Abstract
Despite the difficulties of Niger's circumstances, it showed satisfactory performance under the Poverty Reduction and Growth Facility (PRGF) Arrangement. However, a weakening in program implementation and a reassessment of priorities of the program led to slippages. Executive Directors advised the authorities to implement prudent policies in the revised program to avoid financial slippages. The authorities have shown a strong commitment in the preparation of the full Poverty Reduction Strategy Paper. Directors agreed that Niger has completed the first review under the PRGF Arrangement, and granted waivers.
August 3, 2001
1. Since the issuance of the staff report for the first review under the Poverty Reduction and Growth Facility (PRGF) arrangement (EBS/01/123, 7/20/01) and the report on noncomplying disbursement (EBS/01/124, 7/20/01), the authorities have reported the completion of the following two measures to bring the program back on track. First, a new petroleum product pricing and taxation system that is transparent, automatic, and flexible (a performance criterion for end-June 2001) was approved by the Council of Ministers on July 26, 2001 and implemented on August 1, 2001. Second, the 1999 budgetary accounts were closed on July 30, 2001, in accordance with the standard understood between staff and the authorities, which completes the corrective actions that were to be taken in connection with the noncomplying disbursement of December 2000.
2. Moreover, following a recent decision of the West African Economic and Monetary Union (WAEMU), the West African Development Bank (BOAD) will raise to 50 percent the grant element of the supplementary loans signed with Niger in March 2001. This decision will bring two thirds of BOAD financing in line with program requirement.1 The authorities will not draw on loans whose grant element is still below 50 percent.
3. The above-mentioned measures complement other corrective actions previously taken in the following areas:
The external payments arrears accumulated since January 2001 vis-Ã -vis two Paris Club members were cleared on July 12, 2001, and the authorities have strengthened their monitoring of debt service obligations.
The revised program for 2001 corrects for the end-2000 slippage in the settlement of domestic payments arrears that was caused by delays in external budgetary assistance. In particular, the authorities have adopted a clear and appropriate repayment schedule to settle the programmed amounts in 2001. They are also strengthening the monitoring of domestic payments arrears and the expenditure process to prevent the occurrence of new arrears.
The revised budget law for 2001 maintains the budgetary objectives of the original program and corrects the excess spending that occurred in early 2001 and resulted in the nonobservance of the end-March 2001 benchmark on the basic fiscal deficit.
The installation in April 2001 of an FAD resident expert on budgetary matters and expenditure processes has given a new impetus to budgetary reforms. The revised program now targets the establishment of treasury account opening balances for 2001 and the preparation of a budgetary and public accounting nomenclature by end-September 2001.
4. The authorities are also continuing their efforts to strengthen the administrative capacity of Niger and improve the timeliness and accuracy of economic and financial information. In this context, they will in particular make greater use of technical assistance to address the limited implementation capacity and weaknesses in their monitoring of the program.
5. The staff is of the view that the corrective measures adopted are adequate to bring the program back on track. These measures also demonstrate stronger ownership on the part of the authorities and satisfactory progress toward a better implementation of their program.
Responses to requests for additional grant financing from the African Guarantee and Economic Cooperation Fund and the African Solidarity Fund are still pending.