Mali: Staff Report for the 2015 Article IV Consultation, Fourth Review Under the Extended Credit Facility Arrangement, and Request for Modification of a Performance Criterion—Informational Annex

This 2015 Article IV Consultation highlights that Mali's program performance through June was strong, with all performance criteria and most structural benchmarks met. The 2016 program features a somewhat higher fiscal deficit compared with 2015 to allow for increased public investment and reconstruction spending. The program's structural component incorporates measures to support continued revenue growth, strengthen public financial management, and promote good governance. The external current account is projected to strengthen in the near term but would weaken thereafter, mainly as a result of less favorable terms of trade.

Abstract

This 2015 Article IV Consultation highlights that Mali's program performance through June was strong, with all performance criteria and most structural benchmarks met. The 2016 program features a somewhat higher fiscal deficit compared with 2015 to allow for increased public investment and reconstruction spending. The program's structural component incorporates measures to support continued revenue growth, strengthen public financial management, and promote good governance. The external current account is projected to strengthen in the near term but would weaken thereafter, mainly as a result of less favorable terms of trade.

Relations With the Fund

(As of September 30, 2015)

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Latest Financial Arrangements:

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Projected Payments to Fund 2

(SDR Million; based on existing use of resources and present holdings of SDRs):

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Implementation of HIPC Initiative:

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

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

Implementation of Multilateral Debt Relief Initiative (MDRI):

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

Implementation of Catastrophe Containment and Relief (CCR): Not Applicable As of February 4, 2015, the Post-Catastrophe Debt Relief Trust has been transformed to the Catastrophe Containment and Relief (CCR) Trust.

Decision Point:

Point at which the IMF and the World Bank determine whether a country qualifies for assistance under the HIPC Initiative and decides on the amount of assistance to be committed.

Interim Assistance:

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

Completion Point:

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

Safeguards Assessments: The Central Bank of West African States (BCEAO) is the common central bank of the countries of the West African Economic and Monetary Union (WAEMU). The latest safeguards assessment of the BCEAO of December 13, 2013 found that the bank continued to have a strong control environment and has enhanced its governance framework. Specifically, an internal audit committee was established and progress is underway to strengthen its capacity with external expertise 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 fully comply with international financial reporting standards for the audit of FY 2015. The assessment also identified some limitations in the external audit process and recommended that steps be taken to ensure the adequacy of the mechanism through selection of a second experienced audit firm to conduct joint external audits, which was done in 2015.

Exchange Rate Arrangements:

Mali is a member of the West African Economic and Monetary Union (WAEMU). The union’s common currency, the CFA franc, was pegged to the French franc at the rate of CFAF 50 = FF 1 from 1948 until early 1994. Effective January 12, 1994, the CFA franc was devalued, and the new parity set at CFAF 100 = FF 1. Effective January 1, 1999, the CFA franc was pegged to the Euro at a rate of CFAF 655.96 = EUR 1.

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

Sharing a common trade policy with other members of WAEMU, Mali has shifted key trade policy-making to the sub-regional level. The common external tariff (CET) was adopted in January 2000. Mali complies with the union’s tariff rate structure and has effectively dismantled internal tariffs. Between 1997 and 2003, WAEMU tariff reform reduced the simple average custom duty from 22 percent to 15 percent; the maximum rate is currently 20 percent. Imports to Mali are not subject to quantitative restrictions.

Mali’s exports to the European Union generally enjoy non-reciprocal preferential treatment in the form of exemption from import duties under the Everything but Arms initiative. Malian goods enjoy nonreciprocal preferential access to the markets of developed countries other than the European Union under the Generalized System of Preferences. Mali is also eligible to benefit from the United States’ African Growth and Opportunity Act. Mali imposes no de jure restrictions on exports.

Article IV Consultations:

Mali’s Article IV consultation cycle is governed by the provisions of the decision on consultation cycles, Decision No. 14747-(10/96) (9/28/2010), as amended. The Executive Board completed the last Article IV consultation (Country Report No. 13/44) on January 28, 2013.

Technical Assistance

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Resident Representative

Mr. Anton Op de Beke has been the Fund Resident Representative in Bamako since October 2012.

Joint Management Action Plan Implementation

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Statistical Issues

Mali—Statistical Issues Appendix

(As of October 29, 2015)

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Mali: Common Indicators Required for Surveillance

(as of October 29, 2015)

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Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

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

Foreign, domestic bank, and domestic nonbank financing.

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

Including currency and maturity composition.

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

Note: Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).
1

Formerly PRGF.

2

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

Mali: 2015 Article IV Consultation, Fourth Review Under the Extended Credit Facility Arrangement, and Request for Modification of a Performance Criterion-Press Release; Staff Report; and Statement by the Executive Director for Mali
Author: International Monetary Fund. African Dept.