- While economic growth had been substantial in 2002, economists fear a slower growth rate this year due to the crisis in Côte d'Ivoire and inadequate rainfall. The Malian economy however performs surprisingly well despite "difficult conditions".
The latest review of Mali's economic performance by the International Monetary Fund (IMF) reveals that the country has become one of the best performers among the IMF's clients. "All performance criteria and indicative targets" for the period under review had been met, the IMF concluded.
IMF Deputy Managing Director, Shigemitsu Sugisaki, today stated that "the Malian authorities continued to make good progress in implementing their Fund-supported program, under difficult conditions." The Fund therefore had decided to approve a US$ 8.5 million disbursement for Mali under the Poverty Reduction and Growth Facility (PRGF) arrangement.
Increases in cotton, cereal, and gold production resulted in a strong rebound of economic growth in 2002, the IMF review concluded. This strong growth last year had been secured despite the crisis in Côte d'Ivoire, which had disrupted trade, increased transportation costs, and reduced government revenue.
However, the ongoing "crisis in Côte d'Ivoire and inadequate rainfall could have a negative effect in 2003 on growth in key sectors and would require the authorities to redouble their efforts to achieve program and fiscal objectives," said Mr Sugisaki.
Over the medium term, Malian authorities were "committed to pursuing prudent macroeconomic policies and implementing needed structural reforms, in order to attain the poverty-reducing objectives" set out in the country's poverty reduction strategy, according to the IMF representative.
- The main objective for the remainder of 2003 should be to consolidate the fiscal position, while increasing high-priority social spending, Mr Sugisaki told the Malian government. To this end, Malian authorities were urged to "strengthen recurrent revenues by reducing exemptions and improving tax administration, contain overall outlays, and improve the management of public resources."
Mr Sugisaki added that Mali should continue to make strides to promote private sector activity. "Economic diversification is critical to reducing the economy's vulnerability to external shocks and its reliance on production of natural resources," he said.
Reforms to enhance private sector competitiveness should focus on further liberalising the cotton sector, completing the privatisation program, improving the regulatory environment, and promoting good governance, Mr Sugisaki added.
As a result of the positive developments in Mali during the reviewed period, the IMF's Executive Board had approved a US$ 8.5 million disbursement for the government's poverty reduction programme. Mali's poverty reduction arrangement with the Fund was approved in August 1999 and Mali has so far drawn about US $63.1 million under this arrangement.
This type of loans for low-income countries (PRGF loans) carry an annual interest rate of 0.5 percent and are repayable over 10 years with a 5 ½-year grace period on principal payments, according to the Fund.
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