Abstract
This paper discusses key findings of the 2006 Article IV Consultation and Third Review Under the Poverty Reduction and Growth Facility for Niger. Macroeconomic performance and policy implementation have been broadly satisfactory. After a drought in 2004, a bumper harvest in late 2005 and good rains in 2006 have helped economic recovery, improved food security, and eased inflation. The fiscal deficit in 2006 is expected to be narrower than programmed, reflecting mainly lower spending on investment and food security.
The following information has become available sinde the issuance of the staff report for the 2006 Article IV Consultation and Third Review under the Poverty Reduction and Growth Facility. The thrust of the staff appraisal remains unchanged.
1. Fiscal developments at end-September 2006 remained in line with program objectives. Revenue performance was higher than programmed by the equivalent of 0.3 percent of GDP, while domestically financed expenditure remained below program by 0.9 percent of GDP. The revenue overperformance reflects the impact of ongoing reforms to strengthen tax and customs administration, while underspending was mainly related to the food security program, because of improved food supply and large donor assistance. As a result, the basic budget deficit (on commitment basis, excluding grants) and net domestic financing were smaller than the indicative targets.
2. The improvement in food security situation continued to reduce inflation. Year-on-year inflation declined from 0.4 percent in September 2006 to 1.4 percent in November.