IMF Executive Board Concludes 2023 Article IV Consultation with Mali
May 26, 2023
Washington, DC: The Executive Board of the International Monetary Fund (IMF) concluded the 2023 Article IV consultation [1] with Mali and endorsed the staff appraisal.
Mali’s economy has been hit by multiple shocks since 2020 but remained resilient in 2022 amid high inflation. Real GDP growth increased from 3.1 percent in 2021 to 3.7 percent in 2022, despite elevated security and socio-political challenges, regional sanctions in the first half of 2022 and a high incidence of food insecurity. Growth is projected to rebound to over 5 percent in 2023 and 2024, assuming strong agricultural and gold output. However, the economic outlook is subject to significant downside risks. They include a worsening security situation, potential election delays, volatile international commodity prices, tighter global financial conditions, and climate risks. Headline inflation reached 10 percent in 2022, reflecting energy and food price shocks due to Russia’s war in Ukraine and regional sanctions, but is projected to come down to 5 percent in 2023 and to 2 percent in 2024 as global energy and food prices decline.
The government’s fiscal deficit—at just under 5 percent of GDP in 2022—reflects a rapid increase in security spending, public wages, and the interest bill, which are crowding out growth-friendly spending including those on the social safety net and capital investment. Mali is facing a tightening in financing conditions. This stems from the lack of external budget support—halted after two coups d’état in 2020 and 2021 and unlikely to resume until after elections are held in 2024—and higher global interest rates. The tightening of financing conditions across the regional market poses additional financing risks.
Mali’s current account deficit improved slightly in 2022, down to 6.9 percent of GDP from 7.5 percent in 2021, on account of higher gold exports and lower capital goods imports. In the medium term, the current account deficit will fall to below 4 percent due to strong gold and agricultural exports.
At the conclusion of the Executive Board’s discussion, Mr. Kenji Okamura, Deputy Managing Director, and Acting Chair, made the following statement:
“Executive Directors agreed with the thrust of the staff appraisal. They noted that Mali had been hit by multiple shocks in the past three years, as well as an embargo in the first half of 2022. These have had negative impacts, including on poverty and food insecurity. Nonetheless, Mali’s economy proved relatively resilient in 2022, owing in part to sound policies. Looking ahead, significant challenges remain, with a marked rise in Mali’s public debt amid tighter financing conditions and downside risks to the outlook. Directors stressed that fiscal adjustment and steadfast implementation of governance and other reforms are critical to improve confidence, boost economic growth, and reduce poverty. Directors underscored the importance of capacity development assistance, as well as steps to reengage with international partners, to support the reform agenda. Further and prompt engagement with the Fund, including through the Food Shock Window, could also be beneficial.
“Directors encouraged the authorities to pursue an ambitious fiscal consolidation to reduce the deficit in the near term and bring it below 3 percent of GDP by 2025, while protecting growth-enhancing capital spending. They recommended greater domestic revenue mobilization, containing the rapidly rising public sector wage bill, and enhancing the efficiency and management of public spending. Improving the financial performance and transparency of state-owned enterprises is also crucial. With the rise in poverty and food insecurity in Mali, Directors highlighted the importance of protecting the most vulnerable. They recommended reprioritizing social spending, strengthening the social safety net, and scaling up targeted measures while phasing out untargeted subsidies.
“Directors emphasized the importance of creating the conditions for sustainable long-term growth. They noted the need to address governance weaknesses and corruption including by strengthening the asset declaration regime and improving transparency in public procurement and the mining industry. They also encouraged the authorities to improve the business environment, strengthen the AML/CFT framework, and reform the education and health systems to also improve gender outcomes. Building resilience to climate change will also be important.”
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[1] Under 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.
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