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© 2011 International Monetary Fund

February 2011

IMF Country Report No. 11/37

Mali: Fifth Review Under the Three-Year Arrangement Under the Extended Credit Facility and Request for Extension of the Arrangement and Rephasing of Disbursement—Staff Report; Joint IDA/IMF Debt Sustainability Analysis; Informational Annex; Staff Statement; Statement by the Executive Director for Mali; and Press Release on the Executive Board Discussion

In the context of the fifth review under the three-year arrangement under the Extended Credit Facility and request for extension of the arrangement and rephasing of disbursement, the following documents have been released and are included in this package:

  • The staff report for the Fifth Review Under the Three-Year Arrangement Under the Extended Credit Facility and Request for Extension of the Arrangement and Rephasing of Disbursement, prepared by a staff team of the IMF, following discussions that ended on November 10, 2010, with the officials of Mali on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on January 2, 2011. The views expressed in the staff report are those of the staff team and do not necessarily reflect the views of the Executive Board of the IMF.

  • Joint IDA/IMF Debt Sustainability Analysis

  • Informational Annex

  • A staff statement of January 20, 2001, updating information on recent developments.

  • A statement by the Executive Director for Mali.

  • A Press Release summarizing the views of the Executive Board as expressed during its January 26, 2001, discussion of the staff report that completed the request and/or review.

The policy of publication of staff reports and other documents allows for the deletion of market-sensitive information.

Copies of this report are available to the public from

International Monetary Fund • Publication Services

700 19th Street, N.W. • Washington, D.C. 20431

Telephone: (202) 623-7430 • Telefax: (202) 623-7201

E-mail: publications@imf.org • Internet: http://www.imf.org

International Monetary Fund

Washington, D.C.

Front Matter Page

INTERNATIONAL MONETARY FUND

MALI

Fifth Review Under the Three-Year Arrangement Under the Extended Credit Facility and Request for Extension of the Arrangement and Rephasing of Disbursement

Prepared by the African Department

(In consultation with other departments)

Approved by Roger Nord and Thomas Dorsey

January 3, 2011

Discussions. The discussions were held in Bamako during October 28–November 10, 2010. The staff team comprised Mr. Josz (head), Ms. Farahbaksh, and Messrs. Ghazanchyan, Blondy, Féler (resident representative) and Traore (local economist). The team met Prime Minister Modibo Sidibé, Minister of Finance and Economy Sanoussi Touré, Minister of Budget Lassine Bouaré, National Director of the Central Bank of West African States (BCEAO) Tatam Ly, other ministers and senior officials, the Vice-President of the National Assembly’s Finance Commission, trade union leaders, as well as representatives from the donor community, the private sector, and civil society.

ECF arrangement. The three-year arrangement under the Extended Credit Facility (ECF) was approved on May 28, 2008, in the amount equivalent to SDR 27.99 million (30 percent of quota). The fourth review was completed on July 16, 2010, along with the conclusion of the 2010 Article IV Consultation. The authorities are requesting the sixth disbursement under the arrangement (SDR 2 million), an extension of the arrangement from May 27, 2011 to December 31, 2011, and a rephasing of the last disbursement (SDR 2 million) into two equal tranches.

Staff views. The staff recommends completion of the review, extension of the arrangement, and rephasing of the last disbursement on the basis of the authorities’ achievements and policy intentions.

Contents

  • Executive Summary

  • I. Background

  • II. Recent Economic Developments and 2010 Program Implementation

  • III. Program Issues

    1. The Medium-Term Macroeconomic Framework

    2. Fiscal Policy and Reforms

    3. Debt Sustainability

    4. Other Structural Reforms

    5. Relations with the Fund

    6. Program Modalities and Risks

  • IV. Staff Appraisal

  • Appendix I. Letter of Intent

    • Attachment I. Memorandum of Economic and Financial Policies for 2010–11

    • Attachment II. Technical Memorandum of Understanding

  • Figure

  • 1. Macroeconomic Developments, 2008–13

  • Text Tables

  • 1. Key Economic Indicators, 2008–13

  • 2. Central Government Consolidated Financial Operations, 2010–11

  • Tables

  • 1. Selected Economic and Financial Indicators, 2008–13

  • 2. National Accounts, 2008–13

  • 3. Central Government Consolidated Financial Operations, 2008–13, in CFA billion

  • 4. Central Government Consolidated Financial Operations, 2010, in CFA billion

  • 5. Central Government Consolidated Financial Operations, 2008–13, in percent of GDP

  • 6. Balance of Payments, 2008–13

  • 7. Monetary Survey, 2008–13

  • 8. Financial Soundness Indicators of the Banking Sector, 2002–10

  • 9. Indicators of Capacity to Repay the Fund, 2008–14

  • 10. Schedule of Disbursements under the ECF Arrangement, 2008–11

  • 11. Millennium Development Goals, 1990–2008

ACRONYMS

ACCT

Central Treasury Accounting Bureau

ACI

Property Transfer Agency

AFRITAC

West Africa Regional Technical Administration Center

BCEAO

Central Bank of West African States

BHM

Banque de l’Habitat du Mali (Housing Bank of Mali)

CFAF

CFA francs

CMDT

Compagnie Malienne pour le Développement des Textiles (Cotton Ginning Company of Mali)

DGD

Directorate General of Customs

DGDP

Directorate General of Public Debt

DGI

Directorate General of Taxation

DME

Medium-sized Business Directorate

DNDC

National Directorate of Property Titles

DSA

Debt Sustainability Analysis

ECF

Extended Credit Facility

EITI

Extractive Industry Transparency Initiative

EPA

Ex-Post Assessment

FSAP

Financial Sector Assessment Program

G-PRSP

Growth and Poverty Reduction Strategy Paper

HIPC

Highly Indebted Poor Countries

MEFP

Memorandum of Economic and financial policies

MDGs

Millennium Development Goals

MDRI

Multilateral Debt Relief Initiative

OMH

National Housing Authority

PAGAM-GFP

Programme d’action gouvernementale d’amélioration et de modernisation de la gestion des finances publiques (Government Action Program for Improving and Modernizing Public Finance)

PC

Performance criterion

PEFA

Public expenditure and financial accountability

PFM

Public Financial Management

PGT

General Payment Office

PRSP

Poverty Reduction Strategy Paper

RGD

Tax Collection Office

SMEs

Small and mediaum-sized enterprises

SOTELMA

Société de Télécommunications du Mali (Telephone Company of Mali)

TFPs

Technical and financial partners

TMU

Technical Memorandum of Understanding

TOFE

Central Government Consolidated Financial Operations Table

VAT

Value-added tax

WAEMU

West African Economic and Monetary Union

Executive Summary

Program performance has been good. Macroeconomic outcomes have been favorable, helped by the able fiscal stewardship of the authorities. All end-June performance criteria and all but two end-June and end-September 2010 indicative targets were met. Three out of four structural benchmarks for the fifth review were observed, albeit with delay. Work is underway to meet the remaining benchmark. The end-year fiscal targets and structural benchmarks are within reach.

The authorities are requesting an extension of the ECF arrangement from May 27, 2011 to end-December 2011 (and a rephasing of the remaining disbursement in two equal tranches) to allow additional time for reaching new understandings on program design and policies. This would also enable the authorities to take full account of the findings of the ongoing Ex-Post Assessment (EPA) of the last seven years of Fund engagement in Mali, before deciding on the future nature of its engagement with the Fund.

The 2011 program aims to sustain economic growth, maintain low inflation, promote fiscal consolidation, and emphasize priority spending under Mali’s second Growth and Poverty Reduction Strategy (G-PRSP II) for 2007–11:

  • The draft 2011 budget introduced to Parliament is closely aligned with the program’s macroeconomic objectives and the G-PRSP II priorities.

  • The program’s spending envelope is slightly smaller than in the budget (by 0.5 percent of GDP), in anticipation of a supplementary budget that will identify resources to pay for underestimated VAT tax refunds in the draft budget, while keeping the deficit target unchanged.

  • The program will advance key reforms in tax policy, tax and customs administration, public financial management (PFM), financial sector development, and the cotton sector.

On the basis of the authorities’ achievements and policy intentions, the staff recommends completion of the review, extension of the ECF arrangement, and rephasing of the last disbursement.

Front Matter Page

INTERNATIONAL DEVELOPMENT ASSOCIATION

AND

INTERNATIONAL MONETARY FUND

MALI

Joint IDA/IMF Debt Sustainability Analysis Under the Debt Sustainability Framework for Low-Income Countries

Prepared by the staffs of the World Bank and the International Monetary Fund

Approved by Roger Nord and Thomas Dorsey and Jan Walliser and Carlos Braga (World Bank)

January 3, 2011

The updated DSA indicates that the risk of debt distress shifts from low to moderate because of increased vulnerabilities owing to higher volatility of gold exports than anticipated in the 2009 DSA. With the expected decline in gold exports in the medium term and the uncertain prospects for export diversification, Mali’s debt sustainability needs to remain under close scrutiny and to continue to be supported by prudent financial policies.

Front Matter Page

INTERNATIONAL MONETARY FUND

MALI

Fifth Review Under the Three-Year Arrangement Under the Extended Credit Facility and Request for Extension of the Arrangement and Rephasing of Disbursement—Informational Annex

Prepared by the African Department

(In collaboration with other departments)

Approved by Roger Nord and Thomas Dorsey

January 3, 2011

  • Relations with the Fund. Describes financial and technical assistance from the Fund and provides information on the safeguards assessment and exchange rate system.

  • Joint Management Action Plan (JMAP). Describes the priorities and main activities of the World Bank Group and areas of cooperation with the IMF in their work with Malian authorities.

  • Statistical Issues. Assesses the quality of economic statistics. Data provision for surveillance purposes is adequate overall, but weaknesses in a broad range of economic statistics are hampering the analyses of economic developments.

Contents

  1. Relations with the Fund

  2. Relations with the World Bank Group

  3. Statistical Issues

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January 20, 2011

Front Matter Page

January 21, 2011

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Press Release No. 11/20

FOR IMMEDIATE RELEASE

January 26, 2011

International Monetary Fund

Washington, D.C. 20431 USA

Telephone 202-623-7100

Fax 202-623-6772

www.imf.org

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Mali: Fifth Review Under the Three-Year Arrangement Under the Extended Credit Facility and Request for Extension of the Arrangement and Rephasing of Disbursement—Staff Report; Joint IDA/IMF Debt Sustainability Analysis; Informational Annex; Staff Statement; Statement by the Executive Director for Mali; and Press Release on the Executive Board Discussion
Author:
International Monetary Fund