IMF and Niger Reach Staff-Level Agreement on the First Review of the Extended Credit Facility Arrangement
Washington : An International Monetary Fund (IMF) staff team led by Mr. Antonio David held meetings from May 4 to May 13, 2022, on the first review of the three-year arrangement with Niger supported by the Extended Credit Facility (ECF).
At the end of the mission, Mr. David issued the following statement:
“The Nigerien authorities and the IMF team reached a staff-level agreement on the first review of Niger’s economic program under the Extended Credit Facility. The staff-level agreement is subject to IMF Management and Executive Board approval. The Board meeting is expected to take place in June. The review’s completion would allow the disbursement of SDR39.48 million (about US$ 53 million, or 30 percent of Niger’s quota) to Niger to cover external financing needs.
“After a substantial deceleration to 1.3 percent in 2021 following the adverse effects of climate-related shocks and insecurity on the agricultural sector, growth is projected to rebound to 6.9 percent in 2022 on the back of the recovery in agricultural production and the acceleration of the implementation of large investment projects related to the oil pipeline to Benin. However, inflation would remain elevated due to continued food price pressures at both the global and domestic levels.
“Despite the projected positive outlook this year, Niger is facing an acute food crisis. Around 4.4 million people are expected to face food insecurity during the lean season. The authorities are taking action and recently approved a new support plan for 2022 targeting vulnerable populations. Moreover, the security situation in the Sahel and political instability in neighboring countries, as well as uncertain climate conditions continue to pose risks to Niger’s economic prospects. The war in Ukraine is exacerbating these challenges by adding to global and local food price pressures.
“As a response to these shocks, authorities are implementing several emergency measures, including the acquisition of cereals for food distribution to vulnerable populations; the implementation of the emergency plan to support livestock feed; the implementation of a support plan for the acquisition of fertilizer and pesticides and a program to address dilapidated school infrastructure. As a result of these measures, the overall fiscal deficit is projected to temporarily widen in 2022 to 6.6 percent of GDP. Still, public debt would remain at moderate risk of debt distress.
“The authorities also committed to implementing corrective measures on the revenue side, including measures to reduce tax evasion and improve revenue administration, to ensure that program targets are met and that the deficit reverts to the program’s trajectory over the medium-term.
“The three-year arrangement under the ECF is supporting Niger’s recovery from the pandemic, while reinforcing macroeconomic stability and laying the foundations for resilient, inclusive and private sector-led growth.
“Program performance until end-March 2022 was broadly satisfactory and most quantitative macroeconomic objectives were met. Structural reforms are gradually advancing, as measures are being taken to rationalize tax exemptions, improve public procurement and public investment management, enhance tax administration by promoting digitalization, and boost transparency through the publication of beneficial ownership information of companies awarded single tender or sole source contracts.
“Further efforts to bolster domestic revenue mobilization are crucial to increase fiscal space for priority spending and support fiscal adjustment over the medium-term. In that context, Nigerien authorities plan to assess and simplify their current tax system and accelerate the digitalization of revenue administration.
“Reforms to enhance the quality of public spending to improve the delivery of public goods are also ongoing. Authorities are committed to scaling up public spending on education and social safety nets to foster human capital and improve the protection of vulnerable populations. Strengthening public financial management systems is essential to achieve these objectives.
“The IMF will continue to support the authorities’ efforts to strengthen governance and transparency and welcomes the recent publication of the audit report of COVID-19 related expenditures as well as the audit report on tax exemptions to the extractive sector, which were structural benchmarks under the program. Looking ahead, the mission welcomes the authorities’ intention to take steps towards implementing the reports’ recommendations.
“The mission met his Excellency President Mohamed Bazoum and his Excellency Prime Minister Ouhoumoudou Mahamadou. The mission also held working sessions with the Minister of Finance, Dr. Ahmat Jidoud, Minister of Petroleum, Mr. Mahamane Sani Issoufou, the National Director of the BCEAO, Mr. Maman Laouane Karim, as well as other senior government officials.
“The team would like to thank the authorities for their cooperation, and for the constructive and productive discussions.