(Ecofin Agency) - Satisfied with the corrective measures the government of Mali deployed during the first half this year, the Board of the International Monetary Fund (IMF) approved yesterday August 28 a three-year aid program in favor of the nation. The $191.9 million ECF was passed with the immediate disbursement of $27.4 million.
IMF says it is supporting “the development strategy the Malian authorities put in place to make economic growth stronger and more inclusive through job creation, economy diversification, and higher resilience.” This news is welcomed as a relief for the country’s tax revenues.
According to the Malian government, the new support will help strengthen the State incomes which drastically dropped last year, “after successive growth years”. Tax income contracted by 3.4% while non tax revenues dropped by 0.8% year on year in 2018, due to the unrest in the country and the increase in global fuel prices.
An immediate effect of its program, IMF points out, would be to “bring revenues close to the level before 2018 by empowering tax and customs services,” following the same dynamic as in H1 2019 when “significant progress was achieved.”
The IMF program is also benefiting Mali’s power utility EDM SA. The latter has been facing tough financial situation for so long and has already got a support from the World Bank; but things are not yet like they should be. Through its program, the IMF is encouraging authorities to seek a debt restructuring plan with commercial banks.
While Mali’s economic outlook remain positive overall, it is subject to high risk related to the security situation, potential terms of trade shocks (gold, cotton and oil prices) and bad weather conditions, the Washington Institution is concerned.
Although the outlook is exposed to these risks, the three-year program will focus on maintaining annual economic growth at 5%, with the budget deficit below 3%, driven by the continued expansion of the key sectors of gold and cotton. IMF believes the Malian government should also focus on areas such as governance, the fight against corruption, improving the business climate, financial inclusion, empowering women and controlling public spending.
Fiacre E. Kakpo