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© 2005 International Monetary Fund

April 2005

IMF Country Report No. No. 05/129

Mali: First Review Under the Three–Year Arrangement Under the Poverty Reduction and Growth Facility and Request for Waiver of Nonobservance Performance Criteria—Staff Report; Staff Statement; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Mali

In the context of the fourth review under the three-year arrangement under the Poverty Reduction and Growth Facility and request for a waiver of nonobservance of performance criteria, the following documents have been released and are included in this package:

  • the staff report for the first review under the three-year arrangement under the Poverty Reduction and Growth Facility and request for waiver of nonobservance performance criteria, prepared by a staff team of the IMF, following discussions that ended on November 13, 2004, with the officials of Mali on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on February 7, 2005. The views expressed in the staff report are those of the staff team and do not necessarily reflect the views of the Executive Board of the IMF.

  • a staff statement of March 7, 2005 updating information on recent developments.

  • a Press Release summarizing the views of the Executive Board as expressed during its March 7, 2005 discussion of the staff report that completed the review and request.

  • a statement by the Executive Director for Mali.

The documents listed below have been or will be separately released.

  • Letter of Intent sent to the IMF by the authorities of Mali*

  • Addendum to the Technical Memorandum of Understanding*

  • *May also be included in Staff Report

The policy of publication of staff reports and other documents allows for the deletion of market-sensitive information.

To assist the IMF in evaluating the publication policy, reader comments are invited and may be sent by e-mail to

Copies of this report are available to the public from

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First Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility and Request for Waiver of Nonobservance of Performance Criteria

Prepared by the African Department in consultation with other departments

Approved by Benedicte Vibe Christensen and Martin Fetherston

February 7, 2005

  • PRGF Arrangement. The Fund supports Mali’s economic program for 2004–07 under a PRGF approved by the Executive Board in June 2004. On that occasion Directors welcomed progress made in implementing the PRSP, while pressing the need for a clearer prioritization of policy actions. They also encouraged the authorities to implement decisively the agenda of structural reforms to strengthen the economy’s resilience to external shocks. Total access under the arrangement is SDR 9.33 million, or 10 percent of quota, of which SDR 1.33 million has been disbursed so far (Appendix I). A further SDR 1.33 million becomes available on the completion of this review. The World Bank is also supporting Mali’s program through both project and adjustment credits (Appendix II).

  • Political Developments. The domestic political situation remains stable. In the sub-region, an end to a cease fire between government and rebels in neighboring Côte d’Ivoire in November 2004 has heightened tension. However, direct effects on Mali have been limited, with most trade already rerouted through more distant ports.

  • Discussions. During September 13–20 and November 2–13, 2004, the staff team met with Prime Minister Maiga, Finance Minister Traoré, BCEAO National Director Traoré, and other senior officials. The mission also met with representatives from the banking and business communities and with civil society.

  • The Staff Team’s members were Chris Lane (head), Abdoul Aziz Wane, Jean- Claude Nachega, Charalambos Tsangarides (all AFR), Alejandro Simone (FAD), and Abdelali Tazi (Resident Representative).


  • Executive Summary

  • I. Recent Developments

  • II. Policy Discussions

    • A. Macroeconomic Framework

    • B. Fiscal Policy and Reforms

    • C. Monetary Policy and Financial Sector Reforms

    • D. Cotton Sector and Privatization

  • III. Program Modalities

  • IV. Staff Appraisal

  • Tables

  • 1. Selected Economic and Financial Indicators, 2002–07

  • 2. Selected National Accounts Indicators, 2002–07

  • 3. Balance of Payments, 2002–07

  • 4. External Financing Requirements and Resources, 2002–07

  • 5. Monetary Survey, 2002–05

  • 6. Central Government Consolidated Financial Operations, 2002–05

  • 7. Fund Position, 2002–05

  • 8. Millennium Development Goals, 1990–2002

  • Figures

  • 1. Macroeconomic Indicators, 1999–2007

  • 2. Main External Indicators, 1999–2007

  • 3. Main Fiscal Indicators, 1992–2005

  • Boxes

  • 1. Economic Impact of Locust Infestation

  • 2. Economic Impact of Increases in Excises on Petroleum Products

  • 3. Cotton Sector Reform

  • Appendices

  • I. Relations with the Fund (As of December 31, 2004)

  • II. Relations with the World Bank (As of January 5, 2005)

  • III. Assessing External Debt Sustainability

  • Attachment

  • Attachment 1: Letter of Intent

  • Annexes

  • Annex A: Quantitative Performance Criteria and Indicative Targets for March 2004–December 2005

  • Annex B: Structural Conditions, 2004–05

  • Annex C: Addendum to the Technical Memorandum of Understanding

Executive Summary

  • Economic performance has weakened, largely on account of unfavorable external developments. Low rainfall and locust attacks have reduced 2004/05 food production and significantly slowed GDP growth. A drop in cotton prices, coupled with a rise of oil prices, has substantially weakened the terms of trade, thereby reducing potential income growth in 2005. Nonetheless, consumer price inflation has been subdued.

  • Program implementation in 2004 was mixed. The authorities stuck to their fiscal program, meeting all targets and indicators through end-September, despite some revenue and financing shortfalls. However, progress on structural reforms, particularly privatization, has been disappointing. The authorities request waivers for three structural performance criteria on the basis of corrective actions concerning privatization policies in the cotton, telecommunications and banking sectors.

  • Policy discussions focused on the draft 2005 budget. To maintain macroeconomic stability in 2005, the authorities have committed to adjust to the terms of trade shock through fiscal and structural measures. The measures include passing on world oil price increases to consumers by reversing fuel excise cuts and reducing budget spending to accommodate the financing needs of the cotton sector.

  • To close a residual financing gap of 0.9 percent of GDP, the authorities have requested increased concessional financing. Donors offered assurances to cover the financing gap, and the authorities have committed to covering any shortfalls that arise through further fiscal adjustment. The package will be finalized in the context of the second review.

  • Cotton sector privatization has been postponed by the authorities from 2006 to 2008 to give more time to put in place the necessary preparatory steps.

  • The authorities have an appropriately ambitious program of structural reform for 2005. A new flexible producer price mechanism will send world price signals to the cotton sector and minimize future budgetary risks. Efforts will be made to increase non tax revenues. The authorities will continue their public expenditure management reforms and review their policies in the area of social safety net spending and electricity subsidies. A significant reform of the civil service pension fund is under way.

  • Financial sector reforms. The authorities are continuing their efforts to dispose of remaining state shareholdings in commercial banks, as well as strengthening private pension provision, microfinance supervision, and insurance sector regulation.

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March 7, 2005

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Press Release No. 05/55


March 8, 2005

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March 7, 2005