Abstract
The political situation has continued to stabilize, following the signing of the peace agreement in June 2015. However, security conditions remain fragile as jihadist groups that were not part of the agreement continue to perpetrate terrorist attacks on civilians and guerrilla attacks on UN and Malian forces. On the macroeconomic side, the recovery continued in 2015, with strong GDP growth, low inflation, and strengthening of the fiscal position. The near-term outlook is positive, with continued robust output growth, but subject to substantial risks owing mainly to the fragile security situation.
The Executive Board of the International Monetary Fund (IMF) today completed the Fifth Review of Mali’s performance under an economic program supported by an Extended Credit Facility (ECF) arrangement.1 The decision enables the disbursement of SDR 19 million (about US$26.9 million), bringing total disbursements under the arrangement to SDR 41 million (about US$58.1 million).
In addition, the Executive Board approved the authorities’ request for a one-year extension of the ECF arrangement to December 17, 2017 and an augmentation of access by SDR 60 million for 2016 through 2017. The additional financing and time will help strengthen the country’s efforts to implement the peace agreement, address related balance of payment needs and maintain program continuity. This will bring Mali’s total access under the current arrangement to SDR 98 million (about US$138.8 million). The Board also approved a request for the modification of the performance criteria for June 2016 on gross tax revenue and government financing.
The Executive Board approved the ECF arrangement for Mali on December 18, 2013 for the equivalent of SDR 30 million (about US$42.5 million at the time,
Following the Executive Board’s discussion, Mr. Min Zhu, Deputy Managing Director and Acting Chair, made the following statement:
“The Malian authorities continue to make good progress with the implementation of their economic program. Growth is robust and inflation remains low, although security conditions continue to be a challenge.
“The recent strong increase in tax revenue reflects the authorities’ efforts to improve compliance and broaden the tax base. A key challenge going forward is to sustain tax revenue growth, which is needed to help fund priority public expenditures while keeping the public finances on a strong footing. The authorities’ program incorporates several measures to strengthen tax administration further. Increasing the effectiveness of tax audits, reducing exemptions, and reforming the system of incentives for tax inspectors will be important elements.
“The fiscal program for 2016 allows for a higher overall deficit, notably to accommodate peace-related needs. The authorities are committed to a gradual fiscal consolidation, consistent with their commitments to meet WAEMU criteria over the medium term. This will help ensure that Mali’s public debt burden remains manageable. Further improvements to public financial management are necessary to support fiscal discipline. It is important in this context that the authorities fully implement the Treasury Single Account, complete the reform of the procurement code, and improve the financial position of the electricity company.
“Fiscal decentralization is central to the peace agreement, and the authorities’ gradual approach is appropriate. The process would need to move in tandem with improvements in the administrative and absorptive capacities at the regional level. Government initiatives to strengthen audit and control mechanisms for the regions to foster transparency and accountability are also important in this regard.
“Efforts to address financial sector weaknesses are ongoing. Priorities include strengthening the balance sheet of the restructured housing bank, reforming the microfinance sector, and further modernizing the framework for anti-money laundering and combating the financing of terrorism.”
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For more detail on Mali’s ECF and broader economic outlook, go to: www.imf.org/mali.