Statement by the IMF Staff Representative on Mali
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International Monetary Fund
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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.

1. This statement provides information that has become available since the issuance of staff report on January 4, 2011. The new information does not alter the thrust of the staff appraisal.

2. Parliament adopted the 2011 budget. The final budget is very close to the draft budget on which the program is anchored: approved spending is slightly higher than in the draft budget (by CFA 13 billion or 0.2 percent of GDP) owing to capital expenditure financed with grants.

3. Three of the four measures subject to end-December 2010 structural benchmarks have been implemented (Memorandum of Economic and Financial Policies [MEFP], Table 2). The authorities have produced an evaluation of the Housing Bank of Mali (BHM) restructuring. They have elaborated a program for the reform of the tax system, aiming at a greater mobilization of revenue while ensuring greater rationalization and modernization of the tax laws, including through reconsideration of tax exemptions. They have implemented a new public accounting software in the Treasury with the necessary links to the budget application software to ensure monitoring of spending from commitment to payment, including the stock of pending bills. However, they have not yet completed the implementation of a system for the management and timely payment of Value Added Tax (VAT) credits to eligible companies, as the opening of a treasury account at the BCEAO to set aside revenue for VAT refunds is still pending (MEFP, ¶21). The authorities have committed to open this account by the end of the month.

4. Average consumer price inflation registered 1.2 percent in 2010, in line with the staff projection.

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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