May 8, 2008
The 2008 debt sustainability analysis (DSA) indicates that Mali is at a low risk of debt distress. The outlook remained broadly stable since the previous DSA, completed in October 2007. Further fiscal consolidation, structural reforms to reduce vulnerability to shocks, and strengthened debt management would help Mali further reduce its risk of debt distress.
Prepared jointly by IMF and World Bank staff. ADB staff was consulted during the preparation process.
HIPC debt relief was granted by all multilaterals, Paris Club bilateral creditors, and three non-Paris Club creditors (Saudi Arabia, Kuwait and China). Negotiations with four countries are ongoing.
This reflects new concessional loans from IDA and the ADB, and a non-concessional loan from IsDB.
The 2007 PRSP projects an annual economic growth of 7 percent. The teams assumed a more conservative approach, taking into account the current pace of economic reform, assuming that the economy will grow at its historical trend rate of 5 percent per year.
Based on the World Bank classification, the external debt burden thresholds relevant for Mali are (i) NPV of debt-to-exports ratio of 150 percent; (ii) NPV of debt-to-revenue of 250 percent; (iii) NPV of debt-to-GDP of 40 percent; and (iv) debt service-to-exports and revenue ratios of 20 and 30 percent, respectively.
In the past, Mali has generally contracted concessional loans. In 2007, a non-concessional package was contracted from the IsDB in the amount of US$71 million (about 1 percent of Mali’s 2007 GDP). Based on the economic merits of the package, IDA granted a waiver on its non-concessional borrowing policy.
Excluding grants, the NPV-of-debt-to-revenue ratio is projected to increase from 75.8 percent in 2007 to 152 percent in 2026.
Mali’s current debt strategy relies on lower cost concessional external financing, thereby reducing the stock of the government’s domestic borrowing and promoting the “crowding in” of credit to the private sector.