Statement by the IMF Staff Representative

This paper focuses on Mali’s First Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility and Request for Waiver of Nonobservance Performance Criteria. 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.

Abstract

This paper focuses on Mali’s First Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility and Request for Waiver of Nonobservance Performance Criteria. 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.

1. This statement provides additional information that has become available since the circulation of the staff report. The information does not change the thrust of the staff appraisal.

2. Industrial gold production in 2004 amounted to 41.6 tons, consistent with the revised program projections.

3. The rate of consumer price inflation increased to the program projection for 2005. Consumer prices increased by 2.5 percent over the 12 months to January 2005, largely on account of increases in the prices of food items. Non-food inflation was 0.8 percent.

4. In 2004, monetary and credit aggregates expanded faster than expected under the program, while still decelerating substantially compared to 2003. Broad money increased by 11.9 percent (6.6 percent programmed) primarily on account of faster growth of credit to the economy (6.0 percent against 1.4 percent programmed). Net international reserves increased by US$100 million over the year, very slightly below program estimates.

5. Preliminary data indicate that budget execution in 2004 was in line with the staff report estimates. Revenues at end-December were broadly as estimated, while modest shortfalls in external grants and loans were covered through a reduction of current spending and additional domestic financing. A short-term treasury bill issue took place on the regional market in January 2005, rolling over bills maturing at end-2004.

6. Against a background of rising oil prices, the authorities increased pump prices by 1.5 percent in February 2005. At the same time, fuel excises were lowered by an equivalent of 2.5 percent of the pump price. The authorities have reconfirmed their commitment to raise fuel excises back to levels prevailing in early 2004 by end-March 2005.

7. Progress in privatization is continuing, consistent with the program. A contract with a privatization adviser for BIM-SA was signed on January 25, 2005. Discussions for the sale of the cotton-seed processor company are at their final stage. The sale is expected to amount to about CFAF 9 billion.

8. The U.K. and Canadian authorities announced plans to fund a portion of Mali’s debt service to the World Bank and African Development Bank. The relief totals approximately US$65 million over 2005–15 (1 percent of current GDP and 7 percent of exports of goods and services).

Mali: First Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility and Request for Waiver of Nonobservance of Performance Criteria
Author: International Monetary Fund