1. The following information has become available since the staff report (www.imf.org) was issued. It does not alter the thrust of the staff appraisal.
2. The Council of Ministers approved the supplementary budget in mid-May, and National Assembly approval is expected by the end of May. In addition to the CFAF 70 billion in spending shown in the staff report, the supplementary budget includes additional foreign-financed spending of CFAF 8 billion (0.4 percent of GDP) linked to Islamic Conference project aid for the agricultural sector, US Millennium Challenge grants for education and governance, and emergency budgetary support from the West African Economic and Monetary Union (WAEMU).
3. On the revenue side, new measures include (i) extension for the full year of the suspension of taxes on imported rice, which had been initially envisaged only for three months starting in March 2008; (ii) suspension for the full year of the VAT on domestically produced rice; (iii) suspension for the year of the excise tax on vegetable oils and the import tax on milk, and (iv) small reduction of the taxable base for sugar and flour for customs purposes. The cost of these measures is estimated at 0.6 percent of GDP, the bulk of which is generated by the measures on rice; the initial estimate given in the staff report was 0.2 percent of GDP for the three-month suspension of tax on imported rice. The revenue shortfall is offset by higher projected revenue from the re-export tax on transit trade to Nigeria and the profit tax on mining companies, and by refunds from the WAEMU of taxes on border trade. Corrections of the paragraphs of the MEFP related to the supplementary budget (¶¶ 37 and 38) have been issued http://www.imf.org.
4. The authorities have indicated (www.imf.org) that they may request an augmentation of the arrangement should additional resources be needed to deal with the increase in international hydrocarbon and food prices.
5. The CPI fell by 0.2 percent in April, reflecting a welcome small decline in the price of rice and millet, which had increased significantly over the last six months. The suspension of taxes on rice in March 2008 presumably contributed to the decline.
6. The balance of payments projection for 2008 given in the staff report, indicating a current account deficit including grants of 9.6 percent of GDP, was calculated on the basis of recent price projections for refined petroleum products for 2008. Although the Research Department’s latest oil price projections for 2008 indicate a further price increase of 17 percent, staff estimates that the impact of recent oil trends on the balance of payments of Niger in 2008 will be modest, on the order of 0.1 percent, for two reasons: First, the petroleum price most relevant to Niger’s imports is that of refined products, Mediterranean origin, for which the increase from the average 2007 level has been lower than for the three main petroleum crudes. Second, the CFA franc has appreciated by another 5 percent against the US dollar from the level used in the staff report projections for 2008.
7. While the security stock of cereals is relatively high (68,000 tons), there are concerns that it would be inadequate for interventions for vulnerable populations should the September–October harvest be lower than expected. Donors are therefore seeking to accelerate imports of cereal for the reserve (120,000 tons), which should take place in the next few months. However, tensions in world cereal markets are making this more difficult.