Mali: Staff Report for the 2003 Article IV Consultation
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International Monetary Fund
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Publication Date:
12 Jan 2004
eISBN:
9781451826302
Language:
English
Keywords:
ISCR; CR; CFA franc; authority; net present value; fund; Malian authorities; development partner; financial support; consumer price index; government divestiture program; Agricultural commodities; West Africa
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Mali has been implementing reforms supported by the IMF through the Enhanced Structural Adjustment Facility (ESAF) and Poverty Reduction and Growth Facility (PRGF) arrangements. Executive Directors commended the macroeconomic management, poverty reduction, and structural reforms, and emphasized the need for strengthening fiscal performance, the finance system, and the effectiveness of the Anti-Money Laundering and Combating Financing of Terrorism regime. They agreed that the ex post assessment of performance under the (ESAF)/PRGF arrangements have helped Mali to stabilize the macroeconomic situation and improve the structure of its economy.

Abstract

Mali has been implementing reforms supported by the IMF through the Enhanced Structural Adjustment Facility (ESAF) and Poverty Reduction and Growth Facility (PRGF) arrangements. Executive Directors commended the macroeconomic management, poverty reduction, and structural reforms, and emphasized the need for strengthening fiscal performance, the finance system, and the effectiveness of the Anti-Money Laundering and Combating Financing of Terrorism regime. They agreed that the ex post assessment of performance under the (ESAF)/PRGF arrangements have helped Mali to stabilize the macroeconomic situation and improve the structure of its economy.

I. Introduction

1. The last Article IV consultation with Mali was concluded on December 17, 2001. On that occasion, Executive Directors commended the authorities for their continued sound macroeconomic policies and structural reforms. They stressed the need to maintain steady and rapid growth, speed up structural reforms, especially in the cotton sector, diversify the productive base, promote private sector development, and strengthen governance, with a view to improving the economy’s ability to reduce poverty and withstand exogenous shocks.

2. In early March 2003, Mali reached the completion point under the enhanced Initiative for the Heavily Indebted Poor Countries (HIPC Initiative), and Paris Club creditors agreed to reduce Mali’s debt stock on March 12, 2003. Total debt relief is estimated at US$417 million in net present value (NPV) terms, of which the Fund will provide US$45.2 million (SDR 34.7 million).

3. The World Bank approved a third structural adjustment credit (SAC III) of US$70 million (SDR 55 million equivalent) in December 2001. The third and final tranche was disbursed in August 2003. The World Bank also intends to help Mali deal with the impact of the crisis in Cote d’Ivoire by adding a US$15 million supplement to the SAC III, which will be disbursed before end-2003. Summaries of Mali’s relations with the Fund and the World Bank Group are presented in Appendices II and III, respectively.

4. Mali’s statistical database is adequate for monitoring macroeconomic developments (see Appendix IV). Mali has been participating in the General Data Dissemination System (GDDS) since September 2001, and its metadata are posted on the Fund’s Dissemination Standards Bulletin Board. A recent multisector mission from the Fund’s Department of Statistics noted a number of methodological shortcomings and institutional weaknesses, especially in the compilation of the national accounts, which make it difficult to assess the impact of alternative policies. Implementation of the resulting recommendations, which are outlined on the Dissemination Standards Bulletin Board, is expected to further improve data quality and timeliness. The national accounts should also be improved by using expenditure data from the 2001 household survey, the results of which are to be available soon. Mali’s debt-monitoring system provides for a comprehensive accounting of medium- and long-term public and publicly guaranteed debt on a loan-by-loan basis. Portfolio analysis and debt sustainability analysis are conducted annually, as well as on an ad-hoc basis. The concessionary of new loans is systematically evaluated. Areas for improvement include the monitoring of parastatal debt, a systematic reconciliation and updating of debt data with information provided by creditors, and the integration of data on debt relief granted under the initial and the enhanced HIPC Initiative. The authorities have also agreed on a work program with the West Africa Regional Technical Assistance Center (West AFRITAC) that seeks to strengthen data collection, compilation, and publication.

II. Recent Developments

5. Overall, Mali’s economic performance has been satisfactory in 2002 and 2003, in spite of a difficult regional environment resulting from the crisis in Côte d’lvoire (Box 1). Based on the national accounts methodology used until now, real GDP grew by 9.7 percent in 2002, as cotton production recovered from a depressed level and gold output reached a new high of 66 tons. Real GDP is forecast to decline by about 0.4 percent in 2003, or slightly less than the rate projected earlier, owing to a fall in gold output and weather-related declines in cereal and cotton production during the 2002/03 crop year, in addition to the adverse impact of the continuing Ivoirien crisis (Table 2 and Figure 1).

Mali: Impact of the Crisis in Côte d’lvoire

The crisis in Côte d’Ivoire and the closing of the Abidjan-Bamako road have hit Mali’s economy hard since the end of the third quarter of 2002. The authorities reacted rapidly, and trade has been diverted to other ports in the region and new sources of supply found for key products. However, the distance to new ports and their limited capacity, in addition to the poor condition of the transportation system, have created great difficulties.

Real GDP growth is estimated to have been reduced by about ½ of 1 percent in 2002 and 2003, owing to lower activity in public works, construction, and trade. In addition, increased transportation costs helped to keep inflation at about 5 percent in 2002. Since the Abidjan-Bamako road reopened officially in May 2003, traffic has yet to recover, because of security concerns and a fee equivalent to US$300 to be paid per truck per trip to Abidjan.

As regards the external sector, in 2002 the crisis delayed the shipment of cotton exports for an amount equivalent to 1.2 percent of GDP and prevented the export of livestock (equivalent to 1 percent of GDP on an annual basis). Diversion of trade to other ports also increased freight charges. In 2003, the current account deficit, excluding official transfers, is projected to be 1 percentage point of GDP wider than initially projected, mainly because of continued delays in exporting cotton via other ports in the region.

As for the fiscal impact, the shortfall in tax revenue is estimated at 1 percent of GDP in 2002, mainly from lower receipts on import duties and domestic value-added tax. In addition, the government, to assist enterprises, granted tax exemptions estimated at 0.3 percentage point of GDP in the first semester of 2003 and delayed increasing the special tax on petroleum products by three months to May 2003. The impact of the crisis on government spending was small in 2002 and 2003, since refugees were mostly assisted by the international community. However, because of the regional tension, there have been pressures to increase outlays on security.

Table 1.

Mali: Fund Position, 2002-06

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Source: IMF, Finance Department.
Table 2.

Mali: Selected Economic and Financial Indicators, 2000-06

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Sources: Malian authorities; and staff estimates and projections.

The two columns differ because the authorities revised their GDP methodology to be consistent with the West African Economic and Monetary Union (WAEMU) and System of National Account (SNA) 1993 methodology.

Including capital outlays financed through external aid and transfers to the local authorities; data on payment order base.

Change in percent of broad money at the beginning of the period.

End-of-period interest rate on the West African Monetary Union money market.

Defined as total revenue minus total expenditures and net lending, excluding foreign-financed investment

Defined as footnote 5 above, but also excluding HIPC intiative-relaud expenditure.

In percent of exports of goods and services.

Of goods and services.

Figure 1.
Figure 1.

Mali: Main Economic Indicators, 1995-2006

Citation: IMF Staff Country Reports 2004, 011; 10.5089/9781451826302.002.A001

Sources: Malian authorities; and staff estimates and projections.1/ Percentage change in average consumer price index.2/ Central government, on commitment basis.

6. On the basis of the new national accounts methodology recently adopted by the West African Economic and Monetary Union (WAEMU), real GDP increased by 4.4 percent in 2002 and is expected to grow by at least 3.2 percent in 2003. The differences in GDP growth are mainly due to the recording of crops at the time of production rather than the time of sale, which has the effect of moving the recording of most crops up by one year (Box 2).1 Furthermore, given the very good rainfall during the second half of 2003, the latest indications are that agricultural production could rise by as much as 30 percent this year. If this is confirmed, real GDP growth would be twice as high as currently projected.

Mali: Impact of Changes in National Accounts Methodology, 2000-03

(Annual percentage change at constant prices, unless otherwise indicated)
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Sources: Malian authorities; and staff estimates and projections.

Cotton ginning and rice hulling were previously included in the primary sector.

7. Inflation has been considerably lower than anticipated in 2003, with the consumer price index falling by 1.4 percent over the 12 months to September. The price of food declined as the authorities and development partners distributed food in early 2003, and farmers and traders reduced stocks once it became evident that the forthcoming crop would be very good. Hence, average inflation is likely to be below 1 percent in 2003, compared with the projected 3.8 percent and the 5.0 percent recorded in 2002. Excluding food, inflation is expected to average 2 percent in 2003.

8. As regards the balance of payments, the external current account deficit, excluding official transfers, narrowed by 6.7 percentage points of GDP to 5.8 percent in 2002 because of a sharp increase in exports of cotton and gold (Table 7). However, in 2O03, the deficit is expected to widen by almost VA percentage points of GDP to 9.2 percent, compared with the 8.2 percent anticipated previously. The volume of cotton exports is likely to fall as a result of the drop in cotton production in the 2002/03 crop year and continued difficulties in shipping cotton. Also, receipts from tourism are likely to decline from the high level attained in 2002, when they were boosted by the holding of the African Soccer Cup in Mali. Including current official transfers, the current account deficit would increase from 4.3 percent of GDP in 2002 to 6.5 percent in 2003. The deficit in 2003 is expected to be more than financed by official assistance, including debt relief under the enhanced HIPC Initiative, and private capital inflows, some of it due to businesses moving their financial operations from Côte d’lvoire to Bamako. Hence, Mali is expected to record a surplus in the overall balance of payments and to continue contributing to a buildup in the international reserves of the Central Bank of West African States (BCEAO).

Table 3.

Mali: Selected National Accounts Indicators, 2000-06

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Sources: Malian authorities; and staff estimates and projections.

Including current official transfers.

Table 4.

Mali: Central Government Consolidated Financial Operations, 2000-06

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

Revenue and expenditure are from the budget. The staff took 80 percent of capital expenditure, in line with the past execution levels.

Outlays financed by enhanced HIPC Initiative resources are recorded according to their economic classification. Starting in 2003, salaries included in annexed budgets are recorded under wages and salaries.

Defined as total revenue, excluding grants, minus total expenditure and net lending, excluding foreign-financed capital expenditure.

Table 5.

Mali: Compliance with WAEMU Convergence Criteria, 2000-06

(Ratios in percent, unless otherwise indicated)

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Sources: Malian authorities; and staff estimates and projections.
Table 6.

Mali: Monetary Survey, 2001-04

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Sources: BCEAO; and staff estimates and projections.
Table 7.

Mali: Balance of Payments, 2001-06 1/

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Sources: Malian autherities and estimates and projections.

Presented according to the IMF Balance of Payments Manual (5th ed.)

Includes short-term capital inflows.

Sum of the original and enhanced HIPC Initiative assistance.

In percent of exports of goods and services

Table 8.

External Financing Requirements and ReSources, 2000-06

(In billions of CFA francs, unless otherwise indicated)

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Sources: Malian authorities; and Fund and World Bank staff estimates and projections.

Excluding the change in the net position vis-à-vis the Fund.

Errors and omissions.

Includes both existing and expected new commitments.

Includes private capital grants.

Sum of original and enhanced HIPC Initiative framework for the 2000 estimate and 2001 projection; original HIPC Initiative only for the program.

Table 9.

Mali: Indicators of Fund Credit and Debt Servicing, 2001-12

(Ratios in percent unless otherwise indicated)

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Sources: IMF, Finance Department, Malian authorities; and staff estimates and projections.

Outstanding Fund credit includes loans and outstanding purchases under the Structural Adjustment Facility (SAF) and the Poverty Reduction and Growth Facility (PRGF).

Financing needs are defined as the sum of the current account deficit, including grants, amortization due, repurchases and repayments of SAF and PRGF loans to the Fund, targeted accumulations of reserves, and the reduction of external arrears, if any.

Debt service, before debt relief, moratoriums, and potential IIIPC Initiative assistance (estimated for the period 2001-12), including SDR charges, as a percentage of exports of goods and services.

Debt service, after debt relief, moratoriums, and potential HIPC Initiative assistance (estimated for the period 200-12), including SDR charges, as a percentage of exports of goods and services.

Table 10.

Mali: Tracking of Delivery of HIPC Initiative Anittance - Enhmoed Framework 1/

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Source: Malian authorities.

Reflects formal commitments received by the authorities from the creditors.

9. The real effective exchange rate has appreciated by 4 percent since end-2001 (see Figure 2), 2 mostly reflecting an appreciation of the euro, to which the CFA franc is pegged, against the U.S. dollar. Longer term, the real effective exchange rate has depreciated by 4 percent since end-1995, when the effects of the devaluation of the CFA franc in January 1994 had worked their way through the economy. However, other factors, such as the evolution of labor costs, and increased transport costs owing to the Ivoirien crisis, would suggest that Mali’s competitiveness may have eroded to some extent over the past few years (Box 3).

Figure 2.
Figure 2.

Mali: Real and Nominal Effective Exchange Rates, January 1990 - July 2003

(Period average; 1990=100)

Citation: IMF Staff Country Reports 2004, 011; 10.5089/9781451826302.002.A001

Source: IMF, Information Notice System.1/ Based on relative consumer price indices.

10. As regards monetary developments, broad money expanded by 21.8 percent over the 12 months to end-June 2003, which is partly due to the transfer of some firms’ financial operations from Côte d’lvoire (Table 6). Over the same period, credit to the economy slowed to 9.9 percent, as the cotton company repaid bank loans. For the year as a whole, broad money is expected to expand by 15.4 percent, compared with 28.4 percent in 2002, with credit to the economy rising by 10.5 percent. The BCEAO reduced the discount rate by 150 basis points to 5.0 percent between July and October 2003 in response to the fall in inflation, the decline in interest rates in the euro area, and the high level of international reserves. However, the measure is unlikely to have a major impact on bank lending in the short run since commercial banks have had a high level of free reserves for some time.

Mali: Competitiveness of the Economy

Since the devaluation of the CFA franc in 1994, high economic growth has to a large extent been export led, reflecting regained competitiveness, the streamlining of the regulatory framework, the government divestiture program, price and trade liberalization efforts, and the exploitation of new gold mines.

Mali’s trade remains, however, heavily concentrated in a few commodities—gold, cotton, and livestock accounted for 91 percent of exports in 2002. With gold exports starting to decline and cotton production likely to grow at a moderate rate in the coming years, the authorities are seeking to add value to those traditional exports in which Mali has a comparative advantage and promote nontraditional exports, in order to maintain growth at a high and sustainable level and reduce Mali’s vulnerability to exogenous shocks. In particular, the government aims at creating 16,000 jobs in manufacturing and increasing the share of manufacturing in GDP from 8 percent to 12 percent over 2003-07.

The government goals are ambitious, given that the authorities face many challenges in attracting private investment, including poor human and physical resources, limited financial development, inadequate property rights and a weak judicial system, and high costs of energy, communication, and transportation. The level of financial deepening remains very low, bank lending is mostly limited to short-term trade finance; and the spread between lending and deposit rates remains wide, owing to insufficient competition, a high level of nonperforming loans, difficulties in recovering overdue loans, and high operating costs. Unit labor costs are relatively high and rising. For instance, the civil service salary for the average grade has more than doubled since 1994, compared with an increase of 36 percent in the consumer price index over the same period. The price of energy has risen by 21 percent since 1998, even after a 10 percent cut imposed in February 2003, and is among the highest prices in the region.

The key, therefore, is for the government to promote growth and the diversification of the economy by improving infrastructure, increasing labor productivity, and reducing public utility and transportation costs. Private sector investment should also be promoted by streamlining the regulatory framework, strengthening the judicial system and governance, and deepening financial intermediation. At the same time, the government should refrain from granting tax exemptions and subsidies, which risk increasing distortions in the economy, threatening fiscal consolidation, and reducing the level of resources available for poverty reduction.

11. The financial strength of the banking system deteriorated somewhat in the first half of 2003, with the ratio of nonperforming loans to gross bank credit to the economy rising from 18.7 percent in December 2002 to 21.6 percent at the end of June 2003. Taking into account loan provisions, the ratio of net nonperforming loans to bank credit rose from 9.2 percent to 10.8 percent over the same period. The increase stems from delays in the repayments of trade credit, reflecting the longer time needed to transport imports from more distant ports. The authorities viewed this as a temporary problem that will be resolved as financial institutions and traders adapt to the situation created by the crisis in Côte d’lvoire. Financial institutions generally meet prudential ratios, as indicated in Box 4, and the financial situation of the larger banks has improved over the past 12 months. Nevertheless, the maturity mismatch of assets and liabilities remains an issue, as banks rely largely on demand deposits to finance long term loans. The authorities are seeking to address this issue by encouraging banks to create new financial instruments that will lengthen the maturity of resources available for development purposes. Microfinance institutions have continued to record strong growth in both deposits (21 percent) and loans (17 percent) in 2002 (see Box 5). The latest data show that microfinance institutions as a group were profitable in 2000. However, the first quarter of 2003 was characterized by a significant reduction in outstanding credit (12 percent) and an increase in the ratio of nonperforming loans to total credit from 4.4 percent at end-December 2002 to 5.6 percent at end-March 2003.

Mali: Compliance with Prudential Norms, 2001-03 1/

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Source: BCEAO.

Number of complying commercial banks and nonbank financial institutions out of the total number of institutions.

The number of banks increased from eight to nine in 2002. Nonbank financial institutions comprise two leasing companies, a mortgage company and a financing company for small- and medium-size enterprises.

Measured as the ratio of stable resources to fixed assets and medium- and long-term loans.

Ratio of liquid assets to short-term liabilities. This norm is applicable to banks only.

12. Fiscal policy in 2002 was tighter than originally envisaged, as the overall fiscal deficit, on a payment order basis and excluding grants, is estimated at 7.2 percent of GDP (Table 4), compared with the 9.4 percent set under the program for 2002 (adjusted for the revised GDP). This outcome reflects both higher revenue (16.6 percent of GDP) and lower expenditure (23.8 percent of GDP) than targeted. Including grants, the fiscal deficit for 2002 is estimated at 3.6 percent of GDP. The fiscal objectives for June 2003 were met mainly because government revenue was higher than targeted on account of settlements of tax arrears and payments of profit taxes and dividends by the mining sector. This additional revenue more than offset the high level of tax exemptions granted to enterprises facing difficulties because of the Ivoirien crisis. The fiscal objectives for the year as a whole are also likely to be met, provided that, as agreed, the authorities refrain from granting ad-hoc tax exemptions and keep the tax on petroleum products at its current level. On the expenditure side, the government should contain the wage bill by updating the civil service payroll using the results of the civil service census conducted last February. As a first step, salaries for November 2003 of civil servants who did not participate in the census will be paid only after their administrative situation can be verified. Overall, the fiscal deficit, on a payment order basis and excluding grants, would widen to 8.2 percent of GDP in 2003, with total revenue increasing by 0.6 percentage point of GDP to 17.2 percent and total government expenditure and net lending rising from 23.8 percent of GDP to 25.4 percent. Including grants, the overall fiscal deficit is expected to be contained to 3.9 percent given budget support likely from the European Union, the World Bank, and bilateral donors, part of which has been granted to mitigate the impact of the crisis in Côte d’lvoire. The remaining deficit is expected to be financed by debt relief under the enhanced HIPC Initiative, and by loans tied to investment projects and sectoral programs. After conducting an inventory of all government domestic debt in the fall of 2002, the authorities agreed to settle an amount equivalent to 1½ percent of GDP, which was mostly due to public utility companies.

Mali: Developments in Microfinance

The microfinance sector emerged in the 1980s to mobilize small savings and finance microprojects in the informal sector in both urban and rural areas, with a focus on low-income groups and individuals. The sector includes (i) mutual savings and loans institutions (institutions mutualistes), governed by their members and whose main activity is savings mobilization; (ii) autonomous village banks (caisses villagoises d’épargne et de credit autogere’es), governed by the villages; and (iii) direct credit institutions (institutions de credit solidaire), whose main activity is to provide credit to meet the needs of small borrowers.

There are currently 465 microfinance institutions, with a total membership of about 520,000 individuals. At end-March 2003, total deposits of these institutions amounted to CFAF 21.2 billion, while total loans were CFAF 21.1 billion (equivalent to 5 percent of loans made by commercial banks). The gap in resources was financed by borrowing from the banking sector and external resources. The sector’s overall performance has been satisfactory, as the credit recovery rate exceeds 90 percent and the ratio of nonperforming loans to total loans rose only slightly to 5.6 percent at end-March 2003 from 4.4 percent at end-2002.

The government intends to promote the development of the sector through policies aimed at (i) making microfinance institutions comply fully with the laws and regulations governing their activity; (ii) providing training in management and accounting; and (iii) fostering cooperation between formal commercial banks and the microfinance system. The ongoing World Bank program to reform the financial sector is expected to strengthen the framework for microfinance.

13. During the first nine months of 2003, the management of the railroad company (RCFM) was privatized under a concession contract, and a tender was launched for the management of Mali’s airports. The authorities are discussing terms of the privatization of the cottonseed oil-producing company (HUICOMA) with the successful bidder. As for the cotton sector, the parapublic enterprise (CMDT) reduced staffing by one-fourth and offered a severance package that was partly financed through the budget. To ensure that the CMDT meet minimum capital ratios under regional business laws (OHADA), the government and other shareholders decided to revalue the enterprise’s assets. The authorities have also agreed with the World Bank and other bilateral and multilateral development partners on a timetable for splitting the CMDT into three or four private enterprises, each of which would have exclusive rights to purchase cotton seeds in its designated area. This regional monopsony status of each enterprise is expected to end over the medium term.

III. Policy Discussions

14. The staff discussed with the authorities the assessment of Mali’s performance under past Fund-supported programs, challenges facing the economy, policies that the authorities intended to implement in 2004 and over the medium term, and the possible future engagement of the Fund with Mali.

A. Assessment of Performance Under Past Fund-Supported Programs

15. Following the expiration of the Fund arrangement with Mali last August, the staff conducted an ex post assessment of performance under the last three Fund-supported programs covering the period 1992-2002. The main conclusion is that important progress was made in restoring macroeconomic stability, laying the foundations for sustainable growth, and reducing poverty (Boxes 6 and 7, and Appendix I). The improvement resulted from the government’s commitment to the programs, the political transition to democracy, and the devaluation of the CFA franc in January 1994, as well as a high level of international financial assistance. Real GDP growth rose from 1 percent per year on average over 1991-93 to 5.7 percent over the last five years, with more than 50 percent of growth concentrated in the production of three primary commodities—cotton, rice, and gold. Inflation remained low, except in the aftermath of the CFA franc devaluation. Although the volume of exports of goods grew by 1314 percent a year on average over the 1992-2002 period, or twice as fast as imports, the improvement in the external current account deficit, excluding official transfers, was somewhat limited because of unfavorable terms of trade and a sharp increase in the repatriation of profits by mining companies. At the same time, the economy became more open following the implementation of a common external tariff within the WAEMU and the gradual elimination of barriers to intraregional trade. Nevertheless, in spite of these achievements, Mali, as a landlocked country in the Sahe! region, faces many challenges and remains vulnerable to exogenous shocks, including bad weather, terms of trade fluctuations, and the political environment in the region.

16. Fiscal performance improved over the past ten years, as the streamlining of the tax system boosted revenue mobilization, while enhanced government resource management helped keep spending under control. However, the overall fiscal deficit fell somewhat less than envisaged, especially under the last Poverty Reduction and Growth Facility (PRGF) supported program, when spending started to rise again, partly as a result of the implementation of the poverty reduction strategy, including programs financed by HIPC Initiative resources.

17. As regards structural reforms, the privatization program is well advanced, and the authorities have improved the legal and regulatory environment. Nevertheless, liberalizing the cotton sector has been difficult because of the authorities’ concern that, given the size of the sector, introducing competition might disrupt production and have serious political repercussions. In addition much remains to be done to enhance the investment climate, improve governance, and reduce government intervention in the economy. At the level of the financial system, Mali has made notable advances in strengthening its banking sector and |deepening financial intermediation over the past decade, even though, overall, the financial sector remains underdeveloped.

18. The authorities agreed with the thrust of the assessment of Fund-supported programs. They observed that, after more than 20 years of heavy government intervention in the economy, Fund-supported programs contributed to the design of sound economic policies and structural reforms that reduced external and internal imbalances and opened the economy to private sector initiatives. The authorities considered that conditionalities and financing assurances associated with the arrangement with the Fund were key elements in that process. As the reform agenda is unfinished, they viewed a new formal agreement with the Fund as an essential element in their efforts to move the process forward and mobilize foreign financial assistance.

19. The authorities also noted several points where Fund-supported programs could be improved. In their view, first, the adjustment pace had been too rapid and had not given the government sufficient time to deal with the political and social aspects of reforms. A related point is that the earlier programs had too many measures for effective monitoring. Second, they considered that the decision to delay a disbursement when a single condition was not met was too severe a measure, since it disrupted programs, including social programs, that were unrelated to the unfulfilled condition. Third, programs did not take sufficiently into account the vulnerability of the economy to exogenous shocks. And, finally, they felt that program conditionality was often imposed on them and, therefore, weakened program ownership. In response, the staff noted that conditionality was streamlined over the last Fund-supported programs and that all six reviews under the last PRGF were completed not withstanding the fact that less than half of the structural performance criteria and benchmarks were observed on time.

B. Medium-Term Outlook and Strategy

20. The staff discussed with the authorities the key challenges faced by Mali, as indicated in Box 6 above. In particular, given the slow progress made in reducing poverty over the past ten years, the mission discussed policies to accelerate growth through a diversification of the economy and an increase in private sector investment, and to reduce Mali’s vulnerability to exogenous shocks. The authorities reiterated that they were committed to sustaining Mali’s record of macroeconomic stability; to pursuing fiscal consolidation and further improving expenditure management to meet the social policy objectives set in the PRSP; to completing the privatization program and liberalizing the cotton sector; to promoting private sector development; and to strengthening institutions and their capacity to implement reforms. They also indicated that they would seek to reverse the decline in international assistance, which was essential to underpin accelerated growth, and to increase the share of grants in external financing in order to ensure that external debt remained sustainable.

Mali: Performance Under Fund-Supported Programs, 1992-2002

The main achievements under the Fund-supported program were the following:

  • Macroeconomic imbalances were reduced and growth accelerated, as a result of the government’s commitment to the program, the transition to democracy, and the devaluation of the CFA franc. Debt sustainability improved after Mali reached the completion point under the enhanced HIPC Initiative.

  • The fiscal stance improved markedly, thanks to a streamlining and strengthening of tax policy and administration that boosted government revenue.

  • Together with other WAEMU countries, Mali liberalized trade by implementing a common external tariff and narrowing the range of tariffs on imports.

  • The privatization program advanced well, competition increased, and the soundness of the financial sector improved.

  • The management, monitoring, and auditing of government public expenditure improved.

Remaining challenges include the following:

  • Poverty reduction, economic diversification, private sector involvement, and the lowering of vulnerability to exogenous shocks are still elusive goals. Progress on these issues is likely to be slow and uncertain, requiring a steady, high level of international support for the foreseeable future.

  • Fiscal consolidation needs to be pursued, while public expenditure priorities should better reflect social policy objectives, given the low level of poverty-related spending.

  • The financial sector requires further strengthening.

  • The benefits of privatization need to be more visible for the program to be broadly supported by the population.

  • The liberalization of the cotton sector is still at a very early stage, although a broad consensus seems to be emerging on the need to end the CMDT’s monopsony.

  • Institutions and the capacity to design, implement, monitor, and evaluate reforms need to be strengthened through technical assistance. Governance remains an issue, and the government should refrain from direct interference in the economy. Improvement in the macroeconomic and social indicators databases would facilitate the assessment of alternative policies.

Aspects of program design

  • Implementation of programs was generally satisfactory, with performance somewhat better in the quantitative than in structural areas, and under the Enhanced Structural Adjustment Facility (ESAF) than under the Poverty Reduction and Growth Facility (PRGF) arrangements.

  • Prior actions were extensively used. The streamlining of conditionality was relatively limited since the focus of structural conditionally tended to be on noncore areas of the Fund (e.g., the cotton sector reform) that were nevertheless considered essential to maintain macroeconomic stability.

Mali: Key Economic Indicators, 1992-2002 1/

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Sources: Malian authorities; and staff estimates.

The GDP figures are based on the old national accounts methodology.

The medium-term program covering the period 1992-95 was split into two periods because of the devaluation of the CFA franc in January 1994.

In percent of exports of goods and services.

21. As regards diversification and sources of growth, the staff noted that the International Trade Center (ITC) ranked Mali 144th out of 184 countries with respect to the diversification of agricultural exports and 46th with respect to its diversification of industrial exports. The authorities observed that agriculture was the sector with the highest growth potential and that the PRSP included a broad range of projects that could contribute to diversification. They also indicated that they would seek financing for those projects from bilateral and multilateral development partners during a donors’ roundtable to be held early next year. However, strong concerns were expressed about the agricultural subsidies and trade barriers in industrial countries that were preventing Mali from benefiting fully from the potential in agriculture. According to the ITC, Mali’s agricultural exports are subject to average ad valorem equivalent tariffs3 of 10.5 percent in the United States and 20.7 percent in the European Union, whereas Mali’s industrial exports to those countries face almost no tariff. The authorities regretted that the request for a progressive elimination of subsidies on cotton that Benin, Burkina Faso, Chad, and Mali had submitted to the Ministerial conference of the World Trade Organization (WTO) held in Cancun last September was not successful. They were nevertheless encouraged by their ability to mount a broad campaign for the elimination of cotton subsidies and to put the issue on the agenda for trade negotiation.

22. The authorities considered attracting private foreign investment as crucial for keeping economic growth above 5 percent over the medium term, given the projected decline in gold production and a moderate increase in cotton output. However, they were concerned that foreign firms had not shown a greater interest in investing in Mali; they attributed this to the high cost of doing business in Mali, owing to its poor infrastructure, excessive cost of energy and telecommunications, insufficient tax incentives, and distance from ports in the region. The crisis in Côte d’lvoire had also deterred some investors from coming to Mali. Private sector representatives considered that, in addition to the high cost of doing business, the lack of a skilled workforce was a major impediment, which can be alleviated only partly by hiring foreign workers. They also stressed that governance was an issue, especially the insufficient transparency of procurement procedures and the inadequate judicial system. To gain a better understanding of the obstacles to private investment, the authorities intend to undertake, with the assistance of the World Bank, an Investment Climate Assessment that will (i) evaluate the state of the private sector; (ii) assess the competitiveness of firms in Mali; and (iii) identify the key constraints on increases in firm productivity.

23. The staff agreed with the authorities’ strategy of developing infrastructure, adding value to exports of raw materials, and promoting the textile industry, rice and sugar production, and meat processing. However, it cautioned against achieving these objectives by granting tax exemptions and subsidies. For instance, a new foreign-owned cotton spinning company is expected to receive broad tax exemptions and purchase cotton fiber below the world market price. The staff observed that such measures would increase distortions, reduce resources available for social sectors, and jeopardize fiscal consolidation. It also noted that Mali was likely to face strong competition on the world textile market, as the bilateral quotas that had dominated trade in their sector for several decades would be phased out by early 2005. Instead, the authorities were urged to address more forcefully impediments to private investment first, by strengthening Mali’s competitiveness through the adoption of a prudent wage policy and the implementation of structural reforms and training programs that would increase labor productivity; and second, by streamlining further the regulatory environment, strengthening property rights, and improving the judicial system. In that context, the staff encouraged the authorities to pursue the reform of the cotton sector, complete the privatization program, and strengthen the financial system. In addition, greater regional integration within the WAEMU and Economic Community of West African States (ECOWAS) would offer new opportunities for companies in Mali, provided that the security situation improves.

24. Against this background, the authorities are revising the medium-term macroeconomic framework in the context of the first annual review of the poverty reduction strategy paper (PRSP) (see below). Preliminary indications are that the framework will reflect the challenges of raising the rate of economic growth given Mali’s limited policy implementation capacity, as well as a decline in gold mining output and slow growth in cotton production. Hence, real GDP growth would average 5-5.5 percent over 2004-06, or about ½ of 1 percentage point less than projected initially. Inflation would remain stable at 2.5 percent on average, with annual fluctuations reflecting mostly the impact of rainfall on the production and prices of food.

25. The fiscal position is likely to improve only slightly over the next three years as the government intends to increase social spending further in an effort to meet the Millennium Development Goals (MDGs). The overall fiscal deficit, on a payment order basis and excluding grants, is expected to decline from the 8.2 percent of GDP expected in 2003 to 7.4 percent by 2006; meanwhile total government revenue would rise by 1.1 percentage points of GDP to 18.3 percent while total expenditure would remain at about 25½ percent of GDP. Including project-related grants, the overall fiscal deficit would amount to about 4.7 percent of GDP by 2006, which is about ½ of percentage of GDP higher than over the period 2000-02.4 Hence, the fiscal situation will need to be monitored closely to ensure that the external debt remains at a sustainable level, and to avoid that excess aggregate demand puts pressure on price of nontradables and hence on the economy’s competitiveness. The staff suggested that the authorities reduce the fiscal deficit first, by increasing tax revenue to at least 17 percent of GDP—one of WAEMU’s convergence criteria—through a strengthening of the tax administration and a broadening of the tax base; and, second, by containing government spending through a reduction in the share of outlays not related to poverty reduction. In addition, the share of grants in total financing would need to be raised above the current level.

C. Macroeconomic Policies for 2004

26. The authorities expect domestic demand to rise significantly in 2004, given that household income would benefit from an anticipated increase in cereal and cotton production and higher producer prices for cotton. Hence, assuming that the regional situation remains stable, real GDP is expected to grow by 5 percent next year, in spite of a decline in gold production. At the same time, inflation is likely to remain low, at less than 3 percent.

Fiscal policy

27. The staff discussed the draft budget for 2004, which has since been approved without modification by the government and submitted to the National Assembly (Box 8). It is projected that the overall fiscal deficit, on a payment order basis and excluding grants, would remain stable at about 8.0 percent of GDP in 2004. Including grants, the deficit would rise from 3.9 percent of GDP in 2003 to 5.1 percent in 2004 because the government has yet to secure budget support from bilateral and multilateral donors. There currently remains a residual financing gap, projected at 2.5 percent of GDP. As such financing may be difficult to secure, it may be necessary to roll over maturing government domestic bonds, instead of reducing net domestic liabilities by 1.3 percent of GDP as currently envisaged.

28. Total government revenue is projected to increase from 17.2 percent of GDP in 2003 to 18.1 percent in 2004, with tax revenue rising from 14.2 percent of GDP to 15.3 percent through an improvement in tax collection. Nontax revenue will decline slightly relative to GDP because of lower dividend payments by gold mining companies. The mission agreed that tax collection needed to be strengthened further, in particular via an improved computer system and closer collaboration among tax agencies. However, administrative measures alone are unlikely to yield the projected additional revenue. Therefore, the staff recommended that the authorities reduce exemptions, which rose considerably in the first half of 2003; tighten controls on reimbursement of value-added taxes paid by exempt companies; and keep the specific tax on petroleum at least at the level set in August 2003, instead of modifying it to cushion the effect of fluctuations in international prices of petroleum products. It also suggested that the authorities review taxes on property, which currently yield little revenue. In the coming months, a technical assistance mission from the Fund is expected to assess tax policy and recommend measures to increase revenue.

29. Total government spending is projected to rise by 0.6 percentage point of GDP to 26.0 percent in 2004.5 This would bring the total increase in spending since 2000 to 4 percentage points of GDP, including an increase of 1.4 percentage points of GDP in outlays for health and education over the period. Discussions focused mainly on the wage bill and wage policy, and on the increase in transfer payments and subsidies. The wage bill is to rise by 15.8 percent in 2004, with recruitments for the priority sectors—education, health, and justice—accounting for just 38 percent of the increase. The remainder is due to the regular progression up the pay scale and recruitments for the security forces and other sectors, as well as the financial impact of the reform of the civil service agreed with trade unions in 2001. The latter includes adjustment to the pay scale and benefits of some categories of employees, as well as an allowance for overtime pay. The staff expressed concern because the continued increase in the wage bill—about 1 percentage point of GDP from 2000 to 2004—was due to a large extent to higher pay rather than to recruitments in social sectors. It suggested that the authorities assess wage policy in a medium-term context to ensure that it was compatible with the need to increase recruitments in social sectors, pursue fiscal consolidation, and maintain the competitiveness of the economy. Also, as indicated earlier, greater attention should be paid to improving the skills of the labor force.

30. Government transfers and subsidies are expected to rise by 15.2 percent in 2004, owing to the widening deficit of the civil service retirement fund (CRM), which is financed through the budget. The deficit of the CRM is expected to double to 0.7 percent of GDP in 2004 because of an increase in retirement benefits, which are tied to current civil service salaries. The authorities agreed with the staff on the need to verify the list of beneficiaries, conduct a financial audit of the fund, and study the possibility of removing the link between current salaries and retirement benefits. In other areas, the authorities intend to renew in 2004 the subsidies paid in 2003 to the water and energy company as a compensation for the cut in tariffs imposed by the government in February 2003. However, discussions are continuing between the government and the company on the level of the subsidy that is required. While staff suggested that the tariff cut be limited to the lowest-level consumption tranches, the government, as well as trade unions and private enterprises, has called for further cuts in tariffs, given that the cost of producing electricity should have dropped with the coming on stream of the Manantali Dam in 2002. At the same time, the utility company considers the high tariffs as essential for financing the agreed-upon extension of water and electricity distribution.

Monetary and banking issues

31. Monetary policy, which is conducted at the regional level by the BCEAO, aims at preserving the parity of the CFA franc vis à vis the euro by maintaining an adequate level of external reserves and keeping inflation at a rate compatible with that of the anchor currency. Given developments in 2003, broad money is anticipated to expand by 11.9 percent in 2004, with credit to the economy rising by 18.3 percent. The government is also pursuing the restructuring and privatization of commercial banks, and expects to reduce its participation in their capital to below 20 percent by end-2004. In addition, the authorities are working on the strengthening of the legal and regulatory framework for the financial system with assistance provided by the World Bank under the Financial Sector Development Project.

D. Structural Reforms

32. The focus in the coming year and over the medium term will remain on strengthening public expenditure management, implementing the reform of the cotton sector, and completing the privatization program. As regards public expenditure management, the implementation of a new budget classification system allows the monitoring of budget expenditure, contributing to poverty reduction (Box 9). At the same time, the authorities have strengthened the medium-term budget programs that are submitted to the National Assembly, together with the annual budget, and are working with the World Bank on medium-term expenditure frameworks (MTEFs) for health and education. The MTEFs are to be extended to all ministries over the medium term.

Mali: Total and Poverty-Reducing Expenditures, 2002-04 1/

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Source: Ministry of Economy and Finance.

The coverage and the classification of expenditure differ from those in the table on central government financial operations. The budget includes outlays to be effected over several years and financing items, such as debt-amortization payments.

33. On the cotton sector, as indicated in paragraph 13, CMDT’s assets will be divided into 3 or 4 lots, and the bidding process for their sale will begin before end-2004. The authorities are discussing terms of reference for the IFC to advise them on the privatization process. Given the recovery in the world market price of cotton, the CMDT is expected to make a profit next year, even though the producer price was increased from CFAF 180 per kilogram to CFAF 200 for the crop year 2003-04. In other sectors, the authorities are expected to complete in 2004 the privatization of the cottonseed oil company, HUICOMA, and the company managing airports; they also intend to start the process for the privatization of the telecommunications company, SOTELMA.

E. PRSP and Poverty Reduction

34. A first-year assessment of the PRSP adopted in May 2002 will be completed by November 2003 and serve as a basis for a donors’ roundtable to be organized with the assistance of the United Nations Development Program (UNDP) in early 2004. As noted in previous staff reports, the 7.4 percent objective for economic growth set in the PRSP will not be reached in 20036 because of a decline in agricultural production and the impact of the crisis in Côte d’lvoire. In other areas, preliminary results have been mixed, owing to the lack of human and financial resources, inadequate prioritization of projects and programs, and weak mechanisms for monitoring and assessing the implementation of reform, elements that were highlighted in the joint staff assessment (EBD/03/13; 2/14/03). The authorities also noted the difficulties of conducting a yearly assessment of the PRSP in spite of a strengthening of the unit responsible for coordinating its implementation. The Fund and Word Bank staffs urged the authorities to fully integrate the PRSP review process in the budget cycle, so that relevant recommendations can be integrated in the budget of the coming year. The government was also encouraged to improve the list of indicators to be used for monitoring PRSP implementation, as this would greatly facilitate annual assessment.

F. Regional Integration, Exchange System, and Trade Regime

35. Mali has made progress in observing WAEMU’s convergence criteria in recent years (Table 5). By end-2003, Mali is expected to respect four out of five primary criteria (the criterion on the ratio of total debt to GDP will not be met), and two out of four secondary criteria. Achieving compliance with all criteria implies continuous adjustment efforts over the medium term. In particular, the government needs to follow prudent fiscal policies and lower its financing needs in order to reduce the debt-to-GDP ratio over time. Likewise, the authorities should continue their efforts to broaden the tax base and increase domestic revenue, so as to lift fiscal revenue above the level of 17 percent of GDP. However, it may be difficult for Mali to reduce its external current deficit to less than 5 percent of GDP, given the expected fall in gold exports.

Mali: Status of Actions to Strengthen Tracking of Poverty-Reducing Public Spending

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S: short term; M: medium term.

As reported in the IMF staff report (IMF Country Report No. 02/157). FI: fully implemented; NS: not started; II: Implementation initiated.

36. Mali accepted the obligations of Article VIII, Sections 2, 3, and 4 effective June 1, 1996. Mali’s exchange system, common to all members of WAEMU, is free of restrictions on making payments or transfers for current international transactions. In addition, Mali does not engage in multiple currency practices. Mali’s trade regime is relatively open. The country shares a common trade regime with other members of the WAEMU. The common external tariff (CET) was adopted in January 2000. Mali is compliant with the tariff rate structure of the union and has effectively implemented the dismantling of internal tariffs. Imports to Mali are not subject to quantitative restrictions. Concerning common safeguard measures established by the WAEMU, Mali does not implement the decreasing protection tax to provide temporary and declining protection for selected products, nor does it apply the compensatory import levies. While a common antidumping legislation for the WAEMU still has to be prepared, Mali does not implement antidumping tariffs unilaterally. Mali is a signatory of the Cotonou Convention, 7 and as such Malian exports to the European Union generally enjoy nonreciprocal preferential treatment in the form of exemption from import duties. Likewise, Malian goods enjoy nonreciprocal preferential access to the markets of developed countries other than the European Union member states under the Generalized System of Preferences. Mali is also eligible for the benefits of the United States’ African Growth and Opportunity Act (AGOA). At the WAEMU level, Mali does not officially experience legal or regulatory impediments to its exports.

G. Balance of Payments Outlook and Debt Sustainability

37. Fluctuations in the trade balance are likely to remain large over the medium term, reflecting the lack of diversification of exports, variations in the terms of trade, and weather-related production shocks. The trade surplus should narrow because the growth in the volume of exports is likely to slow considerably, given the expected decline in gold exports. Exports of gold, cotton, and livestock are likely to continue to account for the bulk of total exports. At the same time, the volume of imports is likely to grow at about the same rate as real GDP. The external current account deficit, excluding current official transfers, is projected to remain stable at about 7.1 percent of GDP over the 2004-06 period, as the deficit in the income balance should narrow with the decline in activity in the gold sector. Including current official transfers, the current account deficit is projected to average 6.4 percent of GDP, before taking into account external grants that the authorities expect to receive to finance the budget deficit. The current account deficit is expected to be covered by official loans to finance the public investment program, and debt relief provided under the HIPC Initiative, as well as additional exceptional financing that Mali is seeking to finance the implementation of the PRSP.

38. The staff has updated the debt sustainability analysis conducted in the context of the enhanced HIPC Initiative (Tables 11 and 12) in early 2003. The analysis show that, as indicated in the completion point document for the enhanced HIPC Initiative (IMF Country Report No. 03/61), the NPV of debt-to-exports ratio, after debt relief, is likely to rise in the coming years from 110 percent projected at end-2003 to 143 percent on average over 2011-21. The upward trend is due to the expected decline in gold output, which will restrain the growth in the exports of goods and services to 5 percent per year in nominal terms. Compared with the debt sustainability analysis done at the completion point, the NPV of debt-to-exports ratio is now projected to be lower in the near term because of a higher level of exports of gold; however, the ratio is projected to be slightly higher on average over 2007-21, reflecting additional borrowing to finance the fiscal deficit. Relative to government revenue, the NPV of debt would steadily decline, provided that total government revenue would rise from 17.2 percent in 2003 to 20 percent in 2011-21. Alternative scenarios that include a growth of exports of less than 5 percent would result in a NPV of external debt-to-exports ratio that is higher than 150 percent by 2015. The authorities share these conclusions, which were discussed during a seminar on debt sustainability held last summer in Bamako. Hence, they agreed with the staff on the need to increase the proportion of grants in external financing in order to meet the objectives set in the PRSP and keep external debt at a manageable level. Grants averaged 55 percent of total external financing over 1996-2001, but dropped to 45 percent in 2002.

Table 11.

Mali: External Debt Indicators, 2002-21 1/

(In percent, unless otherwise indicated)

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Sources: Malian authorities; and staff estimates and projections.

All debt indicators refer to public end publicly guaranteed (PPG) debt and are defined after rescheduling, unless otherwise indicated.

Based on 3 three-year average of exports of goods and services on the previous year (e.g., export average over 2000-02 for NPV of debt-to-exports ratio in 2002).

Revenue is defined as central government revenue, excluding grants.

See Table 11 in EBS/03/15 (2/14/03).

Table 12.

Mali: External Debt Service After Full Implementation of Debt-Relief Mechanisms, 2002-21

(In millions of U.S. dollars; unless otherwise indicated)

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Sources: Malian authorities; and staff estimates and projections.
Table 13.

Mali: Selected Social and Demographic Indicators

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Sources: World Bank, World Development Indicators, 2002.

Year in parantheses indicates year that was used for the 2000-01 period.

Source is Mali’s budget program, Exercice Budgiteirt 2002.

For the year 1999.

IV. Future Role of the Fund

39. The authorities reiterated their interest in having a successor PRGF arrangement, noting that, in spite of the progress accomplished over the past ten years, the economy remained very fragile and susceptible to exogenous shocks. They added that the reform agenda was unfinished and that continued Fund policy advice and financing was essential to help the process move forward. As indicated earlier, key issues in the Fund’s core areas concern fiscal consolidation, public resource management, debt management, the deepening of financial intermediation, the soundness of the financial sector, and the complex process of integrating the PRSP into sound multiyear macroeconomic framework. In addition, it is unlikely that Mali will have high access to international capital markets in the foreseeable future, and the authorities considered that a Fund-supported program would help their efforts to attract foreign investment. Such a program would also help ensure that the level of funding on concessional terms remains adequate to finance the development program, a view shared by many donors in Mali. The authorities also attached more importance to reaching agreement on a Fund-supported program than to the level of access to Fund resources.

40. The staff considers that a Fund arrangement with low access would help the authorities to prepare a comprehensive set of policies and measures aimed at accelerating growth and reducing poverty. Hence, an arrangement would reduce the risk of slippages in the pursuit of fiscal consolidation, and in the implementation of the reform agenda. It would also provide a framework for policy adjustment in case of exogenous shocks. In addition, an arrangement would facilitate the securing of international financial support. Continued Fund involvement should rest on three main pillars: (i) helping preserve a stable macroeconomic framework; (ii) focusing the reform agenda on the core areas of the Fund, notably fiscal consolidation, external sector sustainability, and financial sector reforms to foster financial intermediation and investment; and (iii) collaborating with the World Bank and other donors to encourage an acceleration of structural reforms aimed at economic diversification and private sector development.

V. Staff Appraisal

41. Mali’s economic situation has remained relatively stable in 2003, considering the difficult regional environment. A prompt response by the authorities and additional financial assistance from the international community have helped the country weather the impact of the crisis in Côte d’lvoire. In addition, higher-than-average rainfall in the second half of the year contributed to an improvement in agricultural output and a lowering of inflation. Given the anticipated increase in revenue in the agricultural sector, the economic outlook for 2004 is favorable, provided that the regional environment does not deteriorate further.

42. The staff encourages the authorities to stay the course of fiscal consolidation and to continue the reform process. In particular, additional revenue-enhancing measures may be needed in order to attain the 2004 revenue target. At the same time, government expenditures should be contained by focusing on poverty reducing expenditure, reducing the widening deficit of the civil service retirement fund, and tightening wage policy over the medium term. The latter measure is especially important, given the large recruitments required for health and education. Longer term, the staff recommends a tightening of the fiscal stance and a greater reliance on external grants to ensure that external debt remains at a sustainable level. As indicated at the time of the enhanced HIPC Initiative completion point, the NPV of debt-to-export ratio is likely to rise over the coming years since export growth is projected to slow down with the expected decline in gold output. The staff welcomes the progress made in strengthening public resource management and monitoring poverty-reducing outlays.

43. The staff agrees that diversifying the economy is essential for maintaining high and sustainable growth. This should be achieved by bolstering competitiveness through the development of infrastructure, the completion of the privatization program and other key structural reforms, as well as the implementation of a cautious wage policy. Private sector investment should also be promoted by streamlining the regulatory framework, strengthening the judicial system and governance, deepening financial intermediation, and improving labor skills and productivity. In addition, the authorities should refrain from intervening directly in the economy and from granting tax exemptions or offering subsidies, which, experience has shown, are likely to aggravate distortions in the economy, jeopardize fiscal consolidation, and reduce the resources available for social sectors.

44. The staff encourages the authorities to complete the assessment of the first year implementation of the PRSP, deepen the poverty policy analysis with the help of the expenditure data from the 2001 household survey, which will be available shortly, clarify social policy objectives and government spending priorities, and strengthen mechanisms for monitoring and evaluating strategy implementation.

45. The ex post assessment of performance under the last three Enhanced Structural Adjustment Facility (ESAF)ZPRGF arrangements shows that Fund-supported programs have helped Mali stabilize the macroeconomic situation and improve the structure of its economy. The authorities consider that financial support from the Fund has been essential in that process, as it has helped them define objectives and implement a coherent set of policies and measures.

46. The staff agrees with the authorities that continued financial support from the Fund remains crucial to implement the unfinished reform agenda and support the authorities’ efforts to deal with the daunting challenges facing Mali. It recommends beginning discussions on a new medium-term program that could be supported by the Fund under a low-access PRGF arrangement.

47. The staff recommends that the next Article IV consultation with Mali be held in accordance with the provisions of the decision on consultation cycles approved on July 15, 2002.

Appendix I Mali: Expost Assessment of Performance Under ESAF/PRGF-Supported Programs

Prepared by a Team from AFR, FAD, MFD, and PDR, 1

August 29, 2003

I. Introduction

1. This report reviews Mali’s performance under the last three Fund-supported programs, covering the period 1992- 2002. It also discusses key challenges ahead that Mali must meet to make progress toward the Millennium Development Goals (MDGs).

2. Since 1992, the Fund has continuously supported Mali under three successive arrangements under the Enhanced Structural Adjustment Facility (ESAF) and the Poverty Reduction and Growth Facility (PRGF). The main objectives of the programs have been to reestablish macroeconomic stability and reform the economy, with a view to boosting growth and accelerating poverty reduction. The programs were initially underpinned by successive policy framework papers and then by the interim poverty reduction strategy paper (PRSP); currently, the program is supported by the full PRSP adopted in May 2002.

3. The political and social situation in Mali greatly improved over the past decade. Democratic presidential elections have been organized every five years since 1992. Also, ethnic tensions in some regions were peacefully settled. Mr. Toure won the presidential election held in April-May 2002, which marked the first democratic transition from one president to another in Mali. The legislative elections held in July 2002 resulted in a split National Assembly, and the President appointed Mr. Ag Hamani to form a broad coalition government in October 2002. The government is committed to preserving macroeconomic stability, increasing growth, and reducing poverty.

4. Mali’s satisfactory record of macroeconomic and structural policy implementation, together with the political transition to a democratically elected government, has earned the country the support of the donor community and debt relief under the enhanced Initiative for Heavily Indebted Poor Countries (HIPC Initiative). Nevertheless, as a landlocked country in the Sahel region with a narrow economic base, Mali’s economy is still very vulnerable to exogenous shocks, including droughts, fluctuations in terms of trade, as well as political crises in west Africa.

II. Performance Under The ESAF and PRGF Arrangements

A. Macroeconomic Developments

5. Since 1992, Mali has made major progress in macroeconomic stabilization (see Appendix I, Table 1 and Figure 1). This, together with the devaluation of the CFA franc in 1994, contributed to an export-led growth that boosted real GDP growth from 1 percent per year on average over 1991-93 to 4.5 percent during 1994-96, and 5.7 percent over the past five years. As shown in Table 1 and Figure 1, growth was actually slightly higher than projected at the inception of the Fund-supported programs. However, growth was largely 2 concentrated in three primary commodities over 1992-2002, with cotton (a 14.3 percent annual average growth rate), rice (8.5 percent), and gold mining (29.4 percent) accounting for more than 50 percent of total growth.

Figure 1.
Figure 1.

Mali: Real Sector: Programs’ Objectives and Outcomes

Citation: IMF Staff Country Reports 2004, 011; 10.5089/9781451826302.002.A001

6. Inflation remained low over 1992-2002, except for 1994-96 when changes in relative prices resulting from the devaluation of the CFA franc worked their way through the economy. Excluding these three years, annual inflation averaged less than 2 percent, which is in line with inflation in the euro zone, the currency to which the CFA franc is pegged.

7. The external current account deficit, excluding official transfers, has sharply narrowed since 1992, reflecting an impressive export performance, especially for cotton and gold, supported by strong increases in foreign direct investment (Appendix I, Figure 2). The volume of exports increased on average by 13 ½ percent a year, or twice as rapidly as imports. Nevertheless, export growth was marked by large swings from year to year, as cotton exports fluctuated sharply, owing to weather conditions and volatility in world market prices. Also, the international community reduced its assistance to Mali over the past decade, with current official transfers and capital transfers dropping significantly. Nevertheless, Mali has recorded surpluses in the overall balance of payments averaging US$17 million per annum since 1996 because of the improvement in the external current account, official loan disbursements, and foreign direct investments in the gold sector. Mali thus increased its contribution to the Central Bank of West Africa States’ (BCEAO) foreign reserves to US$595 million at end-2002.

Figure 2.
Figure 2.

Mali: Balance of Payments: Programs’ Objectives and Outcomes

Citation: IMF Staff Country Reports 2004, 011; 10.5089/9781451826302.002.A001

8. Mali’s sound macroeconomic policies helped it reach the completion points under the initial HIPC Initiative in September 2000 and under the enhanced HIPC Initiative in March 2003. Debt relief under these initiatives, which amounted to US$539 million in net present value (NPV) terms (a reduction of 37.3 percent), was critical in reducing the ratio of NPV of debt to exports to 150 percent.

Mali Key Economic indicators, 1992-2002 1/

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Sources: Malian authorities; and staff estimates.

The GDP figures are based on the old national accounts methodology.

The medium-term program covering the period 1992-95 was split into two periods because of the devaluation of the CFA franc in January 1994.

In percent of exports of goods and services.

9. Together with other West African Economic and Monetary Union (WAEMU) countries, Mali has maintained a liberal trade and payments system. It implemented a regional reform of the trade regime that comprised the setting of a common external tariff four rates, a lowering of the maximum tariff to 20 percent, and a progressive elimination of tariffs within the WAEMU area. Based on traditional exchange rate indicators, Mali seems to have largely preserved its external competitiveness following the devaluation of the CFA franc in 1994. Nevertheless, the competitiveness of the economy may still be an issue as growth outside the primary sector and gold mining has been elusive.

10. Mali’s financial sector remains poorly developed, but there have been notable advances over the past decade. Financial deepening has progressed, as shown by the significant rise in broad money and credit to the private sector relative to GDP. Nevertheless, the spread between lending and deposit rates—more than 10 percentage points on average—has only declined marginally in spite of the entry of three banks (bringing the total to nine) and the divestment of much of the government’s shareholdings commercial banks.3 To some extent, this situation reflects the cost of carrying a high level of nonperforming loans, the difficulties of collecting on outstanding loans, and the high operating costs. Recently, most financial soundness indicators have improved, and the number of banks that are noncompliant with various prudential requirements has fallen; the main weaknesses now relate to the large stock of nonperforming loans and the high loan concentration. Microfinance institutions (MFIs) have multiplied, and now hold almost 5 percent of deposits and credits. A regional stock exchange has been established, and the government successfully issued treasury bills for the first time in June 2003. The World Bank is assisting the authorities in privatizing their banks; raising technical skills in the commercial banks; and strengthening both the supervision of MFIs and their own capacities.

11. Fiscal performance was strong over the past decade (Appendix I, Figure 3), although the overall fiscal deficit declined by somewhat less than envisaged, especially under the last PRGF-supported program. Revenue mobilization improved significantly, with total government revenue rising by 4 percentage points of GDP to 17.7 percent in 2002. Important strides were made in streamlining the tax system, with the introduction of a value-added tax with a single rate (18 percent), the introduction of a synthetic tax for small businesses, and the implementation of a common external tariff in the WAEMU. Tax administration was also strengthened, with the creation of a large-taxpayer unit and the computerization of the customs department.

Figure 3.
Figure 3.

Mali: Public finances: Programs’ Objectives and Outcomes

(In percent of GDP)

Citation: IMF Staff Country Reports 2004, 011; 10.5089/9781451826302.002.A001

12. Total government expenditure declined steadily relative to GDP during the 1990s, but started to rise again over the past three years. This rise reflects to a large extent increases in transfer payments, especially to the cotton sector, the cost of elections, and spending financed with HIPC Initiative resources. Nevertheless, spending for education and health, which was stable relative to GDP until 1999, rose by less than ½ of 1 percentage point of GDP to only 5 percent of GDP in 2002. Hence, the PRSP priorities have yet to be fully reflected in budget appropriations.

13. Public resource management improved over the past decade. The treasury settled all arrears on payments; the preparation of the budget and the tracking of its execution has been computerized; the authorities are preparing three-year budget programs for each ministry and a medium-term expenditure framework (MTEF) for education and health with World Bank assistance; the audit of budget execution has beend strengthened; and the government has adopted drafts of the audited Budget Law, although the account section of the Suprem, hi additi has launched reme Court has yet to finalize t on, the Minister of Finance a project to integrate all phases of the spending procedures in a single information system with a unified database. Despite the progress made, there is still room for improving public resource management.

B. Structural Reforms

14. Earlier Fund-supported programs tackled a broad range of issues, some of them implemented with the support of the World Bank and other development partners. The latest program shows greater selectivity, with a focus on improving public expenditure management and restoring the viability of the cotton sector, measures that are considered essential for Mali to rationalize the use of public resources, maintain a sound macroeconomic environment, achieve high economic growth, and reduce poverty.

15. The privatization program is well advanced, and the authorities have improved the legal and regulatory environment. Plans are under preparation for the privatization of the last two large public enterprises (the telecommunications company (SOTELMA) and the cotton monopsony (CMDT)) and the main bank, in which the government has a majority stake. As regards private sector development, substantial progress has been made toward harmonizing the legislative and regulatory environment under the Organization for the Harmonization of Business Law in Africa (OHADA) Treaty. A ten-year judiciary sector development plan (PRODEJ) was adopted in December 1999, and measures were taken to raise the skills of magistrates and judiciary auxiliaries. In addition to the privatization of public utilities, new legal and regulatory frameworks were implemented. In spite of the progress made, much remains to be done to improve the investment climate, especially in the aria of governance and government interference in the economy.

16. Reforming the cotton sector has been slow and difficult because some participants were concerned that it would result in the sector’s disintegration, even though this reform reflected a large consensus among all stakeholders. Progress was made in improving the CMDTs management, reducing its cost structure, and narrowing its focus on core activities. Nevertheless, these measures have been insufficient to reestablish the company’s financial viability, given the large drop in the international price for cotton. Because of the high financial cost for the government, the CMDT’s financial difficulties, and the recent failure of selling ginning mills, a broad consensus seems to be emerging on the need for an in-depth reform of the sector. In particular, the President, as well as donors who support the reform, indicated in July that they would support splitting the CMDT into several companies. Hence, the authorities are now preparing with the assistance of the World Bank and bilateral donors a plan to fully liberalize the sector. The plan involves the following: splitting the CMDT into three or four private enterprises over the next 12-18 months; fully liberalizing the sector over three-four years, allowing time for key functions to be transferred to the private sector and farmers; and increasing support to institutional and capacity-building activities, including farmers’ organizations.

17. The authorities have started implementing a reform of the civil service. Among the measures implemented, organizational audit of ministries was completed at end-2001, which suggested tasks to be transferred to local governments; pay scales were harmonized in 2003; and a census of the civil service was undertaken to harmonize administrative and payroll files. However, further measures are required to increase efficiency, improve the performance appraisal and monitoring system, and retain and motivate qualified staff.

C. Poverty Reduction, and Social Policy and Indicators

18. Poverty has declined over the past ten years, with real per capita income increasing. by about 2 percent a year Nevertheless, the latest available information (1999) indicates that income distribution remains uneven, with a Gini index of 0.51 and consumption by the lowest quintile of households accounting for 5 percent of total consumption. As indicated in the completion point document for the enhanced HIPC Initiative (IMF Country Report No. 03/61) progress during the ten-year programs for education and health was satisfactory, although initial delays in implementation caused some program targets to be only partially met. Despite improvements, health and education indicators in Mali remain among the lowest in the world, with a large disparity between rural and urban areas. Given the weak capacity for delivering basic services, it will be a major challenge for Mali to achieve the MDGs.

D. Observance of Performance Criteria and Benchmarks Under Fund-Supported Programs

19. The implementation of recent Fund-supported programs was satisfactory, enabling Mali to establish a solid track record of policy performance. However, performance was better in the quantitative than in the structural area, and under the ESAF than under the last PRGF arrangements (see Box 2).

20. The following issues in program design and conditionality should be noted. First, prior actions were extensively and increasingly used (18 under the PRGF arrangement versus 7 under the ESAF arrangements). Second, streamlining of structural conditionality was limited. 4 The number of structural performance criteria attached to the arrangements increased from 6 and 8 under the first and second ESAF arrangements, respectively, to 14 under the PRGF arrangement. The number of structural benchmarks increased from 20 under the first two ESAF arrangements to 26 under the PRGF arrangement. Third, the focus of structural conditionality under the PRGF arrangement continued to be on the reform of the parastatal sector, including the cotton sector, all measures that are in noncore areas of the Fund but essential to maintain macroeconomic stability.

III. Challenges Ahead

21. The reform agenda to achieve high and sustainable growth and reduce poverty is well advanced, but still unfinished. A broad political consensus exists on current policy orientation, and the government is strongly committed to implementing the PRSP. Nevertheless, reaching a consensus on some of the reforms may take time, as was the case for the reform in the cotton sector. In addition, expectations have risen with the implementation of the government’s ambitious program to accelerate growth, create jobs, improve infrastructure, and reduce poverty, through increased participation of the private sector in the economy.

A. The Poverty Reduction Strategy

22. Future economic policies should be underpinned by the government’s strategy laid out in the PRSP, which was adopted in May 2002 and is to be updated annually. The key objective is to achieve a strong and sustainable growth that reduces poverty, and the strategy is built around three priority areas: institutional development and improved governance and participation; human development and strengthened access to basic social services; and development of infrastructure and support for key productive sectors. The authorities are conducting a review of the PRSP’s implementation.

23. Specific actions for improvement include the following: developing the strategy for high and sustainable pro-poor growth; deepening the proverty policy analysis; ensuring that components of all sector strategies are adequately reflected in the PRSP; and strengthening mechanisms to monitor and evaluate strategy implementation and outcomes. In that context, Fund and World Bank staffs are working with the authorities on measures that would help Mali attain the MDGs.

B. Macroeconomic Policies

24. The main challenge for the future is to accelerate growth in order to reduce poverty, while preserving macroeconomic stability and making the economy less vulnerable to external shocks. To this end, the diversification of the economy and growth in the tradable goods sector will be key elements, especially since cotton and gold outputs are unlikely to continue to grow rapidly. The potential for growth is especially favorable through the diversification of the agricultural sector, agribusiness, textiles, tourism, and small and medium-sized enterprises (SMEs) in services and communications. Further regional integration should also be a key ingredient in boosting growth, and Mali should strive to meet all of the WAEMU’s convergence criteria.

25. Fiscal consolidation will remain critical to future econnomic prospects and debt sustainablity. The deficit in the primary fiscal balance, including grants, should be further reduced to avoid a possible increase in the debt burden. The debt sustainability analysis conducted last February when Mali reached the completion point under the HIPC Initiative showed that, after debt relief, the NPV of debt-to-exports ratio would steadily rise from 120 percent in 2003 to 140 percent in 2013. This is mainly because the volume of exports is projected to grow by less than 1 percent a year during 2003-10, given the expected decline in gold exports, while the government would likely continue to borrow on concessional terms to finance its development program. To reduce the risk of an increase in the debt burden would require, an recontinued improvement in tax collection, a tightening of government expenditure increase in financing in the form of grants, and a strengthening of debt management.

Mali: Observance of Performance Criteria and Benchmarks, 1992-2002

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Source: IMF staff reports, 1992-2003

26. Improvement in tax collection should focus on broadening the tax base by combating tax evasion and tightening controls over tax exemptions. In particular, the authorities should resist providing tax exemptions other than those included in the investment code as a means to promote private investment. Potential sources of additional revenue include the mining sector, which benefits from broad tax exemptions, and property taxes, which yield little revenue for the central government. While the WAEMU convergence criterion regarding government revenue calls for Mali to raise tax revenue to 17 percent of GDP, this will be difficult to achieve in the short run, given the current level (14.7 percent in 2002) and the impact of the crisis in Côte d’Ivoire.

27. As government revenue will increase relatively slowly in the near term, accelerating poverty reduction will crucially depend on further efforts to improve expenditure policy and management. As noted earlier, social spending has remained relatively low, and increasing it to the level indicated in the PRSP will require reallocating resources. Also, the quality of spending needs further improvement, while much work remains to be done also to improve performance indicators, as well as the monitoring and evaluating mechanism. The preparation of MTEFs should be encouraged, first for health and education, and then for the other ministries.

28. Budget management of local government also requires strengthening as, under the decentralization policy, local authorities and decentralized entities will have increased spending responsibilities, especially in social areas. In addition, an information system should be set for the central government to monitor and evaluate developments at the local level, while the sharing of resource between the central and local government should be reassessed.

C. Structural Reforms

29. Structural reforms would aim at ensuring macroeconomic stability, improving competitiveness, and making the economy less vulnerable to external and domestic shocks. Reforms are already under way in many areas, as indicated above. In addition to strengthening public resource management and pursuing the implementation of the decentralization policy, reforms should be oriented toward the pursuit of the civil service reform, the completion of the privatization program, the liberalization of the cotton sector, a strengthening of governance, especially in the use of public resources, the deepening of financial intermediation, and the creation of an environment conducive to private sector-led growth.

30. Deepening financial intermediation is essential element to promote investment and growth. While the legal and regulatory framework for financial institutions is mostly set at the regional level, the authorities should complete the privatization program, encourage loan syndication to improve diversification of the bank loan portfolio, conduct regular tenders of treasury bills, develop a land registry and a comprehensive registry of movable property and equipment that will improve loan collaterals, expand the credit registry to facilitate access to financial services by SMEs and households; and strengthen the 5 supervision of, and the regulatory framework for, microfinance institutions with the assistance of development partners and the BCEAO.

D. Technical Assistance Requirements

31. The low level of expertise and the weak institutions will require an increase in the level and intensity of technical assistance from development partners to strengthen economic policy design and implementation.

32. The authorities have requested technical assistance from FAD for the improvement of tax collection (see para. 26), as well as for an assessment of the reform of indirect taxes that has been implemented since 1999. For the financial sector, technical assistance from within and outside the Fund would concentrate on the identified priority areas (para. 29). For surveillance and program purposes, it may be useful for Mali to request that the World Bank and the Fund undertake a Financial Sector Assessment Program. As regards macroeconomic statistics, the staff will follow up on the recommendations recently made by STA for improving the compilation of the national accounts, the balance of payments, and the consumer price index.

Appendix II Mali: Relations with the Fund

(As of September 30, 2003)

I. Membership Status: Joined: September 27, 1963; Article VIII

II. General Resources Account:

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III. SDR Department:

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IV. Outstanding Purchases and Loans:

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V. Latest Financial Arrangements:

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VI. Projected Payments to Fund (without HIPC Assistance)

(SDR Million; based on existing use of resources and present holdings of SDRs):

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Projected Payments to Fund (with Board-approved HIPC Assistance) (SDR Million; based on existing use of resources and present holdings of SDRs):

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VII. Implementation of HIPC Initiative:

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VIII. Safeguards Assessments:

Under the Fund’s safeguards assessment policy, the Central Bank of the West African States (BCEAO), of which Mali is a member, is subject to a full safeguards assessment. An off-site safeguards assessment of the BCEAO was completed on July 25, 2001. The assessment concluded that high risks may exist in the financial reporting framework and recommended an on-site assessment. The on-site assessment was completed on March 04, 2002. The staffs findings and recommendations are reported in the staff report on the fourth review under the PRGF arrangement (IMF Country Report No. 02/157).

IX. Exchange Rate Arrangements

Mali is a member of the West African Economic and Monetary Union (WAEMU). The exchange system, common to all members of the union, is free of restrictions on the making of payments and transfers for current international transactions. The union’s common currency, the CFA franc, was pegged to the French franc at the rate of CFAF 50 = F 1 from 1948 until early 1994. Effective January 12, 1994, the CFA franc was devalued, and the new parity set at CFAF 100 = F 1. Effective January 1, 1999, the CFA franc was pegged to the euro at a rate of C franc in FAF 655.96 = EUR 1. On October 27, 2003, the rate of the CFA terms of the SDR was SDR 1 = CFAF 803.1. As of June 1, 1996, and in conjunction with its WAEMU partners, Mali accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund’s Articles of Agreement.

X. Article IV Consultations

Mali’s Article IV consultation cycle is governed by the provisions of the July 2002 decision on consultation cycles. The 2001 Article IV consultation was completed by the Executive Board on December 17, 2001 (IMF Country Report No. 02/2).

XI ROSC/AAP

An FAD mission visited Bamako during July 17-31, 2001 to help the authorities undertake a fiscal module of a Report on the Observance of Standards and Codes (ROSC) and to prepare a Initiative for Heavily Indebted Poor Countries (HIPC Initiative) Assessment and Action Plan (AAP). The ROSC mission found that important steps had been taken to improve fiscal transparency since the restoration of democracy in the early 1990s and the withdrawal of the state from many industrial activities. The Finance Commission of Parliament plays an active role in examining program budgets that outline the objectives and performance of every government ministry. Internal control and audit is solid: the reports of the Controller General and the Inspection des Finances have recently been followed up at the presidential level, leading to arrests and imprisonments of former high-ranking officials. The main weaknesses relative to the Code of Good Practices on Transparency in Monetary and Financial Policies were (i) an unclear legislative basis for budget making, (ii) the lack of formal dissemination to the public of quarterly budget reports; (iii) incomplete coverage of the budget; (iv) the lack of a medium-term budget framework; and (v) a dysfunctional external audit agency.

Using a HIPC Initiative tracking questionnaire, the mission reached agreement with the authorities on the capacity of the present public expenditure management (PEM) system to track poverty-reducing public expenditures. The results were very similar to the preliminary assessment prepared jointly by Bank/Fund staff in late 2000. Mali shows particular strengths in budget execution (the internal audit system is effective, there are no expenditure arrears, and government ledger accounts are reconciled with bank accounts). It was proposed that the main weaknesses be addressed in a three-year action plan, covering 11 specific areas of PEM, including as main points the following:

  • integrating the program budgets into the annual budget (loi de finances);

  • monitoring expenditures by function (immediate) and by program (for 2002);

  • identifying poverty-reducing expenditures by line item (so far, this has been done only for HIPC Initiative-related expenditures);

  • introducing a medium-term budget framework;

  • preparing more timely monthly treasury balances and deriving the consolidated monthly report of government operations (TOFE) from treasury balances;

  • improving the timeliness of the preparation of final accounts by the Malian Treasury and, especially, their audit by the Section des Comptes (the external audit agency);

  • computerizing further the PEM system.

XII. Technical Assistance

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XIII. Resident Representative

Mr. Tazi, the current Resident Representative, took up this assignment in September 2002. Previously, a resident representative was stationed in Bamako between 1982 and 1991, from October 1993 until October 1995, from July 1996 to August 1998, and from September 1998 to September 2002.

Appendix III Mali: Relations with the World Bank Group

(As of November 2003)

Partnership in Mali’s development strategy

1. Mali’s development objectives place increased emphasis on poverty reduction and growth, as reflected in its Poverty Reduction Strategy Paper (PRSP) approved by the government in May 2002. The joint assessment of the PRSP by the staff of the World Bank and IMF was presented and approved by the respective Boards of Directors in March 2003, along with the Completion Point under the Enhanced HIPC Initiative. The PRSP process builds upon the national poverty strategy formulated in 1998 with UNDP assistance, and places Mali’s main poverty reduction challenges explicitly within a sound macro-economic framework.

2. The IMF has typically taken the lead in assisting Mali to maintain macroeconomic and financial sustainability through setting quantitative targets within the framework of the Poverty Reduction Growth Facility (PRGF). The last PRGF, which was in place since August 1999, expired in August 2003. The authorities have requested a new arrangement with the PRGF and the Fund is reviewing its futue role in Mali. Structural measures in the Program (cotton and public expenditure management) were coordinated with the World Bank, and structural conditionality was limited to areas with significant macroeconomic, typically fiscal, implications. Collaboration with the Fund will continue in these areas.

3. The World Bank leads the policy dialogue on structural, social and institutional reforms in a number of sectors. The Third Structural Adjustment Credit (SAC III) is under implementation and a Fourth SAC is under preparation. A proposed SAC III Supplemental Grant (US15 million equivalent) to help mitigate the impact of the Côte d’lvoire crisis on the Malian economy, is to be discussed by the World Bank Board on December 11, 2003. Other Bank operations that address private sector development, financial sector development, education sector reforms and investment program, and health sector reforms and investment program, have been under implementation for varying lengths of time (see Table on page 8). Progress is being made in all these operations, albeit slower than anticipated in some sectors where capacity is weak and other implementation challenges are present.

4. The World Bank is also leading the diagnostic trade study under the Integrated Framework for Trade (IF), an initiative supported by the World Bank, IMF, the World Trade Organization, the UN Conference on Trade and Development, UNDP, and the International Trade Commission. The Mali IF, which is being undertaken in collaboration with USATD, aims to enhance Mali’s integration into the world economy and international trade policy discussions. The trade diagnostic study will highlight Mali’s comparative advantages and formulate an action plan for capacity building and technical assistance to promote export-led growth, centered around selected agro-industries and some traditional knowledge industries (namely music and handicrafts). The diagnostic report will be discussed during a Mali Round Table for Trade, which is tentatively anticipated to be held in the first quarter of 2004.

Bank Group strategy

5. On July 31, 2003, the Board discussed the country Assistance Strategy (CAS; IDA/R2003-0160) for Mali. The CAS, which was designed to directly support the PRSP pillars and complement the interventions of other donors, selectively focuses on three main themes: (i) promotion of growth; (ii) human resources development; and (iii) public finance management and governance. The CAS combines a mix of Bank instruments including: (i) programmatic support to the social sectors (through pooled sector-wide assistance programs) as a transition to Poverty Reduction Support Credits (PRSC); (ii) community-driven development operations; (iii) specific lending operations focused on growth and on strengthening critical infrastructure networks; and (iv) non-lending activities focused on strengthening the knowledge base underpinning the three main CAS themes and the framework for a transition to PRSCs. The CAS also envisages the provision of some grant financing as per the guidelines of the IDA 13 replenishment (it is expected that 29 percent of Mali’s FY04-06 lending program could be financed by IDA grants). By the end of the CAS period in FY06, programmatic lending is anticipated to comprise about a third of the portfolio.

6. The active portfolio comprises eleven projects: three in rural development, three in infrastructure and energy, three in health and education, one in the financial sector (including components on the judicial reform and micro-finance) and one on structural adjustment. The performance of the portfolio is satisfactory overall, both in terms of development objectives and implementation progress. Non-lending analytical services under the assistance program have comprised an irrigation strategy, a poverty and household survey, a poverty profile update, and technical assistance on public expenditure reviews. It has also included monitoring of economic developments together with the IMF and other development partners in response to evolving domestic, regional and international economic conditions. This activity has included assessing the impact of the Côte d’lvoire crisis on Mali’s economy, in view of Mali’s landlocked status and consequent dependence on neighboring countries (particularly Côte d’lvoire) for the handling of its trade flows. The Bank is also supporting capacity building on analytical skills for macroeconomic and poverty analysis, as well as on sectoral medium-term expenditure frameworks.

7. As regards promotion of pro-poor growth, the Bank focus is on helping Mali to: (i) develop and diversify sources of growth through improving the financial and business environment for increased private sector development, including for micro, small, and medium enterprises; (ii) build and maintain necessary infrastructure; and (iii) involve decentralized government, de-concentrated public services departments and local populations, while building capacity. Operations under preparation include: a growth project supporting programs in telecommunications, mining and the private sector; an agricultural project supporting diversification and competitiveness; two transport sector projects; and a community-based development program. Advisory support is ongoing on energy/water sector regulation so as to safeguard the effectiveness of the management concession agreement. A Household Energy and Universal Access project was approved in October 2003, and the ongoing Urban Development and Decentralization project is to be extended to allow the necessary time for its full implementation. Ongoing or planned analytical studies include transportation and growth, urban development, and an economic study of growth.

8. As regards human resources development, the core of Mali’s programs comprises sector-wide reforms in health and education defined over ten years, each jointly supported by a range of bilateral and multilateral donors, including the World Bank. Both sector reform programs, whose implementations are satisfactory, focus on improvements in quality and access to basic services, with increasing emphasis on the poorest regions. Some progress on social indicators has been made since 1998; however, Mali still faces challenges that contribute to hampering the pace of progress, and that are receiving increasing attention in the respective sector medium-term expenditure frameworks.1 Challenges include difficulties in attracting staff to positions outside the capital, and the limited supply of qualified staff. The authorities are assessing various options for balancing the incentive structure between the capital and positions in the regions. To address the supply constraint, health and education training is being decentralized to the regions, with the intent of attracting regional residents into the social sector profession.

9. For the implementation of the health and education sector projects, the Bank is focusing on: (i) solidifying the necessary framework for sustainable human development; (ii) increasing participation and local accountability in de-concentrated service delivery; (iii) improving access to quality services; (iv) working more closely with donors to build capacity of the public sector and other development actors; and (v) working with NGOs, the private sector, community groups and civic organizations to reduce the risk of an HIV/AIDS epidemic and improve access to (and quality of) judicial services. For education, in addition to defining the second phase of the sector program, the Bank aims to restructure the ongoing sector project into a fully pooled sector-wide program by all donors supporting the sector, so as to minimize the multiplicity of donor procedures the authorities face which contribute to hampering implementation of the program. For health, the Bank aims to support completion of the first phase of the sector program and preparation of the second phase.

10. Regarding public finance and governance, continued support will be provided for capacity building in managing public financial accountability, and for encouraging greater openness in the Malian administration. To this end, the Bank will support the next phase of public finance reform measures under a proposed Fourth Structural Adjustment Credit (FY05). This would include development of medium term expenditure frameworks (MTEF) for two additional sectors (rural development and public works/transport), and strengthening the links he between the budget formulation and the macroeconomic framework through the global MTEF. The Bank will also support implementation of actions listed in the Country Fiduciary Accountability Assessment (CFAA) which was finalized in August 2003. These initiatives should help position Mali for assistance through a PRSC toward the end of the current CAS period.

11. As a member of the West Africa regional groups WAEMU and ECOWAS,2 Mali is included under the World Bank’s 2001 Regional Integration Assistance Strategy (RIAS), which promotes an “open, unified regional economic space” to support deeper regional integration and a conducive environment for growth of a more efficient and competitive private sector. The RIAS also supports these regional objectives while recognizing tha assistance to individual countries - with a heightened focus on cross-border constraints and opportunities facing a country - will remain the primary vehicle for interventions by the Bank. The following regional activities all play a core role in the Bank’s overall support to Mali:

  • The West African Power Project (WAPP) aims to build and reinforce regional electricity transmission lines through financing a line between Côte d’lvoire and Mali and to assist in developing the regulatory framework for regional power trade within ECOWAS;

  • The harmonization of telecommunications policy and the establishment of a regional regulatory framework is likely to feature as a component of the Sources of Growth Project (FY05);

  • The Bank is providing support to regional water management issues through Analytical and Advisory Services (AAA) work and a regional Institutional Development Fund to the Organization for the Development of the Senegal River Basin (OMVS);

  • The proposed transport operations are being designed within an overall regional framework for strengthening and diversifying the transport corridors in western Africa;

  • The Bank’s AAA will focus on fast-tracking integration between Mali, Senegal and Guinea;

  • A Regional Payments System Credit to the BCEAO is under implementation that seeks to establish payment systems adapted to the market needs of WAEMU and that are internationally acceptable;

  • Support to the implementation of the WAEMU Agricultural Policy (adopted in December 2001); and,

  • A proposed Institutional and Financial Development Project for the West African Development Bank which would promote the development of integrated financial marketing in western Africa.

Bank-Fund collaboration in specific areas

12. The IMF and World Bank staffs maintain a collaborative relationship in supporting the government’s structural reforms. As part of its overall assistance to Mali through lending, country analytic work and technical assistance, the Bank supports policy reforms in the following areas in collaboration with the Fund.

Cotton sector reforms

13. The objective of the cotton sector reforms is to safeguard an important source of growth and income generation of the rural population. Difficulties experienced in the late 1990s highlighted the sector’s vulnerability to external shocks such as the continued decrease of cotton prices on the international markets. The government’s decision to pull out of productive, industrial and commercial activities has led it to design a reform strategy with the following objectives: (i) the improvement of the flexibility and responsiveness of the institutional structure of the cotton sector; (ii) the reduction of the risks associated with having only one operator; and (iii) the establishment of a higher visibility (transparency and capacity to anticipate) in the management of the sector. These objectives are being achieved through the comprehensive program to redefine the parastatal company’s role in core cotton production activities, increase participation of producers and the private sector, and liberalize cotton and cottonseed oil markets and enterprises. In view of the potential budgetary impact of cotton sector losses, the Bank and the Fund collaborate closely on the reform program, with the Bank taking the lead in the policy dialogue and program implementation under the Third Structural Adjustment Credits (SAC). A proposed Fourth SAC and proposed Agriculture Diversification and Competitiveness project will also support the cotton sector reforms.

14. The cotton reform program supported by the SAC III is on track, and the authorities are continuing the efforts toward privatization of the parastatal company and liberalization of the cotton sector over the next three years. The sale of shares in HUICOMA (the cottonseed oil processing company) has been provisionally awarded, and the provisional purchaser invited for final negotiations to start November 10, 2003. At the government’s request, the International Finance Corporation (IFC) has prepared a proposal covering advisory services to Mali for steering (together with the authorities) the CMDT privatization process over the coming 2-3 years. The government intends to engage the IFC (which the authorities indicate they prefer over an investment bank advisor) by the end of the first quarter 2004.

Public expenditure management

15. Mali has made significant progress in the last several years to move the public expenditure system closer to the desired level of effectiveness, and the government is steadily implementing measures in its ongoing reform program. The objectives of the current reform program are: (i) improving the budget preparation process in order to progressively reach a system that establishes solid links between the allocation of public resources and the poverty reduction objectives of the development programs; (ii) improving the efficiency and effectiveness of public expenditure exeution; and (iii) improving financial transparency and managerial accountability in the use of budget resources, through an effective expenditures monitoring and control system and information reports on budget execution. These reforms have been supported by the donor community including through successive World Bank projects, and the donor community continues to work with the government on the ongoing reform program.

16. The reform program is supported by the Bank under the SAC III which includes, among other actions, a better integration of the various budget documents, improving classification of expenditures to enable better poverty-oriented monitoring (including at the decentralized level), automation of budget execution through an integrated information system, actions to improve the timeliness of government account preparation, strengthened internal and ex-post audit functions, and preparation of a medium-term expenditure framework (MTEF) globally and at key sector levels (initially in the social sectors and subsequently in rural development and public works/transport). The program is on track, and progress continues to be made in preparing the new integrated information system (linking the treasury, budget and financial audit departments) for implementation in the first quarter of 2004 as scheduled in the SAC III letter of development policy. In addition to the monthly treasury balance statement, the government now prepares and distributes a quarterly note on the economic and financial conditions of the country. Progress has also been made on other actions in the program for tracking of poverty-reducing public spending. The next phase of reforms is to be supported under a proposed fourth SAC.

17. The Bank and Fund have collaborated in reviewing Mali’s public expenditure management (PEM) performance, through the sharing of SAC III mission documents and those of the Fund’s Fiscal Affairs Department (FAD) which, together, yielded a comprehensive action plan for PEM reforms (ROSC AAP). The Fund FAD team has, consistent with the program under the SAC III, provided technical assistance on specific areas, notably on the classification of poverty and HTPC expenditures. In 2002-03, the Bank undertook a Country Financial Accountability Assessment (CFAA) that highlights key policy measures relating to strengthening financial management in readiness for the potential shift to programmatic lending. The CFAA recommendations have been incorporated in the forthcoming CAS and progress in implementing them will be monitored closely.

Privatization program

18. Mali is engaged in far-reaching reforms in the private sector, supported under various World Bank programs—a telecommunications support program, a transport and railway support program, a financial sector development project, the structural adjustment credits (on the cotton sector), and the Private Sector Assistance Project (including support to judicial reform) that closed in mid 2002. The program’s objectives are (i) the reduction of state ownership of the banking sector to less than 20 percent; (ii) the divestment of the state from ten non-bank enterprises (either through the sale of shares, liquidation, or the establishment of concession contracts);3 and (iii) the continuation of private sector development initiatives, through enhancing competition and improving the business environment in key sectors of the economy. During 2003, the authorities successfully concluded the railway privatization with Bank support, and awarded the concession contract which became effective in September 2003.

19. A key issue of mutual interest to the Bank and the Fund are the privatizations’ associated retrenchment programs (particularly for the railway and the cotton sector), their potential impact on the government budget and the implications for future privatizations, notably of the telecommunications company. The Bank is taking the lead in evaluating the retrenchment plans in the course of supervising the various sector programs.

World Bank Operations in Mali

(As of November 16, 2003, in US$ millions)

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Source: World Bank.

For additional information please contact: Mr. A. David Craig, Country Director, Tel. (202) 473-2589; Ms. Christina A. Wood, Sr. Economist, Tel. (202) 473-5829; or Aline Cabal, Operations Analyst, Tel. (202) 473-4334.

Appendix IV Mali: Statistical Issues

(As of October 2003)

1. Mali’s statistical database is broadly comprehensive and sufficient for program monitoring. However, weaknesses exist in the national accounts and industrial production data. The authorities are making efforts to improve the quality, timeliness, and availability of economic and financial data. Progress has been achieved in addressing a number of past weaknesses by implementing the recommendations of various technical assistance missions. Mali has been participating in the General Data Dissemination Standards Bulletin Board (DSBB). However, there is a need to update the information on the DSBB, particularly with respect to the status of implementation of the short-term plans for improvement.

Real sector

2. There are important weaknesses in the accuracy, coverage, and timeliness of national accounts data. Technical assistance needs, including the review of data sources and training in collection and compilation methods, were addressed by an STA resident expert in national accounts (May 1995 to August 1996). STA completed two follow missions and the regional statistical office (AFRISTAT) in Bamako also provided short-term technical assistance in the area of national accounts. Nonetheless, the April 23-May 6, 2003 multisector statistics mission considered the national accounts data to be unreliable. The main reason is the inadequacy of the real sector databases, owing to the severe underfunding of the National Directorat of Statistics and Data Processing (DSDP).

3. In collaboration with other West African Economic and Monetary Union (WAEMU) member countries, the DSDP has been compiling and publishing a harmonized consumer price index (CPI) for Bamako, on a monthly basis since early 1998. This index has been consistently available on a timely basis since that date. The multisector mission recommended that the authorities revise the index weights household survey. In addition, a national household budget survey should be undertaken to update the national CPI covering Bamako and five other regional capital cities.

Government finance statistics

4. In early 2003, the Ministry of Economy and Finance began compiling monthly statistics covering general government operations on a pilot basis, with inputs from the customs, tax, debt, and treasury directorates. These data are available on request with a one-to two-month lag. As part of the process of economic integration among the member countries of the WAEMU, Mali has made progress in bringing its fiscal data in line with the common framework that has been developed with technical assistance from the Fund (the harmonized table of government financial operations - TOFE). However, efforts need to be made to improve the timeliness of the TOFE.

5. The authorities plan to step up the monitoring of public investment expenditure financed from abroad through increased training of project managers and the preparation of a semiannual report on the implementation (expenditure and corresponding financing) of the special investment budget (BSI). Public debt Directorate and domestic debt by the National Directorate of the Treasury and Government Accounting. Improving coordination between these entities was an issue raised by the multisector mission.

6. Mali does not report annual statistics for publication in the Government Finance Statistics Yearbook, nor any subannual government finance statistics for publication in International Finance Statistics (IFS); data for both publications could be compiled on the basis of the TOFE. More generally, fiscal data dissemination practices could be improved in Mali. The multisector mission recommended that the Ministry of Economy and Finance accept, at least as an interim solution, the proposal of the WAEMU Commission to post the members states’ data on its web site (IZF).

Monetary data

7. Preliminary monetary data for Mali are prepared by the national agency of the Bank of Central African States (BCEAO) and released officially by the headquarters of the BCEAO. Joint AFR/STA and STA/BCS missions visited BCEAO headquarters in August 1997 and in February 1998, respectively, and made recommendations to improve the quality and timeliness of monetary statistics in all WAEMU countries. Although some progress has been made since then, the collection of monetary data from the BCEAO can be delayed up to eight weeks.

8. A monetary and financial statistics mission visited the BCEAO headquarters in Dakar in May 2001. The mission provided technical assistance in addressing the main shortcomings pertaining to the coverage, methodology, and timeliness of monetary statistics. The mission discussed and agreed with the authorities on an action plan for the implementation of the Monetary and Financial Statistics Manual (MFSM) and for the introduction of a page in IFS on the WAEMU. The new page was published for the first time in January 2003. Moreover, proposals were discussed with the authorities for the provision of future technical assistance in monetary statistics for the region.

9. Following the recommendations of the May 2001 mission, a regional seminar on monetary and financial statistics was organized by the BCEAO in Dakar during April 22-25, 2003. Participants agreed to set up a working group consisting of representatives from the BCEAO national agencies and headquarters; the working group will follow up on the implementation of the seminar’s recommendations to foster implementation of the MFSM

Balance of payments data

10. Since December 1998, the responsibility for compiling and disseminating balance of payments statistics has been formally assigned to the BCEAO by area-wide legislation adopted by the countries comprising the WAEMU. The national agency of the BCEAO in Bamako is responsible for completing and disseminating the balance of payments statement, and the BCEAO headquarters in Dakar for delineating the methodology and calculating the international reserves managed on behalf of the participating countries. Data consistency has significantly improved over the past few years, with a full transition to the Balance of Payments Manual, fifth edition (BPM5). This was supported by technical assistance provided by STA (statistical advisor posted at the BCEAO headquarters in Dakar from July 1996 through July 1999), which contributed to the improved reporting of yearly balance of payments data in the framework of the BPM5 for the period 1996-99 with the backward revision of data to 1988, a consistent series was thus created. The BCEAO national agency disseminates balance of payments statistics with seven months lag and annual international investment position data with 18 months lag, fully consistent with the recommendations in the GDDS guidelines.

11. Regarding trade data, the customs computer system (SYDONIA1) was upgraded in 1999, which allows for a better monitoring of import data and informal trade, in particular with Senegal and Côte d’lvoire. However, significant gaps remain in the trade data for mining products, due to the undercoverage of gold exports.

12. Further improvement in the data for services and transfers (especially workers’ remittances) depends on the intensification of the contacts with reporting bodies.

13. The foreign assets of the private nonbanking sector are still not well covered in the financial accounts, especially the assets of WAEMU residents, which are obtained through Bank for International Settlements (BIS) data. The organization of an annual survey for the reporting of foreign direct investment transaction in Mali is still in a preliminary stage. The BCEAO has recently implemented a compilation system allowing commercial banks to report data on payments involving nonresidents.

14. External debt data are produced by the General Directorate for Public Debt of the Ministry of Finance (DGDP) with the support of the computer debt-management system software, CS-DRMS (Commonwealth Secretariat - Debt Recording and Management System).

15. The multisector statistics mission that visited Mali during April 22-May 6, 2003 found that the balance of payments compilation system is generally sound and encouraged the authorities to integrate banking settlement sources and disseminate the Mali balance of payments within the recommended timeliness, as set by the GDDS.

Mali: Core Statistical Indicators

(As of October 28, 2003)

article image

IMF, Economic Information System (EIS); and IMF, Finance Department

Central Bank of West African States (BCEAO).

Preliminary data for staff use only; actual data unrestricted.
1

Other differences include the treatment of owner-occupied dwellings and the consumption of fixed capital by the government, all of which have the effect of raising the level of GDP for all years. A note in the Statistical Annex to be issued provides more details on the new methodology. All ratios to GDP refer to the revised figures, unless otherwise indicated.

2

Based on consumer price indices.

3

The ad valorem equivalent (AVE) tariff calculated by the ITC includes all ad valorem tariffs, plus ad valorem equivalents for specific tariffs and tariff quotas. The ITC figures on European Union and U.S. agricultural tariffs for Mali are estimates, and may not fully reflect the impact of European Union’s “Everything But Arms” initiative and the U.S.’s African growth and opportunity Act (AGOA). Both initiatives provide duty- and quota-free access for most Low Income Country exports.

4

Assuming that Mali receives budgetary support in the form of grants amounting to 1.2 percent of GDP, the yearly average for 2000-02.

5

Assuming that 80 percent of the public investment program included in the budget will be implemented in 2004.

6

The PRSP framework is still based on the old methodology for national accounts.

7

The convention regulates relations between the European Union and the African, Caribbean, and Pacific (ACP) countries in the areas of trade cooperation and development aid.

1

The team was led by Mr. Briancon (AFR) and comprised Mr. Bouley (FAD), Mr. Hardy (MFD), Mr. Nascimento (PDR), and Mr. Wane (AFR).

2

As the devaluation of the CFA franc in 1994 was not initially included in the ESAFsup d ported program for 1992-95, Figure 1 includes also the objectives of the program approve in March 1994 (“as the variable ESAF 1 a”).

3

The government is soon to sell the majority ownership that it still holds in one bank.

4

A clear measure has yet to be developed for a reliably assessing of streamlining of structural conditionality. A proxy used here is the number of conditions.

5

Experience in other countries suggests that the tax administration system can be used to establish a credit record, even for those who have little interaction with the formal financial system.

1

Social sector resources have increased from CFAF 80 billion in 2002 and CFAF 102 billion 2003, to CFAF 118.5 billion in the proposed 2004 Budget. As of the 2003 Budget, the authorities prepare multi-year budget allocations for all sectors, with priority accorded first to the social sectors and next to the productive sectors (notably infrastructure, agriculture). With assistance of the World Bank, the authorities have prepared medium-term expenditure frameworks (MTEFs) for health and education, and are commencing the development of MTEFs for public works/transport and for agriculture/livestock/fisheries sectors. The sector MTEFs will facilitate improved intra-sectoral prioritization of expenditures according to poverty reduction and growth objectives.

2

WAEMU is the West African Economic and Monetary Union, comprising Benin, Burkina Faso, Côte d’lvoire, Guinea-Bissau, Mali, Niger, Senegal and Togo. ECOWAS is the Economic Community of West African States, comprising WAEMU countries plus Cape Verde, Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone.

3

Eighteen nonbank enterprises were to remain in the government portfolio—those with majority government holding – CMDT (cotton fiber), ON (agricultural development), RCFM (railways), OP AM (food management), ONP (post office), PPM (pharmaceutical s products market), PMU-Mali (horse racing), ADM (airport management), COMANAV (river transport), CESPA (film production); and those with minority government holding - EDM (electricity and water), SOTELMA (telecom), COMATEX-SA, (textiles) ITEMA (textiles), SOMOSY-SA (mining), SEMOS-SA (mining), ACI-SA (real estate), and SUKALA (sugar and alcohol).

1

The SYDONIA software, sponsored by the United Nations Conference on Trade and Development(UNCTAD) and by donor countries, has already been implemented in many countries. Freely available to customs administration, it is provided together with appropriate staff training schemes.

1

Under Article IV of the IMFA’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country. collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country’s authorities.

2

On November 22, 1999, the IMF’s concessional facility for low-income countries, the Enhanced Structural Adjustment Facility, was renamed the Poverty Reduction and Growth Facility, and its purposes were redefined. It is intended that PRGF-supported programs will be based on countryowned poverty reduction strategies adopted in a participatory process involving civil society and development partners, and articulated in a poverty reduction strategy paper. This is intended to ensure that each PRGF-supported program is consistent with a comprehensive framework for macroeconomic, structural, and social policies to foster growth and reduce poverty. PRGF loans carry an interest rate of 0.5 percent a year, and are repayable over 10 years with a 5½, year grace period.

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Cover IMF Staff Country Reports
Mali: Staff Report for the 2003 Article IV Consultation
Author:
International Monetary Fund
Volume/Issue:
Volume 2004: Issue 011
Publisher:
International Monetary Fund
ISBN:
9781451826302
ISSN:
1934-7685
Pages:
79
DOI:
https://doi.org/10.5089/9781451826302.002
  • Figure 1.
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    Figure 1.

    Mali: Main Economic Indicators, 1995-2006

  • Figure 2.
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    Figure 2.

    Mali: Real and Nominal Effective Exchange Rates, January 1990 - July 2003

    (Period average; 1990=100)

  • Figure 1.
    View in gallery
    Figure 1.

    Mali: Real Sector: Programs’ Objectives and Outcomes

  • Figure 2.
    View in gallery
    Figure 2.

    Mali: Balance of Payments: Programs’ Objectives and Outcomes

  • Figure 3.
    View in gallery
    Figure 3.

    Mali: Public finances: Programs’ Objectives and Outcomes

    (In percent of GDP)

Figure 1.

Mali: Main Economic Indicators, 1995-2006
Figure 2.

Mali: Real and Nominal Effective Exchange Rates, January 1990 - July 2003

(Period average; 1990=100)
Figure 1.

Mali: Real Sector: Programs’ Objectives and Outcomes
Figure 2.

Mali: Balance of Payments: Programs’ Objectives and Outcomes
Figure 3.

Mali: Public finances: Programs’ Objectives and Outcomes

(In percent of GDP)