IMF Staff Completes 2023 Article IV Mission to Mali

IMF Staff Completes 2023 Article IV Mission to Mali

March 24, 2023

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF’s Executive Board for discussion and decision.

• Mali’s economy has been relatively resilient despite facing multiple shocks since 2020 including coups d’état, sanctions, and a cost-of-living crisis following the war in Ukraine. However, Mali’s population is suffering from high incidence of food insecurity and the country faces acute domestic security challenges.
• The lack of external budget support and tighter financial conditions are limiting Mali’s financing options amid continued spending pressures, especially security expenses and a high wage bill.
• Reducing the fiscal deficit and a faster convergence to the West African Economic and Monetary Union’s 3-percent fiscal deficit ceiling would help ensure debt sustainability and ease debt financing.

Washington, DC:
An International Monetary Fund (IMF) team, led by Ms. Wenjie Chen,
conducted discussions virtually on the 2023 Article IV consultation with
Mali from March 6 to March 17, 2023. The mission held constructive
discussions with a broad range of counterparts including the government and
private sector to exchange views on economic prospects and risks, progress
on reform, challenges, and policies.

At the end of the visit, Ms. Chen issued the following statement:

“Mali’s economy has been hit by multiple shocks since 2020. The economy has
proved relatively resilient, however, with economic growth above 3 percent
in 2021 and at 3.7 percent in 2022. The acute security challenges facing
the country are ongoing, with a direct impact on food insecurity.

“The government’s fiscal deficit—at just under 5 percent of GDP in
2022—reflects a rapid increase in security spending, public wages, and the
interest bill. Together, these consume close to 80 percent of fiscal
revenues and risk crowding out growth-friendly spending including those on
the social safety net and investment. The absence of external budget
support, combined with tighter financing conditions due to global monetary
policy tightening, has caused the cost of funding to increase while the
sources of funding have dwindled.

“The near-term outlook is positive but subject to substantial downside
risks. Real GDP growth is projected to rebound to over 5 percent in 2023
and 2024 thanks to strong agricultural and gold output. That forecast is
predicated on elections taking place in 2024, which is assumed to prompt a
resumption of external budget support and spur foreign investments.
However, risks are titled to the downside and include a worsening security
situation, potential election delays, volatile international commodity
prices, tighter global financial conditions, and climate risks.

“Meanwhile, fiscal and external buffers have fallen, leaving Mali more
vulnerable to a further deterioration in the financing environment. There
has been a tightening of the Central Bank of West African State’s (BCEAO)
bank refinancing conditions and low subscription rates for Mali’s
government regional debt issuances in late 2022 and the early months of
2023, for example.

“Thus, reducing the fiscal deficit and converging towards the 3-percent
fiscal deficit ceiling of the West African Economic and Monetary Union
(WAEMU) is becoming more urgent. Improving domestic revenue mobilization is
an important objective. Some key short-term measures would include the
elimination of various tax exemptions and expansion of digital taxation. On
expenditures, limiting further increases in the public sector wage bill
will be the most important step. Other measures include phasing out
untargeted subsidies and transfers while reprioritizing social transfers to
target the most vulnerable households. The efficiency of public spending
could also be improved through stronger cash management and commitment
controls.

“To bolster medium-term growth prospects, strengthening governance and
stepping up the fight against corruption will be essential. Crucial
measures include a strengthening of the mandates of anti-corruption
investigations by judicial and prosecution bodies and improved transparency
in public procurement and the mining industry.

“Policies to address climate change will also be important, as well as
reforms to the education and health sectors such as creating opportunities
for vocational training, improving women’s labor market participation and
achieving greater gender equity.

“The mission thanks the authorities and other counterparts for their close
collaboration and productive discussions.”

The team met with the Minister of Finance Mr. Alousséni Sanou, the Acting
Director of the BCEAO in Bamako Mr. Barema Bocoum, Directors and staff of
the main ministries and government agencies, development partners, and the
private sector.