Mali: First Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility, and Requests for Waiver of Nonobservance of Performance Criteria, and Deletion and Modification of Performance Criteria: Informational Annex

This paper presents Mali’s First Review under the Poverty Reduction and Growth Facility, and requests for Waiver of Nonobservance of Performance Criteria. The food and fuel price shocks have begun to moderate, partly because of the authorities' supply-side measures and declining oil prices. New risks are emerging from the global credit crisis and its spillover effects onto global growth, commodity markets, and exchange rates. The authorities need to be vigilant on the fiscal front because policies have relaxed owing to external food and fuel price shocks and higher-than-expected nondebt financing.


This paper presents Mali’s First Review under the Poverty Reduction and Growth Facility, and requests for Waiver of Nonobservance of Performance Criteria. The food and fuel price shocks have begun to moderate, partly because of the authorities' supply-side measures and declining oil prices. New risks are emerging from the global credit crisis and its spillover effects onto global growth, commodity markets, and exchange rates. The authorities need to be vigilant on the fiscal front because policies have relaxed owing to external food and fuel price shocks and higher-than-expected nondebt financing.

Appendix I. Mali: Relations with the Fund

(As of October 31, 2008)

I. Membership Status: Joined September 27, 1963 Article VIII

II. General Resources Account

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III. SDR Department

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IV. Outstanding Purchases and Loans

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V. Latest Financial Arrangements

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VI. Projected Payments to Fund (SDR millions;based on existing use of resources and present holdings of SDRs):

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VII. Implementation of HIPC Initiative

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Assistance committed under the original framework is expressed in net present value (NPV) terms at the completion point, and assistance committed under the enhanced framework is expressed in NPV terms at the decision point. Hence these two amounts cannot be added.

Under the enhanced framework, an additional disbursement is made at the completion point corresponding to interest income earned on the amount committed at the decision point but not disbursed during the interim period.

Decision point—point at which the IMF and the World Bank determine whether a country qualifies for assistance under the HIPC initiative and decide on the amount of assistance to be committed.

Interim assistance—amount disbursed to a country during the period between decision and completion points, up to 20 percent annually and 60 percent in total of the assistance committed at the decision point (or 25 percent and 75 percent, respectively, in exceptional circumstances).

Completion point—point at which the country receives the remaining balance of its assistance committed at the decision point, together with an additional disbursement of interest income as defined in footnote 2 above. The timing of the completion point is linked to the implementation of pre-agreed key structural reforms (i.e., floating completion point).

VIII. Implementation of Multilateral Debt Relief Initiative (MDRI)

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IX. Safeguards Assessments

The Central Bank of West African States (BCEAO) is a common central bank of the countries of the West African Economic and Monetary Union. The most recent safeguards assessment of the BCEAO was completed on November 4, 2005. The assessment indicated progress has been made in strengthening the bank’s safeguards framework since the 2002 assessment and identified some areas where further steps would help solidify it. The BCEAO now publishes a full set of audited financial statements and improvements have been made to move financial reporting closer to International Financial Reporting Standards (IFRS). Furthermore, an internal audit charter has been put in place, mechanisms for improving risk management have been established, and follow-up on internal and external audit recommendations has been strengthened. The results of continuous safeguards monitoring indicate that while certain vulnerabilities remain in internal control systems and legal structure, there has been some progress in other areas, including through: (i) improving the external audit process by adopting a multi-year audit program; (ii) establishing an audit committee; (iii) expanding disclosures on financial positions of WAEMU countries with the Fund in the notes to the annual financial statements; and (iv) further strengthening of the effectiveness of the internal audit function.

X. Exchange Rate Arrangements

Mali is a member of the West African Economic and Monetary Union (WAEMU). The exchange system, common to all members of the union, has no restrictions on the making of payments and transfers for current international transactions. The union’s common currency, the CFA franc, was pegged to the French franc at the rate of CFAF 50 = F 1 from 1948 until early 1994. Effective January 12, 1994, the CFA franc was devalued, and the new parity set at CFAF 100 = F 1. Effective January 1, 1999, the CFA franc was pegged to the Euro at a rate of CFAF 655.96 = EUR 1.

As of June 1, 1996, Mali and other members of WAEMU accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund’s Articles of Agreement. Mali’s exchange system has no restrictions on making payments or transfers for current international transactions and the country does not engage in multiple currency practices.

Sharing a common trade policy with other members of WAEMU, Mali has shifted key trade policy-making to the sub-regional level. The common external tariff (CET) was adopted in January 2000. Mali complies with the union’s tariff rate structure and has effectively dismantled internal tariffs. WAEMU tariff reform has reduced the simple average custom duty from 22.1 percent in 1997 to 14.6 percent in 2003 (latest available): the maximum rate is 20 percent. Imports to Mali are not subject to quantitative restrictions.

Mali’s exports to the European Union generally enjoy non-reciprocal preferential treatment in the form of exemption from import duties under the Everything but Arms initiative. Malian goods enjoy nonreciprocal preferential access to the markets of developed countries other than the European Union under the Generalized System of Preferences. Mali is also eligible to benefits from the United States’ African Growth and Opportunity Act. At the WAEMU level, officially Mali experiences no regulatory impediments to its exports.

XI. Article IV Consultations

Mali’s Article IV consultation cycle is governed by the provisions of the July 2002 decision on consultation cycles. The Executive Board completed the 2008 Article IV consultation on May 28, 2008.


Regarding the HIPC Assessment Action Plan, a May 2004 mission concluded that progress had been achieved. The number of tightly defined benchmarks observed by Mali had increased from 8 out of 15 in 2001 to 11 out of 16, and significant advances were made in the areas where the benchmarks were not yet met. The report put forward an action plan to strengthen Mali’s budget management capacity, with the view to helping Mali meet all 16 indicators in the medium term. One of the priorities the mission identified in many areas was to extend beyond the procedural monitoring of compliance with the rules to emphasize effectiveness and efficiency based on a tighter focus on risk management.

XIII. Technical Assistance

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Appendix II: Mali: IMF-World Bank Relations

(April 8, 2008)2

A. Partnership in Mali’s development strategy

1. Mali’s Growth and Poverty Reduction Strategy Framework (GPRSF) adopted by the Government in December 2006, comprises programs over the 2007-11 period grouped under the following three pillars: (i) infrastructure development and strengthening of the productive sectors (including food security, rural development, SME development, and sustainable natural resources management); (ii) strengthening the structural reform agenda (comprising public sector reforms, investment climate, financial sector, governance, and capacity of the civil society); and (iii) strengthening of social sector services (including promotion of job creation, improved access to basic social services, and HIV/AIDS).

2. The IMF and World Bank staffs maintain a collaborative relationship in supporting the Government’s macroeconomic and structural reforms, in line with the guidelines for enhanced Bank-Fund collaboration. This includes participation of Bank staff in the meetings with the Malian authorities on the Fund’s program review missions, and IMF staff participation in Bank development policy missions as well as in Bank internal review meetings on key operations or studies. The IMF takes the lead in macroeconomic stabilization and the World Bank in social and structural areas, with close collaboration on a few structural areas that have a particular impact on macroeconomic stability. The Fund’s dialogue and conditionality are consistent with the structural programs agreed with the Bank, and the Bank’s policy framework with Mali is elaborated consistent with the Governments’ macroeconomic framework agreed with the Fund.

B. World Bank Group strategy

3. The World Bank Group’s strategy, outlined in the new joint IDA-IFC Country Assistance Strategy (CAS), discussed by the Board of Directors on February 5, 2008 selectively supports key pillars of the 2006 GPRSF. The CAS covers the period FY08-11 and has two strategic objectives: (i) promote rapid and broad-based growth; and (ii) strengthen public sector performance for service delivery. Within the two CAS pillars, the Bank will focus on (a) private sector led growth by addressing key constraints such as productivity, energy, transport, and finance and by linking the country to the rest of the world; b) governance; and (c) capacity development. The Bank also supports Mali under the Bank’s Regional Integration Assistance Strategy (2001), notably the programs for connection to the West Africa Power Pool, harmonization of country policies and/or regulatory frameworks (telecommunications, agriculture, and financial sectors), water resource development of the Niger and Senegal Rivers, strengthening of road transport corridors and transit facilitation, and strengthening the regional payments system. The Bank’s assistance to Mali in its support to regional integration will be fully aligned with the regional PRS and UEMOA regional economic program (REP) priorities.

4. As of December 2007, the IDA portfolio in Mali consists of 14 operations totaling $622.4 million in net commitments, of which $353.5 million (57 percent) remain undisbursed. Including the regional operations, the portfolio amounts to $723.8 million. Close to 47 percent of the IDA portfolio is concentrated in the rural development sector and more than 22 percent in the transport sector.. Since FY07, the Bank has provided budget support through Poverty Reduction Support Credits (PRSCs) underpinned by a medium-term program. In light of the limited IDA allocations,, the FY08-FY11 CAS envisages yearly PRSCs and self-standing investments in key projects in the energy, agriculture and urban sectors.

5. Recently completed non-lending activities include a Macroeconomic Growth and Water Variability study, Poverty Assessment, Country Procurement Assessment Review (CPAR), a Diagnostic Trade Integrated Framework Study, urban sector review, health and education country status reports, transport and growth study, a Poverty and Social Impact Analysis of the cotton sector, and a Country Economic Memorandum providing analysis on Mali’s growth performance and prospects. The Bank has also assisted with development of medium-term expenditure frameworks (MTEF) for health, education, transport, and agriculture-livestock-fisheries sectors. In FY07, the Bank was the lead donor for Mali’s Public Expenditure and Financial Accountability (PEFA) review. Ongoing non-lending activities include a Public Expenditure Management and Financial Accountability Review (PEMFAR), and three studies: Demography and Economics, Rural Finance and Governance Diagnostic. Going forward, the Bank will focus on tackling constraints to growth and service delivery. The FY09 indicative knowledge program includes a growth note on mining, a study on remittances, an investment climate assessment (ICA) update, a country environmental assessment and a skills development study.

C. IMF-World Bank collaboration

6. Areas in which the Fund leads. The Fund takes the lead in macroeconomic stabilization including macro-fiscal policy, monetary policy, exchange rate policy, and financial stability and risk management.

7. Areas in which the Bank leads. The Bank takes the lead in structural areas where both institutions have conditionality, including cotton sector reform, privatization and regulatory reform (telecommunications, banking, financial and energy sectors), pension reform, and measures to improve the investment climate. The Bank also leads in other areas such as: agricultural competitiveness/diversification; rural development (irrigation, roads, support to producer organizations); private sector development (strengthening the investment climate, telecommunications sector, airport improvement, mining regulation and environment management, small-scale mining, access to business services, support to small/medium enterprises); urban development (land/housing market development, water/road infrastructure); transportation policy/infrastructure; energy sector reforms; and social sectors (health, education and social protection, including HIV/AIDS). The Bank’s work in structural areas includes analytical work and dialogue on trade and growth policies, which form part of the overall economic policy dialogue. The Bank collaborates closely with other donors in all areas of its sector dialogue with Mali. Harmonized donor support is established in some sections (health, education, Office du Niger, cotton) and is being established in other sectors, namely rural water supply and sanitation. The Bank is lead donor in the dialogue to harmonize donor budget support to Mali.

8. Areas of shared responsibility. Both Bank and Fund collaborate in assessing performance of HIPC resource use. Both also monitor progress on budgetary and public expenditure management, yet emphasize different aspects of the Government’s reform program in the respective support operations to Mali. The Bank emphasis in this area is on strengthening all phases of the public expenditure system—budget preparation, execution, and controls—to support the Government’s objectives of progressive shifts toward result-based budgeting and improved expenditure management. Bank support is at the national level in the finance ministry (global MTEF, integrated information technology system, audit capabilities, budget reporting) and sector ministries (selected sector MTEFs, inter- and intra-sectoral allocations), as well as at de-concentrated levels of the government (IT system, capacity building). The Fund’s emphasis is on fiscal management, expenditure management (including financing of transfers to parastatals), revenue enhancing measures, and audit capabilities. Table 1 summarizes the areas of Bank-Fund collaboration in Mali.

Table 1.

Bank Fund Collaboration in Mali

(ongoing or planned)

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Prepared by World Bank staff. Questions may be referred to Ms Bassani (Acting Country Director, 473-2644) or Ms. Sousa (Sr. Economist, 473-2558).

Appendix III: Mali: Statistical Issues

(As of September 30, 2008)

Data provision has some shortcomings, but is broadly adequate for surveillance. Mali has been participating in the General Data Dissemination System (GDDS) since September 2001 and has advanced the implementation of its short- and medium-term plans for improvement. The metadata posted on the Dissemination Standards Bulletin Board (DSBB), last certified in June 2003, require updating.

Real sector

There are weaknesses in the accuracy, coverage, and timeliness of national accounts data. The main reason has been the inadequacy of source data, along with insufficient funding and technical staffing of the National Directorate of Statistics and Data Processing (DSDP). With the support of AFRITAC West, a mission in September 2008 reviewed reliability of the source data of the 2006 national accounts and assisted the NSO in compiling the 2006 national accounts. The work on implementing the System of National Accounts 1993 (1993 SNA) and rebasing the national account data is ongoing with the support of the West African Economic and Monetary Union (WAEMU) commission and AFRITAC West.

In collaboration with other West African Economic and Monetary Union (WAEMU) member countries, the DSDP has been compiling and publishing a harmonized consumer price index (CPI) for Bamako, on a monthly basis since early 1998. Index weights and, possibly, extension of coverage to additional cities are under review.

Government finance statistics

As part of the process of economic integration among the member countries of the WAEMU, the country has made significant progress in bringing its fiscal data in line with the common framework that has been developed with technical assistance from the Fund (the harmonized table of government financial operations – TOFE). However, further efforts are needed to improve the timeliness of the TOFE. Work is progressing with the assistance of STA, AFRITAC West and AFRISTAT to expand the coverage of the TOFE to public agencies and local governments. Fiscal data are re-disseminated on the Bank of Central African States (BCEAO) and the WAEMU’s website, and the Ministry of Economy and Finance launched a website in 2006.

In July 2007 a GFS mission visited Bamako to advance further the implementation of the Government Finance Statistics Manual 2001, and subsequently a country page was introduced in the 2007 issue of GFS Yearbook. To date the authorities have supplied six years of annual GFS data and they are preparing to disseminate quarterly data to STA for publication in IFS. In January 2008, the Minister of Finance issued a decree committing the government to the development of a database which will facilitate the balance sheet approach to analysis of the public sector; among the first steps will be an inventory and appraisal of the fair market value of nonfinancial assets. In July 2008, STA AFRITAC West staff visited Bamako for a short follow-up mission and was provided with complete data on both social security agencies.

Public debt statistics are prepared and monitored by separate agencies: external debt by the National Public Debt Directorate (NPDD) and domestic debt by the National Directorate of the Treasury and Government Accounting. The NPDD uses CS-DRMS accounting software. Debt data and projections are of generally good quality, although there is scope for improving presentation as well as the coverage of debt relief (multilateral and bilateral). A procedure for regularly updating exchange rate projections is needed.

Monetary data

Preliminary monetary data are prepared by the national agency of the BCEAO and released officially by the headquarters of the BCEAO. The dissemination of monthly monetary data from the BCEAO takes four to six weeks consistent with GDDS recommendations. Data are posted on the BCEAO website with a considerably longer lag.

In June 2005, the BCEAO made substantial revisions to the estimates of currency in circulation in member states. The revised method, based on updating sorting coefficients, has been applied retroactively from December 2003. The revised estimates increased the export of CFA franc banknotes from Mali to other member states, from 2003 resulting in a reduction of currency in circulation and a reduction of the counterpart net foreign assets in the BCEAO national balance sheet. Parallel revisions were also made to the balance of payments. Nonetheless, the national BCEAO balance sheets remain estimates based on the calculation of banknote movements.

In March 2006, as part of the authorities’ efforts to implement the MFSM’s methodology, the BCEAO reported to STA test data for the central bank for June 2005 for all member countries using the Standardized Report Form (1SR). In response to STA’s comments, the BCEAO has recently provided a revised 1SR and indicated that the form for Other Depository Corporations (2SR) is being prepared.

Balance of payments

In December 1998, the responsibility for compiling and disseminating balance of payments statistics was formally assigned to the BCEAO by area-wide legislation adopted by the countries participating in the WAEMU. The BCEAO national agency disseminates balance of payments statistics with a longer lag than that consistent with GDDS guidelines. The BCEAO national agency compiles quarterly balance of payments statements, which, however, are not sufficiently robust for publication.

The foreign assets of the private non banking sector are not well covered in the financial accounts as the surveys of residents’ foreign assets remain very partial, and no use is made of an existing alternative source, e.g., BIS statistics.

The April-May 2003 multi sector statistics mission found that the balance of payments compilation system is generally sound and encouraged the authorities to integrate banking settlement sources and disseminate the balance of payments within the recommended timeliness, as set by the GDDS. Implementation of these recommendations is pending. Annual statistics on balance of payments and international investment position are reported to STA on a regular basis.

Poverty Statistics

The PRS Annual Update identifies a key set of poverty indicators for monitoring of the PRS implementation.

Mali: Common Indicators Required for Surveillance

(As of September 30, 2008)

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Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability position vis-à-vis nonresidents.

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

1 The MDRI provides 100 percent debt relief to eligible member countries that qualify for the assistance. Grant assistance from the MDRI Trust and MDRI Trust and HIPC resources provide debt relief to cover the full stock of debt owed to the Fund as of end-2004 that remains outstanding at the time the member qualifies for such debt relief.


This note is updated on an annual basis by World Bank staff.