Niger and IMF reached agreement on review of ECF-supported program

The Nigerien authorities and the IMF team reached staff-level agreement for the completion of the fifth review of the Extended Credit Facility (ECF) – program.

It could be considered by the Executive Board of the IMF in early-January 2020.

An International Monetary Fund (IMF) staff team led by Christoph A. Klingen visited Niamey from October 29 to November 12, 2019 to conduct discussions on the fifth review of the program supported by the Extended Credit Facility (ECF) arrangement. Niger’s program was approved by the IMF Board on January 23, 2017.

Klingen said at the end of the visit that the government of Niger remains strongly committed to the reforms in its PDES 2017-2021, supported by the ECF arrangement. It is making commendable reform efforts, implementing its program with the IMF in a satisfactory manner.

“Macroeconomic stability remains firmly in place on the back of prudent fiscal policy and solid growth. Economic activity is benefitting from the government’s success in attracting foreign investors and the scaling-up of donor support, as well as favorable harvests, despite a tense security situation and the closure of the border with Nigeria. Growth should reach 6.3 percent this year and average more than 7 percent over the next five years. The construction of the pipeline for crude oil and the expected onset of oil exports in 2022 are an important boon for the economy. The mission will continue to work closely with the authorities with a view to devising policies that maximize the benefits from the large-scale projects for the Nigerien economy.

“The fiscal situation remains broadly satisfactory, with the overall deficit on track to improve this year and comply with the WAEMU deficit ceiling of 3 percent of GDP in 2020. While revenue mobilization remains an uphill battle, especially considering the Nigeria border closure, the government’s unrelenting reform efforts and prudent expenditure management keep public finances solid. The 2020 budget marks an important step toward generating fiscal space for priority expenditures. High quality and transparency in public spending remains imperative to make the best of limited resources.

“The IMF team congratulates the authorities on securing the construction of a pipeline for the export of crude oil and the associated oil field development. Fiscal revenues should rise by at least 2 percent of GDP from 2022 and local suppliers and employees of oil-related activity should benefit as well. It will now be important to carefully design the contracts and institutional arrangements governing the petroleum sector to make Niger’s impending oil exporter status an unqualified success.

“Persistently seeking to improve conditions for the formal local private sector is critical, not least to allow it to benefit fully from the dynamism surrounding the large-scale projects. In this context, the government’s efforts to improve the readings of business environment indicators is commendable. Improving access to financing is rightly high on the agenda. Formalizing the informal sector simultaneously levels the playing field and spreads the tax burden more widely. The mission welcomes ongoing efforts to improve governance, including the strengthening of HALCIA, the application to rejoin the EITI, and plans to upgrade the asset declaration regime for high-ranking public officials.

“The team met with the Prime Minister Brigi Rafini, Minister of State for Petroleum, the Ministers of Finance and Justice, the Minister Delegate for the Budget, the Special Presidential Advisor in charge of the business environment, as well as other senior government officials. Staff also exchanged views with representatives of the private sector and the donor community.”

IMF Executive Board Completes Second Review of the Extended Credit Facility with Guinea

The Executive Board of the International Monetary Fund (IMF) has enabled the immediate disbursement of US$23.9 million to Guinea, bringing total disbursements under the arrangement to US$71.6 million.

Tao Zhang

On December 21, 2018, the Executive Board of the International Monetary Fund (IMF) completed the second review of Guinea’s economic performance under the Extended Credit Facility (ECF) arrangement. Completion of this review enables the immediate disbursement of US$23.9 million, bringing total disbursements under the arrangement to US$71.6 million.

The Board also approved the authorities’ request for modification and a waiver of non-observance of a performance criterion.

Guinea’s three-year ECF arrangement was approved by the Executive Board of the IMF on December 11, 2017 for US$167.2 million at the time of the arrangement’s approval, or 56.25 percent of Guinea’s quota). The ECF arrangement aims at strengthening resilience, scaling-up public investment in infrastructure while preserving stability, strengthening social safety nets, and promoting private sector development.

Following the Executive Board’s discussion on Guinea, Mr. Tao Zhang, Acting Chair and Deputy Managing Director, issued the following statement:

“Guinea is implementing a program of macroeconomic policies and reforms to achieve high and broad-based growth and reduce poverty while preserving macroeconomic stability. Performance under the ECF-supported program against end-June targets was satisfactory and program-supported reforms advanced well. In view of revenue shortfalls, the authorities have undertaken additional measures to achieve the end-2018 fiscal target. The strong growth momentum continues, and the medium-term outlook is favorable.

“Achieving a basic fiscal surplus will support preserving macroeconomic stability. Mobilizing additional tax revenues will allow scaling-up growth-supporting infrastructure investment. The authorities also aim to reduce untargeted electricity subsidies and have an automatic adjustment mechanism for petroleum prices. Attention to the social impact of these planned reforms will be important, including by strengthening social safety nets.

“Prudent debt management will be crucial to maintaining debt sustainability. Limiting non-concessional borrowing and enhancing public finance and investment management will help preserve debt sustainability and support efficiency and transparency.

“A more active strategy to accumulate reserves will help build external buffers and strengthen Guinea’s resilience to shocks. Increasing competition in the foreign exchange market and moving to a rule-based intervention strategy will also support greater exchange rate flexibility.

“Monetary policy will remain prudent to preserve moderate inflation. The authorities will continue to limit government budgetary borrowing from the central bank and move toward a more active liquidity management. Strengthening banking supervision and the regulatory framework will support financial sector stability.

“The authorities are committed to advancing growth-supporting structural reforms. Strengthening the anti-corruption framework and the business climate will enhance governance and support private sector development.”