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© 2008 International Monetary Fund
July 2008
IMF Country Report No. 08/211
Niger: Sixth Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility, Request for Waiver of Nonobservance of Performance Criteria, and Request for a New Three-Year Arrangement Under the Poverty Reduction and Growth Facility—Staff Report; Staff Statement; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Niger
In the context of the sixth review under the three-year arrangement under the Poverty Reduction and Growth Facility, request for waiver of nonobservance of performance criteria, and request for a new three-year arrangement under the Poverty Reduction and Growth Facility, the following documents have been released and are included in this package:
The documents listed below have been separately released.
Letter of Intent sent to the IMF by the authorities of Niger*
Memorandum of Economic and Financial Policies by the authorities of Niger*
Technical Memorandum of Understanding*
Poverty Reduction Strategy Paper
Joint Staff Advisory Note of the Poverty Reduction Strategy Paper
* Also included in Staff Report
The policy of publication of staff reports and other documents allows for the deletion of marketsensitive information.
Copies of this report are available to the public from
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International Monetary Fund
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INTERNATIONAL MONETARY FUND
NIGER
Sixth Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility, Request for Waiver of Nonobservance of Performance Criteria, and Request for a New Three-Year Arrangement Under the Poverty Reduction and Growth Facility
Prepared by the African Department
(In consultation with other departments)
Approved by Jean A. P. Clément and Anthony Boote
May 13, 2008
Contents
Executive Summary
I. Program Performance and Recent Developments
A. The Economy Is More Stable and Creditworthiness Is Being Restored
B. Performance in 2007 Was Satisfactory
II. Key Challenges: Consolidate Growth, Preserve Macroeconomic Stability, and Improve Further Fiscal Management
III. The New PRGF Arrangement
A. Maintain Macroeconomic Stability
B. Strengthen Public Finance Management and Improve Investment Climate
C. The Program for 2008
D. Program Modalities, Monitoring, and Risks
IV. Staff Appraisal
Figure
1. Selected MDG Indicators
Box
1. Main Findings of the 2004 Ex-Post Assessment of Performance Under IMF-Supported Programs and Developments After 2004
Tables
1. Proposed Scheduled Disbursements Under the Successor PRGF, 2008–11
2. Selected Economic and Financial Indicators, 2005–11
3a. Financial Operations of the Central Government, 2005–11
3b. Financial Operations of the Central Government, 2005–11 (percent of GDP)
4. Monetary Survey, 2005–11
5. Balance of Payments, 2005–11
6. Indicators of Capacity to Repay the Fund, 2006–15
7. External Financing Requirements and Sources, 2005–11
8. Budget Expenditure on Social and Rural Sectors, 2004–08
9. Petroleum Products Taxation, November 2007–May 2008
10. Road Map for Structural Conditionality Under the PRGF-Supported Program
Appendix
I. Letter of Intent
Attachment I. Memorandum of Economic and Financial Policies of the Government of Niger for 2008–11
Attachment II. Technical Memorandum of Understanding for 2008
Executive Summary
Performance on the 2005–08 PRGF-supported program was satisfactory. Significant progress has been achieved in stabilizing the economy, mobilizing revenue, and managing expenditure. Creditworthiness was restored through the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI).
All quantitative and structural performance criteria were met except for a slight slippage in the reduction of domestic arrears at end-2007, which was corrected in February 2008, and for the reduction in May 2008 of the tax take on petroleum products below the agreed floor to dampen the effect of price increases on the purchasing power of the population. However, over the past six months, the average monthly tax take on petroleum products was significantly above the floor because of significant retail price increases. All indicative targets were met.
Three structural benchmarks were missed, and another was met with delay. The three still not implemented are (i) the finalization of arrears settlement with commercial banks, for which negotiations have been protracted; (ii) the reduction of the threshold for contracts requiring approval by the General Directorate of Public Procurement, which has been rescheduled to September 2008; and (iii) the arrears compensation with the main telephone company, which is still under discussion. The regularization of depository accounts with the Treasury, and closing of inactive accounts, was completed with a three month delay.
A successor PRGF-supported program would support the authorities’ efforts to move toward meeting the MDGs while preserving economic stability. The new program emphasizes improving public expenditure management through better integrating annual budgets with the PRSP, increasing transparency and controls, mobilizing more revenue, building up the financial sector, and enhancing the investment climate.
Among the risks to the new program are adverse climatic shocks, higher food and international oil prices, and the insurgency in the North.
Given the corrective actions taken and the solid track record of the authorities in implementing the program, staff supports the requests for the waivers for nonobservance of two performance criteria, and the request for a new PRGF arrangement.
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INTERNATIONAL MONETARY FUND
NIGER
Niger: Sixth Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility, Request for Waiver of Nonobservance of Performance Criteria, and Request for a New Three-Year Arrangement Under the Poverty Reduction and Growth Facility
Informational Annex
Prepared by the African Department
(In consultation with other departments)
Approved by Jean A. P. Clément and Anthony Boote
May 14, 2008
Contents
I. Relations with the Fund
II. Relations with the World Bank Group
A. Partnership in Niger’s Development Strategy
B. Areas in which the Bank leads
C. Areas where Bank and Fund share the lead
D. Areas in which the Fund Leads
E. World Bank Group Strategy
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May 28, 2008
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Press Release No. 08/127
FOR IMMEDIATE RELEASE
M ay 29, 2008
International Monetary Fund
Washington, D.C. 20431 USA
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May 28, 2008
