Press Release No. 03/123

Press Release: IMF Completes Sixth Review Under Mali's PRGF Arrangement and Approves US$8.5 Million Disbursement

July 24, 2003

The Executive Board of the International Monetary Fund (IMF) has completed the sixth review of Mali's economic performance under the Poverty Reduction and Growth Facility (PRGF) arrangement. As a result, Mali will be able to draw an amount equivalent to SDR 6.1 million (about US$8.5 million) under the arrangement.

Mali's PRGF arrangement was approved on August 6, 1999 (see Press Release No. 99/39) for SDR 46.65 million (about US$ 65.2 million). It was extended by one year and the amount increased by SDR 4.7 million (about US$6.6 million) in July 2001. So far, Mali has drawn the equivalent to SDR 45.17 (about US$ 63.1 million).

The PRGF is the IMF's concessional facility for low-income countries. PRGF-supported programs are based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners and articulated in a Poverty Reduction Strategy Paper (PRSP). This is intended to ensure that PRGF-supported programs are consistent with a comprehensive framework for macroeconomic, structural, and social policies to foster growth and reduce poverty. PRGF loans carry an annual interest rate of 0.5 percent and are repayable over 10 years with a 5 ½-year grace period on principal payments.

Following the Executive Board's discussion on Mali on July 23, 2003, Shigemitsu Sugisaki, Deputy Managing Director and Acting Chairman, stated:

"The Malian authorities continued to make good progress in implementing their Fund-supported program, under difficult conditions. All performance criteria and indicative targets for the sixth review were met. Increases in cotton, cereal, and gold production resulted in a strong rebound of economic growth in 2002. However, the crisis in Côte d'Ivoire and inadequate rainfall could have a negative effect in 2003 on growth in key sectors and would require the authorities to redouble their efforts to achieve program and fiscal objectives.

"Over the medium term, the authorities are committed to pursuing prudent macroeconomic policies and implementing needed structural reforms, in order to attain the poverty-reducing objectives set out in the PRSP. The main objective for the remainder of 2003 should be to consolidate the fiscal position, while increasing high-priority social spending. To this end, the authorities should strengthen recurrent revenues by reducing exemptions and improving tax administration, contain overall outlays, and improve the management of public resources.

"Mali should continue to make strides to promote private sector activity. Economic diversification is critical to reducing the economy's vulnerability to external shocks and its reliance on production of natural resources. Reforms to enhance private sector competitiveness should focus on further liberalizing the cotton sector, completing the privatization program, improving the regulatory environment, and promoting good governance," Mr. Sugisaki stated.