The Executive Board of the International Monetary Fund (IMF) completed today the second review of Niger's economic performance under a three-year Poverty Reduction and Growth Facility (PRGF) arrangement. The completion of the review enables the release of a further SDR 5.875 million (about US$8.7 million), which will bring the total amount drawn under the arrangement to SDR 17.625 million (about US$26.1 million). Niger's PRGF arrangement was approved on January 31, 2005 (see Press Release No.05/20) and augmented in November 2005 (see Press Release No. 05/251).

The Board also granted waivers for the nonobservance of two structural performance criteria.

Following the Executive Board's discussion of Niger, Mr. Agustín Carstens, Deputy Managing Director and Acting Chair, stated:

“Despite a good harvest in late 2005 that allowed a rebound of GDP growth and easing of inflation, the effects of the 2004 drought continue. There have been large losses of livestock and a high level of household indebtedness; moreover, an estimated 1.8 million people remain vulnerable to food shortages. Notwithstanding these difficulties, the authorities persevered with the implementation of policies and reforms.

“The revised fiscal program aims at strengthening food security and advancing policies and reforms to promote growth and reduce poverty. It accommodates the cost of the 2006 food security program, as well as priority investment projects to reduce Niger's vulnerability to droughts. The program incorporates reforms to strengthen revenue and expenditure management, which are critical for fiscal sustainability and implementing pro-growth and pro-poor programs.

“The authorities are committed to using prudently the resources freed up by the Multilateral Debt Relief Initiative (MDRI), which will reduce significantly Niger's external debt burden, to advance toward the Millennium Development Goals (MDGs). The authorities should continue seeking highly concessional financing to safeguard debt sustainability, while strengthening further their external debt management capacity.

“The authorities place a high priority on reforming the financial sector and privatizing public utilities. They intend to finalize public sector disengagement from Crédit du Niger, and complete the restructuring of the National Postal and Saving Institution.

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“A timely revision of the Poverty Reduction Strategy Paper (PRSP) will be essential for mobilizing additional donor support and expediting reforms to strengthen growth and reduce poverty. The authorities will work closely with donors in streamlining and harmonizing donor conditionality, costing the MDGs, and improving coordination and information flow, to ensure timely disbursement of resources for the budget and poverty reduction programs,” Mr. Carstens said.

The PRGF is the IMF's concessional facility for low-income countries. PRGF-supported programs are based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners and articulated in the Poverty Reduction Strategy Paper (PRSP). This is intended to ensure that PRGF-supported programs are consistent with a comprehensive framework for macroeconomic, structural, and social policies to foster growth and reduce poverty. PRGF loans carry an annual interest rate of 0.5 percent and are repayable over 10 years with a 5½-year grace period on principal payments.