Niger: Second and Third Reviews Under the Extended Credit Facility Arrangement and Requests for Waivers of Nonobservance of Performance Criteria and for Extension of the Program Period and Arrangement, Rephasing of Disbursements, and Modification of Performance Criteria
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International Monetary Fund. African Dept.
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Publication Date:
19 Jun 2014
eISBN:
9781498368018
Language:
English
Keywords:
ISCR; CR; authority; revenue; complying disbursement; debt management framework; loan; public finance management; debt management; natural resource; debt service; cash management; debt relief
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This paper discusses Niger’s Second and Third Reviews Under the Extended Credit Facility (ECF) Arrangement and Requests for Waivers of Nonobservance of Performance Criteria and for Extension of the Program Period and Arrangement. Fiscal performance was broadly in line with program targets. The medium-term outlook appears favorable, with robust growth benefiting from important natural resource sector investments. However, the outlook is vulnerable to high domestic and external risks, including potential spillovers from the security situation in the region and climatic shocks. The IMF staff recommends the completion of the second and third reviews under the ECF.

Abstract

This paper discusses Niger’s Second and Third Reviews Under the Extended Credit Facility (ECF) Arrangement and Requests for Waivers of Nonobservance of Performance Criteria and for Extension of the Program Period and Arrangement. Fiscal performance was broadly in line with program targets. The medium-term outlook appears favorable, with robust growth benefiting from important natural resource sector investments. However, the outlook is vulnerable to high domestic and external risks, including potential spillovers from the security situation in the region and climatic shocks. The IMF staff recommends the completion of the second and third reviews under the ECF.

Recent Developments

1. The socio-political and security situation remains fragile and is placing significant strains on socio-political stability and development outcomes. In the face of the regional security situation and its spillover terrorist and criminal activities within Niger, the authorities are increasing security-related spending to tighten security within the country and strive to secure the country’s borders.1 These external shocks are compounded by a fragile domestic environment characterized by widespread food insecurity, large inflows of refugees from neighboring countries, and weak provision of social services. Development indicators are improving somewhat, including a significant reduction in child mortality rates in the last several years, but poverty remains pervasive and Niger is ranked last in the UN Human Development Index.2 A national unity government involving a coalition of several parties was formed in August 2013.

2. Macroeconomic performance has been adversely affected by climatic shocks and spillovers from the regional security situation. Real GDP growth reached exceptionally 11.1 percent in 2012, driven by the coming on-stream of oil production, a good harvest, and increased uranium production, but is projected to have decelerated significantly to 3.6 percent in 2013—against an initial projection of 6.2 percent—because of a decline in agricultural output due to below average rainfall, the temporary closure of the largest uranium mine (SOMAIR) following a terrorist attack, and a long interruption in electricity supply from a neighboring country.3 The impacts of these negative shocks were partially offset by an increase in oil production to 19,000 barrels per day at the end of 2013 from 13,000 barrels per day in 2012. Average CPI inflation was contained to 2.3 percent in 2013 as the upward pressures on food prices were dampened by the government food program, and support from development partners (Table 1).4

Table 1.

Niger: Selected Economic and Financial Indicators, 2011–18

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

In 2014, this includes a new project loan of CFAF 437.4 billion (10.9 percent of GDP) to refinance the loan for the construction of the refinery Soraz. The new loan was initally expected to be signed in 2013 but it has been delayed to 2014. The loan had previously been contracted by the refinery directly and partly guaranteed by the government. The government will on-lend it to the refinery.

Revenue minus expenditure net of externally-financed capital expenditure.

3. Fiscal performance was broadly in line with program targets. Despite a shortfall in uranium fiscal receipts, total revenue increased by 1 percentage point of GDP to 17.1 percent of GDP in 2013 reflecting progress in revenue administration and exceptional revenue from the oil sector (approximately FCFA 20 billion or 0.6 percent of GDP).5 To compensate higher security-related spending (FCFA 38.9 billion in 2013 or 1.1 percent of GDP), the authorities contained the increase in capital expenditures. The authorities reduced domestic arrears by FCFA 30 billion or 0.8 percent of GDP, above the program target. Government deposits at the central bank also increased.

4. Monetary expansion slowed in 2013, reflecting the weakened economic activity. The annual growth rate of credit to the economy is estimated to have declined from 24.2 percent in 2012 to an estimated 6.6 percent in 2013. Together with the moderate increase in net foreign assets and an improvement in the government net position, this translated in an expansion in broad money of about 11.8 percent (Table 4 and Figure 2).

Table 2.

Niger: Financial Operations of the Central Government, 2011–18

(Billions of CFA francs)

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Sources: Nigerien authorities; and IMF staff estimates.

The special accounts include the financing on the National Retirement Fund, Priority Investments Fund, and Fund for Continuous Professional Development.

In 2014, this includes a new project loan of 437.4 billion CFAF (10.9 percent of GDP) to refinance the loan for the construction of the refinery Soraz. The new loan was initally expected to be signed in 2013 but it has been delayed to 2014. The loan had previously been contracted by the refinery directly and partly guaranteed by the government. The government will on-lend it to the refinery.

Revenues minus expenditure net of externally-financed capital expenditure.

Table 3.

Niger: Financial Operations of the Central Government, 2011–18

(Percent of GDP)

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Sources: Nigerien authorities; and IMF staff estimates.

The special accounts include the financing on the National Retirement Fund, Priority Investments Fund, and Fund for Continuous Professional Development.

In 2014, this includes a new project loan of 437.4 billion CFAF (10.9 percent of GDP) to refinance the loan for the construction of the refinery Soraz. The new loan was initally expected to be signed in 2013 but it has been delayed to 2014. The loan had previously been contracted by the refinery directly and partly guaranteed by the government. The

Revenues minus expenditure net of externally-financed capital expenditure.

Table 4.

Niger: Monetary Survey, 2011–18

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Sources: BCEAO; and IMF staff estimates and projections.
Figure 1.
Figure 1.

Niger: Fiscal Developments, 2011–2013

Citation: IMF Staff Country Reports 2014, 168; 10.5089/9781498368018.002.A001

Sources: Nigerien authorities; and IMF staff calculations.1/ Capital expenditure excludes net lending related to the SORAZ loan in 2013 IMF staff report projections.
Figure 2.
Figure 2.

Niger: Recent Economic Developments

Citation: IMF Staff Country Reports 2014, 168; 10.5089/9781498368018.002.A001

Sources: Nigerien authorities; and IMF staff calculations.

5. The current account deficit (excluding grants) is estimated to have increased by 1 percentage point of GDP to 19.4 percent of GDP in 2013. This reflects a small rise in exports, notably oil exports, which was more than compensated by the expansion in imports of goods and services related to investment projects associated with the extractive industries and public works. The current account deficit was outweighed by a surplus in the capital and financial account, resulting in an increase of Niger’s contribution to the net foreign assets of the West African Economic and Monetary Union (WAEMU) by FCFA 76 billion in 2013 (Table 5). Gross international reserves in the WAEMU would remain at the equivalent of about 5 months of import of goods and services at end-December 2013.

Table 5.

Niger: Balance of Payments, 2011–18

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

In 2014, this includes a new project loan of 437.4 billion CFAF (10.9 percent of GDP) to refinance the loan for the construction of the refinery Soraz. The new loan was initally expected to be signed in 2013 but it has been delayed to 2014. The loan had previously been contracted by the refinery directly and partly guaranteed by the government. The government will on-lend it to the refinery. Projections of FDI for 2014-15 are based on the construction of a pipeline expected to come on stream in 2016.

6. The authorities took steps to help diversify budget financing and deepen the regional financial market. To diversify the financing sources of their ambitious economic and social development plan, the authorities issued a FCFA 25 billion bond on the regional financial market in November 2013. The bond has the following characteristics: (i) interest rate of 6.25 percent; (ii) maturity of five years; (iii) one-year grace period for repayment. The proceeds of this bond are to be used to finance basic infrastructure, including the construction of school classrooms. The auction outcome was highly successful, with an oversubscription of FCFA 32.4 billion and issuance terms similar to other sovereign in the region. Domestic banks (FCFA 13.440 billion) and regional banks (FCFA 6.510 billion) were the major subscribers, the rest (FCFA 5.050 billion) was allocated to local investors. Based on this successful issuance, the authorities plan to tap the regional market in 2014 with another bond issue of FCFA 25 billion.

7. Significant concessional loans are under negotiation. Understandings have been reached with Exim Bank China on the contracting of a concessional loan of US$880 million (FCFA 437.4 billon or 12 percent of 2013 GDP), but the arrangement (originally expected to be agreed during 2013) awaits final approval. This loan was to refinance an existing nonconcessional financing of the refinery Société de raffinage de Zinder (SORAZ), which was initially provided by the China National Petroleum Company (CNPC, the Chinese investment partner) with 40 percent guarantee by the state. In addition, the authorities recently signed a US$1 billion master facility agreement with Exim Bank China. Loans contracted under this facility, to be earmarked for infrastructure projects, will have a maturity of 25 years, a grace period of 8 years, and an interest rate of 2 percent (MEFP, ¶20). Based on these terms, the master facility was concessional at the discount rate prevailing at the time of its signature (September 30, 2013).6

Medium-Term Outlook and Risks

8. The medium-term outlook remains favorable, but subject to significant external and domestic risks and uncertainty. GDP growth is expected to rebound to 6.5 percent in 2014 and average 10 percent during 2015-18 owing to anticipated positive developments in the extractive industry with the coming in production phase of two large projects—crude oil export and a uranium mine—starting in 2015-16 (Box). As a result, beginning in 2016 oil and mining output and exports are projected to double, and natural resource-related fiscal revenue is expected to increase by more than 50 percent with respect to 2015 (Tables 1, 2, 3, 5 and Figure 4). However, the current account is set to deteriorate, In 2014-15 due to high imports and services related to the projects in the extractive industry and other development projects (Table 5). Inflation would remain moderate over the medium-term.

9. Recently contracted external loans, albeit concessional, serve to raise the debt stock at end-2014.7 The refinancing loan for the construction of the SORAZ refinery, now expected to be approved in 2014 rather than in 2013 as previously anticipated, would increase the external debt stock by about 6.6 percent of GDP; any loans contracted under the master facility agreement would add further to the debt stock, though borrowing under the facility is expected to be over a number of years, starting at relatively modest levels. The authorities stressed that the financing available under the master facility would be used to address infrastructure gaps identified in the Poverty Reduction Strategy Paper (PRSP, particularly in agriculture, such as irrigation) and already built into their medium-term program. Based on these indications and improved prospects for ongoing resource projects, staff’s preliminary assessment shows that the fiscal accounts and export prospects would strengthen over the medium to long-term. Moreover, as these new loans carry higher grant elements than assumed in the previous DSA, the projected average interest rate of Niger’s debt would decline. The overall impact on debt sustainability will depend, in part, on the pace of new borrowing under the master facility and on other projected financing being available on concessional terms. Given Niger’s low administrative capacity, and the need to ensure the efficiency of such investments, staff urges the authorities to proceed cautiously in scaling up spending, seeking World Bank technical assistance in project monitoring, selection, and implementation. Staff also noted that the authorities’ intention to issue further bonds on the West African Economic and Monetary Union (WAEMU) regional market highlighted the need to finalize a medium-term debt strategy and an annual borrowing plan consistent with it.

10. Risks to the outlook stem from both internal and external sources. The main near-term risk relates to a further deterioration in the security situation in the region and/or a weakening of political consensus. This could have severe negative consequences on the outlook given the expected impact on FDIs, private sector activity, and the fiscal outcome. Projected increases in debt and debt service burdens also pose risks, especially if debt-financed projects do not deliver value for money. The timing, financing, and feasibility of the projects in the extractive industry pose particular risks, as these are characterized by substantial uncertainty due notably to limited implementation capacity and past difficulties in the oversight of the sector. In the absence of mitigation measures, the recurrence of flooding and droughts would also have a strong negative impact given the large contribution of agriculture both to national GDP and in sustaining living standards (Figure 3).8 Finally, Niger remains vulnerable to commodity price volatility and limited predictability in donor support.

Figure 3.
Figure 3.

Niger: GDP Composition and Output Volatility

Citation: IMF Staff Country Reports 2014, 168; 10.5089/9781498368018.002.A001

Sources: Nigerien authorities; and IMF staff calculations.

Program Implementation

11. The program went off-track at end-December 2012. The first review with end-June 2012 test date was completed with delay in March 2013. The program went off-track at the end of 2012 with end-December performance criteria (PC) for domestic financing and domestic arrears missed due to lower revenue and overspending on current expenditure, including security-related spending of FCFA 37.6 billion or 1.1 percent of GDP (Table 6). Also, the continuous PC on new nonconcessional external debt with maturities of one year or more contracted or guaranteed by the government and public enterprises was missed as in November 2012. Niger contracted through the Ministry of Planning two project loans amounting to FCFA 34.1 billion from the Economic Community of West African States (ECOWAS) Bank for Investment and Development that did not meet the 35 percent minimum grant element required under the ECF-supported program.9

Table 6.

Niger: Quantitative Performance Criteria and Indicative Targets, (Dec. 2012–Dec. 2013)

(Billions CFA Francs)

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Note: The terms in this table are defined in the TMU.

Program indicators under A and B are performance criteria at end-December and end-June; indicative targets otherwise.

The ceiling on domestic financing of the budget will be adjusted if the amount of disbursements of external budgetary assistance, as defined in footnote 4, falls short of or exceeds program forecasts. If disbursements are less (higher) than the programmed amounts, the ceiling will be raised (reduced) pro tanto, up to a maximum of CFAF 15 billion at the end of each quarter of 2013.

Minimum.

External budgetary assistance (excluding net financing from the IMF).

Excluding ordinary credit for imports or debt relief.

Excluding debt relief obtained in the form of rescheduling or refinancing.

Minimum. Including the loan for the construction of the refinery Soraz.

Minimum.

12. Corrective measures were then taken and the program has been brought back on track:

  • In August 2013, the authorities obtained subsidies from the WAEMU for the two loans, raising the concessionality level of the loans to 35.9 percent and 34.5 percent respectively.10 Further, the authorities refrained from drawing on the two loans until grant funding was identified to increase the level of concessionality of the loans means that the objectives of the ECF-supported program can still be met.

  • To strengthen debt management and prevent the recurrence of nonconcessional borrowing, the authorities instituted a joint-signatory authority for nonconcessional loans and loans with non-traditional partners by the Minister of Finance and the Minister of Planning. In addition, an inter-ministerial committee, including both ministers, the National Director of the BCEAO, and representatives of concerned departments has been established to follow and monitor all aspects of nonconcessional loans and loans with non-traditional partners (MEFP, ¶21). The committee is responsible for monitoring Niger’s indebtedness policy, examining the financing terms of all loans negotiated with nontraditional partners, as well as all nonconcessional loans, and keeping all partners, including the IMF, equally informed at each stage of the indebtedness process. Staff is working with the authorities to ensure better synergy between the inter-ministerial committee and the National Committee for Public Debt Management.

  • Parliament adopted a revised budget in line with the understanding reached with staff during a staff visit in August. Tax revenue collection was broadly on track but overspending in current expenditures, half of which related to security, combined with a temporary delay in the receipt of budgetary support from the World Bank and the European Union, resulted in the end-June performance criterion on domestic financing being missed. The criterion relative to contracting nonconcessional external debt continued to be missed. Additional measures were taken to address the stock of domestic arrears, and the end-June PC was met with a wide margin. Reflecting stepped-up efforts to increase revenue mobilization and better control of expenditure commitments, most indicative targets for end-September were close to the targets established under the program—the exception is the floor on spending on poverty reduction which has been missed by a small margin as the government has had to reorient spending to meet the emerging needs related to the regional security situation; however, the authorities indicated to staff that they intend to meet the full-year target.

13. The authorities request waivers for the nonobservance of the performance criteria on net domestic financing of the government at end-December 2012 and at end-June 2013 and on domestic arrears at end-December 2012. Staff supports authorities’ requests for waivers given the corrective measures that have been taken. The authorities are also requesting waivers for the nonobservance of the performance criteria on nonconcessional debt at end-December 2012 and end-June 2013. Staff supports also waivers on these PC given the corrective actions being taken and that the objectives of the ECF-supported program can still be met.

14. The structural reform agenda is being implemented, albeit with delay. Some of the reforms constituting structural benchmarks through the end of 2013 have not been completed by the end of the year but are progressing. To establish a Treasury Single Account (TSA) the authorities have been working to identify inactive or irregular bank accounts, some of which have already been closed. Steps have also been taken to produce quarterly cash and commitment plans, and strengthen custom revenue collections (MEFP, ¶6). To ensure the profitability of an upcoming oil pipeline project for the transportation of crude oil, the government has conducted an assessment of different alternatives to better inform its decision (prior action) (MEFP, ¶24).

Niger: Developments in the Resource Sector

Over the past few years large projects have been underway to expand and develop Niger’s uranium and oil sectors.

Uranium

Niger is currently the world’s fourth largest uranium producer. Ongoing mining investments are expected to double uranium production over the next few years.

  • 1. Somair’ and Cominak’s contracts renegotiations. Negotiations with the French investor (Areva) on the renewal of the 10-year contracts for the mines Somair (the biggest mine currently in production) and Cominak are ongoing. The previous contracts, scheduled to expire on December 31, 2013, have been extended for three months to give more time to the parties to reach an agreement.

  • 2. Imuraren mine. The project is a joint venture with Areva. The state has a participation of 33.35 percent. The mine is expected to enter into production in 2016. With a maximum capacity of 5,000 tons per year, the mine will double current total production, making Niger the world’s second largest uranium producer. Production was originally due to start in 2012 but it has been postponed several times.

Petroleum Products

Niger has become an oil producer only recently. A Production Sharing Agreement (PSA) for the exploitation of the Agadem Block was signed with a Chinese investor (China National Petroleum Corporation) in 2008. The PSA envisages two major projects: (i) establishing a refinery; and (ii) the construction of a transportation system for the export of crude oil. Some uncertainty surrounds the production capacity of the block. Initially, the fields’ output was estimated at 20,000 b/d, or 1 million metric tons per year, for a life span of about 40 years, but estimates on reserves have been recently revised up.

  • 3. Refinery in Zinder (Société de raffinage de Zinder, (SORAZ). The state has a 40 percent share in this joint venture. The total cost of the project amounted to US$980 million of which US$100 million were disbursed at the beginning of the construction and US$880 million were financed through a loan contracted by CNPC with Exim Bank of China and on-lent to Soraz. The state guarantees the repayment of 40 percent of the loan, which has a maturity of 11 years and carries an interest of Libor +3.5 percent. The refinery entered into production in November 2011. In 2012, a shortfall in production combined with the high costs of the loan repayment contributed to losses for the refinery equal to about US$40 million. Since then, performance has improved and the refinery is expected to record a small surplus in 2013. Production is expected to reach full capacity in 2014. Negotiations to refinance the US$880 million loan on concessional terms are at an advanced stage.

  • 4. Crude Oil Project. As the Agadem field reserves have been significantly revised upwards and the refinery capacity is limited to 20,000 b/d, the government is currently embarking on a project for the export of crude oil. In the first quarter of 2014 the government conducted an assessment of different exportation projects (prior action). The construction of a pipeline is expected to start in the last quarter of the year after the launch of an international tender. The project is expected to enter into the production stage in 2016. Niger’s participation in the project would take the form of a Public Private Partnership (PPP) with CNPC. The PPP terms have yet to be clarified.

Policy Discussions

15. The program builds on the government’s broad development strategy as elaborated in the Poverty Reduction Strategy Paper adopted in August 2012 (Country Report No: 13/105). Discussions focused on policies and reforms to enhance macroeconomic stability, improve the country’s institutional capacities, and promote broad-based and sustainable economic growth. Priorities were given to: (i) macro-budgetary framework consistent with rebuilding fiscal buffers; (ii) maintaining the momentum in public financial management (PFM) and revenue collection reforms; (iii) enhancing natural resource management; (iv) ensuring debt sustainability and strengthening debt management; and (v) removing constraints to private sector growth.

A. Fiscal Policy

16. The fiscal strategy aims at containing the basic fiscal deficit (excluding external grants and net lending) to around 3 percent of GDP in 2014 and moving gradually to zero basic balance over the medium term, consistent with the WAEMU criterion. The agreed budgetary framework for 2014 is more conservative than the budget approved in Parliament in November: growth was revised down to 6.5 percent from 7.5 percent; and total revenues lowered by FCFA 216 billion (5.4 percent of GDP), an amount that represents exceptional, but highly uncertain, revenue that the authorities expect from the telecommunication sector.11 Expenditure allocations were revised accordingly. The authorities agreed to introduce a revised budget to Parliament to reflect agreed modifications if at least FCFA 36 billion, corresponding to two-month collection of this expected revenue, fails to materialize by end-February 2014 (MEFP, ¶9-11).

  • Under the agreed framework, total revenue is projected to rise by 1.2 percentage points of GDP to 18.3 percent of GDP, reflecting higher custom revenues and other tax revenues as a result of the adoption of the new VAT threshold and the implementation of tax audits.

  • Total expenditure (excluding net lending) is projected to decrease by 2.5 percentage point of GDP to 26.5 percent, reflecting a decrease in capital expenditures that more than compensates higher current expenditures due to new recruitment of security forces and higher spending on social sectors (education and health).

  • The 2014 budget reflects the FCFA 437.4 billion of the SORAZ project loan, whose finalization is still pending, contingent on the approval of the loan by the Chinese Ministry of Trade.

As a result, the 2014 overall fiscal deficit (commitment basis, including grants but excluding net lending) is projected at 2.6 percent of GDP.

17. The authorities expressed their firm commitment to the ECF-supported program and are likely to receive significant support from donors in 2014. External financing needs are projected at some FCFA 755.9 billion (excluding amortization and debt relief), which includes FCFA 229.8 billion grants and FCFA 547.5 billion loans (including the refinancing of the project loan to the refinery). For budget support, the authorities expect to receive FCFA 78 billion in grants and FCFA 42 billion in loans from donors (MEFP, ¶12).

18. The authorities agreed on the need to ensure full transparency in the use of natural resource revenues. Nonrenewable resources have started playing an important role in the Nigerien economy (Figure 4), and the authorities are aware of the challenges for formulating fiscal policy that takes into consideration the exhaustibility and price volatility of natural resources. Strengthening the fiscal framework would require adopting formally an adequate fiscal anchor to ensure a sound management of the country’s nonrenewable resources. This will also help enhance the predictability of public spending over the medium term while taking into account commodity price volatility and capacity constraints that may adversely impact the efficiency of spending. Formulating such a fiscal anchor in the context of large expenditure pressures to close the infrastructure and social gaps remains a challenge for the authorities.

Figure 4.
Figure 4.

Niger: Contribution of the Natural Resources Sector to the Economy

Citation: IMF Staff Country Reports 2014, 168; 10.5089/9781498368018.002.A001

Sources: Nigerien authorities; and IMF staff calculations.

B. Financial Sector Reforms

19. Despite the recent expansion of the banking sector, its contribution to the economy remains low. Niger’s bank assets increased by 24 percent in 2012, albeit from a very low base, while credit to the private sector amounted only to 14 percent of GDP and the deposit-to-GDP ratio was 11.8 percent, the lowest in the WAEMU region. The shallow banking system is even more pronounced in terms of bank services and access to credit: it is estimated that only 1.5 percent of the population has a bank account and access to credit remains limited to sectors dominated by large companies (e.g. extractive industries, telecommunication, transport).

20. Financial sector reforms are ongoing. The authorities’ financial sector development strategy, elaborated with the assistance of the World Bank and other donors, provides a key framework for reforms in this area, focusing on small-and medium-sized enterprises and rural credit. However, protracted delays in the approval of the related decree, which establishes the body in charge of the supervision of the strategy, have prevented its implementation to date. The draft decree has been recently revised, and is expected to be approved promptly by the government. (MEFP, ¶27).

21. Sector-wide prudential indicators have shown significant improvement between 2010—2012 but some deterioration is noticeable in recent months. At end-June 2013, capital adequacy ratios continue to largely exceed the regulatory threshold of 8 percent and, although gross non-performing loans are high, banks are on average well provisioned and highly profitable (Table 12). However, some deterioration in capital adequacy and asset quality has emerged in 2013 that needs to be monitored. In addition, sector-wide indicators mask significant variations among banks: three banks, of which two have state participation, are currently undergoing restructuring. The authorities consider the continuation of activity of those banks to be critical to the economy because of their size or of their areas of activity (MEFP, ¶28). Other pockets of risk stem from large exposures to individual borrowers and the supervision of regional banks needs to be strengthened.12

Table 7.

Niger: Quantitative Performance Criteria and Indicative Targets (Mar. 2014–Dec. 2014)

(Billions CFA Francs)

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Note: The terms in this table are defined in the TMU.

Performance criteria for program indicators under A and B; indicative targets otherwise.

The ceiling on domestic financing of the budget will be adjusted if the amount of disbursements of external budgetary assistance, as defined in footnote 4, falls short of or exceeds program forecasts. If disbursements are less (higher) than the programmed amounts, the ceiling will be raised (reduced) pro tanto, up to a maximum of CFAF 15 billion at the end of each quarter of 2014.

Minimum.

External budgetary assistance (excluding net financing from the IMF).

Excluding ordinary credit for imports or debt relief.

Excluding debt relief obtained in the form of rescheduling or refinancing.

Minimum. Excluding the loan for the construction of the refinery Soraz.

Minimum

Table 8.

Niger: Prior Actions and Structural Benchmarks, 2013

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Table 9.

Niger: Prior Actions and Structural Benchmarks, 2014

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Table 10.

Niger: Indicators of Capacity to Repay the Fund, 2013–25

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Source: IMF staff estimates and projections.

Total external debt service includes IMF repurchases and repayments.

Table 11.

Niger: Proposed Scheduled Disbursements under the ECF Arrangement, 2012-15

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Source: International Monetary Fund
Table 12.

Niger: Indicators of Financial Soundness, December 2007–June 2013

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Source: BCEAO.

Items reported with semestral periodicity.

Taxes on financial operations excluded.

C. Other Structural Reforms

Public Financial Management and Tax Administration

22. The authorities continue to take actions to further strengthen budget and cash-flow management and improve tax administration. The authorities aim to limit expenditure through special procedures to a maximum of 5 percent of total expenditure; expedite procedures for the release of budget allocations—particularly for the investment budget—establish a budgetary committee to select priority expenditure items; establish a Treasury Single Account (TSA); and produce quarterly cash and commitment plans (MEFP, ¶15). Further measures to improve customs administration are expected by end-June 2014 (MEFP, ¶16).

23. The authorities adopted a new tax code in January 2013 and took steps to reduce tax exemptions. However, further effort is necessary to limit fiscal expenditures and apply new VAT thresholds and an expanded tax audit program to large- and small-medium-sized enterprises (MEFP, ¶17).

Natural Resources Management

24. Several steps were taken to enhance oversight in the petroleum sector. The authorities commissioned firms of international standing to conduct an audit of the costs of the upstream and downstream processes. The audits revealed (i) inflated and undocumented costs by the Chinese investor in the case of the upstream (Agadem Block); and (ii) reasonable costs but significant space to improve efficiency in the case of the downstream (refinery SORAZ) (MEFP, ¶22). These findings have been critical to give leverage to the Nigerien authorities in the negotiations for the refinancing of the US$880 million SORAZ loan, an essential step to ensuring the viability of the refinery. The refinery audit that was completed in May 2013 helped also identify unjustified expenses which have thus been disallowed.

25. The authorities consider that the role of the state-owned company, the Société Nigérienne des Produits Pétroliers (SONIDEP), is critical in the oil sector, however pricing policies need to be revised and stepped-up efforts are needed to enhance efficiency and transparency.13 SONIDEP has a monopoly on the marketing and distribution of petroleum products. As a result of a 2012 agreement between the authorities and the foreign investor in the petroleum sector (CNPC), SONIDEP sells refined products below market prices on the domestic market. Domestic prices were further reduced in 2013. This rebate represents an implicit subsidy that entails reduced revenue for the state and endangers the viability of the refinery. In addition, it is critical to address SONIDEP’s recurrent payment delays to the refinery as these complicate its cash management.

Program Design

26. Extension of the arrangement and rephasing of disbursements. In view of the weak performance during the first part of the program and of delays in implementing the structural reform program, staff supports the authorities’ request to extend the program until December 31, 2015 and to rephase the remaining purchases under the current arrangement (Table 11). This will provide the authorities with additional time to stabilize the economy and move ahead with their structural reform agenda.

27. The fourth review of the ECF arrangement will be based on the established PCs and the structural benchmarks for end-December 2013. The fifth and sixth reviews will be based on the continuous PCs, and proposed end-June 2014 PCs and end-December 2014 PCs respectively (Tables 6-9). Indicative targets and structural benchmarks are also proposed through end-December 2014. With the proposed extension of the program period, the tranches for the fourth and fifth reviews would be reduced to SDR 5.64 million (8.6 percent of quota).

28. Niger’s capacity to repay the IMF remains adequate (Table 10), but there are risks to program implementation. The major risks concern the regional security situation and its continued spillover on Niger, rising debt burdens, weather-related shocks, and a fragile political consensus.

29. In accordance with safeguards policy requirements for regional central banks, a quadrennial safeguards assessment of the Central Bank of West African States (BCEAO) was completed in December 2013. The assessment found that the bank continued to have a strong control environment and has, with the implementation of the 2010 Institutional Reform, enhanced its governance framework. Specifically, an audit committee was established to oversee the audit and financial reporting processes, transparency has increased with more timely publication of the audited financial statements, and the BCEAO is committed to International Financial Reporting Standards (IFRS) implementation by end-2014. The assessment also identified some limitations in the external audit process and recommended that steps be taken to ensure its adequacy.

Staff Appraisal

30. Despite the regional security situation’s spillovers and the negative climatic shocks, the Nigerien economy delivered positive growth in 2013 and the medium-term growth prospects look favorable. Economic activity has been somewhat resilient, given the very challenging and unfavorable security and climatic environment. Continued efforts to increase the resilience of the economy to these shocks are important to ensure lasting improvements in development outcomes. Inflation remains contained. The major challenge remains to make growth more inclusive so as to reduce unemployment and poverty over the medium term in the presence of a strongly growing natural resource sector.

31. Ensuring fiscal sustainability over the medium term, while addressing infrastructure and social spending needs, will require further strengthening of the fiscal framework. The government’s continued commitment to further strengthening revenue collection is critical, including through the full implementation of the ongoing initiatives to improve tax policy and administration, reform customs administration, and curtail exemptions. Further steps to enhance public financial management are underway, including through reducing exceptional spending, but additional efforts are needed to significantly strengthen cash management and planning to better manage the bunching of domestic debt payments toward the end of the year.

32. Establishing strong institutions and policy frameworks to manage revenues related to extractive industries is a key priority. The challenge for the fiscal framework is to strengthen the prudent management of natural resources, taking into account commodity price cycles and the need to ensure the efficiency of spending. The framework will also need to respond to the need to devote more resources for infrastructure and reduce social gaps over time to help curb unemployment and poverty. Continued efforts to enhance transparency in the sector are crucial.

33. Staff welcomes the authorities’ commitment to implement the financial sector reform. It encourages the government to approve swiftly the decree needed to implement the financial sector development strategy elaborated with the assistance of the World Bank and other donors.

34. Given the increase of external borrowing, establishing sound debt management practices is fundamental. Debt-financing investment spending should be scaled up cautiously, drawing on development partner support, in order to ensure value for money and to contain debt vulnerabilities. In this connection, recent institutional reforms to strengthen debt management are welcome steps that will help promote the efficiency of investment. Staff urges the authorities to urgently adopt a medium-term debt management strategy to guide its annual borrowing plan; this will be particularly important as Niger considers to float another regional bond in 2014. Investment spending should be closely aligned to the implementation of the Poverty Reduction Strategy.

35. Given corrective actions taken by the authorities and stepped-up efforts that brought the program back on track, staff recommends the completion of the second and third reviews. Based on the corrective actions that have being taken, staff supports the waivers for the nonobservance of the performance criteria on net domestic financing and domestic arrears at end-December 2012, and on domestic financing at end-June 2013. Given the corrective measures being taken by the authorities, and that the program’s objectives can still be met, staff also supports the authorities’ request for waivers on the nonobservance of the continuous performance criterion on the non-contracting of nonconcessional debt, and the disbursement of the third and fourth tranches under the arrangement for a total amount of SDR 22.56 million.

Appendix I. Letter of Intent

Niamey, March 13, 2014

Madame Christine Lagarde

Managing Director,

International Monetary Fund

Washington D.C., 20431

Niamey, March 13, 2014

Madame Managing Director,

Niger continues to post positive results despite the security situation in the sub-region and low levels of rainfall. The conflict in neighboring Mali, and the terrorist and criminal activities arising there from in 2013, put the country’s economic stability under heavy pressure. Niger was forced to deploy troops to sustain the military intervention in Mali and strengthen security on its own borders. These developments generated a significant increase in military spending, to the detriment of social priorities. This, combined with poor rainfall and the effects of terrorist attacks on the SOMAIR facilities, had a direct impact on economic activities. Thanks to the security measures adopted by the government, and the “Nigeriens Nourish Nigeriens” or “3N” initiative, the economy is gradually recovering from the effects of the shocks; and economic growth remains positive at an estimated at 3.6 percent in 2013.

Despite the difficult situation, progress was made in implementing the program supported by the Extended Credit Facility (ECF). Owing to security-related expenses, compounded by the fact that foreign grants and loans turned out to be lower than initially envisaged in the program, additional funds had to be raised from domestic sources, in particular the nonbanking sector. As a result, the end-June performance criterion for domestic financing could not be met. Nonetheless, additional measures were taken to reduce arrears, and the end-June performance criterion on payment arrears was met. Moreover, the criterion on the non-accumulation of external payment arrears was also satisfied, as well as that relating to new short-term loan agreements.

The government is determined to achieve the program objectives and believes the policies and measures included in the Memorandum of Economic and Financial Policies (MEFP) attached to this document will contribute towards this. In particular, the implementation of structural reforms in the financial authorities’ area, together with budget execution consistent in line with actual revenue and the progressive normalization of the security situation, should make the future easier with respect to the domestic financing criterion. To improve coordination within the government, particularly on loan agreements, the government has set up a technical committee with representation from the Office of the President, the Office of the Prime Minister, the Ministry of Finance and the Ministry of Planning, to review and approve the financing terms of all loans negotiated with nontraditional partners, as well as all nonconcessional loans. It was also decided that any new agreement would be jointly signed by the Minister of Finance and the Minister of Planning. These measures should also make it easier to meet the criterion on nonconcessional loans.

Based on the corrective actions that are being taken, we are requesting waivers for the current failure to meet the criteria on domestic financing for end-December 2012 and end-June 2013, the criterion on domestic arrears for end-December 2012, and the non observance of the continuous criterion on nonconcessional external debt. We are convinced that the measures mentioned above should avoid a recurrence. Under the current programming, Niger is eligible for four disbursements in 2014. To be able to smooth the flow of disbursements more effectively, we are requesting a nine-month extension to the program, which would mean the ECF- supported program, would last until December 31 2015, as well as a rephasing of disbursements according to Table 5 of the MEFP.

Table 1.

Niger: Quantitative Performance Criteria and Indicative Targets (Dec 2012–Dec 2013)

(Billions CFA francs)

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Note: The terms in this table are defined in the TMU.

Program indicators under A and B are performance criteria at end-December and end-June; indicative targets otherwise.

The ceiling on domestic financing of the budget will be adjusted if the amount of disbursements of external budgetary assistance, as defined in footnote 4, falls short of or exceeds program forecasts. If disbursements are less (higher) than the programmed amounts, the ceiling will be raised (reduced) pro tanto, up to a maximum of CFAF 15 billion at the end of each quarter of 2013.

Minimum.

External budgetary assistance (excluding net financing from the IMF).

Excluding ordinary credit for imports or debt relief.

Excluding debt relief obtained in the form of rescheduling or refinancing.

Minimum. Including the loan for the construction of the refinery Soraz.

Minimum.

Table 2.

Niger: Quantitative Performance Criteria and Indicative Targets (Mar 2014–Dec 2014)

(Billions CFA francs)

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Note: The terms in this table are defined in the TMU.

Performance criteria for program indicators under A and B; indicative targets otherwise.

The ceiling on domestic financing of the budget will be adjusted if the amount of disbursements of external budgetary assistance, as defined in footnote 4, falls short of or exceeds program forecasts. If disbursements are less (higher) than the programmed amounts, the ceiling will be raised (reduced) pro tanto, up to a maximum of CFAF 15 billion at the end of each quarter of 2014.

Minimum.

External budgetary assistance (excluding net financing from the IMF).

Excluding ordinary credit for imports or debt relief.

Excluding debt relief obtained in the form of rescheduling or refinancing.

Minimum. Excluding the loan for the construction of the refinery Soraz.

Minimum.

Table 3.

Niger: Prior Actions and Structural Benchmarks, 2013

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Table 4.

Niger: Prior Actions and Structural Benchmarks, 2014

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Table 5.

Niger: Proposed Scheduled Disbursements under the ECF Arrangement, 2012-15

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Source: International Monetary Fund

The Nigerien government asks the IMF to complete the second and third reviews, so that the third and fourth disbursements, each of SDR 11.28 million, can be released under the arrangement. We will consult with IMF staff, on our own initiative or at the request of the Fund’s Managing Director, before adopting any other additional measure that we may deem necessary, or if any changes are to be made to the policies contained in this Memorandum. The government is also committed to cooperating fully with the Fund to achieve the program’s objectives.

The Nigerien authorities agree to publication of this Letter of Intent, along with the Memorandum of Economic and Financial Policies and the Technical Memorandum of Understanding, attached hereto, as well as the IMF staff report reviewing the ECF-supported program. We hereby authorize their publication and posting on the IMF website site, following completion of the second and third review of the program by the IMF Executive Board.

Sincerely yours,

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Attachments:

I. Memorandum of Economic and Financial Policies

II. Technical Memorandum of Understanding

Attachment I. Memorandum of Economic and Financial Policies of the Government of Niger

Niamey, March 13, 2014

Introduction

1. This Memorandum of Economic and Financial Policies (MEFP) updates and completes that of March 2013. It describes the most recent economic developments, program implementation, the macroeconomic outlook, and the policies to be implemented in 2014. The priorities and objectives of the Extended Credit Facility (ECF)-supported program remain focused on the main issues of (i) maintaining macroeconomic stability; (ii) rebuilding central bank reserves to strengthen the country’s resilience against shocks; (iii) improving budget execution, in particular enhancing fiscal revenue collection efforts and improving debt management; (iv) increasing transparency in the mining and oil sectors; and (v) supporting the development of the private and financial sectors. These objectives are in line with the government’s 2012-2015 Economic and Social Development Plan (Plan de Developpement Economique et Social – PDES), which itself is based on the progress made under the 2008-2012 Accelerated Development and Poverty-Reduction Strategy, the Niger Rebirth Program (Programme de Renaissance du Niger) and the government’s General Policy Statement.

Recent Economic Developments and Implementation of the ECF-Supported Program In 2013

A. Recent Economic Developments

2. The economic recovery in 2012 was stymied by the poor results of the 2012/2013 agricultural harvest, and the negative externalities generated by the security situation in the subregion. In 2012, economic activity rebounded strongly, posting growth of 11.1 percent, thanks to the country’s macroeconomic stability, the start of oil production and the buoyancy of activity in the primary sector, particularly subsistence crops and livestock breeding. Nonetheless, the Libyan crisis, the conflict in Mali, and terrorist activities in the subregion all combined to undermine the country’s socioeconomic stability in 2013. Niger deployed troops to sustain the military intervention in Mali and to strengthen security on its own borders; and this involved a significant increase in military spending, to the detriment of social priorities. The regional security situation, compounded by low rainfall and the effects of terrorist attacks against the SOMAIR uranium production facilities, directly impacted on economic growth, which is estimated at 3.6 percent in 2013. Inflation remained under control at 2.3 percent in 2013, thanks particularly to the government’s food program, which has made it possible to attenuate the rise in food prices.

3. Budget execution in 2013 has been generally satisfactory. The estimated deficit at end-December 2013 is 5.6 percent of GDP compared to the 4.3 percent (excluding net loans) projected in the program. Net lending expenditure to refinance the SORAZ refinery (an amount of FCFA 437.4 billion or 12 percent of 2013 GDP), for which approval from the Chinese Ministry of Trade had been expected in 2013, has now been postponed to 2014. If this loan were taken into account, the 2013 deficit would be 17.6 percent of GDP, compared to a deficit of 16.3 percent projected in the program.

4. The external accounts have behaved relatively well. The current account balance (including grants) is expected to post a deficit of 17.2 percent of GDP, an improvement of roughly 1.5 percentage point of GDP compared to the program target—largely attributable to a reduction in imports.

B. Economic and Financial Program Implementation in 2013

5. Following the corrective measures adopted after the July 2013 IMF mission, program implementation has improved. Significant progress has been made in implementing structural reforms, although budget execution has been hit by high additional security expenses, underperforming revenue, and a weakness in foreign loan disbursements, albeit with a recovery towards the last quarter of the year. This situation required recourse to domestic financing, particularly the regional financial market and [a loan from the Republic of Congo]. Consequently, the performance criterion in respect of domestic financing at end-June was not met, as had been the case in December 2012 (Table 1). Furthermore, the government has contracted, but not yet drawn upon, two nonconcessional loans with the ECOWAS Bank for Investment and Development (BIDC), to strengthen capacities in road and energy infrastructures; and this made it impossible to meet the criterion on new nonconcessional loan agreements with a maturity of at least one year. The fact that these two loan agreements were not discussed with IMF staff in advance is not a deliberate desire by the government to conceal information, but rather a concern to complete the subsidy procedures undertaken to make these loans concessional before they were drawn upon. The government has since obtained subsidized funds from regional institutions, which have made one of these two loans concessional, with the second loan having a concessional level of 34.5 percent. The target on the reduction of domestic payment arrears was met both at end-June and at end-September, although not at end-December 2012. The government also honored its commitments with respect to foreign debt; and the ongoing performance criterion relating to the accumulation of external payment arrears was met at end-June and end-September. The same is true of the ongoing performance criterion relating to new external debt agreements contracted or guaranteed by the State with a maturity of less than one year. Unlike the situation at end-December 2012, the basic budget balance (indicative target) was met at end-June 2013.

6. Steps have been taken to speed up implementation of the structural reform program (Table 3). We prepared quarterly budget execution reports, and the Prime Minister sent a circular to all ministries requesting them to limit expenditure executed through special procedures to a maximum of 5 percent of spending commitments. As at end-September 2013, this figure was 3 percent, but compliance with the legislation could be improved further. Among actions aimed at setting up a Single Treasury Account (Compte Unique du Trésor –CUT), we have already identified 1,954 accounts opened at various banks on the local market (of which 1,787 are for public administrative establishments (Établissement public à caractère administratif – EPA) and 167 for public industrial establishments (Établissement public à caractère industriel – EPI), involving total assets amounting to FCFA 52,907,054,044. The Ministry of Finance has issued an order to close irregular and dormant bank accounts. Nonetheless, a case-by-case analysis of claims to meet the CUT benchmark is currently ongoing. We are determined to raise the pace of necessary reforms in customs, as well as in the revenue and tax administrations (as indicated in Section III, C), in order to mobilize the tax revenues targeted under this program.

ECF-Supported Program for 2014

7. The program’s objectives are in line with the PDES. Implementation of the latter should enable government to: (i) develop basic infrastructure in the energy and transportation sectors, to help Niger surmount the challenges it faces as a landlocked country and boost its competitiveness; (ii) implement public policies to diversify production, including by establishing development hubs; and (iii) enhance the country’s human and institutional capacities. The 2014 program, which is consistent with the 2012-15 ECF-supported triennial program, is aimed mainly at ensuring macroeconomic stability and reviving a process of strong and sustained growth that will create jobs.

C. Economic Outlook for 2014

8. Despite the existence of various domestic and external risks, the short- and medium-term macroeconomic outlook is favorable. The macroeconomic framework for 2014 and beyond is based on an assumption of strong and sustained economic growth, in conjunction with the continued expansion of the natural resources sector (specifically the oil export project with a production level that is expected to grow from 20,000 barrels per day in 2014 to 65,000 barrels per day in 2018); an increase in public investments, particularly in infrastructures; and a broader implementation of the 3N initiative, all within a context of heightened security. Thus, real GDP growth, which is forecast to be around 6.5 percent in 2014, should gather pace to attain an average of about 10 percent in 2014-2016. With food prices dropping following the marketing of produce from the recent harvest, inflation is expected to remain low (about 2.5 percent) in 2014. The risks that could affect the macroeconomic outlook relate to the sensitive security situation in the region and climate shocks.

D. Fiscal policy and external financing in 2014

9. The government recently adopted a proactive budget for 2014 aimed at sustaining growth and strengthening poverty reduction. This budget, which includes an estimated FCFA 216 billion in royalties from the telecommunications sector, is 58.2 percent financed out of domestic resources, of which 55.6 percent consists of tax revenue. On the expenditure side, appropriations for investments have increased considerably. This budget does not include the amount of FCFA 437.4 billion in net lending expenditure for refinancing the SORAZ refinery, which was originally slated for 2013 but then postponed to 2014, pending approval of the loan from the Chinese Ministry of Trade. The overall budget deficit (including grants), not including this project loan, would be 2.5 percent of GDP, compared to 5.6 percent of GDP in 2013.

10. The government aims to raise additional domestic resources, particularly in high-potential sectors such as telecommunications, from which FCFA 216 billion is expected to be raised. Should these resources not start to arrive by February 2014, everything will be done to introduce a supplementary budget to neutralize this revenue in the 2014 budget. The supplementary budget would also take account of the FCFA 437.4 billion of the project refinancing loan, and would still pursue the government objective of allocating a substantial part of resources to capital investments for the purpose of giving new impetus to the economic recovery. If the amount of 216 billion were raised, as much as around 55 percent of the financing for capital expenditure and net lending will come from domestic resources, representing 6.7 percent of GDP. These investments are expected to lay the foundation for medium-term growth, which is essential for reducing poverty. The overall balance (commitment basis, but excluding refinancing of the SORAZ refinery) is expected to represent 2.5 percent of GDP, with government deposits at the central bank growing by about FCFA 13.6 billion to increase Niger’s resilience to shocks.

11. With the neutralization of revenue from the telecommunications sector, the revised budget would be aligned with the targets of the ECF-supported program. Budgeted revenue for 2014 would rise to about 18.2 percent of GDP; and customs duties are expected to increase by 30 percent following the adoption of the new policies to strengthen customs administration capacities. Taxes on goods and services are also expected to increase by 33 percent with the adoption of the new VAT threshold and the implementation of tax audits.

12. We expect to raise FCFA 120.2 billion in external budget financing in the form of grants and concessional loans. Of this amount, FCFA 33.4 billion will come from the World Bank, FCFA 28.8 billion from the European Union, FCFA 6 billion from Agence Française pour le Développement, FCFA 17 billion from the African Development Bank, FCFA 25 billion from the Republic of Congo, and FCFA 10 billion from other multilateral and bilateral donors.

E. Structural Reforms

13. In order to meet our macroeconomic objectives, we must continue to consolidate the on-going reforms and implement new structural measures. The public policies to be implemented under the program will focus on enhancing domestic revenue mobilization and public finance management, while also working to improve the business environment.

14. We expect our revenue-raising efforts to generate additional resources representing about 2 percentage points of GDP in 2014. To this end, we are currently undertaking a wide-ranging reform of the financial authorities. One of the main expectations of these initiatives is to achieve an in-depth reform of the tax office, and to enhance the effectiveness of the customs service, in line with the recommendations of the IMF technical assistance missions. The reform of the tax office also involves simplifying the income tax system, ensuring a more effective and more appropriate system of taxation for small enterprises, as well as strict control of tax exemptions.

Public finance management

15. We will continue to implement the public financial management action plan, in particular through the following measures:

  • Limiting expenditure executed through special procedures to a maximum of 5 percent of total spending commitments (structural benchmark for each quarter). All line ministries will be reminded of the need to strictly adhere to this measure.

  • Accelerating the pace of budget execution. Expenditure execution, particularly for the investment budget, tends to be slow because of delays in releasing appropriations and the various bottlenecks affecting the project cycle. Accordingly, the government will adopt a plan of action to ease constraints affecting the execution of the investment budget. We will also review the expenditure programs and establish a budgetary committee to select priority expenditure items and improve efficiency in allocating our limited budget resources to priority sectors.

  • Implementation of a Treasury Single Account (Compte unique du Trésor – CUT). Dormant and irregular bank accounts will be gradually closed following a case-by-case review of the accounts identified. As a result of the inventory of 1,954 accounts opened in the different banks on the domestic market (of which 1,787 are for EPAs and 167 are for EPIs) with total assets amounting to FCFA 52,907,054,044, the Ministry of Finance has already issued an order to close certain accounts held by public organizations in commercial banks; a case by case review of claims is ongoing, to attain the CUT benchmark (structural benchmark for end-June 2013).

  • Expediting the process for approving the draft law on fiscal transparency to enhance and strengthen expenditure monitoring. We will continue to prepare quarterly budget execution reports on a commitment, payment order, and payment basis (quarterly structural benchmark) as well as a table of poverty reduction spending. These documents will be submitted to the IMF within six weeks after the end of the quarter.

  • Reinforcing institutional coordination between the Ministry of Planning and the Ministry of Finance.

  • Improving cash flow management. We shall draft quarterly cash and commitment plans that take account of spending ministries’ plans for contract awards; the cash plans and commitment plans will be aligned with one another and updated on a monthly basis. To reinforce this measure, the government has already issued a decree to turn all divisions responsible for procurement into public procurement directorates in the different ministries. Moreover, to improve the use of credits, the government adopted measures, at the Council of Ministers of December 20, 2013, to implement the recommendations made in the study of bottlenecks affecting the execution of the government investment budget (structural benchmark for each quarter).

16. Implementation of the customs administration’s strategic plan is dependent on the strengthening of its capacities. Nevertheless, the following measures have been implemented: (i) establishment of two regional departments at the entry points in Diffa and Agadès and opening of three field offices with full powers in the principal mining and oil production sites namely the SORAZ refinery, the Agadem oilfield, and the Imuraren uranium mine; (ii) adoption of the information technology development plan, and (iii) monitoring of the exemptions management system, as well as other specific economic regimes. Furthermore, the customs administration is committed to implementing performance enhancing reforms by the end of June 2014, including: (i) Implementation of an electronic transit system; (ii) Pre-clearing of goods; (iii) Use of secure customs documents; (iv) Establishment of the single interconnection server among the various offices; (v) Migration from SYDONIA++ to SYDONIA WORLD; and (vi) strengthening of administrative assistance services with Benin, Togo, and Burkina Faso in particular by putting in place the interconnection and detaching customs representatives to the various ports.

17. Tax reforms are under way in the general tax administration. The new general tax code entered into force in January 2013 and we have taken measures to reduce tax exemptions. A circular notice was published, establishing the thresholds for large, medium, and small sized enterprises. The 2013 Finance Law raised the sales threshold at which VAT may be applied to a business, from FCFA 30 million to FCFA 50 million. There is however still some way to go in controlling exemptions. The Council of Ministers recently adopted a decree on the organization of the Finance Ministry, which transforms the small and medium-sized enterprises department into the medium-sized enterprises department. Small enterprises are now under the responsibility of the regional departments. The enabling text of this decree is expected to enter into force at the start of 2014.

Debt management

18. We undertake to ensure a transparent system of public debt management in which reporting and data transmission will continue, in coordination with all the ministries and departments concerned. To this end, we are sustaining our efforts to consolidate the position and role of the National Public Debt Management Committee (CNGDP) within the administration. We will also inform the committee about all new loans and government guarantees, including financing in the natural resources sector, in order to enable a detailed debt sustainability analysis. We intend to continue to submit to IMF staff, the detailed semiannual reports on outstanding public debt, new commitments and borrowings (including disbursements), and public debt service. These reports will also include an analysis of the costs and risks related to both domestic and external public debt.

19. We remain firm in our determination to implement a prudent debt policy that will enable us to finance our investment plans while maintaining debt sustainability. In this context, we will continue to limit government guarantees and carefully assess the impact that any new loans might have on debt sustainability. It is our intention to finance investment projects with concessional resources. Loans will be limited to high return and properly evaluated industrial and infrastructure projects that can guarantee sufficient revenue for government, to cover the attendant debt servicing. In the event that concessional resources are not adequate to finance high return projects, we will consult with IMF staff on the scope to modify the program to include nonconcessional borrowing provided that it remains consistent with debt sustainability.

20. We are currently in negotiations with EXIM Bank of China for a US$ 880 million loan (FCFA 437.4 billion) under more favorable conditions, to replace the current financing for the SORAZ oil refinery. We have also negotiated a US$ 1 billion master facility (13 percent of GDP) with EXIM Bank of China, which will be used to finance major infrastructure projects. The general conditions of this maser facility, for which specific structuring projects will be eligible, are a 25-year amortization period, a grace period of eight years, and an interest rate of 2 percent.

21. Steps are being taken to improve coordination within the government, particularly in relation to loan agreements. To strengthen debt management procedures and avoid breaches of the performance criteria on nonconcessional loans, the authorities have established an Inter-Ministerial Committee adopted through an order of the Prime Minister. The order instituted a joint-signatory authority for nonconcessional loans and loans with traditional partners by the Minister of Finance and the Minister of Planning. The Inter-Ministerial Committee monitors also Niger’s indebtedness policy and is responsible for examining the financing terms of all loans negotiated with nontraditional partners, as well as all nonconcessional loans. In addition, the order defines the mechanism for exchanging information for keeping all partners, including the IMF, equally informed at each stage of the indebtedness process.

Natural resource management

22. We are persevering with actions to reinforce sound management of the natural resource sector. The results of the recent audit of the refinery were made available in May 2013 and have shown that, as in the case of the audit of the upstream production in the Agadem block, costs could be reduced substantially. On the basis of these results the committee overseeing the refinery is enacting measures to revise costs and better monitor performance. In addition, the refinancing of the US$ 880 million SORAZ loan at better conditions is close to finalization. In the uranium sector, we are in the process of renegotiating the terms of the fiscal regime of the Somair and COMINAK companies with our counterparty (strategic partner), Areva. To this end, an audit financed by Areva was conducted in October to gauge the impact of the introduction of the fiscal regime governed by the 2006 Mining Code. Another audit, financed by development partners, is expected to report results by the end of the year. To increase the share of mining revenue, we are also increasing investor diversification, and exploration permits were granted to new partners. To better defend Nigerien interests in mining projects, we are reinforcing the role of the Société du Patrimoine des Mines du Niger (SOPAMIN), the portfolio manager of government interests in mining companies. We will ensure that best practices are followed and that the full amount of dividends is remitted to the Treasury.

23. Production from the Zinder refinery increased in 2013, as also did exports. The technical difficulties that affected production during the first year of operations have been overcome, and output has reached the level of 18,000 barrels-per-day. The refinery is expected to reach full capacity (20,000 b/d) in 2014. SONIDEP’s commercialization of refined oil products has improved, and exports to neighboring countries have increased.

24. We are conducting studies to assess the feasibility and profitability of a crude oil export project that should come on stream in 2016. A recent study conducted by the China National Petroleum Corporation (CNPC) has revised estimates of the oil reserves in the Agadem block. Production of 80,000 b/d for an estimated life span of 25 years is forecast as from 2016, of which 60,000 b/d will be for export. The results of this study are expected very soon, along with the revaluation of gross reserves. We have also conducted a comparative analysis of the costs of different exportation projects. Alternative routes for transporting the crude oil are currently under consideration by the government. At this stage, five possible routes have been identified, four of which pass through Cameroon and Chad, and one through Bénin. Once the choice has been made, an international call for tenders will be launched to recruit an operator to construct the pipeline. At the same time, the government expects to set up a pipeline management company. Niger’s participation in the project is expected to be in the form of a public-private partnership (PPP) with CNPC, the terms of which have yet to be defined.

25. The government will continue to ensure transparency in the extractive industries sector. The 2011 report of the Extractive Industries Transparency Initiative (EITI), on tax receipts from the extractive industries, was released in November 2013.

Financial sector

26. Despite continued progress over the past few years, financial sector development and penetration remain very low compared those of other countries in the region. Overall, the banking sector is well capitalized and prudential indicators have shown improvements in recent years. There is however a certain degree of heterogeneity among banks.

27. We will continue efforts to develop the financial system and ensure that it can effectively contribute to the development of Niger’s economy. The government program for the development of the sector has been revised to include corrections suggested by the Council of Ministers and development partners and was recently submitted to the government for approval. This plan is a comprehensive framework that aims at (i) improving stability and transparency, (ii) deepening financial intermediation in all sectors of the economy, (iii) improving the regulatory framework, and (iv) strengthen financial sector supervision.

28. To ensure the continued activity of certain banks, given their importance or strategic role, the government has purchased shareholdings in three institutions currently under restructuring. The government sees the survival of these banks as critical to the economy, owing to their size (BIA) or activity (BRS Niger and BAGRI). Contacts have been signed with a number of private investors that have expressed interest in buying the government’s shares in the BIA and BAGRI.

Business climate

29. We are well aware of the need to diversify our economy beyond agriculture and natural resources. In order to achieve this, there is a need to establish an enabling environment for business and the private sector. We are therefore determined to improve the business environment and indeed a specialized ministry has just been created, with responsibility for promoting the private sector.

30. We will continue to implement the following measures: Already under way: (i) review of the activities of the National Council of Private Investors (CNIP), which advises the authorities on ways of promoting the private sector; (ii) establishment of an ongoing dialogue and cooperation framework between the private sector (represented by the Chamber of Commerce) and the ministry; (iii) creation of an enterprise center (maison d’entreprise), with a mission to support the Business Formalities Center (Centre des formalités des entreprises – CFE) and the Investment Promotion Center (Centre de promotion des investissements – CPI); (iv) implementation of an institutional structure to improve business climate indicators; (v) launch of a program to integrate trade into development strategies (integrated framework), along with the implementation of a management unit; (vi) adoption of a law on public-private partnerships, and implementation of a technical coordination unit. The government will continue efforts to pass legislation governing the tax and accounting regime of public-private partnerships and to reach an agreement on enterprise access to financing.

Program Monitoring

31. The program will continue to be monitored on a quarterly basis by the IMF Executive Board, using quantitative monitoring indicators (Table 2), structural benchmarks, and prior actions (Table 4). These indicators are described in the appended Technical Memorandum of Understanding (TMU). Semiannual reviews will be based on data as at end-June and end-December 2014. For monitoring purposes, the authorities will provide IMF staff with the statistical data and information described in the technical memorandum of understanding, as well as any other information that they deem necessary, or that the IMF staff may request. During the period of the program, the government shall refrain from introducing or intensifying any restrictions on payments and transfers related to current international transactions without prior approval of the IMF. They shall also refrain from introducing or amending any multiple currency practices; entering into bilateral agreements that do not comply with article VIII of the IMF’s Articles of Agreement, and introducing and intensifying restrictions on imports for balance of payments reasons.

32. The program will be reviewed semiannually. The fourth, fifth, and sixth reviews are scheduled for July 2014, December 2014, and June 2015 respectively.

Attachment II. Technical Memorandum of Understanding

1. This technical memorandum of understanding defines the performance criteria and indicative targets of Niger’s program under the Extended Credit Facility arrangement (ECF) for the period 2012-Q1 2015. The performance criteria and indicative targets for end-June and end-December 2013 are set out in Table 1 of the attached Memorandum of Economic and Financial Policies (MEFP) dated December 17, 2013. This technical memorandum of understanding also sets out data-reporting requirements for program monitoring.

Definitions

2. For the purposes of this technical memorandum, the following definitions of “government,” “debt,” “payments arrears,” and “government obligations” “will be used:

  1. Government refers to the central government of the Republic of Niger; it does not include any political subdivision, public entity, or central bank with separate legal personality.

  2. As specified in point 9 of the Guidelines on Performance Criteria with Respect to External Debt in Fund Arrangements adopted by the Decision No. 6230-(79/140) of the Executive Board of the IMF, as amended effective December 1, 2009, debt will be understood to mean a current, i.e., not contingent, liability, created under a contractual arrangement through the provision of value in the form of assets (including currency) or services, and which requires the obligor to make one or more payments in the form of assets (including currency) or services, according to a specific schedule; these payments will discharge the obligor of the principal and/or interest liabilities incurred under the contract. Debts can take a number of forms, the primary ones being are as follows: (i) loans, i.e. advances of money to the obligor by the lender made on the basis of an undertaking that the obligor will repay the funds in the future (including deposits, bonds, debentures, commercial loans, and buyers’ credits) and temporary exchanges of assets that are equivalent to fully collateralized loans, under which the obligor is required to repay the funds, and usually pay interest, by repurchasing the collateral from the buyer in the future (such as repurchase agreements and official swap arrangements); (ii) suppliers’ credits, i.e., contracts where the supplier permits the obligor to defer payments until sometime after the date on which the goods are delivered or services are provided; and (iii) leases, i.e., arrangements under which property is provided that the lessee has the right to use for one or more specified period(s) of time that are usually shorter than the total expected service life of the property, while the lesser retains the title to the property. For the purpose of this guideline, the debt is the present value (at the inception of the lease) of all lease payments expected to be made during the period of the agreement, excluding those payments necessary for the operation, repair, or maintenance of the property. Under the definition of debt set out above, arrears, penalties, and judicially awarded damages arising from the failure to make payment under a contractual obligation that constitutes debt are debt. Failure to make payment on an obligation that is not considered debt under this definition (e.g., payment on delivery) will not give rise to debt.

  3. External payments arrears are payments due but not paid. Domestic payments arrears are domestic payments owed by the government but not paid. They include authorized fiscal year expenditure that is not paid within 90 days.

  4. Government obligation is any financial obligation of the government accepted as such by the government (including any government debt).

Quantitative Performance Criteria

A. Net Domestic Financing of the Government
Definition

3. Net domestic financing of the government is defined as the sum of (i) net bank credit to the government; (ii) net nonbank domestic financing of the government, including government securities issued in FCFA on the WAEMU regional financial market and not held by resident commercial banks, proceeds from the sale of government assets, and privatization receipts.

4. Net bank credit to the government is equal to the balance of government claims and debts vis-à-vis national banking institutions. Government claims include cash holdings of the Nigerien Treasury, secured obligations, deposits with the central bank, and deposits of the Treasury (including regional offices) with commercial banks. Government deposits with commercial banks are excluded from government claims insofar as they are used solely to finance externally financed capital expenditure.

5. Government debt to the banking system includes assistance from the central bank (excluding net IMF financing under the ECF arrangement and the FCFA counterpart of the 2009 General SDR Allocation), assistance from commercial banks (including government securities held by the central bank and commercial banks), and deposits with the CCP (postal checking system).

6. The scope of net bank credit to the government as defined by the BCEAO includes all central government administrations. Net bank credit to the government and the amount of Treasury bills and bonds issued in FCFA on the WAEMU regional financial market are calculated by the BCEAO.

7. Net nonbank domestic financing includes (i) the change in the stock of government securities (Treasury bills and bonds) issued in FCFA on the WAEMU regional financial market and not held by resident commercial banks; (ii) the change in the balance of Treasury correspondents’ deposit accounts; (iii) the change in the balance of various deposit accounts at the Treasury; and (iv) the change in the stock of claims on the government forgiven by the private sector. Net nonbank financing of the government is calculated by the Nigerien Treasury.

8. The 2014 quarterly targets are based on the change between the end-December 2013 level and the date selected for the performance criterion or indicative target.

Adjustment

9. The ceiling on net domestic financing of the government will be subject to adjustment if disbursements of external budgetary support net of external debt service and external arrears payments, including disbursements under the ECF arrangement, fall short of program projections.

10. If, at the end of each quarter of 2014, disbursements of external budgetary support fall short of the projected amounts at the end of each quarter, the corresponding quarterly ceilings will be raised pro tanto, up to a maximum of FCFA 15 billion.

Reporting requirement

11. Detailed data on domestic financing of the government will be provided monthly, within six weeks after the end of each month.

B. Reduction of Domestic Payments Arrears
Definition

12. The reduction of domestic payments arrears is equal to the difference between the stock of arrears at end-2013 and the stock of arrears on the reference date.

13. The Centre d’amortissement de la dette intérieure de l’État (CAADIE) and the Treasury are responsible for calculating the stock of domestic payments arrears on government obligations and recording their repayment.

Reporting requirement

14. Data on the stock, accumulation (including the change in Treasury balances outstanding), and repayment of domestic arrears on government obligations will be provided monthly, within six weeks following the end of each month.

C. External Payments Arrears
Definition

15. Government debt is outstanding debt owed or guaranteed by the government. For the program, the government undertakes not to accumulate external payments arrears on its debt (including Treasury bills and bonds issued in FCFA on the WAEMU regional financial market), with the exception of external payments arrears arising from debt being renegotiated with external creditors, including Paris Club creditors.

Reporting requirement

16. Data on the stock, accumulation, and repayment of external payments arrears will be provided monthly, within six weeks following the end of each month.

D. External Nonconcessional Loans Contracted or Guaranteed by the Public Sector
Definition

17. The government and the public enterprises listed in ¶21 will not contract or guarantee external debt with an original maturity of one year or more and having a grant element of less than 35 percent. For program purposes, a debt is concessional if it includes a grant element of at least 35 percent, calculated as follows: the grant element of a debt is the difference between the present value (PV) of debt and its nominal value, expressed as a percentage of the nominal value of the debt. The PV of debt at the time of its contracting is calculated by discounting the future stream of payments of debt service due on this debt.1 The discount rate used for this purpose is 5 percent.2

18. This performance criterion applies not only to debt as defined in point 9 of the Guidelines on Performance Criteria with Respect to External Debt in Fund Arrangements adopted by Decision No. 6230-(79/140) of the Executive Board of the IMF, as amended effective December 1, 2009, but also to any obligation contracted or guaranteed for which no value has been received. However, this performance criterion does not apply to financing provided by the IMF and to debt rescheduling in the form of new loans.

19. For the purposes of the relevant criteria, the guarantee of a debt arises from any explicit legal obligation of the government to service a debt in the event of nonpayment by the debtor (involving payments in cash or kind).

20. For the purposes of the relevant performance criterion, external debt is defined as debt borrowed or serviced, or requiring repayment, in a currency other than the CFA franc. This definition also applies to debt among WAEMU countries.

21. For the purposes of this performance criterion, the public sector includes the government, as defined in ¶2 above, and the following public enterprises: (i) Société Nigérienne d’Electricité (Nigelec); (ii) Société de Construction et de Gestion des Marchés (Socogem); (iii) Société de Patrimoine des Eaux du Niger (SPEN), (iv) Société Nigérienne de Charbon (Sonichar), (v) Société Nigérienne des Produits Pétroliers (Sonidep), (vi) Société Nigérienne des Télécommunications (Sonitel), (vii) Société de Patrimoine des Mines du Niger (Sopamin); and (viii) Société Hôtel Gaweye (SPEG).

Reporting Requirement

22. Details on all external public sector debt will be provided monthly, within six weeks after the end of each month. The same requirement applies to guarantees granted by the central government. The Ministry of Finance will regularly forward to Fund staff a list of loans in process of negotiation. It will also prepare semiannual reports on any external debt contracted or in process of negotiation and the terms thereof, as well as on the borrowing program for the next six months, including the terms thereof, and will forward them to Fund staff.

E. Short-Term External Debt of the Central Government
Definition

23. The government will not accumulate or guarantee new external debt with an original maturity of less than one year. This performance criterion applies not only to debt as defined in point 9 of the Guidelines on Performance Criteria with Respect to External Debt in Fund Arrangements adopted by Decision No. 6230-(79/140) of the Executive Board of the IMF, as amended effective December 1, 2009, but also to any obligation contracted or guaranteed for which no value has been received. Short-term loans related to imports are excluded from this performance criterion, as are short-term securities issued in FCFA on the regional financial market.

Reporting requirement

24. Details on all external government debt will be provided monthly, within six weeks following the end of each month. The same requirement applies to guarantees granted by the government.

Quantitative Targets

F. Definitions

25. Total revenue is an indicative target for the program. It includes tax, nontax, and special accounts revenue, but excludes proceeds from the settlement of reciprocal debts between the government and enterprises.

26. The basic fiscal deficit is defined as the difference between: (i) total tax revenue as defined in ¶22; and (ii) total fiscal expenditure excluding externally financed investment expenditure but including HIPC-financed expenditure.

27. The floor on poverty-reducing expenditure is an indicative target for the program. This expenditure comprises all budget lines included in the Unified Priority List (UPL) of poverty-reducing and HIPC-financed expenditure.

G. Reporting Requirement

28. Information on revenue and expenditure will be provided to the IMF monthly, within six weeks after the end of each month.

29. Information on UPL expenditure will be provided to the IMF monthly, within six weeks after the end of each quarter.

Additional Information For Program Monitoring

H. Government finance

30. The government will forward the following to IMF staff:

  • Detailed monthly estimates of revenue and expenditure, including priority expenditure, the payment of domestic and external arrears, and a breakdown of customs, DGI, and Treasury revenue;

  • The Table of Government Financial Operations with comprehensive monthly data on domestic and external financing of the budget, and changes in arrears and Treasury balances outstanding. These data are to be provided monthly, within six weeks following the end of each month;

  • Comprehensive monthly data on net nonbank domestic financing: (i) the change in the stock of government securities (Treasury bills and bonds) issued in FCFA on the WAEMU regional financial market and not held by resident commercial banks; (ii) the change in the balance of Treasury correspondents’ deposit accounts; (iii) the change in the balance of various deposit accounts at the Treasury (iv) the change in the stock of claims on the government forgiven by the private sector;

  • Quarterly data on expenditure for UPL lines (statement of appropriations approved, disbursed, and used);

  • Quarterly reports on budget execution, including the rate of execution of poverty-reducing expenditure and, in particular, the use of appropriations by the line ministries concerned (National Education, Public Health, Equipment, Agriculture, Livestock);

  • Monthly data on the balances of accounts of the Treasury (Treasury trial balance) and of other public accounts at the BCEAO;

  • Monthly data on Treasury balances outstanding, by reference fiscal year, with a breakdown of maturities of more than and less than 90 days;

  • Monthly data on effective debt service (principal and interest) compared with the programmed maturities provided within four weeks after the end of each month; and

  • List of external loans contracted or in process of negotiation and projected borrowing in the next six months, including the financial terms and conditions.

I. Monetary Sector

31. The authorities will provide the following information each month, within eight weeks following the end of each month:

  • Consolidated balance sheet of monetary institutions and, in applicable cases, the balance sheets of individual banks;

  • Monetary survey, within eight weeks after the end of the month (provisional data);

  • Borrowing and lending interest rates; and

  • Customary banking supervision indicators for banks and nonbank financial institutions (if necessary, these same indicators for individual institutions may also be provided).

J. Balance of Payments

32. The government will give IMF staff the following information:

  • Any revision of balance of payments data (including services, private transfers, official transfers, and capital transactions) whenever they occur; and

  • Preliminary annual balance of payments data, within six months after the end of the reference year.

K. Real Sector

33. The government will provide IMF staff with the following information:

  • Disaggregated monthly consumer price indexes, within two weeks following the end of each month;

  • The national accounts, within six months after the end of the year; and

  • Any revision of the national accounts.

L. Structural Reforms and Other Data

34. The government will provide the following information:

  • Any study or official report on Niger’s economy, within two weeks after its publication;

  • Any decision, order, law, decree, ordinance, or circular with economic or financial implications, upon its publication or, at the latest, when it enters into force;

  • Any draft contract in the mining and petroleum sectors involving the direct financial participation or guarantee of the government;

  • Any new information on the mining and petroleum sectors, including production and sales volumes, prices, and foreign investment; and

  • Any agreement with private sector stakeholders having economic or financial repercussions for the government, including in the natural resources sector.

Summary of Data to be Reported

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1

Niger suffered two suicide bomb attacks in May 2013, targeting military barracks and a uranium mine in the north-east, and a jail break in the capital in June.

2

The population living under the poverty line declined marginally from about 63 percent in 1990 to 59.5 percent in 2007. Per capita GDP increased by US$40 over the last five years to reach US$370 in 2012 but remains well below the WAEMU average of US$720 in 2012.

3

The electricity cut was caused by a storm that knocked out power lines in Western Nigeria.

4

The initiative 3N (“les Nigeriens Nourrisent les Nigeriens”) seeks to promote agriculture through support for irrigation to increase the resilience of local food production to climatic shocks.

5

The government collected FCFA 59 billion (1.6 percent of GDP) from the sale of exploration rights in the Agadem Block, of which approximately FCFA 20 billion is fiscal revenue.

6

Staff estimated the grant element at 35.7 percent, using the discount rate of 5.47 percent, as of September 2013 and including an upfront commission of 0.25 percent.

7

An update to the DSA will be discussed in the upcoming combined fourth ECF review and Article IV consultation.

8

Although the contribution of natural resources to GDP is rapidly expanding, subsistence agriculture continues to be the major contributor to output, as well as the principal source of income for the population, exposing economic performance to high volatility due to the frequent climatic shocks.

9

As these loans were not reported to staff at the time of the completion of the first review, this triggered a misreporting procedure (¶12 and Report on Noncomplying Disbursement).

10

The new 5 percent uniform discount rate to be used going forward from this review was not yet applicable to the program at the time of the contracting of these loans.

11

Revenue of about FCFA 40 billion from the telecommunication sector was expected at end-December 2013 but did not materialize.

12

As Niger is a member of the West African Economic and Monetary Union (WAEMU), the Central Bank of West African States (BCEAO) is responsible for Niger’s monetary policy management and the Banking Commission for its banking regulation and supervision. Recently, governance problems in the pan-African group Ecobank have prompted an investigation on governance practices by the Nigerian Security Exchange Commission and raised concern about the Board’s ability to manage its own activities, monitor management, evaluate performance and oversee ethical behavior.

13

The government has entrusted the state-owned company SONIDEP as the sole entity responsible for the commercialization of the refined petroleum products, of which one third is domestically marketed and the remainder exported in neighboring countries.

1

The calculation of concessionality will take into account all aspects of the loan agreement, including maturity, grace period, payment schedule, upfront commissions, and management fees.

2

On October 11, 2013, the Executive Boards of the IMF and the World Bank adopted a new methodology setting a single, unified discount rate to calculate the grant element of individual loans. The new unified discount rate is set at 5 percent (see http://www.imf.org/external/np/pdr/conc/calculator/.)

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Cover IMF Staff Country Reports
Niger: Second and Third Reviews Under the Extended Credit Facility Arrangement and Requests for Waivers of Nonobservance of Performance Criteria and for Extension of the Program Period and Arrangement, Rephasing of Disbursements, and Modification of Performance Criteria
Author:
International Monetary Fund. African Dept.
Volume/Issue:
Volume 2014: Issue 168
Publisher:
International Monetary Fund
ISBN:
9781498368018
ISSN:
1934-7685
Pages:
67
DOI:
https://doi.org/10.5089/9781498368018.002
Figure 1.

Niger: Fiscal Developments, 2011–2013
Figure 2.

Niger: Recent Economic Developments
Figure 3.

Niger: GDP Composition and Output Volatility
Figure 4.

Niger: Contribution of the Natural Resources Sector to the Economy