Introduction

Our Nigerien authorities thank the Executive Board, Management and Staff for the Fund continued support under the ECF arrangement and for the Fund’s strong commitment to assist low income countries and the membership at large in their efforts to contain and mitigate the effects of the coronavirus pandemic. The authorities value the constructive policy discussions they have had with staff as well as the meetings held in Niamey last January with Mr. David Lipton, then First Deputy Managing Director.

The coronavirus outbreak is affecting Niger amid an already very challenging situation owing to terrorist attacks, the sharp decline in the price of uranium, the country’s main export product, the effects of climate change and the closure of the land border with Nigeria. The authorities have initiated measures to contain the pandemic and support the economy. Yet, the COVID-19 shock has increased the pressures on Niger’s public finances and balance of payments. The authorities are requesting Fund’s financial assistance of SDR 83.66 million, equivalent to 63.6 percent of quota under the Rapid Credit Facility (RCF), to sustain their efforts and contain the impact of the pandemic on the economy. To facilitate the provision of this financial support, they are also requesting from the Executive Board, the approval of the rephasing of access under the ECF arrangement.

Impact of the COVID-19 Pandemic and Outlook

The first case of the coronavirus was recorded on March 19, 2020 and since, the number of infected people has increased with several fatalities. Given the limited capacities and resources of the country, those numbers could augment substantially. The pandemic is severely affecting economic activity through trade disruption, delays in the implementation of large-scale projects, and tightening of financial conditions.

In this context, the favorable outlook before the crisis is altered and growth is now projected to plunge to 1 percent in 2020. Inflation will rise to 4.4 percent thus exceeding the WAEMU convergence criterion of 3 percent. The fiscal deficit would widen to 5 percent of GDP. The authorities are also mindful of the elevated uncertainty around the size of the global and domestic effects of the COVID-19 pandemic, which increase the downside risks to Niger’s economic outlook.

Riposte Plan to the Pandemic

The authorities devised a bold response plan to contain the spread of the pandemic and effectively address its effects on the economy. The Head of State declared a state of emergency including a curfew at night and a restriction of movement. A ministerial committee under the chairmanship of the minister of finance was established to oversee the implementation of the riposte plan.

The plan presented to the donor community on March 25, 2020 comprises health policy measures and steps to deal with the social and economic consequences of the crisis. Accordingly, the authorities’ efforts are focused on the health sector with the implementation of containment, prevention and isolation measures. The physical and human capacities of the health system are also being strengthened with the intention to hire 1500 additional health workers. To alleviate the social hardship inflicted to the population, food at reduced prices will be distributed and poor households will be granted two months of waivers for utility payments. In addition, the government envisages the expansion of cash-transfer programs and to provide incentives to open mobile money accounts. Measures to contain the economic consequences of the crisis include notably waiving tax and customs duties on medical goods and equipment. Public transportation will be exempted from VAT during the suspension of services while the WAEMU directive to reduce VAT rate for hotels will be implemented.

Furthermore, the regional central bank (BCEAO) announced monetary and financial measures to mitigate the impact of the COVID-19 on the financial sector. This includes increasing liquidity available to banks, maintaining refinancing rates close to 2.5 percent and expanding collateral for access to BCEAO refinancing. The central bank is also encouraging banks to fully participate in the regional refinancing schemes for credit to small and medium- sized enterprises while maintaining close monitoring of non-performing loans.

The cost of the riposte plan is estimated at CFAF 597 billion or 7.6 percent of GDP. To be fully implemented, the plan requires significant amount of grants and concessional financial support from the international community as it will entail losses of domestic revenue and increases in public expenditure in favor of health and social programs.

Performance and Rephasing of ECF Program

The authorities’ strong commitment to the ECF-supported program continues to underpin its satisfactory implementation amid daunting challenges. The fifth review of the program was completed last January, and the program period has been extended to July 2020. Given the impact of the coronavirus pandemic on the economic outlook and difficulties to adjust the macroeconomic framework in this context filled with heightened uncertainties, the authorities are requesting the rephasing of the final disbursement under the sixth and last review.

Conclusion

The authorities of Niger remain strongly committed to their ECF-supported program. They are cognizant of the importance of treating the riposte measures as temporary. In order to successfully tackle the pandemic effects, our Nigerien authorities are seeking the Executive Board’ s approval of their requests for an urgent disbursement under the RCF and a rephasing of the ECF arrangement.