review of Niger’s economic performance under the program supported by a three-year, SDR 78.96 million (about US$118.3 million) Extended Credit Facility (ECF) arrangement approved by the IMF’s Executive Board on March 16, 2012 (see Press Release No. 12/90). The decision enables an immediate disbursement of an amount equivalent to SDR 11.28 million (about US$16.9 million), bringing total disbursements under the arrangement to an amount equivalent to SDR 22.56 million (US$33.8 million).
In completing the review, the Executive Board approved the request for a waiver for nonobservance of the performance criterion on new non-concessional external debt with maturities of one year or more. The Executive Board’s decision on the first review was taken on a lapse of time basis.1
Economic activity was buoyant in 2012, with economic growth estimated at over 11 percent, thanks to the coming onstream of a new oil project and a rebound in agricultural production. Average inflation is estimated to have remained slightly below 1 percent, as upward pressures on food prices caused by food shortages in the first part of the year were largely offset by lower energy prices. Credit to the private sector expanded significantly, driven by high credit demand from public enterprises and trading firms. The current account deficit is projected to decline, reflecting the coming onstream of petroleum production resulting in net exports of petroleum products.
Fiscal revenues in 2012 increased relative to 2011, but are likely to fall short of program targets for 2012 due to weaknesses in customs and oil revenue. All end-June quantitative performance criteria were met, but at the expense of expenditure constraint. Several end-September fiscal targets were missed as spending increased in order to bring poverty-reducing spending back in line with program targets and due to an increase in military spending following the deterioration in the regional security situation. Additional measures were taken to limit spending during the remaining months of 2012. The continuous performance criterion on non-concessional borrowing was breached because of the contracting of a non-concessional loan with the Republic of Congo, but a waiver was granted by the Executive Board, as the loan was cancelled before disbursing. The majority of the structural reforms under the program were implemented, albeit with delays, and a plan to stem the losses at the oil refinery has been developed for implementation in 2013.
Medium-term prospects remain positive, thanks to ongoing investment in the natural resource sector, with growth projected at 6¼ percent in 2013 and inflation projected to remain moderate. However, risks remain tilted to the downside given the fragile security situation in the region; the frequent climatic shocks, as evidenced by the August 2012 floods; the uncertainty regarding commodity prices; and potential delays in the implementation of natural resource sector projects.
The ECF-supported program for 2013 builds on the government’s medium-term strategy set out in the Memorandum of Economic and Financial Policies of March 2, 2012. It also takes into account the authorities’ newly adopted ambitious poverty reducing strategy paper, the Plan for Economic and Social Development. A key goal of the 2013 program is to tackle the revenue weaknesses by advancing the plan to strengthen the financial position of the oil refinery and the implementation of measures already taken to strengthen customs. Other elements of the program include (i) creating fiscal space for development spending while maintaining debt sustainability; (ii) rebuilding the government deposits at the central bank; (iii) implementing structural reforms to strengthen budget execution, treasury management, and domestic revenue collection; (iv) enhancing the oversight of the natural resource sector; and (v) continuing ongoing reforms aimed at financial development and improving the business environment.
1 The Executive Board takes decisions under its lapse of time procedure when it is agreed by the Board that a proposal can be considered without convening formal discussions.
International Monetary Fund (IMF)