IMF Staff and Nigerien Authorities have reached an agreement at the staff level on the fourth and fifth reviews of Niger’s economic program under the Extended Credit Facility (ECF) and the first review under the Resilience and Sustainability Facility (RSF). The economic outlook is promising over the near and medium term, with growth projected at 10.6 percent this year, driven by oil exports and the lifting of sanctions. However, this positive outlook is subject to downside risks, especially those related to the security situation and vulnerabilities to climate shocks. Measures to enhance domestic revenue mobilization are crucial to increase fiscal space for priority social and security spending. The ongoing efforts of the authorities to simplify the tax system and adopt an oil revenue management strategy to safeguard the budget from fluctuations in international oil prices are key reforms.
An International Monetary Fund (IMF) staff team led by Mr. Antonio David held meetings from May 20 to June 1, 2024, on the fourth and fifth reviews of the arrangement with Niger supported by the Extended Credit Facility (ECF) and the first review of the arrangement under the Resilience and Sustainability Facility (RSF).
Upon completion of the mission, Mr. David issued the following statement:
“The Nigerien authorities and the IMF team reached a staff-level agreement on the fourth and fifth reviews of Niger’s economic program under the Extended Credit Facility and on the first review of the arrangement under the Resilience and Sustainability Facility. The staff-level agreement is subject to IMF Management and Executive Board approval. The Board meeting is expected to take place in July 2024. The completion of the ECF reviews would enable the disbursement of SDR 19.7 million (about US$ 26.1 million, or 15 percent of Niger’s quota) to address external financing needs. Likewise, the completion of the first review of the RSF would allow for the disbursement of SDR 34.2 million (about US$ 45.3 million, or 26 percent of Niger’s quota).
“Growth is estimated to have declined to 2.4 percent in 2023, primarily due to the effects of sanctions and an unfavorable agriculture season. The economic outlook is promising over the near and medium term, despite uncertainties arising from the decision to exit ECOWAS. Real GDP growth is projected at 10.6 percent in 2024 due to the commencement of oil exports, lifting of sanctions, and increased agricultural production. These factors are also expected to help mitigate inflationary pressures in 2024. However, this positive outlook is subject to downside risks, especially those related to the security situation and vulnerabilities to climate shocks.
“The fiscal deficit for 2023, at 5.4 percent of GDP, exceeded the programmed target partly due to revenue shortfalls. Moving forward, the deficit trajectory aims to adhere to the WAEMU regional convergence criterion of 3 percent GDP by 2025. Following the military takeover and subsequent sanctions, Niger incurred arrears in external and domestic debt service payments. The authorities of Niger are making commendable efforts to fully settle these overdue obligations.
“The Extended Credit Facility aims to strengthen macroeconomic stability and lay the foundation for resilient, inclusive, and private sector-led growth. Program performance showed mixed results. While most quantitative objectives were met at specified intervals, some structural benchmarks were not achieved, and others faced delays.
“Enhancing domestic revenue mobilization is essential to create fiscal space for priority social and security expenditures. The ongoing efforts of the authorities to streamline the tax system, promote digital revenue administration, and implement an oil revenue management strategy to safeguard the budget from fluctuations in international oil prices are critical reforms. Additionally, improving the quality and efficiency of government spending is crucial to enhance public service delivery.
“The authorities of Niger recognize that private sector development is vital for expediting and sustaining economic recovery and are actively working to improve the investment climate. The restructuring of the anti-corruption institutional framework, including the establishment of the Commission against Economic, Financial and Fiscal Crimes (CoLDEFF), demonstrates their commitment to governance improvements. Progress in the governance agenda, including strengthening the Anti-Money Laundering and Combating the Financing of Terrorism framework, is essential.
“RSF funding supports endeavors to advance reforms and investments to address escalating risks and challenges associated with climate change, thereby enhancing resilience and safeguarding livelihoods. The authorities of Niger have made notable progress in implementing reforms to manage risks linked to natural disasters and promote renewable energy sources.
“During the mission, meetings were held with His Excellency Prime Minister and Minister of the Economy and Finance, Mr. Ali Mahamane Lamine Zeine, and Minister of Foreign Affairs, Cooperation, and Nigeriens Abroad, Mr. Bakary Yaou Sangare. Working sessions were also conducted with the Deputy Minister of the Economy and Finance, Mr. Moumouni Boubacar Saidou, the National Director of the BCEAO, Mr. Maman Laouali Abdou Rafa, as well as other senior government officials, private sector representatives, and development partners.
“The team appreciates the cooperation of the authorities and the constructive dialogue that took place during the mission.”
Distributed by APO Group on behalf of the International Monetary Fund (IMF).