IMF Reaches Staff Level Agreement on the Sixth Review for Niger’s Extended Credit Facility (ECF) Arrangement

October 7, 2020

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.
  • The IMF mission team reached a staff-level agreement with the authorities on the completion of the sixth and final review of the Extended Credit Facility-supported program.
  • The authorities' COVID-19 response plan largely contained the pandemic and helped alleviate its socio-economic impact. Economic growth is projected to recover, but uncertainty remains high owing to the global economic outlook.
  • Increased fiscal deficits this year and next support the economy but must not become entrenched to safeguard public finances.

Washington, DC: An International Monetary Fund (IMF) staff team, led by Christoph A. Klingen, held a virtual mission from September 9 to 29, 2020 to conduct discussions on the sixth review of the program supported by the Extended Credit Facility (ECF) arrangement. Niger’s program was approved by the IMF’s Executive Board on January 23, 2017 (see Press Release no 17/18).

At the end of the visit, Mr. Klingen issued the following statement:

“The Nigerien authorities and the IMF mission have reached staff-level agreement on a policy framework, subject to approval by IMF management and the Executive Board. Consideration by the Executive Board is tentatively scheduled for late October 2020.

“The government of Niger remains committed to the reforms in its Social and Economic Development Program 2017-2021, supported by the ECF arrangement. Overall program implementation has been mixed. Notable achievements include the clearance of the remaining domestic payment arrears and the prudent contracting of external debt. However, spending overruns in 2019 and continued difficulties in mobilizing domestic revenues point to remaining challenges.

“The economic response to the COVID-19 pandemic that included food assistance and credit support for the private sector will help growth stay above 1 percent in 2020. This is despite decisive early measures to contain the pandemic that weighed on economic activity. Growth is projected to recover to 6.9 percent in 2021. With crude oil exports expected to commence during 2022 and continued strong investment, growth should average 9 percent over the medium term. Inflation should revert to 2 percent in 2021, from a projected 2.8 percent this year.

“The COVID-19 pandemic is disrupting plans to strengthen public finances, with the deficit in 2020 increasing to 5.8 percent of GDP from 3.6 percent of GDP last year, to finance pandemic-related spending, accommodate revenue losses, and meet critical spending needs for security and development. The draft budget for 2021 with a projected deficit of 4.4 percent [*] of GDP strikes a reasonable balance between supporting economic recovery and taking a first step toward spending normalization. It will be crucial to guard against increased deficits becoming entrenched, so as to keep Niger’s public finances sound. The mission welcomes the cautious assumptions underlying the 2020 and 2021 budgets. It also supports planned measures to build a more robust base for revenue mobilization going forward. Revenues from crude oil exports have the potential to yield significant additional resources but much will depend on international prices and good management of the associated revenue volatility. Continued reforms to increase the quality of spending will lead to limited resources having more impact.

“On the broader structural reform agenda, the IMF mission welcomes the authorities’ emphasis on developing the private sector. Large foreign investments have made a visible mark. However, local formal private enterprises need to draw concrete benefits from them. Increasing access to affordable credit, and training and education, especially for girls, along with investments in digital infrastructure and literacy, will support this objective. Connecting Niger’s businesses to partnerships abroad can increase their efficiency and help their integration into the global value chain. The mission welcomes the government’s continuing efforts to upgrade Niger’s governance framework, notably strengthening the asset declaration regime. Wider and consistent coverage and effective implementation is key for achieving tangible results.

“The team met with the Minister of Finance Mamadou Diop, the Minister in charge of the Budget, Ahmat Jidoud, as well as other government officials and the diplomatic community.”

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The IMF team would like to thank the authorities for the fruitful dialogue and collaboration.

 

[*] The projection for the fiscal deficit in 2021 has been revised to 4.4 percent of GDP, compared to an earlier number of 4.6 percent.

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