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
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As a result of the Enhanced Highly Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI), Mali’s stock of external debt has declined significantly. The central feature of Mali’s medium- and long-term macroeconomic outlook is the steady decline of annual gold production expected to be picked up only in part by other exports. Under baseline assumptions, all external debt and debt-service ratios remain below the policy-dependent thresholds throughout the projection period. Fiscal policy continues to be cautious.

Abstract

As a result of the Enhanced Highly Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI), Mali’s stock of external debt has declined significantly. The central feature of Mali’s medium- and long-term macroeconomic outlook is the steady decline of annual gold production expected to be picked up only in part by other exports. Under baseline assumptions, all external debt and debt-service ratios remain below the policy-dependent thresholds throughout the projection period. Fiscal policy continues to be cautious.

I. Background

1. Presidential and parliamentary elections are scheduled for mid-2012 in the context of a deteriorating security situation in northern Mali where terrorist activities have been reported. Mali’s democratic system is to be reinforced by the constitutional reform package announced by the President, which includes the creation of an upper house of Parliament, an audit court, as well as independent media and election watchdogs.

2. Economic and financial policies are rooted in a participatory growth and poverty reduction strategy process. The 2009 Progress Report on Mali’s second G-PRSP II for 2007-11 highlights progress in most social indicators while indicating the need to improve the targeting and quality of expenditures (Table 11).1 Drawing on the lessons from the implementation of its first two G-PRSPs, the government is preparing its G-PRSP III for 2012-16, in collaboration with civil society, the private sector, and development partners.

II. Recent Economic Developments and 2010 Program Implementation

3. In 2010, real GDP growth is expected to remain at about 4.5 percent and inflation below 1.5 percent (Figure 1, Tables 1 and 2). The sharp decline in gold production (-16.5 percent) due to the delayed opening of a new mine should be more than offset by strong growth in agriculture, which has benefited from favorable rainfall. Abundant crops will also maintain low inflation.

Figure 1.
Figure 1.

Mali: Macroeconomic Developments, 2008-13

Citation: IMF Staff Country Reports 2011, 037; 10.5089/9781455216697.002.A001

Source: Malian authorities; and IMF staff estimates.
Table 1.

Mali: Selected Economic and Financial Indicators, 2008-13

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Sources: Malian authorities; and IMF staff estimates and projections.

IMF Country Report No. 10/255: Mali—2010 Article IV Consultation and Fourth Review Under the Extended Credit Facility (ECF).

Total revenue excluding grants and privatization receipts, less total expenditure plus net lending, excluding capital expenditure financed by foreign donors and lenders and HIPC Initiative-related expenditures.

Basic fiscal balance excluding spending financed by privatization revenue of the telecom company SOTELMA.

Includes BCEAO statutory advances, government bonds, treasury bills, and other debts.

For 2009, reflects new SDR allocation and privatization receipts of SOTELMA.

Table 2.

Mali: National Accounts, 2008-13

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Sources: Malian authorities; and IMF staff estimates and projections.

Share of 2007 Nominal GDP.

IMF Country Report No. 10/255: Mali—2010 Article IV Consultation and Fourth Review Under the Extended Credit Facility (ECF).

4. Fiscal performance has been consistent with program targets during the first nine months of 2010 (Table 4). By end-September, the basic fiscal balance2 showed a surplus of 1.2 percent of GDP, compared with a programmed deficit of 2 percent of GDP, due to stronger-than-programmed tax revenues and delays in expenditure, especially on capital outlays. All pending bills outstanding at end-2009 (CFAF 129 billion or 2.8 percent of GDP) were cleared by August 2010. The domestic debt has been revised upwards (by 1.7 percent of GDP in 2010) owing to better recording of bank loans contracted to repay VAT credits in 2009 and callable government guarantees (Table 1).

Table 3.

Mali: Central Government Consolidated Financial Operations, 2008-13

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Sources: Ministry of Finance; and IMF staff estimates and projections.

IMF Country Report No. 10/255: Mali—2010 Article IV Consultation and Fourth Review Under the Extended Credit Facility (ECF).

Total revenue excluding grants and privatization receipts, less total expenditure plus net lending, excluding capital expenditure financed by foreign donors and lenders and HIPC Initiative-related expenditures.

Basic fiscal balance excluding spending financed by privatization revenue of the telecom company SOTELMA.

Table 4.

Mali: Central Government Consolidated Financial Operations, 2010

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Sources: Ministry of Finance; and IMF staff estimates and projections.

IMF Country Report No. 10/255: Mali—2010 Article IV Consultation and Fourth Review Under the Extended Credit Facility (ECF).

Defined in Table 3, footnote 2.

Defined in Table 3, footnote 3.

5. To meet end-year fiscal targets, the authorities have committed to keep budget execution under tight control (Memorandum of Economic and Financial Policies (MEFP), ¶6). A possible shortfall in prepayments of corporate income tax may point to a need to under-execute the spending envelope of the 2010 supplementary budget by about CFAF 20 billion (0.4 percent of GDP) in order to meet the end-December performance criteria (PC) on net domestic financing of the government. This seems within reach in view of the slow budget execution until September, as well as the Minister of Finance’s order to line ministries to stop committing most expenditure at end-November 2010.

6. The balance of payments is projected to weaken in 2010 following the exceptional surplus recorded in 2009 (Figure 1, Table 6). The current-account deficit, including grants, should increase from 7.5 percent of GDP in 2009 to 8.5 percent of GDP in 2010 owing to lower gold exports. The capital and financial account surplus will fall to 7.7 percent of GDP in 2010, from the exceptional level of 12.3 percent of GDP recorded in 2009 owing to capital inflows from the privatization of the telecom company ($400 million) and the SDR allocations (SDR 74 million). As a result, the overall balance-of-payments should show a deficit of about 0.8 percent of GDP ($71 million), financed by drawing on the reserves of the BCEAO.

Table 5.

Mali: Central Government Consolidated Financial Operations, 2008-13

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Sources: Ministry of Finance; and IMF staff estimates and projections.

IMF Country Report No. 10/255: Mali—2010 Article IV Consultation and Fourth Review Under the Extended Credit Facility (ECF).

Defined in Table 3, footnote 2.

Defined in Table 3, footnote 3.

Table 6.

Mali: Balance of payments, 2008-20131

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Sources: Malian authorities; and IMF staff estimates and projections.

Presented according to the IMF Balance of Payments Manual (5th edition); 2006–2010 data after adjustment for MDRI.

IMF Country Report No. 10/255: Mali—2010 Article IV Consultation and Fourth Review Under the Extended Credit Facility (ECF).

Reflects mainly investments in the gold sector and, in 2009, the privatization of SOTELMA; includes short-term capital flows.