IMF Approves US$67.38 Million in Emergency Support to Equatorial Guinea to Address the COVID-19 Pandemic and Accidental Explosions

The Executive Board of the International Monetary Fund (IMF) today approved a disbursement of SDR 47.25 million (about US$67.38 million, 30 percent of quota) to Equatorial Guinea under the Rapid Financing Instrument (RFI).

The disbursement will help meet the urgent fiscal and balance of payments needs stemming from the COVID-19 pandemic and March Bata explosions, and catalyze additional external resources as well as bolster the regional reserves of the Economic and Monetary Community of Central Africa (CEMAC).

The COVID-19 pandemic and the Bata explosions have inflicted heavy damage on Equatorial Guinea’s economy and have increased external financing needs in the balance of payments by an additional projected US$625 million (5 percent of GDP) in 2021-22 (relative to the EFF-supported program). The authorities have appropriately boosted critical frontline healthcare spending, including the purchase of a large batch of vaccines, and rolled out social assistance to households severely affected by the pandemic and the Bata explosions.

While tackling these crises, the authorities have taken an important initial step to address macro-critical governance and corruption challenges by adopting an anti-corruption law, which is in line with international good practices. To boost transparency, they have established two escrow accounts at the Bank of Central African States (BEAC) for pandemic and Bata emergency-related spending, and are undertaking audits of such spending.

Managing Director Kristalina Georgieva arrives and starts her first day of work at the IMF

The IMF stands ready to provide policy advice and further support to Equatorial Guinea as it battles the fallout from the pandemic and the Bata explosions, including as part of the ongoing cooperation under the EFF-supported program.

Following the Executive Board’s discussion on Equatorial Guinea, Mr. Bo Li, Deputy Managing Director and Acting Chair, made the following statement:

“The Bata explosions and still unfolding COVID-19 pandemic have inflicted heavy human and economic damage on Equatorial Guinea. The authorities are taking measures to contain and mitigate the fallout from these shocks on the most vulnerable segments of the population and limit the impact on economic activity. They have ramped up frontline healthcare and social spending and have provided limited and temporary tax relief to the private sector to cushion adverse effects on activity and employment.

“Addressing longstanding macro-critical governance and corruption challenges is critical to secure inclusive growth. The authorities met four prior actions. They adopted an anti-corruption law, in line with their obligations under the United Nations Convention Against Corruption. They have also commissioned audits for the pandemic and Bata emergency-related spending, they have established two escrow accounts at the BEAC for emergency spending, and they have committed to adhering to good public procurement practices. Continued implementation of these measures is essential for effective spending on pandemic- and reconstruction-related needs.

“To safeguard macroeconomic stability, promote inclusive growth and fight corruption, the authorities need to accelerate reforms under the EFF-supported program. The recent progress in advancing some governance reforms is welcome, but this effort must be sustained and reforms under the EFF-supported program need to be fully implemented.

“It is important that the authorities honor their commitment to prepare and publish a list of meaningful public assets for privatization, and approve regulations in line with the anti-corruption law for an asset declarations regime for public officials and the governance of the anti-corruption commission as soon as possible. Measures to strengthen banking sector stability, such as the settlement of domestic arrears and the recapitalization of the largest bank, need to be implemented without further delay. Additional efforts to safeguard social spending and enhance social protection are needed, together with continued reforms on revenue administration and strengthening public financial management framework.”

IMF Executive Board Approves a US$491.5 Million Disbursement to Uganda to Address the COVID-19 Pandemic

The Executive Board of the International Monetary Fund (IMF) approved today a disbursement of SDR361 million (about US$491.5 million or 100 percent of quota) for Uganda under the Rapid Credit Facility (RCF).

It will help finance the health, social protection and macroeconomic stabilization measures, meet the urgent balance-of-payments and fiscal needs arising from the COVID-19 outbreak and catalyze additional support from the international community.

The Ugandan economy is being severely hit by the COVID-19 pandemic and, in particular, such key sectors as services (tourism), transport, construction, manufacturing and agriculture. The challenging external environment is curtailing remittances and foreign direct investments. The pandemic has also exacerbated the challenges posed by heavy rains in early 2020 and the ongoing locust invasion.

To contain the impact of the pandemic, the authorities have increased health spending, strengthened social protection to the most vulnerable, and enhanced their support to the private sector. The Bank of Uganda has appropriately reduced interest rates and provided liquidity to safeguard financial stability, while maintaining exchange rate flexibility.

The weakening economic conditions emanating from the Covid-19 pandemic have put significant pressures on revenue collection, expenditure, reserves and the exchange rate, creating urgent large external and fiscal financing needs.

The IMF continues to monitor Uganda’s situation closely and stands ready to provide policy advice and further support as needed. The authorities have also committed to put in place targeted transparency and accountability measures to ensure the appropriate use of emergency financing.

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

“The global COVID-19 pandemic is expected to severely hit the Ugandan economy through several channels, with detrimental effects on economic activity and social indicators. The external and fiscal accounts are expected to deteriorate, creating substantial urgent external and fiscal financing needs.

“To limit the pandemic’s human and economic impact, the authorities have promptly adopted bold preventive measures to contain the spread of the virus, and scaled up health spending to strengthen the health system’s capacity. Interventions to support the more vulnerable have also been introduced. In addition, the Bank of Uganda has swiftly introduced policy measures to support liquidity, preserve financial stability and support economic activity. The authorities are encouraged to continue to step up social protection programs to cushion the impact on the vulnerable population and to protect health spending allocations over the medium term.

“A temporary widening of the fiscal deficit is warranted in the short term to allow for the implementation of the response plan. Despite a temporary worsening of debt indicators and heightened vulnerabilities, public debt is expected to remain sustainable. The authorities remain committed to ensuring debt sustainability, including through their efforts to enhance revenue collection and strengthen public investment management.

“The authorities are committed to managing transparently the resources received and will strengthen transparency and accountability. They plan to report separately on the use of the funds, undertake and publish an independent audit of crisis-mitigation spending and publish large procurement contracts.

“The IMF’s emergency financial support under the Rapid Credit Facility, along with the additional donor financing it is expected to help catalyze, will help address Uganda’s urgent balance of payments and budget support needs.”

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 Approves US$22.0 Million Disbursement for Benin

On December 6, 2018, the Executive Board of the International Monetary Fund (IMF) completed the third review of the three-year arrangement with Benin under the Extended Credit Facility (ECF).

The Board’s decision enables a disbursement of US$22.0 million immediately to Benin, bringing total disbursements under the arrangement to US$88.1 million.

In completing the review, the Board also approved Benin’s request to set program conditionality for 2019, and granted a waiver pertaining to the nonobservance of the continuous performance criterion on the non-accumulation of new domestic arrears.

Benin’s three-year arrangement for US$154.2million or 90 percent of the country’s quota at the time of approval of the arrangement), was approved on April 7, 2017. It aims at supporting the country’s economic and financial reform program and focuses on raising living standards and preserving macroeconomic stability.

Following the Executive Board discussion, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, said Benin’s performance under the ECF-supported program remains strong.

He also said that the fiscal position has improved significantly, mainly as a result of expenditure restraint. That the growth momentum continues, and the medium-term economic outlook is favorable, driven by a stronger demand from Nigeria and a better environment for private investment.

“Maintaining the fiscal deficit below 3 percent of GDP in 2019 and beyond is key for debt sustainability. The 2019 draft budget, which complies with the WAEMU deficit criterion, foresees an ambitious effort to mobilize tax revenues. This will contribute to enhance the revenue strategy, by reducing the reliance on one-off nontax revenues and prioritizing durable base-broadening tax measures,” he said, adding that enhanced public debt management is also key for fiscal sustainability.

“The authorities should pursue their efforts to lengthen the average debt maturity and reduce interest costs. The recent debt reprofiling operation is a step in the right direction.

“Sustaining high growth will require greater involvement of the private sector in the next years. Benin’s economic growth has recovered since 2016, partly because of the scaling-up of public investment. With fiscal consolidation under way, the private sector will have to step in as the main growth driver. This calls for continued improvement in the business environment, further reforms that facilitate access to electricity and finance, and a stronger anti-corruption framework.”

IMF Executive Board Approves US$172.1 Million Arrangement Under the Extended Credit Facility for Sierra Leone

The Executive Board of the International Monetary Fund (IMF) on Friday approved a new 43 months arrangement for Sierra Leone under the Extended Credit Facility (ECF) for US$172.1 million, equivalent of 60 percent of Sierra Leone’s quota in the IMF, to support the country’s economic and financial reforms.

The Executive Board’s decision enables an immediate disbursement of SDR15.555 million (about US$21.5 million). The remaining amount will be phased over the duration of the program, subject to semi-annual reviews.

The authorities’ ECF-supported program aims at tackling new challenges that have arisen since June 2017 while at the same time, improving the prospects for long term growth. In particular, addressing the fiscal slippages, adjusting the medium-term framework to correct for these slippages and account for recent external shocks, and supplementing the structural reform agenda to better tailor it to current circumstances, including in the areas of central bank safeguards and governance. Forceful implementation of the program, especially on revenue mobilization and expenditure control, will be essential to achieve fiscal sustainability and medium-term growth objectives.

Following the Executive Board discussion on Sierra Leone, Deputy Managing Director Mr. Tao Zhang, and Acting Chair, said:

“The goals of the new program remain focused on reducing inflation, mobilizing revenue to allow for necessary spending consistent with debt sustainability, safeguarding financial stability, and maintaining external resilience to shocks. These are critical for strong, sustained growth.

“Revenue mobilization is central to the success of the program. In the near term, maintaining the improved revenue performance of the last several months is essential for preventing a reemergence of budget arrears and establishing budget credibility. Over the longer term, sustainably higher revenue is needed to support the government’s policy goals of boosting investment in infrastructure and social protection.

“Controlling expenditure commitments requires increasing the accountability, transparency, and oversight of quasi-government institutions and state-owned enterprises. Effective implementation of the public finance management regulations is an integral part of this effort. The government’s recent reform to operationalize the Treasury Single Account is a welcome step, as are policies to ensure that spending commitments are in line with the available financing envelope. More broadly, these efforts will lead to better governance, helping promote macroeconomic stability and inclusive growth.

“The program aims to reduce the country’s debt burden over the longer term . Infrastructure spending remains essential to improving growth prospects, but the country’s high debt means that priority should be given to projects with high economic returns. External borrowing will be anchored by the objective of reducing the risk of debt distress.

“Monetary policy will remain focused on bringing inflation down to single digits over the medium-term, while the Bank of Sierra Leone (BSL) continue to strengthen its capacity to use indirect instruments. The volatile external environment underscores the importance of increasing exchange-rate flexibility and maintaining reserve buffers.

“As banks’ role in the economy grows, the BSL’s supervisory and regulatory regime will need to be upgraded to ensure that the sector remains sound. Legislation pending parliament approval should improve the oversight and functioning of the financial system. The BSL’s enhanced supervision of the state-owned banks has improved their operations and balance sheets and should continue, but the banks need to be placed on a firmer commercial footing to prevent a reoccurrence of their politically-motivated, loss-making lending practices. Strengthening the BSL’s governance framework remains a priority, and the program’s measures to better safeguard the integrity of the BSL’s foreign exchange reserves will be important for increasing public trust in the institution.”

IMF Staff Concludes Visit to Lesotho

An International Monetary Fund (IMF) mission, led by Mr. Joseph Thornton, visited Maseru from August 23 to September 5, 2018 to discuss the authorities’ economic and financial program and possible financial support by the IMF.

  • Lesotho has been experiencing an economic shock resulting from a decline in revenues from the Southern African Customs Union (SACU).
  • The authorities and the mission made significant progress in their discussions on policies that could be supported by the IMF under a financial arrangement.


Finance Minister Majoro

The authorities and the mission had productive discussions on policies that could be supported by the IMF under a financial arrangement. The program would aim to support growth and employment, and buttress reserves by restoring fiscal sustainability and strengthening public financial management, while ensuring the protection of the most vulnerable.

Mr. Thornton made the following statement at the end of the visit:

“Lesotho has been experiencing an economic shock resulting from a decline in revenues from the Southern African Customs Union (SACU). Public expenditures increased rapidly while SACU revenues were buoyant but have not been reined in as SACU revenues fell after 2015, despite the lack of growth in other revenues sources. The resulting fiscal and external imbalances, if not addressed promptly, would put pressure on international reserves and result in the build-up of government payment arrears.

“The mission discussed with the authorities a number of options for containing the deficit to a level that can be fully financed. The mission noted that the adjustment should be focused on expenditure measures, including efforts to address the public sector wage bill, which is one of the largest in the world compared to the size of the economy, while making efforts to ensure that the most vulnerable are protected. The mission also discussed other possible areas for savings, including on government travel, foreign embassies, and procurement. Discussions also considered measures to modernize tax policy and improve the revenue system. The mission noted the need to address long-standing PFM issues to ensure the provision of reliable fiscal data and ensure sound use of public resources.

“The mission noted the need to accelerate structural reforms to support growth and enhance job creation. It welcomed efforts to review the licensing regime to reduce red tape, modernize the legal framework governing credit, and review the role of the government in the economy.

“Significant progress was made during the visit, and discussions will continue in the coming weeks. If agreement is reached on policy measures in support of the reform program, an arrangement to support Lesotho’s economic program could be proposed for the IMF Executive Board’s consideration.”

The IMF team met with Finance Minister Majoro, Minister of the Public Service Molapo, Governor of the Central Bank Matlanyane and other senior officials. The team also met with representatives of the diplomatic community, private sector, civil society, and multilateral development partners. The team thanks the authorities for their hospitality and constructive discussions.

IMF Executive Board Concludes Regional Consultation with West African Economic and Monetary Union

The Executive Board of the International Monetary Fund (IMF) has concluded the Article IV consultation with the West African Economic and Monetary Union on March 26, 2018.

IMF.jpgUnder Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.


Economic activity remains strong but vulnerabilities persist. Despite lower terms of trade, social tensions, and security challenges within the region, real GDP growth is estimated to have exceeded 6 percent in 2017, underpinned by strong domestic demand. Inflation remained subdued. However, external and internal imbalances widened. Preliminary data point to an increase in the fiscal deficit to 4.7 percent of GDP in 2017 from 4.5 percent in 2016, and the external current account deficit to 6 percent of GDP in 2017 from 5.6 percent in 2016. International reserve coverage rebounded somewhat to 4.2 months at end-2017, helped by sizable Eurobonds issuances by Côte d’Ivoire, Senegal, and the West African Development Bank.

The tightening of monetary policy since end-2016 stimulated the interbank market, reduced banks’ appetite for government debt, and contributed to Eurobond issuances by the two largest WAEMU sovereigns. However, since September 2017, renewed liquidity pressures have pushed up the interbank market rate and maintained the average refinancing rate at the ceiling of the BCEAO’s policy corridor. An ambitious set of reforms were also undertaken in 2017 to modernize financial sector regulations, including a gradual increase in minimum capital requirements in line with the Basel II/III principles. Other reforms include introducing a new accounting plan, moving to consolidated supervision of bank groups, strengthening the resolution framework, and setting up a deposit guarantee fund.

The outlook remains positive but hinges critically on the planned fiscal consolidation and implementation of structural reforms by member countries. Growth is projected to stay above 6 percent with continued low inflation over the medium term. Risks are tilted to the downside and stem from potential delays in fiscal consolidation, slow progress in the implementation of the structural reforms, persistent security concerns in the region, higher international oil prices, as well as tightening of international financial conditions and a slowdown in world growth.

Executive Board Assessment

Executive Directors agreed with the thrust of the staff appraisal. They welcomed the region’s continued strong economic growth resilience and low inflation. Directors stressed that vulnerabilities had persisted in 2017 with increased fiscal and external account deficits, although risks to debt sustainability remain moderate for seven-member countries and low for one member, based on existing DSAs. Although international reserves had rebounded somewhat, this mainly reflects sizable Eurobond issuances. They took note that the exchange rate remains broadly in line with fundamentals. Directors underscored that the medium-term outlook remains positive but is subject to downside risks, and regional security issues remain a concern. Sustaining the growth momentum and preserving external stability require continued macroeconomic stability and accelerated structural reforms.

Directors underscored the need for determined, growth-friendly fiscal consolidation to meet the WAEMU convergence criterion of 3 percent of GDP by 2019. Adjustment efforts should focus on reforms to enhance revenue mobilization and contain current expenditure while protecting priority capital and social spending. Directors emphasized the need to raise the efficiency of public investment, capture fiscal risks, and strengthen debt coverage and management.

Directors supported maintaining the current monetary policy stance. They called on the BCEAO to remain vigilant and stand ready to further tighten monetary policy if pressures persist on the money market or foreign exchange reserves. Directors encouraged the authorities to take steps to further reduce the banking system’s dependence on refinancing, improve liquidity management, energize the interbank market, deepen financial markets and strengthen monetary policy transmission.

Directors commended the authorities for the important steps undertaken to modernize the financial sector, including the launch of an upgraded prudential regime in line with Basle II/III. They highlighted the importance of operationalizing the financial safety net and using upgraded bank supervision and resolution tools to address vulnerabilities in the banking system.

Directors called for the implementation of the regional strategy to promote financial inclusion and deepening to sustain robust and inclusive growth. They highlighted the importance of lowering the cost of financial services, promoting financial literacy, enhancing consumer credit protection and closely supervising microfinance institutions to ensure prudential safeguards, while strengthening AML/CFT supervision.

Directors stressed that sustaining the growth momentum will require efforts to improve competitiveness and promote diversification. They urged the authorities to intensify the pace of structural reforms to improve the business environment and promote private investment.

Directors supported the authorities’ efforts to strengthen the quality, timeliness, and public availability of economic statistics, notably to address weaknesses in the balance of payment data. They also underlined the need to improve consistency between national and regional data, including by accelerating the transition of WAEMU member-countries to the GFSM 2001 fiscal reporting.

The views expressed by Executive Directors today will form part of the Article IV consultations with individual member countries that take place until the next Board discussion of WAEMU common policies. The next Article IV consultation discussion with the WAEMU regional authorities will be held on the 12-month cycle in accordance with the Executive Board decision on the modalities for surveillance over WAEMU policies.