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Mali: Sixth Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility, Request for Waivers for Nonobservance of Performance Criteria, and — Request for Extension of Commitment Period—Informational Annex

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International Monetary Fund
Published Date:
March 2008
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Appendix I. Mali: Relations with the Fund

(As of August 31, 2007)

I. Membership Status: Joined September 27, 1963

Article VIII

II. General Resources Account:

SDR Millions%Quota
Quota93.30100.00
Fund holdings of currency83.7989.81
Reserve position9.5210.21
Holdings Exchange Rate

III. SDR Department:

SDR Millions%Allocation
Net cumulative allocation15.91100.00
Holdings0.090.54

IV. Outstanding Purchases and Loans:

SDR Millions%Quota
PRGF arrangements6.667.14

V. Latest Financial Arrangements:

ApprovalExpirationAmount ApprovedAmount Drawn
TypeDateDate(SDR Millions)(SDR Millions)
PRGFJun 23, 2004Oct. 31, 20079.337.99
PRGFAug 06, 1999Aug 05, 200351.3251.32
PRGFApr 10, 1996Aug 05, 199962.0162.01

VI. Projected Payments to Fund

(SDR millions; based on existing use of resources and present holdings of SDRs):

Forthcoming
20072008200920102011
Principal0.130.53
Charges/interest0.180.670.670.670.67
Total0.180.670.670.811.20

VII. Implementation of HIPC Initiative:

OriginalEnhanced
I. Commitment of HIPC assistanceFrameworkFrameworkTotal
Decision point dateSep 1998Sep 2000
Assistance committed
by all creditors (US$ millions) 1121.00417.00
Of which: IMF assistance (US$ millions)14.0045.21
(SDR equivalent in millions)10.8034.74
Completion point dateSep 2000Mar 2003
II. Disbursement of IMF assistance (SDR millions)
Assistance disbursed to the member10.8034.7445.54
Interim assistance9.089.08
Completion point balance10.8025.6636.46
Additional disbursement of interest income 23.733.73
Total disbursements10.8038.4749.27

Assistance committed under the original framework is expressed in net present value (NPV) terms at the completion point, and assistance committed under the enhanced framework is expressed in NPV terms at the decision point. Hence these two amounts cannot be added.

Under the enhanced framework, an additional disbursement is made at the completion point corresponding to interest income earned on the amount committed at the decision point but not disbursed during the interim period.

Assistance committed under the original framework is expressed in net present value (NPV) terms at the completion point, and assistance committed under the enhanced framework is expressed in NPV terms at the decision point. Hence these two amounts cannot be added.

Under the enhanced framework, an additional disbursement is made at the completion point corresponding to interest income earned on the amount committed at the decision point but not disbursed during the interim period.

VIII. Implementation of Multilateral Debt Relief Initiative (MDRI):

I. Total Debt Relief (SDR million)175.07
Of Which:MDRI62.44
HIPC12.63
II. Debt Relief by Facility (SDR million)
Eligible Debt
Delivery
DateGRAPRGFTotal
January 2006N/A75.0775.07

The MDRI provides 100 percent debt relief to eligible member countries that qualify for the assistance. Grant assistance from the MDRI Trust and HIPC resources provide debt relief to cover the full stock of debt owed to the Fund as of end-2004 that remains outstanding at the time the member qualifies for such debt relief.

Decision point—point at which the IMF and the World Bank determine whether a country qualifies for assistance under the HIPC Initiative and decide on the amount of assistance to be committed.

Interim assistance—amount disbursed to a country during the period between decision and completion points, up to 20 percent annually and 60 percent in total of the assistance committed at the decision point (or 25 percent and 75 percent, respectively, in exceptional circumstances).

Completion point—point at which a country receives the remaining balance of its assistance committed at the decision point, together with an additional disbursement of interest income as defined in footnote 2 above. The timing of the completion point is linked to the implementation of pre-agreed key structural reforms (i.e., floating completion point).

The MDRI provides 100 percent debt relief to eligible member countries that qualify for the assistance. Grant assistance from the MDRI Trust and HIPC resources provide debt relief to cover the full stock of debt owed to the Fund as of end-2004 that remains outstanding at the time the member qualifies for such debt relief.

Decision point—point at which the IMF and the World Bank determine whether a country qualifies for assistance under the HIPC Initiative and decide on the amount of assistance to be committed.

Interim assistance—amount disbursed to a country during the period between decision and completion points, up to 20 percent annually and 60 percent in total of the assistance committed at the decision point (or 25 percent and 75 percent, respectively, in exceptional circumstances).

Completion point—point at which a country receives the remaining balance of its assistance committed at the decision point, together with an additional disbursement of interest income as defined in footnote 2 above. The timing of the completion point is linked to the implementation of pre-agreed key structural reforms (i.e., floating completion point).

IX. Mali: Schedule of Disbursements Under the PRGF Arrangement, 2004–07

AmountAvailable dateDisbursement dateConditions necessary for disbursement 1
SDR 1.330 millionJune 23, 2004June 30, 2004Executive Board approval of the three-year PRGF arrangement
SDR 1.330 millionOctober 15, 2004March 22, 2005Observance of the performance criteria for September 30, 2004, and completion of the first review under the arrangement
SDR 1.330 millionApril 15, 2005January 13, 2006Observance of the performance criteria for March 31, 2005, and completion of the second review under the arrangement
SDR 1.333 millionOctober 15, 2005January 13, 2006Observance of the performance criteria for September 30, 2005, and completion of the third review under the arrangement
SDR 1.333 millionApril 15, 2006August 1, 2006Observance of the performance criteria for March 31, 2006, and completion of the fourth review under the arrangement
SDR 1.333 millionOctober 15, 2006February 26, 2007Observance of the performance criteria for September 30, 2006, and completion of the fifth review under the arrangement
SDR 1.341 millionApril 15, 2007Observance of the performance criteria for March 31, 2007, and completion of the sixth review under the arrangement
Source: International Monetary Fund.

In addition to the generally applicable conditions under the Poverty Reduction and Growth Facility arrangement.

Source: International Monetary Fund.

In addition to the generally applicable conditions under the Poverty Reduction and Growth Facility arrangement.

X. Work Program, 2006–07

6th Review Executive BoardOctober 2007
2007 Article IV Consultation and Negotiations for a New PRGF MissionJanuary 2008
Executive Board Meeting for the 2007 Article IV Consultation and a New PRGFMarch 2008

XI. Safeguards Assessments:

The Central Bank of West African States (BCEAO) is the common central bank of the countries of the West African Economic and Monetary Union. A new safeguards assessment of the BCEAO was completed on November 4, 2005. The assessment found that progress had been made in strengthening the BCEAO’s safeguards framework of the bank since the last safeguards assessment in 2002.

The BCEAO now publishes a full set of audited financial statements, and improvements have been made to move financial reporting closer to International Financial Reporting Standards (IFRS). Furthermore, an internal audit charter has been put in place, mechanisms have been established to improve risk management and risk prevention, and follow-up on internal and external audit recommendations has been strengthened.

The new assessment identified a number of areas where further steps would help solidify the progress made. The main recommendations relate to improvements in the external audit process (including the adoption of a formal rotation policy), further enhancement of the transparency of the financial statements by fully adopting IFRS, and further strengthening of the effectiveness of the internal audit function.

XII. Exchange Rate Arrangements and Summary of Exchange Restrictions

Mali is a member of the West African Economic and Monetary Union (WAEMU). The exchange system, common to all members of the union, has no restrictions on the making of payments and transfers for current international transactions. The union’s common currency, the CFA franc, was pegged to the French franc at the rate of CFAF 50 = F 1 from 1948 until early 1994. Effective January 12, 1994, the CFA franc was devalued, and the new parity set at CFAF 100 = F 1. Effective January 1, 1999, the CFA franc was pegged to the Euro at a rate of CFAF 655.96 = EUR 1.

As of June 1, 1996, Mali and other members of WAEMU accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund’s Articles of Agreement. Mali’s exchange system has no restrictions on making payments or transfers for current international transactions and the country does not engage in multiple currency practices.

Sharing a common trade policy with other members of WAEMU, Mali has shifted key trade policy-making to the subregional level. The common external tariff (CET) was adopted in January 2000. Mali complies with the union’s tariff rate structure and has effectively dismantled internal tariffs. WAEMU tariff reform has reduced the simple average custom duty from 22.1 percent in 1997 to 14.6 percent in 2003 (latest available): the maximum rate is 20 percent. Imports to Mali are not subject to quantitative restrictions.

Because Mali has signed the Cotonou Convention, its exports to the European Union generally enjoy non-reciprocal preferential treatment in the form of exemption from import duties. Malian goods enjoy nonreciprocal preferential access to the markets of developed countries other than the European Union under the Generalized System of Preferences. Mali is also eligible to benefits from the United States’ African Growth and Opportunity Act. At the WAEMU level, officially Mali experiences no regulatory impediments to its exports.

XIII. Article IV Consultations

Mali’s Article IV consultation cycle is governed by the provisions of the July 2002 decision on consultation cycles. The Executive Board completed the 2005 Article IV consultation (Country Report No. 06/73) on December 19, 2005.

XIV. ROSC/AAP

Regarding the HIPC Assessment Action Plan, a May 2004 mission concluded that progress had been achieved. The number of tightly defined benchmarks observed by Mali had increased from 8 out of 15 in 2001 to 11 out of 16, and significant advances were made in the areas where the benchmarks were not yet met. The report put forward an action plan to strengthen Mali’s budget management capacity, with the view to helping Mali meet all 16 indicators in the medium term. One of the priorities the mission identified in many areas was to extend beyond the procedural monitoring of compliance with the rules to emphasize effectiveness and efficiency based on a tighter focus on risk management.

XV. Technical Assistance

DepartmentType of AssistanceTime of DeliveryPurpose
FADStaffJul. 2001Assist in completion of the fiscal module of Report on the Observance of Standards and Codes (ROSC), and drafting an Assessment and Action Plan (AAP); and assess the capacity of the public expenditure management system to track and report on the uses of HIPC Initiative assistance and all poverty-reducing expenditures
FADStaffFeb.–Mar. 2002Help the authorities improve the existing expenditure classifications
FADStaffSept. 2002Help the authorities improve the tracking of poverty-reducing expenditures and implement the WAEMU directive on budget classification
STAExpertMay 2002Assess government finance statistics under the General Data Dissemination System (GDDS) West Africa project
STAExpertJun.– Jul. 2002Provide technical assistance on government finance statistics under the GDDS West Africa project
STAExpert (AFRISTAT)Aug. 2002Assess real sector statistics through the GDDS West Africa project
STAExpertSept. 2002Provide technical assistance on government finance statistics under the GDDS West Africa project
STAStaff and expertsApr. 2003Undertake a multisector statistics mission
AFRITACDebt AdvisorNov. 2003, Feb. 2004, Apr. 2005Advise on external and domestic debt management and assistance in government securities issuance
FADStaffJul. 2001Assist in completion of the fiscal module of Report on the Observance of Standards and Codes (ROSC), and drafting an Assessment and Action Plan (AAP); and assess the capacity of the public expenditure management system to track and report on the uses of HIPC Initiative assistance and all poverty-reducing expenditures
FADStaffFeb.– Mar. 2002Help the authorities improve the existing expenditure classifications
FADStaffSept. 2002Help the authorities improve the tracking of poverty-reducing expenditures and implement the WAEMU directive on budget classification
STAExpertMay 2002Assess government finance statistics under the General Data Dissemination System (GDDS) West Africa project
STAExpertJun.– Jul. 2002Provide technical assistance on government finance statistics under the GDDS West Africa project
STAExpert (AFRISTAT)Aug. 2002Assess real sector statistics through the GDDS West Africa project
STAExpertSept. 2002Provide technical assistance on government finance statistics under the GDDS West Africa project
STAStaff and expertsApr. 2003Undertake a multisector statistics mission
AFRITACDebt AdvisorNov. 2003, Feb. 2004, Apr. 2005Advise on external and domestic debt management and assistance in government securities issuance
FADStaffJan .2004Help the authorities to better mobilize revenue, especially revenue from the mining sector
AFRITAC/FADPEM Advisor/FAD staffApr. 2004Participate in the HIPC/AAP assessment mission
AFRITACMultisector statistical advisorJun. 2005GFS technical assistance.
LEGExpertAug. 2005Help draft anti-money-laundering law
AFRITACPEM Advisor and expertAug. 2005Treasury accounting
AFRITACIMF AdvisorSept. 2005Help CAS/SFD to improve its function, control, and inspection capacity,.
AFR/FADStaffFebruary 2006Staff visit on wage policy
AFRITACCustoms AdvisorMar. 2006Customs valuation
AFRITACSTA AdvisorMar. 2006Strengthen statistics for gold sector
AFRITACSTA AdvisorMar. 2006Design a strategy for developing national accounts and consumer price statistics
AFRITACExpertApr. 2006Fuel pricing and taxation
AFRITACPEM Advisor and expertAug. 2006Computerization of budget operations
AFRITACSTA AdvisorJune 2006Strengthening gold statistics
AFRITACSTA AdvisorJuly 2006Workshop on the GFS compilation
AFRITACDebt AdvisorSep. 2006External debt computerization
AFRITACStatistics AdvisorMarch 2007Gold statistics
Appendix II. Mali: World Bank-IMF Relations

(January 9, 2007)1

A. Partnership in Mali’s development strategy

1. Mali’s Growth and Poverty Reduction Strategy Framework (GPRSF) adopted by the government in December 2006, comprises programs over the 2007–11 period grouped under the following three pillars: (i) infrastructure development and strengthening of the productive sectors (including food security, rural development, small and medium-sized enterprise development, and sustainable natural resources management); (ii) strengthening the structural reform agenda (comprising public sector reforms, investment climate, financial sector, governance, and capacity of the civil society); and (iii) strengthening social sector services (including job creation, access to basic social services, and fighting HIV/AIDS).

2. The IMF and World Bank staffs maintain a collaborative relationship in supporting the government’s macroeconomic and structural reforms, in line with the guidelines for enhanced Bank-Fund collaboration. This includes participation of Bank staff in the meetings with the Malian authorities on the Fund’s program review missions, and IMF staff participation in Bank development policy missions as well as in Bank internal review meetings on key operations or studies. The IMF takes the lead in macroeconomic stabilization and the World Bank in social and structural areas, with close collaboration on a few structural areas that impact macroeconomic stability. The Fund’s dialogue and conditionality are consistent with the structural programs agreed with the Bank, and the Bank’s policy framework with Mali is consistent with the government’s macroeconomic framework agreed with the Fund.

B. World Bank Group strategy

3. The World Bank Group’s strategy, outlined in the Country Assistance Strategy (CAS) discussed by the Board of Directors on July 31, 2003, emphasizes three broad themes, in line with the country’s PRSP: (i) promotion of economic growth; (ii) human resources development; and (iii) public finance management and governance. The Bank also supports Mali under the Bank’s Regional Integration Assistance Strategy (2001), notably the programs for connection to the West Africa Power Pool, harmonization of country policies and/or regulatory frameworks (telecommunications, agriculture, and financial sectors), water resource development of the Niger and Senegal rivers, strengthening of road transport corridors, and strengthening the regional payments system. The Bank’s next CAS, put in place in 2007, aims to support implementation of Mali’s GPRSF.

4. Support to Mali during fiscal years 2004–06 amounts to about US$400 million in the base case, with about 30 percent in grants. Budget support of $25 million has been provided annually through development policy credits, subject to satisfactory macroeconomic management. From FY07 such support is being provided through Poverty Reduction Support Credits (PRSCs) underpinned by a medium-term program. The Bank’s budget support operations are complemented by selected investment operations (targeting education, support to growth, and infrastructure development) and a community-driven development project.

5. The CAS also includes nonlending activities. Recently completed activities include a Macroeconomic Growth and Water Variability study; Poverty Assessment, Country Procurement Assessment Review (CPAR); a Diagnostic Trade Integrated Framework Study; urban sector review; health and education country status reports; transport and growth study; a Poverty and Social Impact Analysis of the cotton sector; and a Country Economic Memorandum providing analysis on Mali’s growth performance and prospects. The Bank has also assisted with development of medium-term expenditure frameworks (MTEF) for health, education, transport, and agriculture-livestock-fisheries sectors. Planned nonlending activities during FY07 include a Public Expenditure Management and Financial Accountability Review (PEMFAR), and the Bank is lead donor for Mali’s Public Expenditure and Financial Accountability (PEFA) review.

C. IMF-World Bank collaboration

6. Areas in which the Fund leads. The Fund takes the lead in macroeconomic stabilization including macro-fiscal policy, monetary policy, exchange rate policy, and financial stability and risk management.

7. Areas in which the Bank leads. The Bank takes the lead in structural areas where both institutions have conditionality, including cotton sector reform, privatization and regulatory reform (telecommunications, banking, financial and energy sectors), pension reform, and measures to improve the investment climate. The Bank also leads in other areas such as agricultural competitiveness/diversification; rural development (irrigation, roads, support to producer organizations); private sector development (strengthening the investment climate, telecommunications sector, airport improvement, mining regulation and environment management, small-scale mining, access to business services, support to small/medium enterprises); urban development (land/housing market development, water/road infrastructure); transportation policy/infrastructure; energy sector reforms; and social sectors (health, education and social protection, including HIV/AIDS care and prevention). The Bank’s work in structural areas includes analytical work and dialogue on trade and growth policies, which form part of the overall economic policy dialogue. The Bank collaborates closely with other donors in all areas of its sector dialogue with Mali. Harmonized donor support is established in some sections (health, education, Office du Niger, cotton) and is being established in other sectors, namely rural water supply and sanitation. The Bank is the lead donor in the dialogue to harmonize donor budget support to Mali.

8. Areas of shared responsibility. Both Bank and Fund staff collaborate in assessing performance of HIPC resource use. Both also monitor progress on budgetary and public expenditure management, yet emphasize different aspects of the government’s reform program in the respective support operations to Mali. The Bank’s emphasis in this area is on strengthening all phases of the public expenditure system—budget preparation, execution, and controls—to support the government’s objectives of progressive shifts toward result-based budgeting and improved expenditure management. Bank support is at the national level in the finance ministry (global MTEF, integrated information technology system, audit capabilities, budget reporting) and sector ministries (selected sector MTEFs, inter- and intra-sectoral allocations), as well as at deconcentrated levels of the government (IT system, capacity building). The Fund’s emphasis is on fiscal management, expenditure management (including financing of transfers to parastatals), revenue-enhancing measures, and audit capabilities. Table 1 summarizes the areas of Bank-Fund collaboration in Mali.

Table 1.Bank Fund Collaboration in Mali(ongoing or planned)
AreaSpecialized Advice from FundSpecialized Advice from BankKey Instruments
Economic Framework/ManagementFiscal/monetary policy, Economic statisticsEconomic growth analysisIMF: PRGF performance criteria and benchmarks on fiscal and monetary targets; technical assistance



Bank PRSC program; Analytical studies
Budget Framework and Public Finance ReformsOverall budget envelope, Expenditure management, Enhancement of tax and nontax revenue, Pension reformSector MTEFs, Integrated information system, Monitoring of budget execution, Efficiency of public expenditures (education and health sectors), Fiduciary accountability and management, Pension reformIMF: PRGF performance criteria and benchmarks on overall fiscal balance and on pension system viability; technical assistance.



Bank: PRSC program; Financial sector development project; CPAR; PEMFAR.
Agriculture and Rural DevelopmentRural development strategy, Agricultural export promotion, Irrigation, Rural roads, Community driven development, Rural water supply and sanitation



Cotton: Reform to improve management of the sector and of the cotton ginning company; and strengthen farmers’ role in sector management
IMF: PRGF performance criteria on benchmarks on preparations on privatization



Bank: PRSC program; Agricultural services and producer organizations project; Agriculture diversification and competitiveness project; National rural infrastructure project (for rural roads and irrigation); Rural Community Support Project
Social Sector Reforms/Poverty MonitoringReforms in education and health, HIV/AIDS program, Poverty strategyBank: Education sector expenditure program (second phase); HIV/AIDS MAP project, PRSC program
Private Sector DevelopmentAdvice in key growth-oriented sectors (telecommunications, banking, energy, urban water, transport services and transit facilitation), Business development services (incl. to SMEs)IMF: PRGF benchmarks on bank and telecom privatization processes.



Bank: PRSC growth component; Financial sector development project; Support to growth project; Household energy project, and advice on electricity utility; 2nd West Africa Power Pool project; Regional transit facilitation project; Regional air travel security project
Infrastructure and Other SectorsStrategy, policy and investment program (transport, energy, health, water)Bank: Transport corridor project; Rural infrastructure project; Household energy and universal access project; 2nd transport sector project (FY07); WAPP; APL 2 Regional water project (Senegal river basin development, and Electricity generation)
Prepared by World Bank staff. Questions may be referred to Mr. Bond (Country Director, 473-2644) or Ms. Wood (Sr. Economist, 473-5829).
Prepared by World Bank staff. Questions may be referred to Mr. Bond (Country Director, 473-2644) or Ms. Wood (Sr. Economist, 473-5829).
1

This note is updated on an annual basis by World Bank staff.

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