Press Release No. 21/319

IMF and Niger Reach Staff-Level Agreement on a New Economic Program

November 2, 2021

• Nigerien authorities and a team from the IMF reached a staff-level agreement on a new arrangement under the Extended Credit Facility (ECF) for 2021-2024.
• The planned new program aims to buttress macroeconomic stability, enhance governance and transparency, while laying the foundations for stronger and more inclusive growth.
• The success of the program hinges on steadfast implementation of reforms helping catalyze additional donor financial support.

Washington, DC: An International Monetary Fund (IMF) staff team led by Mr. Ari Aisen held virtual meetings from October 25 to November 1, 2021 to conclude discussions on IMF financial support via an Extended Credit Facility in support of the authorities’ economic reform program.

At the end of the mission, Mr. Aisen issued the following statement:

“The Nigerien authorities and the IMF team reached a staff-level agreement on economic and structural policies and reforms that would underpin a new three-year arrangement under the Extended Credit Facility (ECF)with access to SDR 197.4 million (equivalent to about US$ 278.5 million or 150 percent of quota). IMF financing would help catalyze additional donor support. The staff-level agreement is subject to IMF Management and Executive Board approval. The Board meeting is expected in December.

“Niger has achieved its first democratic transfer of power with the election of President Mohamed Bazoum in April 2021. The government's general policy statement aims to achieve security and social peace; strong governance and the consolidation of republican institutions; human capital development; rural modernization; infrastructure development; and promote social inclusion. The reform-oriented policy agenda would support higher and more inclusive growth, thereby helping Niger face its pressing and acute development and security challenges. Importantly, the health impact of the pandemic has so far been relatively contained, thanks in part to rapid measures taken to control the spread. However, the economic consequences in terms of foregone growth have been substantial and they add to the difficulties posed by the effects of climate change—affecting agriculture, the country’s main production sector—and the deterioration of the security situation in the Sahel region.

“The economic outlook for 2021 and the medium term remains favorable. Real GDP growth is expected to rebound to 5.6 in 2021 as the economy recovers from the COVID-19 pandemic. Growth is projected to accelerate in 2022 and reach double-digit levels in 2023 boosted by the operationalization of the new oil pipeline to Benin. The external current account is expected to deteriorate in the short term due to the implementation of large-scale projects with high content of imported capital and intermediate goods before improving significantly with oil exports starting in 2023. Although contained, inflationary pressures are expected to persist in 2021—mainly driven by food price hikes due to COVID-19 related supply chain disruptions—before easing in the outer years. The fiscal position, already under strain in 2020, is projected to further deteriorate in 2021 in the face of significant security and development-related needs. However, consolidation efforts and the advent of oil revenues are expected to bring the deficit to the regional target of 3 percent of GDP over the medium term.

“The new ECF arrangement aims to buttress macroeconomic stability by addressing key fiscal challenges —in terms of domestic revenue mobilization, efficiency and transparency of spending, and natural resource management while laying the foundations for stronger, inclusive and private sector-led growth.

On the revenue side, the program is expected to broaden the non-oil revenue base, reduce informality by improving tax policy and the business environment, advance tax administration reforms, improve management of tax arrears to facilitate cash planning, and rationalize and manage exemptions to make the best use of limited fiscal resources. Regarding natural resource revenue mobilization, the program will support the transparent and efficient management of oil revenues to ensure that the prospective increase in oil exports results in a commensurate increase in tax revenues.

“On the spending side, the planned program aims to enhance public financial management to improve efficiency and transparency of spending through reforms aimed at supporting more rigorous medium-term budgeting; enhanced transparency-related reforms, improved planning and selection of investment projects, and strengthened liquidity and debt management with the establishment of a Single Treasury Account.

“Furthermore, stepping up efforts to enhance human capital and governance, fighting corruption and promoting transparency and accountability are key pillars for the efficient management of public finances, provision of public goods, and improvement of the business environment and are well aligned with the government’s commitments.

“The mission held working sessions with the Minister of Finance, Mr. Ahmat Jidoud and Minister of Planning, Mr. Rabiou Abdou, the National Director of the BCEAO, Mr. Maman Laouane Karim as well as other senior government officials. The staff also met with representatives from the private sector, civil society, Banks’ Association, and development partners.

“The team would like to thank the authorities for their cooperation, and for the constructive and productive discussions.”