Niger: Enhanced Initiative for Heavily Indebted Poor Countries Completion Point Document

This paper assesses Niger’s performance in meeting the requirements for reaching the completion point under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative. The paper reviews the status of creditor participation and the delivery of debt relief to Niger under the enhanced HIPC Initiative, presents the results of a new debt sustainability analysis based on the reconciled stock of debt at end-2002, and provides an analysis of the sensitivity of the debt indicators to changes in macroeconomic variables. The paper also focuses on considerations pertaining to a topping up of enhanced HIPC Initiative assistance.

Abstract

This paper assesses Niger’s performance in meeting the requirements for reaching the completion point under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative. The paper reviews the status of creditor participation and the delivery of debt relief to Niger under the enhanced HIPC Initiative, presents the results of a new debt sustainability analysis based on the reconciled stock of debt at end-2002, and provides an analysis of the sensitivity of the debt indicators to changes in macroeconomic variables. The paper also focuses on considerations pertaining to a topping up of enhanced HIPC Initiative assistance.

I. Introduction

1. In December 2000, the Executive Boards of the International Development Association (IDA) and the International Monetary Fund (IMF) agreed that the Republic of Niger had met the requirements for the decision point under the enhanced Initiative for Heavily Indebted Poor Countries (HIPC Initiative).1 Directors noted the significant achievements in the areas of macroeconomic stabilization and structural reform that Niger had made under Fund and IDA-supported programs since 1996, until they were interrupted by a military coup in 1999. They welcomed the actions taken in early 2000 by the new, democratically elected authorities to restore the economic and financial situation of Niger, as well as their commitments to complete and broaden the reform program. The approval of a three-year arrangement under the Fund’s Poverty Reduction and Growth Facility (PRGF)2 and the consideration of the authorities’ interim poverty reduction strategy paper (interim PRSP) by the Executive Boards also paved the way for the approval of Niger’s decision point in December 2000.3 At that time, the Boards defined a set of conditions for Niger to reach the completion point under the enhanced framework. This paper assesses Niger’s progress under the enhanced HIPC Initiative and seeks the Boards’ approval of the completion point, including a topping up of assistance under the Initiative.

2. At the decision point (end-1999), the amount of debt relief under the enhanced HIPC Initiative framework needed to bring the net present value (NPV) of debt to the equivalent of 150 percent of exports of goods and services was estimated at US$520.6 million in NPV terms. This relief represented a reduction of 53.5 percent in the debt, in NPV terms, after the full use of traditional debt-relief mechanisms. In this context, the Executive Boards also agreed to the provision of interim debt relief to cover part of the debt service falling due to the IMF and IDA until Niger reached the completion point under the HIPC Initiative framework. The Fund provided interim debt relief in an amount equivalent to SDR 6.678 million in nominal terms for the period December 2000–November 2003, and IDA interim relief amounted to US$29.2 million through November 2003. Other multilateral institutions have agreed to provide interim relief as well, including the African Development Bank Group (AfDB), the Islamic Development Bank (IsDB), the European Commission (EC), the OPEC Fund (OPEC), the Arab Bank for Economic Development in Africa (BADEA), and the West African Economic and Monetary Union (WAEMU). Paris Club creditors took similar action and provided flow relief on Cologne terms until end-December 2003. Finally, China and the Kuwait Fund for Arab Economic Development have granted assistance since 2001 and 2002, respectively. Total cumulative interim assistance from the decision point up to end-2002 amounted to US$57.1 million.

3. The paper is organized as follows. Section II assesses Niger’s performance in meeting the requirements for reaching the completion point under the enhanced HIPC Initiative. Section III reviews the status of creditor participation and the delivery of debt relief to Niger under the enhanced HIPC Initiative, presents the results of a new debt sustainability analysis (DSA) based on the reconciled stock of debt at end-2002, and provides an analysis of the sensitivity of the debt indicators to changes in macroeconomic variables. In view of the fact that the ratio of NPV of debt-to-exports exceeds the HIPC threshold, Section IV focuses on considerations pertaining to a topping up of enhanced HIPC Initiative assistance. Section V provides conclusions; and Section VI presents issues for discussion.

II. Asessment of Requirements for Reaching the Completion Point

4. Under the enhanced HIPC Initiative framework, the floating completion point is reached when a country (i) prepares and implements a comprehensive poverty reduction strategy; (ii) maintains a stable macroeconomic environment designed to promote growth; and (iii) carries out in a satisfactory manner key social and structural reforms. Specific outcome-oriented trigger conditions are set at the decision point to assess progress in reaching the completion point. As evidenced by the first progress report on the implementation of the poverty reduction strategy and the track record of policy implementation under IMF- and IDA-supported programs since 2000, Niger has made the necessary progress to qualify for the completion point.

A. Poverty Reduction and Social Sector Policies

5. Poverty is widespread in Niger. According to the latest household survey of 1993, two-thirds of the population lives below the poverty line and one-third is considered extremely poor.4 Niger’s social development indicators are among the weakest in sub-Saharan Africa, and the United Nation Development Program (UNDP) human development index ranked Niger 174th out of 175 countries in 2003. Despite recent progress, the infant mortality rate is 156 deaths per 1,000 births, and the average life expectancy at birth is only 46 years. Barely 59 percent of the population has access to potable water, only 5 percent of the rural population has access to sanitation facilities, and less than half of the population has access to health services (Text Table 1 and Table 1).

Text Table 1.

Social Development Indicators for Niger and Sub-Saharan Africa (SSA)

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Source: World Bank 2003, World Development Indicators (2001 or most recent estimate).

2002 data.

Table 1.

Niger: Selected Social and Demographic Indicators

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Source: World Bank; World Development Indicators 2003.

6. Since 2000, Niger has implemented policy reforms and programs aimed at fostering strong and sustained economic growth and poverty reduction. A full Poverty Reduction Strategy Paper (PRSP) was completed in January 2002, using an extensive participatory approach and building on lessons learned from previous experiences, such as the preparation in 1997 of a poverty reduction program.5 It rests on four strategic pillars: (i) the creation of a macroeconomic environment to promote economic growth; (ii) the development of the productive sectors, especially in rural areas, to reduce vulnerability and increase income generation, (iii) the improvement in access of the poor to quality social services, and (iv) the strengthening of human and institutional capacities, promotion of good governance, and decentralization. The Executive Boards of the IMF and IDA considered the PRSP a realistic and credible approach to reducing poverty in Niger, and, at a forum held in Niamey on June 7–8, 2003, the donor community reaffirmed its endorsement of the PRSP as the strategic anchor for assistance to Niger. The first progress report on the implementation of the PRSP was also prepared through a participatory process that culminated in its endorsement by the government via a national workshop held in July 2003. The document assesses progress achieved in the implementation of policies and programs underpinning the four pillars of the PRSP, discusses progress in strengthening the monitoring and evaluation of the strategy, and candidly acknowledges the challenges that Niger faces in addressing pervasive poverty. The joint Bank/Fund staff assessment (JSA) of this progress report concludes that Niger’s PRSP remains a credible framework for Bank and Fund concessional assistance.6

7. Education. Niger’s education sector has been constrained by a number of factors, including poor coverage of basic education, quality deficiencies, internal and external inefficiency, severe financing constraints, and limited institutional and organizational capacity. As a result, the sector has stagnated in the last two decades. Over the past three years, the government has embarked on policy reforms to improve access to basic education by addressing supply-side constraints on schooling. To this end, innovative reforms have been launched with the support of the World Bank. These include the program of hiring contractual teachers to meet teacher shortages, a pilot program of decentralized block grants at the school level, and measures that aim at addressing the issue of teaching quality. As a result, primary enrollment has increased, with the gross enrollment rate moving from 27 percent in 1995 to 42 percent in 2002. Between 2001 and 2002, more than 2,000 new classrooms were built, of which 86 percent are located in rural areas; 3,701 contractual teachers were hired, mainly in rural areas;7 and a countrywide school map was established. However, there is a limit to what could have been achieved in such a short period, and much remains to be done. Niger’s literacy rate of 15 percent is one of the lowest in the world. The enrollment ratio varies between about 24 percent in Zinder to 99 percent in Niamey. It was estimated that 51 percent of all boys, compared with 29 percent of all girls, are enrolled in the first grade.8

8. The government of Niger has recently intensified the reform program with the support of the donor community. In 2002, the government introduced a ten-year development plan for education (PDDE) consistent with the education strategy presented in the PRSP. The Bank plays a key role in supporting this development plan. In particular, in the context of the recently approved Basic Education Project, the Bank will support the first phase of Niger’s ten-year Basic Education Program, focusing on the following: (i) expanding enrollment in basic education; (ii) increasing efficiency and quality of basic education; and (iii) strengthening the institutional capacity of the Ministry of Education (MOE) and empowering local entities and communities. In addition, Niger’s proposal for the Education-for-All Fast Track initiative (EFA-FTI), which aims at accelerating progress toward meeting the Millennium Development Goals (MDGs) in primary education by 2015, is being supported by the donor community. In this context, the government is committed to aligning the objectives of the PDDE with those of the EFA-FTI. However, in the presence of limited technical, institutional, human, and absorptive capacity, it was agreed to keep less ambitious performance targets for the first phase of the program.

9. Health. In the 1990s, Niger’s health conditions were precarious as a result of a combination of factors, including the high prevalence of communicable and parasitic diseases, poor nutrition, high fertility, inadequate preventive and curative health services, low access to safe drinking water and sanitation facilities, low levels of literacy and education, and pervasive poverty. Health sector performance was constrained by inadequate coverage and quality of health services, the lack of resources available for primary health services, insufficient availability and affordability of essential drugs, weak management capacity, inadequate human resources, and inefficient and inequitable budgetary allocations. Against this background, the government initiated a reform program that aimed at ensuring continued improvement in the health status of the population. The implementation of this program resulted in an improvement of both the quality and coverage of basic health care. Coverage increased significantly, with the share of people living within 5 kilometers of a health care facility increasing from 32 percent in 1994 to 47 percent in 2000. The availability of essential drugs in health facilities also improved as a result of the implementation of a law on cost recovery and increased logistical and managerial capacity. The Bank has been supporting the government’s reform program through a Health Sector Development Project.

10. Over the past three years, the health sector reform program has gained momentum. A ten-year health sector strategy, based on the PRSP, was prepared and adopted by the government in the second half of 2002.9 In order to operationalize this strategy, the government has initiated the preparation of a detailed five-year development plan. A pilot program of decentralized recruitment of contractual health workers was launched in 2002, under which 452 health workers were recruited. Health facilities are currently using cost recovery schemes, the strengthening of the existing health centers is continuing, and essential generic drugs are available within the country. Nevertheless, overall, health conditions in Niger remain abysmal. Infant mortality and maternal mortality rates are among the highest in the region. Thirty-nine percent of children under the age of 5 are malnourished.

11. HIV/AIDS. With a prevalence rate estimated at 1 percent in 2002, Niger is the least affected by the epidemic among sub-Saharan African countries.10 However, HIV/AIDS still poses a major risk to human and economic development in Niger, given the high prevalence of sexually transmitted diseases (STDs), high-risk behavior, and low institutional capacity to deal with affected cases. The government has developed a multisectoral strategy to combat the disease. The National Strategic Framework for the Fight Against STDs/HIV/AIDS, covering the period 2002–06 and prepared in collaboration with development partners, including the World Bank, is being implemented. The establishment of a baseline of qualitative and quantitative data, a condition for reaching the HIPC Initiative completion point, served as a basis for the finalization of this strategy. The strategy aims at (i) strengthening and expanding prevention activities, (ii) scaling up treatment and care activities, (iii) enhancing mitigation of the impact of HIV/AIDS on households and communities, and (iv) building national capacity for management and implementation of the National Strategic Framework. In order to help Niger achieve these objectives, the Bank is supporting the implementation of the National Strategic Framework for the Fight Against STDs/HIV/AIDS. To this end, a Multisectoral STDs/HIV/AIDS Support Project was approved in March 2003 to support Niger in its efforts to operationalize and implement the strategic framework.

B. Macroeconomic Stability

12. Overall macroeconomic performance has been satisfactory since 2000, despite the recurrence of sociopolitical tensions, the crisis in Côte d’Ivoire, and difficulties in securing timely and adequate external assistance. The positive macroeconomic trends were linked not only to good weather conditions that spurred strong growth in the rural sector but also to the improvement in public finances, the increase in capital expenditure on infrastructure, and the implementation of structural measures to promote growth. Real GDP is estimated to have grown at an annual average rate of 5.0 percent over the 2001–02 period, with a strong recovery of 7.1 percent in 2001 following the drought in 2000 (Table 2, and Figures 1 and 2). The growth performance was accompanied by a fall in average inflation, on a 12-month basis, from 4.0 percent at end-2001 to 2.7 percent at end-2002 and -0.7 percent at end-September 2003. The external current account deficits (excluding grants for budgetary assistance) remained below the program targets and averaged 7.5 percent of GDP over the 2001–02 period. The lower-than-anticipated deficit reflects in part a slight improvement in the terms of trade.

Table 2.

Niger: Selected Economic and Financial Indicators, 1999-2006

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Sources: Nigerien authorities; and staff estimates and projections.

Commitment basis as per payment orders issued.

In percent of beginning-of-period money stock.

In 2002, includes 0.6 percent of GDP of revenue from the settlement of reciprocal debts between the government and public enterprises.

Total revenue, excluding grants, minus expenditure, excluding interest payments.

Total revenue, excluding grants, minus total expenditure, excluding foreign-financed investment projects.

Program data and projections include grants for projects and HIPC Initiative assistance. Actual data also include grants for budgetary assistance that are disbursed by Niger’s development partners, such as the European Union and bilateral creditors.

For projections, budgetary assistance is not included as it is part of the financing gap.

Including obligations to IMF. The estimates for 2002, 2003 (revised program) and onward reflect the latest debt sustainability exercise.

Before debt relief. For projections, including the financing gap.

Figure 1.
Figure 1.

Niger: Selected Economic Indicators, 1997-2004 1/

Citation: IMF Staff Country Reports 2004, 161; 10.5089/9781451828603.002.A001

Sources: Nigerien authorities; and staff estimates and projections.1/ Dashed line corresponds to origianl projections under the PRGF arrangement approved in December 2000 (IMF Country Report No. 01/15). Solid line corresponds to actual data until 2002, estimates for 2003, and current projections for 2004.
Figure 2.
Figure 2.

Niger: Selected Fiscal Indicators, 1997-2004 1/

Citation: IMF Staff Country Reports 2004, 161; 10.5089/9781451828603.002.A001

Sources: Nigerien authorities; and staff estimates and projections.1/ Dashed line corresponds to origianl projections under the PRGF arrangement approved in December 200 (IMF Country Report No. 01/15). Solid line corresponds to actual data until 2002, estimates for 2003, and current projections for 2004.

13. The recovery of economic activity has been accompanied by the implementation of successful fiscal adjustment policies and an improvement in public finances. Policies were aimed at ensuring a sustainable fiscal position and complying gradually with the convergence criteria of the WAEMU. As envisaged under the PRSP and the PRGF arrangement, revenue increased from 8.6 percent of GDP in 2000 to 10.6 percent in 2002. Current expenditure declined from 11.2 percent of GDP to 10.7 percent, thanks in part to a strict control of the wage bill. Capital expenditure increased from 5.7 percent of GDP to 7.7 percent over the same period, in line with the implementation of the Poverty Reduction Strategy and supported in part by resources freed by the HIPC Initiative. Excluding grants for budgetary assistance (averaging annually 1.6 percent of GDP in 2000–02) and foreign-financed capital expenditure, the budget deficit was reduced from 3 percent of GDP in 2000 to 1.8 percent in 2002. In addition, the stock of domestic payments arrears fell by 38 percent in 2001–02, a reduction equivalent to about 3.5 percent of GDP. Fiscal adjustment is to be maintained in 2003 with a basic fiscal deficit capped at 2.0 percent of GDP, despite expenditure pressures linked to sociopolitical tensions, smaller revenue transfers from the WAEMU Commission as a result of the crisis in Côte d’Ivoire, and shortfalls in external financing.11

14. Unpredictability in the level and timing of external budgetary assistance has, however, hampered the execution of the budget laws and required the implementation of tight cash management practices and intensified expenditure control. Over the 2000-02 period, external budgetary assistance was, on average, equivalent to 42 percent of revenue and 32 percent of expenditure (excluding foreign-financed projects). For 2002, disbursements of budgetary aid were 1.2 percent of GDP lower than programmed under the PRGF arrangement, and a shortfall of 0.4 percent of GDP is expected in 2003. Moreover, because of recurrent administrative delays in concluding annual agreements with partners, disbursements have mostly occurred at the end of each year, exacerbating the tight budgetary constraints and generating difficulties in budget execution, given the limited possible recourse to domestic financing.

C. Key Structural Reforms

15. Progress in the structural reform area has been mixed. Although important budgetary reforms aiming at better governance and management of public finances have been implemented with success, the privatization agenda encountered some delays, regulatory and procurement reforms have been slow, and much remains to be done to strengthen the financial sector.

16. Niger’s performance in expenditure tracking improved over the last two years. A joint Bank and Fund assessment undertaken in 2002 found Niger to have met only three of the 15 benchmarks, one of the lowest scores of all HIPC countries. Major weaknesses were noted in budget formulation, execution and reporting. Specifically, the key weaknesses highlighted in Niger’s public expenditure management (PEM) included (i) deficiencies in identification of poverty-reducing expenditure and the absence of a reporting mechanism for such expenditure; (ii) the paucity of information on quarterly budget execution; (iii) a poor external audit system; and (iv) the absence of a clear medium-term perspective integrated into the budget formulation process. Against this background, Niger adopted an action plan to tackle the gaps identified in its PEM. A 2003 follow-up study on HIPC expenditure tracking found Niger to be one of 14 out of a total of 24 countries which had implemented more than 80 percent of the measures in its action plan.12. As noted in paragraph 29, HIPC Initiative resources used to finance the special poverty reduction program initiated by President Tandja have been fully budgeted and subject to semi-annual reports. However, there is still significant work to be done in all stages of the budget process.

17. In line with the action plan to strengthen public expenditure management, the introduction of a new budget nomenclature and a new charter of public accounts, as well as the adoption of a new procurement code, are the major budgetary reforms achieved since the adoption of the PRSP. The expenditure process was also strengthened, the Chamber of Accounts and Budgetary Discipline began to audit the 1997 budget accounts, and the National Assembly approved the budget review laws (Lois de règlement) for 1998-2000. These reforms will enhance transparency and good governance in public finances. However, the limited institutional capacity of the Ministry of Finance and Economy delayed other measures, such as reinforcing external debt management through the installation of a new debt-management and recording software (completed in early September 2003) and rendering the new procurement code fully operational (also accomplished in September 2003).

18. At the budget implementation level, the two key achievements have been the significant increase in execution rates in 2002 and the clearance of substantial amounts of arrears. The execution rate for the total recurrent budget in 2002 was 71 percent, compared with 61 percent in 2000. The release of funds enabled the Ministries of Education and Health to spend 90 percent and 70 percent of their budgets, respectively, during 2000–02.

19. Budgetary reforms are being reinforced with the assistance of IDA in the context of the Second Public Expenditure Adjustment Credit (PEAC II). A formal budget preparation framework has been established through the issuance of an arrêté which delineates the budget preparation process and establishes the sequence and dates of actions, as well as the role and responsibilities of all ministries, services, and other actors involved in that process. In addition, starting in 2004, budget preparation will contain budget scenarios based on alternative revenue projections. To enhance budget execution and improve the predictability and transparency of budget releases, a framework for a cash allocation plan is being developed further. This will determine quarterly allocations by ministries on the basis of the voted budget and projected revenue flows, will specify core expenditure for which funding will be ensured, and will set criteria for allocation of remaining funds.

20. Over the medium to long term, the government intends to adopt a program budgeting approach. In this regard, the government will prepare multiyear program budgets for the education, health, and rural development sectors that will cover the period 2005–07 and serve as the basis for the preparation of the 2005 budget. The progressive establishment of a medium-term expenditure framework (MTEF) will also contribute to a more predictable and transparent environment for expenditure decisions.

21. With a view to preparing Niger for programmatic lending, budget reforms will be deepened and broadened through the Public Expenditure Management and Financial Accountability Assessment Review (PEMFAR), which is being carried out by IDA in partnership with the government and the European Union. The implementation and effectiveness of this new round of budget reforms will require the strengthening of Niger’s limited capacity, support for which is being provided by a number of partners, including the Bank, Fund, France, and the European Union.

22. The government of Niger has also imparted new momentum to the privatization program since 2000, with the assistance of IDA via the Privatization and Regulatory Reform Technical Assistance Project. As a result, the telecommunications company, SONITEL, was privatized through the sale of 51 percent of its capital. To liberalize the telecommunications sector, two cellular telephone network licenses were awarded through a competitive bidding process in November 2000. In January 2001, a ten-year leasing contract was signed for the production, transport, and distribution of safe water in the 51 centers previously managed by the state water utility. Although the privatization of the petroleum distribution firm, SONIDEP, was initially delayed, bidding documents were issued in October 2003. The completion of this operation, namely, bringing SONIDEP to the point of sale, is expected in the second quarter of 2004. By contrast, the privatization of the electricity company, NIGELEC, has proved difficult owing to outstanding problems, including the need for a substantial amount of financing for rehabilitation and expansion,13 the resolution of pending regulatory issues, and the heavy dependence of Niger on the Nigerian Electrical Power Authority (NEPA), which is in an extremely weak financial position and whose role in the privatization structure needs to be determined.14

23. With regard to regulatory reform, the establishment of a Multisectoral Regulatory Agency (MRA) is well advanced. A consultant was hired to help design the MRA and a President was appointed in March 2003. The four MRA directors in charge of energy, telecommunications, water, and transportation have been selected through a competitive process. It is expected that the MRA will start its operations by January 2004, and an international expert will serve as advisor to the President of the MRA for the first few months. IDA has recommended that the MRA be twinned with a regulatory authority in an industrial country to help build its managerial capacity.

24. The government initiated in 2002 the reform of public procurement, which aims at increasing transparency and accountability in the awarding of public contracts by ensuring equal treatment of all bidders and facilitating sound competition among them. A new Code of Public Procurement consistent with WAEMU guidelines was approved in 2002. The restructuring of the Central Procurement Commission (Commission Centrale des Marchés, CCM) was initiated, and implementation of the new code has recently begun through the issuance of relevant arrêtés.

25. Important constraints have hampered the development of Niger’s financial sector: operating costs are high, the range of financial products is narrow, a large proportion of portfolios are nonperforming, the system for resolving creditor-borrower disputes is weak, and there is little or no competition among institutions. The geographical reach of the financial sector is also limited because of the unsatisfactory condition of microfinance institution, and the closure of the postal savings bank.

26. Key elements of the reform agenda to strengthen the financial sector are the following: (i) restructuring of the banks that remain under government control (Crédit du Niger, CDN, and the Caisse des Prêts aux Collectivités Territoriales, CPCT); (ii) restructuring of the Islamic Trade and Investment Bank (BINCI); (iii) restructuring of the National Postal and Savings Office (ONPE); (iv) an actuarial audit of the National Social Security Fund (CNSS); (v) reform of the insurance sector; and (vi) promotion and supervision of the microfinance sector and reform of the social security system. In the context of a proposed Bank-financed technical assistance project, the government initiated a series of reforms in 2002, including the restructuring of the insurance sector and two banks (BINCI and Banque Commerciale du Niger). Audits of microfinance institutions were launched and the restructuring of the postal financial services started in 2003.

D. Floating Completion Point Conditions

27. In accordance with the decisions of the Boards of IDA and the IMF, specific triggers were set to assess Niger’s eligibility for the completion point under the enhanced HIPC Initiative framework (Box 1).15 These requirements were for the government to (i) maintain a stable macroeconomic environment; (ii) prepare a full PRSP through a participatory process and satisfactorily implement it for at least one year; and (iii) implement key governance reforms and social measures in the education and health sectors.

28. By end-November 2003, nine of the thirteen prerequisites for reaching the completion point had been met, and satisfactory progress had been achieved with respect to the remaining four conditions concerning specific achievements in the health and education sectors. In particular, the government had prepared a full PRSP that the Boards of IDA and the IMF considered a realistic and credible instrument to reduce poverty in February 2002. The poverty reduction strategy has been implemented satisfactorily since that time, as evidenced by the JSA of the country’s first progress report.

29. The government has also maintained macroeconomic stability and built a positive track record of policy implementation under its program supported by the Fund and the Bank (Table 3). Poverty reduction programs financed by HIPC Initiative assistance have been fully budgeted in the context of a special program initiated by President Tandja and subject to semiannual reports. The reports highlight key achievements of this special program, which focuses on education, health, and rural development. The authorities have, however, acknowledged some weaknesses in the implementation of this program that are related mainly to lengthy procurement procedures, the need to reinforce analytical studies prior to the construction of the new infrastructures, and delays in project execution. An independent evaluation of this program and the use of HIPC Initiative resources are being initiated. It aims essentially to identify and alleviate constraints on the execution of this program, as well as to ensure its better integration into sectoral programs.

Table 3.

Niger: Observance of Quantitative and Structural Performance Criteria, 2001-03

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Niger: Status of Triggers for the Floating Completion Point

(As of End-November 2003)

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30. Moreover, substantial progress has been achieved in the implementation of social sector reforms (health, education, and HIV/AIDS; Table 4). The targets for new classrooms and additional staffing for primary education and rural health centers were overshot by significant margins. The objective for DPT3 immunization of children was observed in 2003, and a baseline of quantitative and qualitative data to serve as basis for the finalization of a strategy to fight HIV/AIDS was established.

Table 4.

Niger: Public Expenditure for Health and Education, 2001-03

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Sources: Nigerien authorities; and staff estimates.

Execution rates do not strictly reflect budget execution because off-budget expenditures are also included in the calculation of the execution rates

Includes HIPC Initiative assistance.

All off-budget expenditures are assumed to be financed from abroad as most of these are related to projects directly managed by foreign donors which are not known to the authorities at the time when the investment budget is elaborated.

31. Despite overall progress in policy implementation in the health and education sectors, four triggers for the completion point in these sectors have not yet been met: (i) the carrying out of a study on the impact of health spending on the poor; (ii) the completion of a plan for supplying local health centers with medicines; (iii) an analysis of the barriers to school enrollment; and (iv) the lowering of the repetition rates in the sixth grade from 37 percent in 1999/2000 to 15 percent. The delays in fulfilling these conditions reflect mainly the weak institutional capacity of the country and difficulties in coordinating the technical assistance required.

32. The government has nonetheless made satisfactory progress toward meeting these triggers, which justify its request for waivers to reach the completion point:

  • The government has postponed the beneficiary incidence study of public health spending so that this study can benefit from the PEMFAR, which the government intended to use as a basis for conducting the analysis. The results of the PEMFAR will, in particular, enable an appropriate design of the impact assessment study, including as regards the selection of the geographical zones of the pilot study. The study is expected to be completed by the second half of 2004. To this end, the government has included a budget allocation in the 2004 budget law to finance the study and will submit the study’s terms of reference to IDA by end-December 2003.

  • The plan to ensure an adequate supply of medicines in local health centers has been prepared in the context of a review of the policy on medicine distribution, and the government has confirmed that this plan will be adopted in December 2003. In the meantime, it has taken steps to improve the availability of essential drugs. Measures were already taken in May 2002 to facilitate access by local health centers to supplies of drugs provided by authorized facilities. These actions are to be complemented by the establishment of an effective monitoring and evaluation system in 2004.

  • The study on demand- and supply-side impediments to primary school enrollment is under way. It is based on the various regional studies that have been launched over the years. One study covered the regions Dosso, Diffa, and Miriah and was completed in 2000. Another study that covers three pilot zones and analyzes the effect of distance on schooling is being carried out with the assistance of IDA. A report covering Dakoro and Bouza has been completed, and one on Iléla is expected to be finalized by January 2004. These studies serve as a basis for a comprehensive report on demand and supply constraints on basic education that the government intends to finalize in the first quarter of 2004.

  • The grade-six repetition rate was reduced from 37 percent in 2000 to 34 percent in 2002, and experts have concluded that the original target of 15 percent set at the decision point was overly ambitious. In this context, the government has adopted a more realistic timetable and is committed to reaching the original target of 15 percent by 2006. Comprehensive pedagogical reforms have been designed and incorporated into the ten-year development plan for education, with a view to gradually achieving the original target thanks to better management of the educational system and school enrollment before the final year of the primary school cycle, as well as to better funding in the context of the EFA-FTI.

33. The staffs are of the view that the Nigerien authorities have established a solid track record of policy implementation since 1999 and that satisfactory progress has been achieved toward meeting the four remaining conditions for the floating completion point. The overall assessment of good performance since the decision point also takes into account the persistent weaknesses in the institutional capacity and the difficult circumstances under which the authorities have implemented their program, including sociopolitical tensions and delays in disbursement of external assistance. The delay in meeting the four outstanding triggers does not detract from the overall considerable progress achieved in the health and education sector since 1999.

III. Delivery of Debt Relief and Longer-Term Debt Sustainability

A. Updated Data Reconciliation for the Decision Point

34. In light of additional information received from creditors and a new reconciliation of external debt data at end-1999, IDA and IMF staffs have revised the DSA that was presented in the decision point document for Niger. The following changes may be noted (Table 8):

Table 5.

Niger: Main Assumptions Used for the Debt Sustainability Analysis at the Completion Point, 2003-22

(In percent of GDP, unless otherwise indicated)

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Sources: Nigerien authorities; and staff estimates and projections.

Total revenue, excluding grants, minus expenditure, excluding interest payments.

Total revenue, excluding grants, minus total expenditure, excluding foreign-financed investment projects.

Total revenue, excluding grants, minus current expenditures.

Table 5.

Main Assumptions Used for the Debt Sustainability Analysis at the Completion Point, 2003-22 (concluded)

(In percent of GDP, unless otherwise indicated)

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Sources: Nigerien authorities; and staff estimates and projections.

Total revenue, excluding grants, minus expenditure, excluding interest payments.

Total revenue, excluding grants, minus total expenditure, excluding foreign-financed investment projects.

Total revenue, excluding grants, minus current expenditures.

Table 6.

Niger: Balance of Payments, 2000-22

(In millions of U.S. dollars)

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Sources: Nigerien authorities; and staff estimates and projections.

After 2002, future grants for budgetary assistance are part of the remaining gap, and account for 60 percent of that gap.

In 2002, a grant of CFAF 8.9 billion was provided by the European Commission (EC) for the settlement of external payments arrears to the European Investment Bank.

In 2002, two loans of CFAF 9.4 billion and CFAF 13.7 billion were disbursed by the Organization of Petroleum Exporting Coutries (OPEC Fund) for (i) the settlement of Niger’s external payments arrears at end 1999 vis-à-vis the OPEC Fund; and (ii) the OPEC Fund’s contribution to the HIPC Initiative.

Includes after 2000 the payments of external arrears rescheduled in 2000, that is (i) in 2000, payments vis-a-vis the African Development Bank (AfDB) and the OPEC Fund; (ii) in 2002, payments vis-a-vis the OPEC Fund, Libya, the Saudi Fund for Developme and a commercial bank; and (iii) in 2003, payments vis-à-vis the European Investment Bank.

Includes in the 2002 program assistance from IDA and the AfDB that are now classified as grants; for 2003-05, includes assistance provided through a rescheduling of current maturities by Paris Club creditors (up to the completion point), and China, and of the relief granted by the Islamic Development Bank (IsDB) and the OPEC Fund.

Includes debt under discussion for CFAF 16.6 billion in 2001, CFAF 14.7 billion in 2002, and CFAF 9.5 billion in 2003. CFAF 8.8 billion are estimated in 2004 as all HIPC Initiative assistance is not assumed to be delivered by all Non-Paris Club members.

Includes assistance from the West African Economic and Monetary Union (WAEMU), the Arab Bank for Development in Africa (BADEA), the Kuwait Fund for Arab Economic Development (KFAED), the Paris Club (as of 2004), and the remaining of the assistance from the IsDB and the OPEC Fund.

Table 6.

Niger: Balance of Payments, 2000-22 (continued)

(In millions of U.S. dollars)

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Sources: Nigerien authorities; and staff estimates and projections.

After 2002, future grants for budgetary assistance are part of the remaining gap, and account for 60 percent of that gap.

In 2002, a grant of CFAF 8.9 billion was provided by the European Commission (EC) for the settlement of external payments arrears to the European Investment Bank.

In 2002, two loans of CFAF 9.4 billion and CFAF 13.7 billion were disbursed by the Organization of Petroleum Exporting Coutries (OPEC Fund) for (i) the settlement of Niger’s external payments arrears at end 1999 vis-à-vis the OPEC Fund; and (ii) the OPEC Fund’s contribution to the HIPC Initiative.

Includes after 2000 the payments of external arrears rescheduled in 2000, that is (i) in 2000, payments vis-a-vis the African Development Bank (AfDB) and the OPEC Fund; (ii) in 2002, payments vis-a-vis the OPEC Fund, Libya, the Saudi Fund for Developme and a commercial bank; and (iii) in 2003, payments vis-à-vis the European Investment Bank.

Includes in the 2002 program assistance from IDA and the AfDB that are now classified as grants; for 2003–05, includes assistance provided through a rescheduling of current maturities by Paris Club creditors (up to the completion point), and China, and of the relief granted by the Islamic Development Bank (IsDB) and the OPEC Fund.

Includes debt under discussion for CFAF 16.6 billion in 2001, CFAF 14.7 billion in 2002, and CFAF 9.5 billion in 2003. CFAF 8.8 billion are estimated in 2004 as all HIPC Initiative assistance is not assumed to be delivered by all Non-Paris Club members.

Includes assistance from the West African Economic and Monetary Union (WAEMU), the Arab Bank for Development in Africa (BADEA), the Kuwait Fund for Arab Economic Development (KFAED), the Paris Club (as of 2004), and the remaining of the assistance from the IsDB and the OPEC Fund.