign-financed capital outlays in GDP fell from 8.7 percent in 1989 to 7.8 percent in 1993, while the share of domestically financed development expenditure doubled, to 1.2 percent of GDP. In line with the efforts of donors to gradually reduce Mali’s external debt burden, the proportion of grants in the external development financing increased from 42.6 percent in 1989 to some 51 percent in 1991-93.

Following the devaluation of the CFA franc in early January 1994, the Government has implemented a tight expenditure policy, including a restrained wage policy and a strict control of nonpriority expenditure. This policy aims at limiting total government spending to 28.2 percent of GDP, in spite of the effect of the devaluation on expenditures, especially external debt servicing. An agreement reached between the Government and the labor unions provided for a moderate 10 percent increase in salaries, as of April 1. Increased provisions have been made in the 1994 budget for essential social services, in particular basic education and health services. To mitigate the short-term negative impact of the devaluation on the most disadvantaged social groups, the Government has introduced accompanying social measures with the objective of limiting price increases for essential goods, and improving the availability of basic social services. The immediate measures include the intensification of immunization programs and the strengthening of primary health care to fight infant mortality. A special allocation of CFAF 13 billion for social safety net measures was included in the 1994 budget.

VI. The Public Enterprise Sector

For decades Malian economic policies were characterized by state intervention in virtually all spheres of economic activity. This was particularly evident in the public enterprise sector, which, in the mid-1980s, included 57 enterprises, most of which were dominant in the sectors in which they were operating. Management of these companies was poor, resulting in severe financial difficulties and misallocation of resources. In 1988 the Government, with the support of the World Bank, launched a comprehensive reform program, the Public Enterprise Sector Adjustment Program (PESAP). It sought to (i) settle the arrears between enterprises and between enterprises and the Government; (ii) rehabilitate or restructure six enterprises that would remain in the public domain; (iii) privatize 14 enterprises that were deemed financially viable; and (iv) liquidate 15 enterprises that were considered nonstrategic and nonviable. In 1991, an action plan was prepared to restructure the remaining 22 public enterprises.

Broadly speaking, Mali’s public sector reform program was implemented satisfactorily. By late 1993, the restructuring of 42 public enterprises had been accomplished, of which 23 were liquidated and 12 were privatized. For most of the enterprises remaining on the privatization list, the necessary laws have passed the Parliament and negotiations with private investors are under way, including with foreign partners. All restructuring operations under the action plan are presently on schedule.

Only the few enterprises considered natural monopolies—those in energy, postal services and telecommunications, and the railway system–will remain under state control. The Government is reinforcing the management capacity of the companies remaining in its portfolio. The financial situation of some of these enterprises has improved somewhat lately (Appendix I, Table XVI), notably in the case of the Energie du Mali (EDM); this is due to a reduction of the Government’s arrears in 1993, as well as to enhanced recovery from the private sector.

VII. Money and Banking

1. Introduction

Mali became the seventh member of the West African Monetary Union (WAMU) on June 1, 1984, joining Benin, Burkina Faso, Côte d’lvoire, Niger, Senegal, and Togo. The WAMU was established in 1962; to strengthen the cooperation among the seven member countries, it was transformed into the West African Economic and Monetary Union (WAEMU) following the signing of a new treaty on January 10, 1994. The WAEMU was formally established and started operations on August 1, 1994. The new Union preserves the monetary functions of the WAMU, providing for a common currency, the CFA franc, issued by a common central bank, the Central Bank of the West African States (Banque Centrale des Etats de l’Afrique de l’Ouest–BCEAO), with headquarters in Dakar and national agencies in each of the member states; a common interest rate structure; unhindered capital mobility within the Union; and the pooling of foreign exchange reserves. In accordance with an agreement concluded on December 4, 1974, France guarantees the free convertibility of the CFA franc into French francs by extending overdraft facilities through an operations account held at the French Treasury. As of January 12, 1994, and following the change in the parity of the CFA franc, the fixed rate at which France guarantees the free convertibility has been changed from CFAF 1 - F 0.02 to CFAF 1 - F 0.01. 1/ As part of this agreement, the BCEAO is required to deposit the equivalent of at least 65 percent of its foreign exchange holdings in the operations account, a subaccount is maintained for each member state. In return, France provides a foreign exchange guarantee in terms of an international unit of account, which is currently the SDR. This guarantee holds for the part of the BCEAO’s reserves held in the operations account. Mali’s subaccount balance in the operations account has been positive since it joined the Union, except in 1986-87.

Monetary and credit policy in the WAEMU is broadly defined by its Council of Ministers, the Union’s highest policymaking body, which is composed of two ministers from each member state. The Council of Ministers sets the minimum acceptable ratio between the BCEAO’s gross international assets and its liabilities, and the expansion of credit compatible with this ratio. The Board of Directors of the BCEAO, composed of two directors appointed by each member state and from France, determines the monetary and credit policies of member states on the basis of guidelines provided by the Council of Ministers, and consistent with the targets for monetary expansion and for the external asset position of the Union as a whole. A National Credit Committee (NCC) is responsible for the management of monetary and credit policies in each member state, in accordance with the decisions of the Board of Directors of the BCEAO. The NCC, chaired by the Minister of Finance, is composed of the country’s two representatives to the Board of Directors of the BCEAO, four other senior officials appointed by the Government, and, since March 1988, a representative appointed by France.

2. Policies and insruments

Monetary policy in the Union has been conducted on the basis of an annual monetary program geared toward protecting the foreign reserves of the BCEAO. The conduct of monetary policy in the WAMU underwent significant reforms over the period 1989-93. Prior to the initiation of these reforms, the BCEAO relied largely on: (i) quantitative credit ceilings; (ii) limits on central bank financing; (iii) a discount rate; (iv) an interbank money market to maximize the retention of funds within the WAMU and the effective use of the liquid assets of the commercial banks; and (v) a minimum liquidity ratio and two solvency ratios. The principal objective of the reform of monetary policy instruments was to foster a more efficient and flexible monetary policy by gradually replacing administrative controls over money and credit with more indirect and market-oriented controls, including: (i) the liberalization of banking conditions; (ii) a major reform of money market operations; (iii) the establishment of minimum reserve requirements; (iv) the promotion of an active regional interbank market; and (v) the strengthening of prudential regulations.

As part of the reforms of October 1989, the preferential discount rate and sectoral controls on credit were abolished, the interest rate structure was simplified, and deposit money banks were given more freedom in determining their own deposit and lending rates. The NCC of each member country continued to propose targets for money supply and credit growth, as well as ceilings for central bank financing for the following year to meet the economic and financial requirements of the economy, and the foreign exchange reserve objective established by the Council of Ministers. The BCEAO included crop credits in its overall refinancing ceilings for commercial banks, which had to be observed on a quarterly basis. With a view to expanding the role of the money market in the financial system, nonbank financial institutions and the Treasury were given access to advances from the money market, and direct interbank lending was liberalized. Excess liquidity was absorbed by the BCEAO at market-related rates, and excess supply was placed by the BCEAO in the French money market. In case of shortage of funds in one country, the national agency of the BCEAO provided overnight advances at the regular discount rate.

The supervision of banks was strengthened with the establishment of a supranational banking supervision commission (Commission Bancaire de l’Union Economique et Monétaire Ouest Africaine), which became operational in October 1990. The Commission is located in Abidjan, and has the mandate to conduct frequent audits of all banks operating in the Union. Furthermore, a number of prudential regulations were introduced in June 1991, including a minimum risk weighted capital ratio of 4 percent; a ratio of long-term bank resources to long-term credit set at a minimum of 75 percent; a liquidity ratio set at a minimum of 60 percent; and a loan and commitment to a single borrower ratio set at 100 percent of a bank’s capital base. In January 1992, the required prior authorization of loans was replaced by a new creditworthiness rating system for all lending operations. As a result, commercial banks and other financial institutions must seek an accord de classement from the Central Bank after extending loans to borrowers to which they have an exposure in excess of CFAF 200 million. These accords, to be given by the Central Bank within 60 days, refer to the financial soundness of the borrowers and the loans.

Further reforms were implemented in October 1993, including the elimination of ceilings on commercial bank credits; the transformation of the money market into a weekly auction; the further liberalization of interest rates; and the introduction of minimum reserve requirements. The statutory ceiling on central bank credit to the government remains at 20 percent of the country’s fiscal receipts in the previous complete fiscal year. Under the weekly auctions in the money market, the Central Bank announces the amount of liquidity it is ready to absorb from or provide to the market, and determines the interest rate on the basis of bids made by participating banks. Consequently, banks are no longer assured to be able to place all their excess liquidity in the money market, or to meet all their liquidity needs. Banks are free, however, to enter into bilateral transactions in an interbank market. The Central Bank will continue to provide liquidity as lender of last resort through repurchase agreements and rediscounts. Commercial banks have been granted freedom in setting deposit and lending rates under the proviso that lending rates cannot exceed the legal usury rate set at twice the prevailing discount rate; the rates for short-term time deposits of less than CFAF 5 million and passbook savings accounts continue to be administered by the BCEAO. The new system of reserve requirements sets a minimum reserve coefficient of 1.5 percent applied to ordinary short-term credits and demand deposits.

A decision in June 1994 to introduce a securitization scheme may permit the development of open market operations in the future and assist in mopping up part of the increasing excess liquidity of commercial banks. The scheme entails the issuance to banks and nonbanks of securities representing the BCEAO’s consolidated credits to governments. These securities will have a nominal unit value of CFAF 50 million with a 12-year maturity at 5 percent tax-exempt interest rate payable semiannually, and can be used to meet the reserve requirements of banks and to guarantee possible central bank refinancing. The share of Mali in the total securitization scheme will amount to CFAF 23.9 billion, representing the consolidated loan to the Government arising from the restructuring of the Banque de Développement du Mali.

3. The banking system

At end-1993, the banking system of Mali comprised, besides the national agency of the BCEAO, seven commercial banks (Appendix I, Table XVII). The Banque de Développement du Mali (BDM-SA), one of the largest commercial banks, was established in 1968 with a capital of CFAF 3 billion. It plays a major role in the Malian economy, stemming in large part from its function as banker of the public sector. Reflecting the financial difficulties in the public enterprise sector in the 1980s, inappropriate management and banking practices, mounting defaults by private borrowers, and the inability to recover the collateral on defaulting loans, by mid-1987, 75 percent of the BDM’s total credit portfolio was classified as nonperforming loans. During 1988-89, steps were taken to restructure the BDM, which involved the streamlining and modernization of its operations, the opening of its equity to private shareholders, and a financial restructuring involving CFAF 62.5 billion (40 percent of Mali’s money stock at end-June 1989) worth of nonperforming loans. Financial support for the restructuring was provided by the World Bank and other cofinanciers under the PESAF, the French Caisse Centrale de Coopération Economique (CCCE), the Malian Government, and the BCEAO, through the consolidation of CFAF 23.9 billion of outstanding short-term credit. As a result of the restructuring, the BDM-SA was established on June 30, 1989, as a mixed capital company in which the Government holds 20 percent of the shares. 1/ Since then, the BDM-SA has resumed normal banking operations and has been managed by the Banque Marocaine du Commerce Extérieur, one of the private shareholders, under a fixed-term contract, which was extended in 1992 for an additional two years through September 1994. The BDM-SA operates ten branches across the country. Since the restructuring, its deposits have increased by 21 percent between mid-1989 and end-1993, to reach CFAF 40.4 billion, almost equally divided between public and private deposits.

The Banque Nationale de Développement Agricole (BNDA) became Mali’s largest bank after its capital was doubled to CFAF 3.8 billion between 1990 and 1993. This expansion was accompanied by an increased participation in its capital by the French CCCE and the German foreign aid agency (Deutsche Entwicklungs Gesellschaft–DEG) to 19.6 and 18.5 percent, respectively. The BNDA’s other shareholders include the Government (39.5 percent), the BCEAO (16.8 percent), and the BDM-SA (5.6 percent). The BNDA was established in 1981 with a view to improving the availability of credit and the quality and responsiveness of financial services to rural development agencies and individual farmers; it conducts its operations through 15 regional branches. Between end-1990 and end-1993, its deposits grew by 72 percent, reflecting increased deposits of the public sector.

The three other banks that are partly government-owned are smaller in terms of capital and deposits, and their operations are concentrated mainly in Bamako. The Banque Malienne de Crédit et de Dépôts (BMCD), established in 1961, with a capital of CFAF 1.0 billion (51 percent by the Government and 49 percent by the Crédit Lyonnais), had deposits of CFAF 23.4 billion in five branches at end-1993. The Banque Commerciale du Sahel (BCS), the former BALIMA, was established in 1982 and has a capital of CFAF 1.1 billion, with the Government (49.5 percent), foreign Arab banks (50 percent), and the Malian private sector (0.5 percent) as shareholders; it has one branch in Bamako. By end-1990, the former BALIMA had become illiquid with a portfolio of CFAF 2.0 billion of nonperforming loans; subsequently, the bank was restructured, its capital augmented and its capital base broadened by including private Malian capital. The Société des Chèques Postaux et de la Caisse d’Epargne (SCPCE) was created on October 29, 1990, as a result of reforming the insolvent postal checking system. The reform was implemented with financing from the World Bank and the CCCE, with a view to restoring the liquidity of CFAF 4.3 billion of nongovernment deposits that could not be accessed, except for settling payments to the Treasury. The SCPCE was established as a mixed capital company in which the Government holds 20 percent of the shares; since beginning operations in April 1991, it has been managed by a Malian shareholder bank under a fixed-term contract. The SCPCE is registered as a bank under the supervision of the BCEAO, but has no right to issue credit.

The remaining two commercial banks, the Banque Internationale pour l’Afrique Occidentale du Mali (BIAO-Mali) and Bank of Africa (BOA), are fully privately owned. The BIAO-Mali was established in 1980, and is controlled by the external parent bank (52.1 percent) with a minority shareholding (47.9 percent) of private nationals. Its capital base was augmented from CFAF 1.3 billion in 1990 to CFAF 3.4 billion by end-1993. In terms of deposits, the BIAO is Mali’s largest bank; its deposits in five branches had reached CFAF 44.5 billion by end-1993. The Bank of Africa-Mali, established in 1982, has a capital base of CFAF 1.4 billion, of which 75.6 percent is held by the Malian private sector and the remainder by private foreign shareholders; its deposits in four branches amounted to CFAF 14.3 billion at end-1993.

4. Overall monetary developments 1/

During 1989-92, monetary developments were marked by a significant improvement in the external position of the banking system (Table 6; Appendix I, Tables XVIII-Table XXI). After increasing strongly from CFAF 12.8 billion at end-1989 to CFAF 65.4 billion at end-1991, the rise abated and net foreign assets reached CFAF 67.8 billion at end-1992. The sizable improvement in 1989-91 resulted from higher export receipts of cotton and livestock and a rise in private and official transfers, and the 1992 outcome reflected the drop in export prices for cotton and livestock and a declining inflow of external assistance. The increase in net foreign assets was mainly reflected in the substantial improvement in the net external position of the Central Bank, from CFAF 14.0 billion at end-1989 to CFAF 63.5 billion at end-1992. The credit position of Mali in the operations account with the French Treasury increased from CFAF 29.5 billion at end-1989 to CFAF 80.3 billion at end-1992.

Table 6.

Mali: Monetary Survey, 1989-94 1/

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Source: Data provided by the BCEAO.

Data may not add up because of rounding. Including transactions and reclassifications resulting from the restructuring of the Banque de Développement du Mali and reclassification of deposits resulting from other bank audits. Data are not comparable with the previous RED tables for the period 1989-90 as these were adjusted to a 1987 accounting base to provide comparability with previous years.

Accounts revalued at the new exchange rate of CFAF 100 per French franc.

Excluding SDR allocations and medium- and long-term liabilities.

Including SDR/CFA franc exchange rate revaluation on pre-June 1984 Fund purchases. Including the stabilization fund for the cotton sector and the consolidation of debit balances of the BDM at the BCEAO.

Including nonstatutory advance to the Treasury resulting from the consolidation of the former Central Bank’s debt of CFAF 41.8 billion, including interest thereon.

Net domestic assets declined steeply in 1989-91–owing mostly to a contraction in net credit to the Government resulting from the adjustment efforts since 1988–and remained virtually unchanged in 1992. The rate of growth of credit to the economy slowed from 3.2 percent of beginning-of-period money stock in 1989 to some 1 percent in 1990-91, mainly on account of the tight credit conditions, before accelerating to 3.6 percent in 1992. Reflecting the above developments, the growth of broad money fluctuated strongly during this period. After a decline of 4.9 percent in 1990, the money supply increased by 12.5 percent in 1991, before moderating again to 3.4 percent in 1992. The velocity of circulation of broad money fluctuated around 4.7, and the composition of the money supply remained virtually unchanged.

In 1993, net foreign assets of the banking system improved further, to CFAF 76.8 billion, owing for the most part to a rise in the value of exports. Credit developments mainly reflected the Government’s increased reliance on bank financing, in order to compensate for a decline in domestic revenue and external assistance. The Government exceeded its statutory credit ceiling of CFAF 18.9 billion by CFAF 2.2 billion, and increased its recourse to commercial banks, particularly by drawing on its deposits. By end-December 1993, net government credit had increased by 4.8 percent of the beginning-of-period money stock. Credit to the economy grew only moderately, by 1.7 percent of the beginning-of-period money stock, on account of the continued prudent credit policy of the authorities, the overall decline in economic activity, and a cautious lending stance of commercial banks. While ordinary credit remained subdued during the first three quarters of the year, an overall increase of 3.6 percent was recorded by end-December, reflecting in part the impact of the program adopted by the Government to reactivate the private sector, with financial assistance of the Caisse Franchise de Développement (CFD). Crop credit declined by almost 2 percent, as a result of a substantially lower level of credit extended to the cotton sector which experienced a 20 percent production decline in the 1993/94 season. In view of the increase in net foreign assets and in credit to the Government, the broad money supply increased by 8.4 percent in 1993 and its velocity of circulation declined to 4.4, from 4.7 in 1992.

Following the change in the parity of the CFA franc on January 12, 1994, the net foreign assets of the banking system increased strongly in the first quarter of 1994, by 27.6 percent of the beginning-of-period money stock; the improved receipts of the export sector, substantial disbursements of external budgetary assistance in support of the Government’s adjustment effort, as well as a return of flight capital were the prime factors behind this rise. Net domestic assets declined by 1.6 percent of beginning-of-period money stock in the first quarter of 1994, mainly on account of an important decline in net credit to the Government as a result of a strong revenue performance, the disbursements of external budgetary assistance, and a cautious spending policy. As a result of these developments, broad money increased by 25.4 percent.

During the first quarter of 1994, commercial banks became increasingly liquid, because of sizable increases in bank deposits, reflecting the return of flight capital and the improved financial performance of export-oriented enterprises, as well as the cautious attitude of commercial banks in their lending operations. The excess liquidity of the banking system affected the WAEMU as a whole, and was further aggravated toward end-June. While Malian commercial banks were able to place about 66.4 percent of their excess liquidity in the money market at end-1993, this ratio fell to 24.3 percent by end-March 1994 and to only 3.4 percent by end-June, as Malian banks progressively increased their bids in the money market to CFAF 64 billion.

As a result, the commercial banks accumulated large nonremunerated reserves with the Central Bank. At the same time, Malian banks became active in the zone’s interbank market, where loans were negotiated directly and without BCEAO interference with other banks in the zone. Since the first transaction by Malian banks on December 23, 1993, and through end-June 1994, a total portfolio of CFAF 17.7 billion had been extended to other banks outside Mali, ranging in duration between one day and four months.

5. Interest rates

Interest rate policy in Mali is subject to the rules and constraints inherent to WAEMU membership and the exchange rate arrangements of the French franc zone. Until October 1993, interest rates were seldom used as an active instrument of monetary policy, but were used more frequently since then. The discount rate was adjusted six times between 1989 and end-1993 and four times during the first nine months of 1994 (Table 7; Appendix I, Table XXII). The money market rates were adjusted more frequently, in particular after October 1993 (Appendix I, Table XXIII).

Table 7.

Mali: Interest Rates, 1989-94

(In present)

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Source: Data provided by the BCEAO.

Until October 14, 1993, these rates were for overnight advances; on that date, the money market was transformed into a weekly auction.

Since January 1, 1985, deposit money banks have no longer required to remunarate sight deposites.

Minimum rates for deposits above CFAF 2 million; from October 2, 1989, minimum rates for deposits above CFAF 500.000. Since October 1. 1993, minimum rates for deposits equal or less than CFAF 5 million; rates, on larger deposits are free.

Average monthly money market rate minus 2 percent.

On October 2, 1989, the normal and preferential discount rates were abolished and the new discount rate was introduced. The discount rate and the money market rates, which are determined by the BCEAO in light of developments in prices, credit markets, and the French money market, have remained distinctly positive in real terms until end-1993. The spread of the discount rate with respect to the rate of inflation, as measured by the GDP deflator, ranged from a low of 8.1 percentage points in 1990 to a high of 11.1 percentage points in 1992. The discount rate has been maintained above the rate for money market advances to discourage deposit banks from refinancing with the BCEAO. Interest rates in the money market were set administratively by the Central Bank, taking into account the rates in the Paris call money market. The spread vis-a-vis the Paris money market rates was usually in the range of 100-200 basis points (Chart 4). As part of the reforms of October 1989, the freedom of banks in setting their deposit and lending rates was enlarged. The floor under lending rates was abolished and the ceiling was increased to 15.5 percent; from November 1989 the ceiling on lending rates was again increased to 16.0 percent (Appendix I, Table XXIV). Following a rise in interest rates abroad and the adjustment of the discount rate, the ceiling on lending rates was raised by a further 2 percentage points, to 18 percent, on August 20, 1992; subsequently, the ceiling was lowered to 17.5 percent from November of that year. On October 2, 1989, all rates for deposits up to CFAF 500,000 were liberalized, with the exception of interest rates paid on passbook savings accounts, which remained set in the range of 6.5-7 percent (Appendix I, Table XXV). On August 20, 1992, the minimum rates for deposits above CFAF 500,000 and on savings deposits were also raised by 2 percentage points.

CHART 4
CHART 4

MALI: DISCOUNT RATE AND MONEY MARKET RATES JANUARY 1989-SEPTEMBER 1994

Citation: IMF Staff Country Reports 1994, 011; 10.5089/9781451826180.002.A001

Sources: BCEAO and International Finance Statistics.1/ Until October 2, 1989, ordinary discount rate.2/ Until October 14, 1993, rates for over night advances.3/ Monthly average of rates for day-to-day loans against private bills.

Interest rate developments since October 1993 have reflected the further reforms that were introduced by the BCEAO in the process of shifting from direct to indirect instruments of monetary management, the change in the parity of the CFA franc, and the increased bank liquidity. In response to the rise in excess liquidity, the weekly money market rate declined from 9.5 percent in the first auction on October 14, 1993, to 7.25 percent on December 30, 1993. The discount rate was adjusted downward from 12.5 percent to 10.5 percent on December 20, 1993, and the administered rate on saving deposits was reduced from 8.5 percent to 4.5 percent. Following the liberalization of lending rates, as of October 1, 1993, they remained nearly unchanged, with lending rates to preferred customers in the range of 9-10 percent and the normal lending rate around 14 percent. However, owing to increased excess liquidity, the average rate of return on total bank assets came under pressure.

Following the change in parity of the CFA franc, the BCEAO raised the discount rate to 14.5 percent on January 18, 1994, and this level was maintained through end-June; the administered minimum interest rate on savings deposits was adjusted upward to 8.0 percent. The money market rate rose to 9.25 percent in the last auction of January and was sustained at that level until late June. In light of the recent moderation of inflation, the BCEAO reduced the discount rate and, in response to lower bid rates by participating banks in the money market, successively lowered the money market rate from the third auction of June. Thus, the discount rate was reduced to 12 percent on June 27, and further to 11 percent on August 1, and to 10 percent on September 1. The money market rate declined continuously from 9.25 percent in mid-June to 5.75 percent at end-August. In addition, the rate on savings deposits was reduced to 5 percent on July 8.

VIII. External Sector

1. Overall developments

During the period 1989-93 Mali’s balance of payments failed to improve in a significant way (Table 8; and Appendix I, Table XXVI) in spite of economic policies designed to improve productivity, diversify agricultural production, and foster the growth of the relatively small Industrial and trade sectors. Export receipts, which continued to be dominated by the performance of the cotton sector, expanded only moderately, while the overvaluation of the exchange rate remained an impediment to export diversification and the development of import substitution.

Table 8.

Mali: Balance of Payments, 1989-93 1/ 2/

(In billions of CFA francs)

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Sources: Data provided by the Malian authorities; and staff estimates.

Data may not add up because of rounding.

Including debt service due to the People’s Republic of China and the former U.S.S.R.

After debt cancellation.

PESAP, Public Enterprise Sector Adjustment Program.

Reflects agreements on debt rescheduling and moratoria, as well as debt under negotiation.

Including Trust Fund.

The stock at end of period includes the net change in payments arrears, as well as the change in the value of the stock, owing to exchange rate movements.

The overall deterioration in the competitiveness of the Malian economy is apparent in the appreciation of its currency, which increased by 58 percent vis-à-vis the U.S. dollar during 1986-93. Over the same period, Mali’s real effective exchange rate against other cotton producers rose by some 17 percent. The weakness of Mali’s external position is also reflected in a 21 percent deterioration of its terms of trade over 1986-93, brought about for the most part by an even larger fall in the unit value of export prices. The 50 percent devaluation of the CFA franc on January 12, 1994 aimed at correcting this situation and preliminary information obtained so far indicates that the effects of the new exchange rate on the evolution of key sectors of the economy and the external position have been generally positive.

The period 1989-93 leading up to the January 1994 devaluation is characterized by a decline in the terms of trade, reflecting a fall in cotton export prices; and a continued need for external financial assistance in the form of debt relief and project financing. Virtually unchanged in CFA terms, the external current account deficit, excluding official transfers, improved moderately in terms of GDP, from the equivalent of 14.4 percent in 1989, to 12.9 percent in 1993. By contrast, the overall balance of payments surplus fell from CFAF 56.4 billion (8.6 percent of GDP) to CFAF 1.5 billion (0.2 percent of GDP), respectively, essentially reflecting lower official disbursements and higher debt service obligations. Over the period, Mali continued to benefit from significant debt rescheduling but was unable to prevent the accumulation of external payments arrears which amounted to CFAF 9.8 billion at end-1993.

a. Developments in 1989-91

During 1989-91 the balance of payments registered a modest improvement. Exports receipts (in CFAF terms) increased by 10.3 percent a year, mainly on account of higher cotton volumes and better export prices for livestock. Imports increased at about only half the rate for exports over the period, in line with lower project-related imports and reduced needs for food imports. Net private transfers increased significantly, as the efforts at collecting savings from Malian expatriates were continued with success. Excluding official transfers, the current account deficit remained stable in terms of CFA francs and declined from 14.4 percent of GDP in 1989 to 14 percent in 1991; including official transfers, it declined from the equivalent of 4.4 percent of GDP to 1.6 percent, respectively. Net capital inflows, which increased sharply in 1989, fell back in 1990-91. The sharp increase in 1989 was essentially attributable to higher disbursements of budgetary assistance in support of the restructuring of Mali’s public enterprise sector and of the Development Bank of Mali (BDM), and, to a lesser extent, to higher inflows of private capital related to the implementation of the Syama gold mining project. The surge in capital inflows observed in 1989 resulted in a significant improvement in the overall balance of payments, which registered a surplus of CFAF 56.4 billion, equivalent to 8.6 percent of GDP. The overall balance of payments weakened somewhat in 1990, registering a surplus of CFAF 11.3 billion (1.7 percent of GDP), as net private investment turned slightly negative and disbursements under the public enterprise sector reform project slowed down. It strengthened substantially (to CFAF 39 billion) in 1991, however, as a result of increased project-related official transfers, allowing for a total buildup of net foreign assets of CFAF 91.8 billion over the period.

In 1989, Mali was able to eliminate all its external payments arrears, amounting to CFAF 16 billion, partly through rescheduling. While no new arrears were accumulated in 1990, CFAF 1.1 billion were accumulated in 1991.

Mali benefited from debt relief amounting to CFAF 37.6 billion in 1989, CFAF 27.5 billion in 1990, and CFAF 23.8 billion in 1991.

b. Developments in 1992-93

In 1992, lower export receipts, resulting from a fall in cotton export volumes and a weakening in export prices of Mali’s main export commodities, led to a deterioration of the external situation. This deterioration was partly reversed in 1993, as export volumes increased and the value of imports declined slightly. The overall balance, however, remained weak as net private and official capital inflows fell substantially. In 1992, cotton export receipts fell by about 25 percent, reflecting a 21 percent decline in prices and a moderate fall in volume. For the first time since 1986, livestock export receipts also declined, as the availability of cheaper meat from outside the region drove down prices in neighboring export markets. On the whole, export receipts fell by 11.5 percent in 1992. A modest recovery in 1993, attributable to livestock, cotton, and gold, brought export receipts back to a level close to that of 1991. On the import side, reduced flows of external project-related assistance were chiefly responsible for the fall in the import volume of investment goods. The latter decline, together with a lower need for food imports induced by favorable crops, resulted in a 2 percent fall in total imports in 1993. The 1993 trade deficit was consequently much lower, dropping by the equivalent of almost 2 percentage points of GDP. The deficit of the current account, excluding official transfers, followed the same pattern, moving down by the equivalent of 2 percentage points of GDP. The difficulties mentioned above in the implementation of Mali’s adjustment program were to a large extent responsible for a decline in official budgetary assistance. Consequently, the deficit of the current account, including official transfers, widened somewhat from 4 percent of GDP in 1992 to 4.3 percent in 1993.

Net capital inflows were close to zero in 1992 and slightly negative in 1993, reflecting lower budgetary and project-related loans, a net reversal of private capital flows and increasing amortization payments. Consequently, the overall balance was substantially weaker, recording a deficit of CFAF 2.1 billion in 1992 and a modest surplus of CFAF 1.5 billion in 1993. No drawdown of official reserves occurred over the period, but there was accumulation of external payments arrears, which amounted to CFAF 4.8 billion at end-1992 and CFAF 9.8 billion at end-1993.

Developments in the first few months of 1994 confirm the expected positive effects of the exchange rate adjustment on the evolution of external trade. The expansion of exports, in response to the improvement in the competitiveness of the economy, and the slowdown in certain categories of imports, especially consumer goods, resulted in a significant improvement of the trade balance in the first few months of 1994. There are indications of a strong pickup in exports of livestock, fruits and vegetables to neighboring countries. Other positive elements include a pickup in the flow of private transfers from Malian expatriates. Disbursements of external budgetary assistance have also increased. Together with sizable capital repatriation, these developments resulted in a significant improvement in the net foreign assets of the banking system, which amounted to CFAF 203.2 billion at end-March 1994, compared to CFAF 156.1 billion at end-1993 (revalued at the new exchange rate of CFAF 100 per French franc).

2. Merchandise trade

a. Exports

Merchandise export receipts (f.o.b.), which had increased steadily between 1985 and 1991, fell back in 1992 to close to their 1989-90 level; despite their recovery in 1993, they failed to reach their peak level of 1991. This evolution reflected mainly developments in exports of cotton fiber, livestock, and gold, which account on average for close to 85 percent of total exports (Appendix I, Table XXVII). Over the period 1989-93 cotton fiber, livestock, and gold exports accounted respectively for about 42.6 percent, 25.7 percent, and 13.6 percent of total export receipts. In 1989, exports increased by 15 percent, reflecting a large jump of 42 percent in the volume of cotton exports and a 15 percent fall in gold exports caused by production difficulties at the Kalana mine. In 1990, a decline in the volume of cotton exports was more than offset by an increase in unit values, leaving cotton exports receipts unchanged, while a recovery of livestock exports and the opening of a new gold mine contributed to an overall 7 percent increase in export receipts. In 1991, exports continued to expand, as all main export commodities registered significant volume increases, partly offset, in the case of cotton and gold, by moderate export price declines. Exports fell sharply in 1992 despite a 17 percent increase in gold export receipts, in response to a drop in world cotton prices and difficulties in retaining market shares in traditional livestock export markets. In 1993, total exports grew by almost 9 percent, in spite of a further drop in world cotton prices, as volume of cotton production expanded to record levels and exports of livestock were boosted by a recovery in prices.

Developments in the first half of 1994 indicate a pickup in exports, particularly those of livestock, reflecting an expansion of demand for Malian livestock in traditional export markets, but also the development of exports to neighboring countries outside the CFA zone. A further indication of the improvement in the competitiveness of Malian agriculture is provided by the still modest, but significant, development of exports of a number of agricultural products such as cereals, vegetables, and fruits.

b. Imports

Merchandise imports (c.i.f) increased significantly during 1989-91 and stabilized in 1992 and 1993 (Appendix I, Table XXVIII). On the whole, imports increased on average by slightly more than 3 percent per year over 1989-93, compared with a 5 percent annual average growth rate of nominal GDP during the same period. The moderate increase in imports between 1989 and 1991 reflected essentially a lower degree of dependency on imported cereals and other foodstuffs, as well as a decline in project-related financing, the latter partly linked to lower-than-expected rates of implementation of the investment budget. The containment of imports in 1992 and 1993 weighted mainly on capital goods and durable goods, reflecting a relative decline in total investment during these two years and a slowdown in external project assistance in 1993. The decline in imports in 1993 was also closely related to the decline in economic activity.

Preliminary indications show that after the January 1994 devaluation, there was a sharp drop in imports of foodstuffs, particularly rice imports. For a number of other consumer goods also, a switch away from imported goods has already been identified in cases where local substitutes already exist or where equivalent goods are produced by the domestic industry. This is especially true for textiles, garments, furniture, and a variety of items such as batteries, beverages, cigarettes, and other consumer goods. A secondary noticeable effect of the devaluation consists in a reorientation of trade in favor of cheaper suppliers of equivalent items. This evolution has appeared most clearly so far in the areas of automobile and machine spare parts, electronic equipment, and small manufactured goods.

c. Terms of trade

The deterioration of the terms of trade during 1989-93 was brought about, for the most part, by a 32 percent fall in the unit value of cotton prices (Appendix I, Table XXIX). After a moderate decline in 1989, the terms of trade improved by 5 percent in 1990, reflecting a 6 percent increase in cotton prices, before falling sharply over the next two years, by 10 percent and 12 percent respectively, and stabilizing in 1993. Overall, the terms of trade deteriorated by almost 18 percent, corresponding to a 12 percent fall in unit export prices and a 7 percent increase in unit import prices. The relatively small increase in unit import prices observed over the period 1989-93 is explained by the appreciation of the CFA franc against the currencies of a number of Mali’s trading partners. As discussed below, most of these trading partners belong to the group of developing countries, with which a growing proportion of Mali’s external trade is taking place.

d. Direction of trade

Data compiled in the Fund’s Direction of Trade Statistics Yearbook confirm that over the period 1989-93 the trend identified since the mid-1980s of a shift in Mali’s trade flows away from Industrial countries to developing countries has continued, although at a reduced pace (Appendix I, Table XXX). Industrial countries as a group, which represented close to 56 percent of the share of Mali’s total trade in 1989, accounted for only 41 percent by end-1993. With few exceptions, among which were Belgium-Luxembourg and the United Kingdom, the share of all Mali’s trade partners in the Industrial countries experienced pronounced declines. Thus, the share of France and Germany in total trade declined from 20.8 percent and 6.3 percent to 14.1 percent and 3.1 percent, respectively, during the period. Similarly, the share of smaller trade partners such as Spain declined from 3.1 percent to 1.3 percent during the same period. The increase in the share of developing countries in Mali’s total trade was concentrated in a small number of countries in Africa and Asia. Thus, the share of C6te d’lvoire, already Mali’s main trading partner in the developing countries group, increased from 12.7 percent in 1989 to 20.6 percent in 1993. Among Asian trade partners, Thailand, Vietnam, and Hong Kong increased their shares significantly, reaching a level comparable to that of the People’s Republic of China. On the whole, the share of developing countries in total trade continued to grow from 36 percent in 1989 to 54.5 percent in 1993, with the share of Africa moving from 27.6 percent to 34.6 percent. However, the latter figures, which exclude informal transactions, underestimate the true share of trade conducted with African countries in general, and in the subregion in particular.

3. Services and unrequited transfers

During the period 1989-93, the balance in the services account, excluding freight and insurance payments, improved marginally. Part of this improvement was accounted for by a modest decline in interest payments due, before debt rescheduling, and after debt cancellation. On the receipts side, increases in transportation revenues and investment income, in particular, more than offset a decline in tourism receipts caused by the loss of competitiveness of Mali as a vacation destination.

Net private transfers continued to increase until 1991, reflecting a policy of certain Malian commercial banks of encouraging and facilitating transfers of remittances by Malians living abroad through their network of correspondents. Remittances failed to increase after 1991, however, a fact explained by a stabilization of the number of expatriates, as economic difficulties experienced in certain host countries in the subregion put a constraint on emigration flows and reduced savings of Malians abroad. An increasing preference in the months preceding the devaluation of the CFA franc for effecting unrecorded transfers in the form of foreign bank notes, mainly French francs, may also have been a factor.

Net official transfers rose from CFAF 65.7 billion in 1989 to a peak of CFAF 83 billion in 1991, reflecting a substantial increase in external budgetary assistance to meet the costs of public enterprise reform and restructuring of the banking sector (Appendix I, Table XXXI). Completion of the restructuring project after 1992 and continued progress in reducing reliance on food assistance resulted in 1993 in a return of official transfers to levels comparable to those of 1989.

4. Capital movements

Net capital inflows were on a continued declining trend throughout the period, from CFAF 43.5 billion in 1989 to negative CFAF 5.1 billion in 1993. This evolution reflects mainly three elements: a decline in private sector investments; a slowdown in the level of official disbursements related to the completion of specific projects; and a general increase in the level of amortization payments due.

The turnaround in the direction of private capital flows, which turned negative in 1990 and again in 1992, reflected the end of a period of heavy investments in the gold mining sector. It also seems to have corresponded to a growing lack of confidence on the part of investors in the profitability of investment and competitiveness of the Malian economy before the exchange rate adjustment of January 1994. Official disbursements declined from a peak of CFAF 64.3 billion in 1989 to a low of CFAF 30.3 billion in 1993, in line with a reduction in budgetary loans from the World Bank under a Public Enterprise Structural Adjustment Program (PESAP) completed in 1992. Finally, even after taking into account debt cancellation, amortization payments due rise from CFAF 25.6 billion in 1989 to CFAF 35.4 billion, contributing to bringing net official disbursements close to balance in 1992 and 1993.

5. External debt

One aspect of the prudent external debt policy followed by the Malian authorities over the period 1989-93 consisted in avoiding a rapid increase in the debt burden. A consequence of this prudent policy is evidenced in the stability of the debt-to-GDP ratio, which increased only moderately from the equivalent of 92.9 percent in 1989 to 94.7 percent in 1992. Official disbursed external debt rose from CFAF 607.1 billion to CFAF 698.1 billion, respectively, corresponding to a 4.8 percent average annual rate of increase (Appendix I, Table XXXII). In U.S. dollar terms, the external debt increased at a slightly higher annual rate of 6.5 percent, to US$2,535.7 million by end-1992. By end-1993, total outstanding debt is estimated to have reached US$2,690.6 million (CFAF 793.1 billion). The structure of debt also changed during the same period. The share of debt to suppliers and financial institutions, already low, virtually disappeared, representing less than 0.2 percent of total debt. Debt to the Fund remained about unchanged, equivalent to 2.6 percent of total debt, while debt to other multilateral institutions increased significantly, from 36.2 percent in 1989 to 42 percent in 1992, reflecting a 61 percent increase in outstanding loans from the African Development Fund and a 41 percent increase in IDA loans. The share of bilateral loans declined by a corresponding amount, from 60.1 percent in 1989 to 55.3 percent in 1992, reflecting a decline in the share of France from 24 percent of total debt in 1989 to 20.6 percent in 1992, and a combined decline of the share of the People’s Republic of China and the former U.S.S.R, from 24 percent to 21.7 percent over the same period.

The structure and terms of new loan commitments, excluding use of Fund resources, improved between 1989 and 1991, but deteriorated in 1992 and 1993 (Appendix I, Table XXXIII). Essentially reflecting increases in average maturity to 40.1 years, the grant element of new loans obtained in 1991 rose to 77.9 percent, compared to 72.8 percent in 1989. In 1992 and 1993, however, increases in the average interest and declines in the average maturity and the grace period led to a fall in the grant element to 63.3 percent and 62.8 percent, respectively.

Mali obtained significant debt rescheduling and cancellation from bilateral creditors on current debt service obligations over the period 1989-93. Debt relief has been obtained from Paris Club creditors, including France, Italy, the Netherlands, Switzerland, and the United Kingdom, as well as from other creditors, notably Algeria, the People’s Republic of China, Iraq, Qatar, and the former U.S.S.R. Mali is benefiting from the second annual tranche (September 1993-August 1994) of the multiyear rescheduling agreement obtained from the Paris Club in October 1992. The rescheduling provided relief on enhanced concessional terms, implying a cancellation in net present value terms of 50 percent of the amount rescheduled. Debt cancellation has also been granted on a bilateral basis by France, Germany, and the United States.

Traditionally, the People’s Republic of China and the former U.S.S.R. have agreed to successive debt moratoria. The latest moratorium from the People’s Republic of China covers the period up to 1997. Negotiations are under way with the Russian authorities to complete a final agreement on debt relief. Finally, agreement was also reached in 1993 on the rescheduling of payment arrears due to a number of other creditors, including the Saudi Fund for Economic Development, the Kuwait Fund for Arab Economic Development, the Abu Dhabi Fund, and the Arab Bank for Economic Development in Africa.

Mali’s external debt service obligations–excluding those to the People’s Republic of China and the former U.S.S.R.–before debt rescheduling but after debt cancellation, declined from CFAF 27.3 percent of export of goods and nonfactor services in 1989 to 19.1 percent in 1993 (Table 9). Including obligations to the People’s Republic of China and the former U.S.S.R., the debt service ratio declined only slightly over the same period, from the equivalent of 40.8 percent to 40.2 percent, respectively.

Table 9.

Mali: Debt Service on Medium- and Long-Term External Public Debt, 1989-93 1/ 2/

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Sources: Data provided by the Malian authorities; and staff estimates.

Data may not add up because of rounding.

After debt cancellation beginning in 1988; before debt rescheduling.

Excluding payment of arrears on external debt.

On current debt service obligations.

IX. Exchange and Trade System

1. Exchange rate system

Mali’s currency, the CFA franc, is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 = F 0.01, following the 50 percent devaluation of January 12, 1994. Exchange rates for all other currencies that are officially quoted in the Paris exchange market are based on the fixed rate for the French franc and the Paris exchange market rate for the currencies concerned. There are no taxes or subsidies on purchases or sales of foreign exchange. Foreign exchange transfers are subject to a stamp tax.

Between 1989 and 1993, the trade-weighted nominal effective exchange rate appreciated by 4.2 percent (Appendix I, Table XXXIV; and Chart 5). By contrast, during the same period, the real effective exchange rate depreciated by 12.7 percent, reflecting lower rates of inflation in Mali. 1/ Notwithstanding this decline, Mali’s external competitive position remained weak as explained above. As a result of the devaluation of the CFA franc, the nominal effective exchange rate depreciated by 49.9 percent and the real effective rate by 43.2 percent during the first quarter of 1994, resulting in a significant improvement in the competitiveness of the Malian economy.

CHART 5
CHART 5

MALI: REAL AND NOMINAL EFFECTIVE EXCHANGE RATES INDICES JANUARY 1980-JUNE 1994

(Period average 1980=100)

Citation: IMF Staff Country Reports 1994, 011; 10.5089/9781451826180.002.A001

Source: IMF, Information Notice System.

2. Trade and payment system

Mali continues to maintain an exchange system that is free of restrictions on the making of payments and transfers for current international transactions and similar in most respects to that of other French franc area countries having an operations account with the French Treasury. The system is described in detail in the Fund’s Annual Report on Exchange Arrangements and Exchange Restrictions. 1994.

In order to stem the outflow of capital from the BCEAO zone, on August 2, 1993, the BCEAO suspended the repurchase of its notes circulating outside the territories of the CFA franc zone. However, it maintained the guarantee for unlimited convertibility of CFA francs into French francs through authorized financial intermediaries, and the free capital transferability within the franc zone. In addition, in August 1993 the Malian authorities adopted a series of measures with a view to easing restrictions on foreign exchange allowances for tourism and business travel. Similar regulations were also adopted by other member countries. The new regulations make a distinction between travel to the BCEAO countries, the BEAC countries, France, and the Comoros, and travel to countries outside the franc zone. These include, for resident travelers: (i) the maintenance of the authorization to transport BCEAO bank notes without limits to other BCEAO member countries; (ii) a limit of CFAF 2 million on the transportation of BCEAO bank notes to countries of the Central African Monetary Union (CAMU) 2/ and a similar limit on non-CFA banknotes for travel to non-CFA countries of the franc zone; 3/ and (iii) limits, per trip, of CFAF 500,000 and CFAF 2,250,000, respectively, on foreign exchange carried by tourist and business travelers to countries outside the franc zone. New regulations applicable to nonresident travelers raised to a uniform limit of CFAF 250,000, the amount of foreign bank notes that can be re-exported without restriction. The re-exportation of foreign bank notes above the ceiling would require documentation demonstrating either the importation of foreign bank notes or their purchase against other means of payments registered in the name of the traveler or through the use of nonresident deposits lodged in local banks. Travel allowance limits are administered in a flexible manner, and authorizations for larger amounts granted for all bona fide cases without undue delays. Exchange control approval remains required for capital transfers to all countries with the exception of transfers to countries linked to the French Treasury by an operations account, which are free of restrictions.

X. Environmental Issues

Ongoing soil degradation is one of Mali’s most serious environmental problems today. The problem is further exacerbated by the magnitude of deforestation and demographic pressures. The policy of the authorities with regard to the main environmental issues has been articulated through a number of programs and plans, including the national plan to combat desertification, last updated in 1987; the managing scheme for water management and planning prepared in 1989; and the 1993 strategy document on the saving of domestic energy, which contains priority programs and provides for greater involvement by rural communities in the management of all natural resources. A joint natural resource management program for the agricultural, pastoral, forestry, and hydraulic subsectors is also being developed, as part of the Government’s long-term strategy for agriculture. A follow-up and evaluation unit was established in 1993 and made responsible for designing an environmental strategy, and monitoring the impact of projects on the environment. The actions envisaged in the area of water management include, inter alia, the seeking of financing for the maintenance study for the Niger and Senegal rivers as well as their main affluents (repair of banks, sand cleanups, etc.), and the coordination of the rational use of water from these rivers. Preliminary studies have been prepared on land tenure law to assist, inter alia, the formulation by grass-roots committees of firm proposals for a legal and institutional framework aimed at better management of natural resources. A study on pastoral associations and their potential role in natural resource management was conducted in 1992. In December 1993 a work program was set up by the Ministry of Environment for the establishment of an environmental action plan by December 1994.

Appendix I

Table I.

Mali: Gross Domestic Product at Current Market Prices, 1989-93 1/

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Sources: Data provided by the Malian authorities; and staff estimates.

Data may not add up because of rounding.

Includes cotton, groundnuts, tobacco, fruits, vegetables, and other.

Table II.

Mali: Cereals—Cultivated Area and Rainfall, 1988/89-1992/93

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Sources: Data provided by the Malian authorities.

Deviation in percent from the annual average of the 1960-88 period.

The rainfall is measured for the specific area Where each cereal is grown.

Deviation in percent from the annual average of the 1960-82 period.

Table III.

Mali: Agricultural Production, Marketing, and Official Producer Prices, 1988/89-1992/93 1/

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Source: Data provided by the Malian authorities.

The crop year is April/March; the marketing year is November/October.

Official agencies.

Floor price of first quality cotton.

The official producer price of paddy rice was abolished starting with the 1988/89 crop season. The prices quoted are those offered by the Office du Niger only.

Table IV.

Mali: Average Quarterly Retail Prices for Cereals, 1989-93 1/

(In CFA francs per kilogram)

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Source: Data provided by the Malian authorities.

Free market prices represent the average of prices prevailing in the 13 markets of Bamako.

Table V.

Mali: Office du Niger–Indicators of Activity, 1988/89-1992/93

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Source: Data provided by the Malian authorities.
Table VI.

Mali: Livestock Exports, Slaughtering, and Herd Size, 1989-93

(In thousands of head)

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Source: Data provided by the Hell en authorities.

Provisional data.

Data for Bamako only.

Table VII.

Mali: Index of Industrial Production, 1989-93

(1983 - 100)

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Source: Data provided by the Malian authorities.
Table VIII.

Mali: Quarterly Index of Consumer Prices in Bamako, 1991-94

(July 1986-June 1987 = 100)

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Source: Data provided by the Malian authorities.

Weighted total.

Table IX.

Mali: Evolution of Minimum Wages and Salaries in the Public Sector, 1989-94

(In CFA francs per month)

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Source: Data provided by the Malian authorities.
Table X.

Mali: Evolution of Employment in the Central and Regional Governments and the Public Enterprise Sector, 1989-93

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Source: Data provided by the Malian authorities.

COMANAV, COMATEX, EDIM, EDM, EMAMA, Grand Hôtel, ITEMA, FRUITEMA, OERHN, PPM, SEMA, SEPAMA, SMECMA, SOCAM, SOCIMA, SONATAM, TAMALI, UCEMA, and ULB. (These acronyms are defined in Appendix III.)

Employees only reported if respective company is still under government control.

Table XI.

Mali: 1993 Investment Budget and 1994-96 Public Investment Program 1/ 2/

(In billions of CFA francs)

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Source: Data provided by the Malian authorities.

Data differ from those included in tables on Government Financial Operations, as an implementation rate of less than 100 percent is assumed in the projections.

Data may not add up because of rounding.

Table XII.

Mali: Government Revenue, 1989-93 1/

(In billions of CFA francs)

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Source: Data provided by the Malian authorities.

Data may not add up because of rounding.

Introduced in 1990 and replaced turnover tax.

Beginning in 1991, tax revenues included in this category, which were previously earmarked for special funds, have been consolidated in the budget.

Customs service fee on gold exports.

Table XIII.

Mali: Government Expenditure, 1989-93 1/

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Source: Data provided by the Melien authorities.

Data may not add up because of rounding.

Scheduled; after debt cancellation obtained through 1993. Starting in 1991, interest payments are shown under current budgetary expenditure because of the integretion of the debt-servicing agency (CAA) into the central government budget.

PESAP, Public Enterprise Sector Adjustment Progress, financed by the World Bank end cofinanciers; BDM, Banque de Développement du Mali.

Table XIV.

Mali: Consolidated Operations of the Special Funds and the Annexed Budgets, 1989-93

(In billion of CFA francs)

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Source: Data provided by the Malian authorities.

Starting in 1991, six special funds and annexed budgets, including the Caisse Autonome d‘Amortissement (CAA), the Road Fund (FR), the National Office of Transportation ((MIT), the Mining Fund (FM), the National Forestry Fund (FFN), and the Tourism Promotion Fund (FDT), have been integrated into the central government budget.

OSRP, Office de Stabilisation et de Regulation des Prix; CAA, Caisse Autonome d‘Amortissement

Includes the National Housing Fund (FNL), the Central Veterinary Laboratory (LCV), the National Lottery (LONAMA), the National Institute of Research in Public Health (INRSP), and, prior to 1991, ONT, FM, FFN, and FDT.

Table XV.

Government Wage Bill and Employees, 1989-93

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Source: Data provided by the Malian authorities.
Table XVI.

Mali: Net Operating Results of Major Public Enterprises, 1989-93 1/

(In millions of CFA francs: end of period)

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Sources: Data provided by the Malian authorities; and staff estimates.

The list of the acronyms of the enterprises is given in Appendix III.

Not yet available.

Enterprise privatized.

Activity interrupted.

Enterprise split into three entities.

Table XVII.

Mali: Deposit Money Banks in December 1993

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Source: Data provided by the BCEAO.

Restructured into a société anonyme on June 30, 1989.

Registered as a bank; deposits included in the monetary survey, but with no right to issue credit.

Table XVIII.

Mali: Summary Accounts of the Central Bank, 1989-94 1/

(In billions of CFA francs: end of period)

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Source: Data provided by the BCEAO.

Data may not add up because of rounding.

Accounts revalued at the new exchange rate of CFAF 100 per French franc.

Excluding SDR counterpart.

As a result of the restructuring of the BDM, the BCEAO extended a 15-year loan to the BDM, the installments of which are paid by the Treasury, with a 3-year grace period and an interest rate of 3 percent.

Including cash held by the Treasury.

Includes nonstatutory advances by the BCEAO to the Treasury resulting from the consolidation of the debt of the former Central Bank of Mali of CFAF 41.8 billion on its operations account with the French Treasury, including interest charged thereon.

Table XIX.

Mali: Summary Accounts of the Deposit Money Banks, 1989-94 1/ 2/

(In billions of CFA francs: end of period)

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Source: Data provided by the BCEAO.

Data may not add up because of rounding.

Including transactions and adjustments resulting from the restructuring of the Banque de Développement du Mali, and reclassifications of deposits resulting from other bank audits.

Accounts revalued at the new exchange rate of CFAF 100 per French franc.

Table XX.

Mali: Claims on the Government, 1989-94 1/ 2/

(In billions of CFA francs; end of period)

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Source: Data provided by the BCEAO.

Data may not add up because of rounding.

Including transactions and adjustments resulting from the restructuring of the BDM, and reclassifications of deposits resulting from other bank audits.

Accounts revalued at the new exchange rate of CFAF 100 per French franc.

Consolidation of debit balances of the BDM at the BCEAO.

Includes the cotton stabilization fund.

Table XXI.

Mali: Foreign Assets and Liabilities of the Banking System, 1989-94 1/

(In billions of CFA francs: end of period)

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Source: Data provided by the BCEAO.

Data may not add up because of rounding.

Accounts revalued at the new exchange rate of CFAF 100 per French franc.

Differs from net foreign assets in Table 6, which exclude medium- and long-term foreign liabilities.

Table XXII.

Mali: Rediscount Rates Applied by the Central Bank, 1989-94 1/

(In percent per year)

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Source: Information provided by the BCEAO.

Rates applied to short-term credit of 1 year or less and to mediumterm credit of up to 10 years, and 15 years since October 1, 1989. The BCEAO will also rediscount long-term credit which, at the time of rediscounting, has no more than 15 years to maturity.

Applied also to advances against Government and private paper, to rediscount of customs duty bills, and to prise en pension (a rediscount operation with a promise to transfer the credit title back to the original lender).

Applied to crop credit, credit to the Government and local authorities, small national enterprises with total credit outstanding not exceeding CFAF 30 million, and nationals for the construction of the borrower’s first primary residence (maximum CFAF 15 million with maturities shorter than ten years). Also applied to overdrafts by the Treasury.

The Central Bank’s discount rate will remain above the rates applied in the money market. A special rate, equal to the money market rate minus 1 percentage point, applies to the statutory advances to the Government under Article 16 of the Statutes of the BCEAO. The special rate is a quarterly average, calculated by BCEAO headquarters and communicated on a quarterly basis to the national agencies.

Table XXIII.

Mali: Interest Rates in the Money Market, 1989-94

(In percent per year)

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Source: Information provided by the BCEAO.

Since October 14, the money market was transformed into an auction of weekly advances.

Table XXIV.

Mali: Landing Rates Applied by Commercial Banks, 1984-94

(In percent per year)

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Table XXIV.

(concluded). Mali: Lending Ratas Applied by Commercial Banks, 1984-94

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Source: Information provided by the BCEAO.

Originally not exceeding CPAP 20 million; since May 1, 1979, not exceeding CFAF 30 million.

Of any member state of HAMU.

Originally, with maturity of more than 2 years end less than 10 years, sad lass than 15 years since October 2, 1989.

Cannot exceed the legal usury rate, set at twice the prevailing discount rate.

Minimum abolished on October 2, 1989.

Table XXV.

Mali: Deposit Rates Applied by Commercial Banks, 1986-94 1/

(In percent per year)

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Source: Information provided by the BCEAO.

Fixed rates, unless Marked with an asterisk (*), in which case it is s minimum rate.

Includes deposits of the Treasury, Post Office Savings Bank, and other government agencies, public end Mixed enterprises, and special private sector deposits resulting from legal requirements, such as reserves of insurance companies.

Applicable to savings deposits of less than CPAP 5 million.

The requirement that banks pay interest on demand deposits was suspended beginning January 1, 1985.

Deposit rates no longer fixed by the BCEAO.

Average monthly money Market rate published by BCEAO Minus 2 percent.

Table XXVI.

Mali: Balance of Payments, 1989-93 1/ 2/

(In millions of SDRs)

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Sources: Data provided by the Malian authorities; and staff estimates.

Data may not add up because of rounding.

Including debt service due to the People’s Republic of China and the former U.S.S.R.

After debt cancellation.

PESAP, Public Enterprise Sector Adjustment Program.

Reflects agreements on debt rescheduling end moratoria, as well as debt under negotiation.

Including Trust Fund.

The stock at end of period includes the net change in payments arrears, as well as the change in the value of the stock, owing to exchange rate movements.

Table XXVII.

Mali: Composition of Exports, f.o.b., 1989-93

(Value in billions of CFA francs: volume in metric tons: unit value in CFA francs per kilogram)

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Sources: Data provided by the BCEAO; and staff estimates.
Table XXVIII.

Mali: Composition of Imports, c.i.f., 1989-93

(Value in billions of CFA francs: volume in metric tons; unit value in CFA francs per kilogram)

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Sources: Data provided by the BCEAO; end staff estimates.
Table XXIX.

Mali: Terms of Trade Indices, 1989-93

(1985 = 100)

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Sources: Data provided by the Malian authorities; and staff estimates.

Volume indices for exports and imports are Laspeyres indices.

Unit value indices for exports and imports are Fisher indices calculated in terms of CFA francs.

Table XXX.

Mali: Direction of Trade, 1989-93 1/

(In million, of U.S. dollars)

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Source: IMF, Direction of Trade Statistics Yearbook, 1993 and June 1994.

Data may not add up because of rounding.

Including the former U.S.S.R., Eastern European countries, and others.

Table XXXI.

Mali: Foreign Aid, 1989-93 1/

(In billions of CFA francs)

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Sources: Data provided by the Malian authorities; and staff estimates.

In the balance of payments, grants are included under official transfers; loans are included in nonmonetary capital receipts.

Includes budgetary aid channeled both through the Treasury and outside the Treasury.

Table XXXII.

Mali: External Disbursed Debt Outstanding by Creditor, 1989-92 1/

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Sources: IBRD, Debtor Reporting System; and IMF, International Financial Statistics.

Data may not add up because of rounding.

Includes export credits.

Including Trust Fund.

End of period exchange rate.

Table XXXIII.

Mali: Structure and Terms of New Loan Commitments, 1989-93

(In millions of U.S. dollars, unless otherwise specified)

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Source: IBRD, Debtor Reporting System and Mali an authorities.
Table XXXIV.

Mali: Nominal and Real Effective Exchange Rate Indices, 1987-94 1/

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Source: IMF, Information Notice System (INS).

Period averages, based on the following average trade weights (in percent): France (49.54), Germany (11.91), United Kingdom (11.73), Belgium (7.48), Japan (4.22), Italy (2.91), the Netherlands (2.27), United States (2.05), and other countries (7.89).

APPENDIX II: Mali : Summary of Tax System as of June 30, 1994

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Source: Information provided by the Malian authorities.

Suspended since 1979.

Suspended since August 1993.

Suspended since February 1994.

APPENDIX III: Mali: List of Selected Acronyms

BCEAO

Banque Centrale des Etats de l‘Afrique de l‘Ouest
BDM-SA

Banque de Développement du Mali - Société Anonyme
BOAD

Banque Ouest-Africaine de Développement
CAA

Caisse Autonome d’Amortissement
CCP

Comptes Chéques Postaux
CMDT

Compagnie Malienne pour le Développement des Textiles
CMTR

Compagnie Malienne de Transports Routiers
CNAUR

Commission Nationals d’Aide d’Urgence et de Rehabilitation
COMANAV

Compagnie Malienne de Navigation
COMATEX

Compagnie Malienne des Textiles
DNSI

Direction Nationale de la Statistique et de 1’Informatique
DNT

Direction Nationale des Transports
EDIM

Editions Imprimerie du Mali
EDM

Energie du Mali
EMAB

Entreprise Malienne du Bois
EMAMA

Entreprise Malienne de Maintenance
FDT

Fonds de Développement du Tourisme
FFN

Fonds Forestier National
FM

Fonds Minier
FNL

Fonds National du Logement
FR

Fonds Routier
FRUITEMA

Fruit-Export du Mali
HUICOMA

Huilerie Cotonnière du Mali
INPS

Institut National de Prévoyance Sociale
INRSP

Institut National de la Recherche en Santé Publique
ITEMA

Industrie Textile du Mali
LCV

Laboratoire Central Vétérinaire
LONAMA

Loterie Nationale du Mali
LPM

Librairie Populaire du Mali
OCINAM

Office Cinématographique National du Mali
ODIMO

Office de Développement Industrial Mali Ouest
ODIPAC

Office de Développement Industrial des Products Agricoles
ODR

Opération de Développement Rural
OERHN

Office d’Exploitation des Resources Hydrauliques du Haut Niger
ON

Office du Niger
ONP

Office National des Postes
OPAM

Office des Products Agricoles du Mali
OPT

Office des Postes et Télécommunications
OSRP

Office de Stabilisation et de Régulation des Prix
PESAP

Public Enterprise Sector Adjustment Program
PPM

Pharmacie Populaire du Mali
PRMC

Programme de Restructuration du Marché Céréalier
RCFM

Régie des Chemins de Fer du Mali
SAT

Société Africaine de Transport
SCPCE

Société des Chèques Postaux et de la Caisse d’Epargne
SEMA

Société d’Equipement du Mali
SEPAMA

Société d’Exploitation des Produits Arachidiers du Mali
SEPOM

Société d’Exploitation des Produits Oléagineux du Mali
SGS

Société Gténérale de Surveillance
SMAG

Salaire Minimum Agrlcole Garanti
SMECMA

Société Malienne d’Etude et de Construction de Matériel Agrlcole
SMIG

Salaire Minimum Industrial Garanti
SNS

Stock National de Sécurité
SOCAM

Société des Conserves Alimentaires du Mali
SOCIMA

Société de Cimenterie du Mali
SOCOMA

Société des Conserves du Mali
SOCORAM

Société de Commercialisation des Radios du Mali
SOMBEPEC

Société Malienne du Bétail, des Peaux et des Cuirs
SOMIEX

Société Malienne d’Importation et d’Exportation
SOMISY

Société des Mines d’Or de Syama
SONATAM

Société Nationale des Tabacs et Allunettes du Mali
SONEA

Société Nationale d’Exploitation des Abattoirs et Annexes
SONETRA

Société Nationals d’Entreprises et de Travaux Publics
SOTELMA

Société des Télécommunications du Mali
TAMALI

Tanneries du Mali
TOFE

Tableau des Opérations Financières de l’Etat
UCEMA

Usine de Céramique du Mali
ULB

Union Laitière de Bamako
UMIP

Union Malienne des Travaux Publics
VAEMU

West African Economic and Monetary Union
VAMU

Vest African Monetary Union

BIBLIOGRAPHY: Fund documents

  • SM/91/155, August 9, 1991 (Mali- Recent Economic Developments)

  • International Financial Statistics (various issues)

  • Government Finance Statistics Yearbook (1992 and 1993)

  • Direction of Trade Statistics Yearbook. 1986-1992

Malian documents

  • Ministère du Plan, Direction Nationale de la Statistique et de 1’Informatique, Bulletin Mensuel de Statistique

  • Ministère du Plan, Direction Nationale de la Statistique et de 1’Informatique, Eléments de Conjoncture

  • Ministère de l’Economie, des Finances et du Plan, Direction Nationale de la Statistique et de 1’Informatique, Comptes Economiques du Mali, 1980-1991

    • Search Google Scholar
    • Export Citation

  • Ministère du Plan et de la Coopération Internationale, Direction Nationale de la Statistique et de 1’Informatique, Recensement Géneral de la Population et de 1’Habitat au Mali, 1992

    • Search Google Scholar
    • Export Citation

  • Primature- Commissariat au Plan, Direction Nationale de la Statistique et de 1’Informatique, Prix (various issues)

  • Direction Nationale de la Planification, Programme Triennal d’Investissements, 1994

  • Direction Nationale de la Planification, Etat d’Exécution du Budget Spécial d’Investissement de 1989 à 1993, 1994

  • Banque Centrale des Etats de l’Afrique de 1’Ouest, Note d’Information, (various issues)

World Bank documents

  • Report and Recommendation of the President of the International Development Association to the Executive Directors on a Proposed Development Credit for an Economic Recovery Credit to the Republic of Mali, February 28, 1994

  • Mali: Public Expenditure Review (Report No. 13086-MLI); May 27, 1994

1/

Mali’s economic data base remains weak; the authorities are continuing their efforts to improve the quality and availability of data, and they are receiving technical assistance from bilateral donors and multilateral institutions in this area.

1/

In what follows, all data refer to crop years (campagnes), which start in May and end in April of the following year. National accounting, however, follows calendar years. Although most crops are planted and harvested between May and December, the Direction Nationale de la Statistique et de 1’Informatique (DNSI) has adopted the convention of recording agricultural value added in the second calendar year of the crop season; the increase in output in the 1991/92 crop season was therefore reflected in GDP for 1992.

1/

Data on livestock in Mali suffer from a number of weaknesses related to the predominance of traditional farming. In 1991, the total stock estimate had to be revised downward following the first comprehensive head count in Mali’s history. Estimates of slaughtering and auto-consumption are also impeded by the number of informal operators. Therefore, it is relatively difficult to quantify value added in this sector. Export data, however, as provided by the Transport Ministry and the Customs Department, are fairly reliable.

1/

The Direction Nationale de la Statistique et de l’Informatique (DNSI) collects prices for 269 consumer products in five cities throughout Mali. The base for the index is the period extending from July 1986 to June 1987.

2/

The accompanying measures intended to mitigate the inflationary pressures included: (i) a 30 percent average cut in customs duties; (ii) a 20 percent average cut in domestic taxes; (iii) adjustment of taxes on petroleum products to limit their increase to 30 percent; (iv) an increase in prices for various public services (water, electricity, telecommunications) within a range of 10-20 percent.

1/

On January 1, 1991, six specialized institutions—the Caisse Autonome d’Amortissement (CAA), the Road Fund (FR), the National Office of Transportation (ONT), the Mining Fund (FM), the National Forestry Fund (FFN), and the Tourism Promotion Fund (FDT)—were fully integrated in the central government budget.

1/

See Appendix II for a summary of the tax system as of June 30, 1994.

1/

The rules governing the management of the external account of the Union are set forth in the Agreement Regarding the Operations Account. They are discussed in SM/87/89.

1/

The shareholders are the Government, the BCEAO, and the BOAD (each 20 percent), private national shareholders (23.3 percent), and the Banque Marocaine du Commerce Exterieur (19.7 percent).

1/

Since 1988, the monetary data provided by the Malian authorities have been adjusted to take account of transactions and reclassifications arising from the restructuring of the BDM. Additional adjustments of the monetary aggregates as presented in Table 6 concern the external liabilities and net domestic assets and are as follows: the counterpart liabilities to the SDR allocations were excluded from the external liabilities and reclassified under other items (net); CFAF 2.1 billion of short-term external liabilities of commercial banks was reclassified as medium- and long-term external liabilities in order to reverse an unjustified reclassification by the BCEAO in 1991; the CFAF 23.9 billion of consolidated claims by the BCEAO, resulting from the restructuring of the BDM-SA, was deducted from credit to the economy and reclassified as consolidated claims on the Government. The consolidation involved the conversion of short-term credit by the BCEAO to the BDM-SA into a long-term loan to the Treasury.

1/

Based on Information Notice System weights; it should be noted, however, that the basket does not include informal trade with other African countries.

2/

Cameroon, Chad, Central African Republic, Congo, Equatorial Guinea, Gabon.

3/

France and Comoros.

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Cover IMF Staff Country Reports
Mali: Recent Economic Developments
Author:
International Monetary Fund
Volume/Issue:
Volume 1994: Issue 011
Publisher:
International Monetary Fund
ISBN:
9781451826180
ISSN:
1934-7685
Pages:
110
DOI:
https://doi.org/10.5089/9781451826180.002
  • CHART 1
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    CHART 1

    MALI: AGRICULTURAL PRODUCTION INDICES, 1985/86-1992/93 1/

    (1985/86 = 100)

  • CHART 2
    View in gallery
    CHART 2

    MALI: COTTON EXPORT PRICE INDICES, 1985-94

    (US Dollars and CFA Francs per kilogram; 1985=100)

  • CHART 3.
    View in gallery
    CHART 3.

    MALI: BAMAKO CONSUMER PRICE INDEX JULY 1987-MAY 1994

    (Period average 1980=100)

  • CHART 4
    View in gallery
    CHART 4

    MALI: DISCOUNT RATE AND MONEY MARKET RATES JANUARY 1989-SEPTEMBER 1994

  • CHART 5
    View in gallery
    CHART 5

    MALI: REAL AND NOMINAL EFFECTIVE EXCHANGE RATES INDICES JANUARY 1980-JUNE 1994

    (Period average 1980=100)

CHART 1

MALI: AGRICULTURAL PRODUCTION INDICES, 1985/86-1992/93 1/

(1985/86 = 100)
CHART 2

MALI: COTTON EXPORT PRICE INDICES, 1985-94

(US Dollars and CFA Francs per kilogram; 1985=100)
CHART 3.

MALI: BAMAKO CONSUMER PRICE INDEX JULY 1987-MAY 1994

(Period average 1980=100)
CHART 4

MALI: DISCOUNT RATE AND MONEY MARKET RATES JANUARY 1989-SEPTEMBER 1994
CHART 5

MALI: REAL AND NOMINAL EFFECTIVE EXCHANGE RATES INDICES JANUARY 1980-JUNE 1994

(Period average 1980=100)