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AFRICAN DEVELOPMENT BANK GROUP
MALI
ECONOMIC GOVERNANCE REFORM SUPPORT PROGRAMME, PHASE II
(PARGE-II)
OSGE/GECL DEPARTMENTS
December 2016
Translated Document
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TABLE OF CONTENTS
ACRONYMS AND ABBREVIATIONS ..................................................................................................................i
LOAN AND GRANT INFORMATION SHEET ................................................................................................... ii
PROGRAMME EXECUTIVE SUMMARY ..........................................................................................................iv
I. INTRODUCTION: THE PROPOSAL ............................................................................................................ 1
II. COUNTRY ELIGIBILITY .............................................................................................................................. 2 2.1 Criterion 1 – Government’s Commitment to Poverty Reduction ............................................. 2
2.2 Criterion 2 - Political Stability .................................................................................................. 2
2.3 Criterion 3 - Macroeconomic Stability ..................................................................................... 3
2.4 Criterion 4 - Fiduciary Risk Assessment .................................................................................. 4
2.5 Criterion 5 – Harmonization ..................................................................................................... 5
III. 2016 PROGRAMME - PARGE II ................................................................................................................... 5 3.1 Programme Goal and Objective................................................................................................ 5
3.2 2016 Programme Components ................................................................................................. 5
3.3 Expected Programme Outputs and Outcomes .......................................................................... 7
3.4 Progress Achieved in Fulfilling PARGE-II Preconditions (List of PARGE-II Triggers Defined
in PARGE-I) ............................................................................................................................. 9
3.5 Policy Dialogue ...................................................................................................................... 10
3.6 Loan and Grant Conditions – Prerequisite Actions ................................................................ 10
3.7 Application of Good Practice Principles on Conditionality ................................................... 12
3.8 Financing Requirements ......................................................................................................... 12
IV. PROGRAMME IMPLEMENTATION ......................................................................................................... 12 4.1 Programme Beneficiaries ....................................................................................................... 12
4.2 Programme Implementation, Monitoring and Evaluation ...................................................... 13
4.3 Financial Management, and Disbursement and Reporting Arrangements ............................. 13
4.4 Procurement Arrangements .................................................................................................... 14
V. LEGAL FRAMEWORK ............................................................................................................................... 14 5.1 Legal Instrument ..................................................................................................................... 14
5.2 Conditions for Bank Intervention ........................................................................................... 14
5.3 Compliance with Bank Group Policies................................................................................... 15
VI. RISK MANAGEMENT ................................................................................................................................ 15
VII. RECOMMENDATION ................................................................................................................................. 15
LIST OF TABLES
Table 1 : Key Macroeconomic Indicators 2014 - 2018
Table 2 : Progress Towards Achieving Programme Outputs
Table 3 : Progress Towards Achieving Programme Outcomes
Table 4 : List of PARGE-II Prerequisite Actions
Table 5 : Financing Requirements 2016 (CFAF billion)
LIST OF BOXES Box 1 : Economic Recovery and Sustainable Development Strategic Framework (CREDD)
Thrusts 2016 – 2018
LIST OF ANNEXES
Annex 1 : Government’s Economic Policy Letter
Annex 2 : Matrix of Programme Reforms
Annex 3 : Outcomes Achieved under Previous Budget Support Operations in Mali
Annex 4 : Main Fragility Assessment Results
Annex 5 : Matrix of Fragility Factors
Annex 6 : Note on Relations with the International Monetary Fund (IMF)
CURRENCY EQUIVALNTS
September 2016
Currency Unit : CFA Franc (XOF)
UA 1 : XOF 821.6
EUR 1 : XOF 655.9
USD 1 : XOF 589.2
FISCAL YEAR
1 January - 31 December
i
ACRONYMS AND ABBREVIATIONS
Acronym/
Abbreviation Meaning
ADF African Development Fund
AFD French Development Agency
AfDB African Development Bank
API Investment Promotion Agency of Mali
ARMDS Public Procurement and Public Services Delegation Regulatory Authority
BCEAO Central Bank of West African States
Bn Billion
BP Business Profit
CFRA Country Fiduciary Risk Assessment
CGA Approved Management Centre
CM Council of Ministers
CPI Corruption Perceptions Index
CPIA Country Policy and Institutional Assessment
CREDD Economic Recovery and Sustainable Development Strategic Framework
CSP Country Strategy Paper
CTRCA Business Framework Reform Technical Unit
DGDP General Directorate of Public Debt
DNCF National Directorate of Financial Control
DSA Debt Sustainability Analysis
ECF Extended Credit Facility
EDM Electricity Corporation of Mali
EIG Economic Interest Group
EU European Union
FDI Foreign Direct Investment
GAP Governance Action Plan
GDP Gross Domestic Product
GoM Government of Mali
GPRSP Growth and Poverty Reduction Strategy Paper
GPRSSP Growth and Poverty Reduction Strategy Support Programme
HDI Human Development Index
IMF International Monetary Fund
LA Local Authority
FL Finance Law
AFL Amending Finance Law
MDG Millennium Development Goal
MEF Ministry of Economy and Finance
MLFO Bank’s Mali Country Office
PAB Public Administrative Body
PADDER Decentralisation and Regional Economic Development Support Project
PAG Government Action Programme
PAGAM Government Action Plan to Improve and Modernize Public Finance Management
PAGE Economic Governance Support Project
PAUGRE Emergency Governance and Economic Recovery Support Programme
PDARN Northern Regions Accelerated Development Programme
PEFA Public Expenditure and Financial Accountability
PFM Public Finance Management
PUARE Emergency Economic Recovery Support Programme
PV Present Value
RM Republic of Mali
SME Small- and Medium-sized Enterprise
SNCI National Internal Control Strategy
TA Technical Annex
TFP Technical and Financial Partner
TSF Transition Support Facility
TWS Tax on Wages and Salaries
UA Unit of Account
UAM Million Units of Account
USD United States Dollar
WAEMU West African Economic and Monetary Union
WB World Bank
ii
LOAN AND GRANT INFORMATION SHEET Client Information
BENEFICIARY : Republic of Mali
SECTOR : Economic and Financial Governance
EXECUTING AGENCY : Ministry of Economy and Finance (MEF)
AMOUNT : UA 23.1506 million
2016 Financing Plan for Budget Support Operations
Source of Financing Amount in 2016
ADF Grant UA 11.853 million
ADF XIII Country Allocation UA 8.257 million
Cancelled Grant Balances UA 0.008 million
Restructured Grant Balances UA 3.587 million
ADF Loan UA 9.395 million
ADF XIII Country Allocation UA 1.442 million
Cancelled Loan Balances UA 5.466 million
Restructured Loan Balances UA 2.487 million
TSF Loan UA 1.902 million
European Union (Grant) EUR 85 million
World Bank (Grant) USD 40 million
ADF Key Financing Information
Regular ADF Loan
TSF Loan
ADF Grant
Loan/Grant Currency UA
UA UA
Interest Type* Fixed Not Applicable
Loan Amortization 2% between the eleventh and
twentieth years and 4%
thereafter
2% between the
eleventh and
twentieth years
and 4% thereafter
Not Applicable
Service Charge 0.75% per year on the
outstanding loan balance
disbursed
0.75% per year on
the outstanding
loan balance
disbursed
Not applicable
Commitment Charge* 0.5% (50 basis points) on
loan amount undisbursed 120
days after the signing of the
Loan Agreement
0.5% (50 basis
points) on loan
amount
undisbursed 120
days after the
signing of the
Loan Agreement
Not applicable
Other Charges Not applicable Not applicable
Tenor 40 years 40 years Not applicable
Grace Period 10 years 10 years Not applicable
NPV (baseline scenario) Not applicable (NA) NA NA
ERR (baseline scenario)
NA NA NA
iii
Timeframe - Main Milestones (expected)
Activities Dates
Initial Programme Approval November 2015
Disbursement, PARGE-I December 2015
Programme Appraisal June 2016
Negotiation October 2016
PARGE-II Approval November 2016
Effectiveness December 2016
Disbursement, Phase II December 2016
Supervision Missions January/June 2017
Completion Report December 2017
iv
PROGRAMME EXECUTIVE SUMMARY
2016
Programme
Overview
Programme Name: Economic Governance Reform Support Programme, Phase II (PARGE-II).
This operation is the second of two programme-based general budget support operations (GBS)
for the 2015-2016 period.
Financing: UA 23.1506 million (UA 9.3954 ADF loan; UA 1.902 million TSF loan; and UA
11.8532 million ADF grant).
Programme Goal and Objective: PARGE-II has the same operational objectives as PARGE-I
which was approved in 2015, namely to: (i) improve fiscal decentralisation; (ii) enhance
transparency in public procurement management; (iii) strengthen internal control in order to
improve the use of public resources; (iv) improve the business environment; and (v) support
private enterprise development and promote structuring investments.
Expected Outcomes in 2016: the main outcomes will be: (i) improved PEFA PI-19 indicator
“Transparency, Competition and Complaint Mechanisms in Procurement” from a C score in
2010 to B+ in 2016; (ii) improved rate of fiscal decentralisation in favour of local authorities (%
of expenditure) from 15.2% in 2014 to 16.5% in 2016; and (iii) improved level of credit to the
private sector from 20.5% of GDP in 2014 to 23% of GDP in 2016.
Overview of
Country
Context in 2016
The Government of Mali (GoM) has resolutely embarked on the path of poverty reduction.
Mali’s Development Strategy during the 2016 - 2018 period is in keeping with the Economic
Recovery and Sustainable Development Strategic Framework (CREDD) 2016-2018, which was
approved in April 2016. Since the 2013 presidential elections, the political situation has been
relatively stable, in spite of the climate of insecurity in the north of the country. The signing of
the Agreement for Peace and Reconciliation in Mali (APRM) in Bamako on 15 May 2015 and
20 June 2015 is a strong determination to ensure the stability of the institutions of the Republic,
which is an important prerequisite for any inclusive development. The last meeting of the
Agreement Monitoring Committee (CSA) in March 2016 took note of the genuine efforts made
to implement the APRM in order to ensure national cohesion. The economic recovery which
began in 2014 continued in 2015. Mali’s economic growth rate, which reached 7% in 2014 due
mainly to a bumper harvest, continued with a 6% growth rate in 2015. It is projected at 5.3% in
2016. The GoM pursued a cautious fiscal policy in 2015. The fiscal balance (payment
authorisation basis) dropped by a 1.1 percentage point, from -2.9% of GDP in 2014 to -1.8% of
GDP in 2015. The outstanding public debt to GDP ratio stood at 31.2% in 2015 against 27.3%
in 2014, well below the WAEMU convergence target of 70%.
Lessons
Learned
The key lessons learned include: (i) the need to strengthen policy dialogue in order to improve
the implementation of structural reforms; (ii) the need to build the coordination capacity of the
authorities in the monitoring of reforms; and (iii) the need to effectively materialize the
implementation of a common matrix of reforms among donors, in agreement with the authorities.
Conditions
for Sustained
Support
Mali fulfils the eligibility criteria for general budget support operations. For example, it should
be noted that, regarding macroeconomic stability, the fifth review of the economic and financial
reforms implemented under the Economic and Financial Programme backed by IMF Extended
Credit Facility (ECF), which was finalised in June 2016, concluded that growth is robust and that
inflation is low, despite lingering security challenges. Given the efforts made to implement the
recommendations of previous evaluation of the public finance system, the initial fiduciary risk
(rated as high) was downgraded to a moderate risk in 2014. The PEFA 2016 evaluation covering
the 2013 - 2015 period noted that significant progress has been made due particularly to the
implementation of some WAEMU directives and the consolidation of legal instruments on
external control bodies.
Policy Dialogue
During the implementation of PARGE, dialogue with the authorities will seek to: (i) improve
public finance management especially by improving fiscal decentralisation to ensure the
effective implementation of the Peace Agreement so as to bring about lasting peace and social
cohesion; strengthen the public procurement management system and enhance the efficiency of
internal control in order to improve public expenditure efficiency through structuring investment
programmes; (ii) promote private sector development by more effectively promoting local and
foreign private investment and improving the business climate so as to increase the sector’s
contribution to the country’s economic growth.
v
Results-Based Logical Framework
Country and Programme Name: Mali – Economic Governance Reform Support Programme, Phase II (PARGE-II)
Programme Goal: Contribute to sustained economic growth by enhancing economic governance and promoting private sector development
RESULTS CHAIN
PERFORMANCE INDICATORS MEANS OF
VERIFICATION
RISKS/MITIGATION
MEASURES Indicators
(including CSIs)
Baseline
Situation Target
IMP
AC
T
The acceleration of
economic growth to
ensure gradual
emergence from
fragility is achieved
Number of direct and
indirect jobs created
28 000 in
2010 36 000 2017
OU
TC
OM
ES
Average real GDP
growth over a three-year
period (%)
2.9% from
2012 to
2014
5% from 2015 to
2017
PEFA 2015, MEF,
and IMF
Political and security
risk: The security risk is
related to the country's
fragile situation.
Mitigation measures: This risk could be
mitigated by the
implementation of the
Algiers Agreement signed
in June 2015.
Risk of limited capacity to
implement reforms:
Mitigation measures:
PAGE, the ongoing
institutional support
project, will provide
significant technical
support to the various
entities responsible for
implementing the PARGE
reforms.
Fiduciary risk: In light of
recent fiscal management
trends, the overall
fiduciary risk remains
significant.
Mitigation measures:
This risk will be mitigated
by strengthening public
finance management.
Outcome 1: Public
expenditure
efficiency
is improved
PEFA PI-19
“Transparency,
Competition and
Complaint Mechanisms
in Procurement”
C score in
2010 B+ score in 2016
Rate of fiscal
decentralisation in
favour of local
authorities (% of
expenditure)
15.2% in
2014
16.5% of expenditure
in 2016
Outcome 2: The
private sector
receives greater
support
Domestic credit to the
private sector (% of
GDP)
20.5% in
2014 23% in 2016
OU
TP
UT
S
COMPONENT I – IMPROVEMENT OF PUBLIC EXPENDITURE EFFICIENCY
I.1 – Improvement of Fiscal Decentralisation
Management
contracts are signed
at the regional level
Number of management
contracts signed at the
regional level
0 in 2014
Two (2) contracts for
two regions in
2015; three (3)
contracts for
three regions in
2016
MEF An action plan for
the transfer of
resources and powers
to local authorities is
adopted by the
Council of Ministers
(CM)
Action plan for the
transfer of resources and
powers
Non-
existent in
2015
An action plan
for the transfer of
resources and
powers adopted by
the Government in
2016
vi
I.2 – Improvement of Public Procurement Management
A revised Draft
Public Procurement
Code and the related
implementing orders
are adopted by the
Council of Ministers/
Regional standard
bidding
documents are
transposed into
national law by order
Revised Public
Procurement Code and
related orders/Regional
standard bidding
documents
2008 Public
Procureme
nt Code not
adapted in
2014
The 2008 Code
is revised in
compliance with the
WAEMU
Directive and
adopted by the
CM in 2015 as
well as
WAEMU
regional standard
bidding
documents/The
implementing
orders of the
revised Code are
adopted by the CM in
2016
An audit report on
the public contracts
awarded from 2011
to 2014 is prepared
and published
Audit report on public
contracts awarded
between 2011 and 2014
2010
Report
Audit reports
on the public
contracts
awarded from
2011 to 2014 are
available in 2016.
All reports are
posted on the
websites of MEF
and ARMDS
I.3 – Enhancement of the Role and Efficiency of Internal Control
Additional risk maps
are prepared in
ministries
Number of risk maps in
ministries 4 in 2014
Six (6)
additional risk
maps are
prepared in
2015 and 2016
Establishment of
financial control
delegations in
ministries and public
administrative bodies
(PABs) and sub-
treasuries
Number of ministries,
PABs and sub-treasuries
with financial control
delegations/ Number of
progress reports
prepared by the
delegations
0 in 2014
All ministries have a
delegation in
2015/Four (4)
additional PABs
have a
delegation in
2015/ Four (4) sub-
treasuries have a
delegation in 2016
/Two (2)
progress reports
of the delegations for
the first two
quarters of 2016
COMPONENT II: SUPPORT FOR PRIVATE SECTOR DEVELOPMENT
II.1 Support for Investment Promotion and Private Enterprise Development
The bill on minimum
capital for limited
liability companies is
adopted
Bill on minimum capital
for limited liability
companies
Ongoing in
2015
Bill adopted by CM
in 2015
MEF The bill governing
public-private
partnerships is
adopted
Bill governing public-
private partnerships
Ongoing in
2015
A bill governing
public-private
partnerships adopted
by the CM and tabled
before Parliament in
2016
vii
A National
Investment
Promotion Policy is
prepared and adopted
National investment
promotion policy
Ongoing in
2015
A National
Investment
Promotion Policy in
2016
II.2 – Improvement of the Business Environment
A Business
Framework Reform
Strategic and
Operational Action
Plan 2015 – 2017 is
prepared, adopted
and implemented
2015 – 2017 Business
Framework Reform
Strategic and
Operational Action Plan
Ongoing in
2015
A Strategic Plan is
adopted in 2015 by
the Joint Committee
and implemented in
2016
The WAEMU
Directive on the
opening of credit
information bureaus
is transposed into
national law
Transposition of the
WAEMU Directive on
the opening of credit
information bureaus
Non-
existent in
2015
A bill on the
implementation of
the WAEMU
Directive is
adopted by the CM in
2015/Two
quarterly reports are
prepared by the
bureau in 2016
An Agricultural
Land Tenure Bill is
adopted
Agricultural Land
Tenure Bill
Inexistent
in 2014
A Bill is adopted by
the CM and tabled
before Parliament in
2016
A National State
Property and Land
Tenure Policy is
prepared and adopted
National State Property
and Land Tenure Policy
Ongoing in
2015
Policy adopted by the
Steering Committee
in 2016
A National State
Property and Land
Tenure Policy Road
Map is prepared and
adopted
National State Property
and Land Tenure Policy
Road Map
Ongoing in
2015
Road map adopted by
the Steering
Committee in 2016
Sixty percent of land
titles in Bamako and
Kati are digitised
Percentage of land titles
in Bamako and Kati
digitised
0% in 2014
At least 60% of land
titles are secure in
2016
Financing: AfDB: UA 23.1506 million; EU: EUR 85 million; World Bank: USD 40 million
1
I. INTRODUCTION: THE PROPOSAL
1.1 Management hereby submits the following proposal and recommendation for the award of
a UA 1,902,000 Transition Support Facility (TSF) loan, and a UA 9,395,400 and UA 11,853,200
African Development Fund (ADF) loan and grant respectively to the Republic of Mali to finance the
second phase of the Economic Governance Reform Support Programme (PARGE-II). PARGE was
designed as two consecutive programme-based general budget support operations (GBS) covering
the 2015 and 2016 financial years. This multi-year framework guarantees predictable financing and
creates a medium-term framework for dialogue on major reforms to ensure gradual emergence from
fragility caused by the political and security crisis in 2012. The two operations are single-tranche
operations. The first phase, PARGE-I, which was financed through a UA 15 million grant, was
approved on 4 November 2015 and the resources disbursed on 15 December 2015. This report, which
focuses on the second phase, is presented to the Board of Directors for approval following the
satisfactory implementation of PARGE-I and the achievement of PARGE-II triggers, as defined in
the initial report.
1.2 PARGE-II is a continuation of PARGE-I and previous budget support operations, the results
of which have helped to improve the national public finance management system and private sector
development. Significant achievements were made under PARGE-I, notably: (i) the improvement of
fiscal decentralisation through the signing of management contracts between the State and the regions
of Sikassou and Ségou to promote equitable and inclusive regional development; (ii) the improvement
of public procurement management through the adoption of a new code including WAEMU’s
directives on public procurement transparency to enhance public expenditure efficiency; (iii) the
enhancement of the role and efficiency of internal control by establishing financial control delegations
in all ministries; and (iv) the improvement of the business environment through the adoption of a
Business Framework Reform Strategic and Operational Action Plan 2015 – 2017. The previous
operations, in particular the Emergency Economic Recovery Support Programme (PUARE) and the
Emergency Governance and Economic Recovery Support Programme (PAUGRE) approved in 2013
and 2014 respectively, have, through the implementation of major structural reforms, created
conditions for inclusive and sustainable growth that will gradually help the country to emerge from
its situation of fragility.
1.3 Despite the significant results achieved, Mali still faces a number of challenges in this post-
conflict phase, in particular: (i) sustainable improvement of the security situation, a key factor for
development, which will depend on the Malian Authorities' capacity to implement the commitments
made under the Global Peace and Reconciliation Agreement with the armed groups in the North; (ii)
continuing improvement of public finance management through efficient expenditure and its
equitable distribution in the country's different regions and priority sectors, as well as by enhancing
public procurement transparency through greater compliance with established procurement rules and
procedures, and accelerating the results-based budgeting process in the form of Programme Budgets
in compliance with WAEMU directives; and (iii) the private sector's contribution to the achievement
of strong, sustainable growth in spite of the constraints of the economy's structural fragility.
1.4 PARGE intends to consolidate the achievements of previous operations by helping Mali to
address the above-mentioned challenges through major structural reforms aimed at improving public
expenditure efficiency and increasing private sector development support. PARGE-II, like PARGE-
I, aims to support the efforts made by the Government of Mali (GoM) through the following
operational objectives: (i) improvement of fiscal decentralisation; (ii) enhancement of public
procurement management transparency; (iii) strengthening of internal control to ensure more efficient
use of public resources; (iv) improvement of the business environment; and (v) support for the
development of private enterprises and promotion of structuring investments.
2
II. COUNTRY ELIGIBILITY
Mali meets the eligibility criteria for general budget support operations as defined by the Bank
Group’s Policy on Program-Based Operations adopted in March 2012 (ADF/BD/WP/2011/38).
These criteria were analysed in detail in the PARGE-I appraisal report. The sections below provide
an update of the various criteria.
2.1 Criterion 1 – Government’s Commitment to Poverty Reduction
2.1.1 The Government of Mali (GoM) has resolutely embarked on the path of poverty
reduction. Mali’s Development
Strategy during the 2016 - 2018 period
is defined in the Economic Recovery
and Sustainable Development
Strategic
Framework (CREDD) 2016-2018
which was approved in April 2016.
CREDD 2016 - 2018 is the result of the
review of the Growth and Poverty
Reduction Strategy Paper (GPRSP
2012 - 2017). It takes into account the
priorities of the Mali Sustainable
Recovery Plan (2013 - 2014), the Government Action Programme (PAG) 2013 - 2018, and the
Agreement for Peace and Reconciliation in Mali (APRM) which was signed in Bamako on 15 May
2015 and 20 June 2015. This change in national development strategy between PARGE-I and
PARGE-II does not affect its alignment with the Government’s priorities. In this regard, CREDD
2016 - 2018 is therefore the new reference framework for the design, implementation and monitoring
of development policies and strategies at the national and sector levels. CREDD’s overall objective
is to enable the achievement of Sustainable Development Goals (SDGs) by 2030 by unlocking the
country’s potential and building its resilience to promote inclusive development so as to reduce
poverty and inequalities in a peaceful and united Mali. The strategy consists of 2 prerequisite thrusts,
3 strategic thrusts and 38 specific objectives. Each specific objective focuses on three components,
namely: (i) Fiscal Performance with respect to Programme Budgets; (ii) Institutional Modernization
Measures; and (iii) Quick Impact Actions.
2.2 Criterion 2 - Political Stability
2.2.1 Since the 2013 presidential elections, the political situation has been relatively stable, in
spite of the prevailing climate of insecurity in the north of the country and throughout its
territory. The municipal and local elections which were to be held before the end of 2013, after the
conduct of the 2013 presidential and legislative elections, have been postponed to the end of 2016
due to the security situation in the country’s northern regions. To ease the political climate and revive
political dialogue, the President of the Republic received the leader of the opposition to discuss
various issues of national interest. Furthermore, the National Assembly adopted a new electoral code
which raises the deposit to be paid by candidates for the presidential election from CFAF 10 million
to CFAF 25 million. The signing of the Agreement for Peace and Reconciliation in Mali (APRM) in
Bamako on 15 May 2015 and 20 June 2015 is not only a commitment by all the signatories to promote
the balanced development of all the regions of Mali, taking into account their respective potentials,
but also a strong determination to ensure the stability of the institutions of the Republic, which is an
important prerequisite for any inclusive development. The last meeting of the Agreement Monitoring
Committee (CSA) took note of the genuine efforts made to implement the APRM in order to ensure
national cohesion. Accordingly, a budgetary readjustment is underway with the support of
Box 1: Economic Recovery and Sustainable Development Strategic
Framework (CREDD ) Thrusts 2016 – 2018
CREDD 2016-2018, which is the outcome of a participatory and inclusive
process, comprises the following:
Two Prerequisite Thrusts . Peace and Security
. Macroeconomic Stability
Three Strategic Thrusts
1. Inclusive and Sustainable Economic Growth: it focuses on four priority
areas, namely: (i) rural development and food security; (ii) environmental
protection; (iii) infrastructure development; and (iv) other growth sectors;
2. Access to Basic Social Services: it concerns three priority areas, namely: (i)
skills development; (ii) the development of basic social services; and (iii)
social development, humanitarian action and solidarity;
3. Institutional Development and Governance: it focuses on three priority
areas, namely: (i) transparency and policy coordination; (ii) institutional
development; and (iii) international relations.
3
development partners to better take into account the implementation of the APRM. The security
situation in the northern regions is gradually stabilizing, in spite of sporadic attacks against UN,
Malian and French armed forces, and sometimes the convoys of humanitarian agencies. Given the
gradual stabilization of security in the northern part of the country, terrorist groups have changed their
strategy and are moving from the north to the centre of the country (Mopti and Ségou) while attacking
the UN peacekeepers and Malian army camps (attacks in Nampala, Tenenkou, Diafarabé, and Boni).
Mali’s corruption perceptions index is still high, although the country has improved its ranking from
115th out of 175 countries in 2014 to 95th out of 168 countries in 2015 with a score of 35, according
to the Corruption Perceptions Index (CPI) ranking of Transparency International.
2.3 Criterion 3 - Macroeconomic Stability
2.3.1 The economic recovery that began in 2014 continued in 2015.
Mali’s economic growth, which reached 7% in 2014 due mainly to a bumper harvest, continued to
improve with a 6% growth rate in 2015. It is expected to remain robust in the short term (Table 1).
In 2015, economic activity
was largely driven by the
agricultural (8.3% growth) and
services (7.4% growth)
sectors. On average, inflation
(consumer price index - CPI)
increased slightly to 1.4% in
2015 (against 0.9% in 2014)
due to an increase in food
prices. However, it is expected
to remain below the regional
ceiling of 3% over the 2016-
2018 period. Externally, the
widening of the country’s
current account deficit which
began in 2014 (that is 4.7% of
GDP) continued in 2015 (5.1%
of GDP). This negative trend
mainly reflects the
deterioration in the balance of
services, with a balance of -CFAF 972.2 billion in 2015 (or 12.5% of GDP) against CFAF 850.1
billion in 2014 (or 11.9% of GDP) due to the increase in the military services received.
2.3.2 The Government pursued a cautious fiscal policy in 2015. Budget execution was
characterized by the good performance of aggregates in 2015. An Amending Finance Law (AFL
2015) was approved by the National Assembly in June 2015 in order to increase budgetary revenue.
Consequently, the fiscal balance (payment authorisation basis) dropped by 1.1 percentage points,
from -CFAF 204.7 billion (-2.9% of GDP) in 2014 to -CFAF 141.1 billion (-1.8% of GDP) in 2015.
This improvement was, in part, due to the satisfactory mobilisation of tax resources owing to the
favourable economic environment and the efforts made to collect tax resources, particularly the
multiplication of verifications and controls1, and the continuous streamlining of current expenditure.
The outstanding public debt to GDP ratio stands at 31.2% against 27.3%, well below the WAEMU
convergence target of 70%, reflecting a cautious approach regarding non-concessional financing in
order to preserve the country’s debt sustainability.
1 In early 2015, the Ministry of Economy and Finance took a series of strong measures, notably: (i) the appointment of a new Director of the Customs
Administration; (ii) the establishment of a results-based management system in the tax and customs administrations; and (iii) the increase in revenue
derived from fuel tax using the space created by the fall in global oil prices.
Table 1: Key Macroeconomic Indicators, 2014-2018
2014 2015 2016 2017 2018
Estimated Projected
(Annual Variation as a %)
Real GDP Growth 7.0 6.0 5.4 5.3 4.8
Inflation (average) 0.9 1.4 -1.6 0.8 1.2 Credit to the Economy 12.4 14.6 12.2 9.3 6.7
(as a % of GDP)
Revenue and Grants 17.1 19.1 18.8 19.2 19.6
Total Revenue 14.9 16.4 16.8 17.2 17.6 Of which: Tax Revenue 12.5 14.0 14.8 15.2 15.6
Grants 2.2 2.7 2.0 2.0 2.0
Expenditure and Net Lending (settlement) 20.0 20.9 23.1 23.3 23.1 Of which : Current Expenditure 11.9 11.9 12.6 12.6 12.5
Capital Expenditure -6.5 7.3 9.3 9.5 9.4
Overall Balance ( settlement, including grants)
-2.9 -1.8 -4.3 -4.1 -3.5
Variation in Arrears -0.7 -0.5 -0.3 0.2 -0.1
Overall Balance (cash, including grants) -2.4 -3.2 -4.3 -4.1 -3.6 Current Account Balance (including
transfers)
-4.7 -7.3 -7.6 -6.7 -5.3
Total Public Debt 27.3 30.9 29.6 29.9 30.7 Internal Debt 6.3 7.5 6.8 7.0 7.0
External Debt 21.0 23.4 22.8 22.9 23.7
(For the record) Nominal GDP (CFAF billion) 7 114 7 748 8 312 8 938 9 401
Source: Ministry of Finance and IMF estimates, September 2016.
4
2.3.3 The economic outlook in 2016 is favourable but fragile, due to the country’s security
situation. Internally, 2016 should be marked by a rebound in economic activity thanks to the
continuation of reforms and anchor investment projects as part of the implementation of the APRM.
In this regard, the GDP growth rate is expected to stand at 5.4%, slightly below its 2015 level. This
growth is driven mainly by increased public investment. For its part, inflation was maintained below
the WAEMU threshold of 3% in 2016. Fiscal management in 2016 is still prudent, but faces the urgent
need to meet the expenditure priorities of the Peace Agreement in the short term. Thus, the overall
budget deficit is expected to increase to 4.3% of GDP in 2016. Tax revenue will increase (0.8
percentage point of GDP), well below that of budget expenditure (2.2 percentage points of GDP).
However, the authorities are aware of the need to redouble efforts to improve public expenditure
quality and efficiency and to increase tax revenue in order not only to create budgetary space to
finance priority needs, but also to preserve public financial stability, which is essential for sustainable
and sustained development. The current account balance will continue to worsen in 2016 and is
expected to stand at -7.6% of GDP, that is, an increase in deficit of 0.3 percentage point of GDP
compared to 2015. The latest joint International Monetary Fund (IMF)-World Bank (WB) debt
sustainability analysis, carried out in November 2015, confirms that Mali’s risk of debt distress
remains moderate. Anchor public investment projects will be mainly financed by highly concessional
loans2. The sixth review of the Government’s Economic and Financial Programme backed by the
IMF through the Extended Credit Facility (ECF) carried out in September 2016 shows that its
implementation is satisfactory and that all quantitative targets have been achieved and progress made
in the implementation of structural reforms in most areas. The ECF Programme with the IMF ends in
December 2017. Given the trend in budgetary aggregates and the fiscal outlook, Mali’s overall
macroeconomic framework provides a stable basis for the implementation of this budget support
operation.
2.4 Criterion 4 - Fiduciary Risk Assessment
2.4.1 According to the latest public finance management assessment, PEFA 2015, covering
the 2013 – 2015 period, which was finalised in June 2016, like the previous PEFA 2010 and
PEMFAR 2010 assessments, Mali's public finance management system is relatively reliable, but
can be improved. Between 2013 and 2015, significant progress was made particularly regarding (i)
budget credibility and public policy-based budgeting; (ii) the budget cycle, coverage and
transparency; and (iii) predictability and control in budget execution, as well as accounting and
reporting. In PEFA 2015, the number of improving indicators shows an improvement of the public
finance management system, while the number of declining indicators often corresponds to a
difference of opinion with respect to the previous assessment. This is the result of an ongoing effort,
in spite of the political crisis faced by the country in 2012 the security effects of which linger on. The
implementation of the second phase of the Government’s Action Plan to Improve and Modernize
Public Finance Management (PAGAM-GFP) has been satisfactory. Despite these considerable
efforts, the fiduciary risk as a whole remains moderate (§ 4.3), but the continuation of ongoing
reforms maintains the national public finance management system on course (see Technical Annex -
AT1 for detailed analysis and mitigation measures). The third phase of PAGAM-GFP dubbed the
“Public Finance Management Reform Plan - PREM 2017 – 2021” which was adopted by the GoM in
September 2016, seeks to implement major structural reforms to improve the public finance
institutional and regulatory framework in Mali in the long run.
2 In 2016, however, in agreement with the IMF, provision has been made for a ceiling of about USD 426 million of non-concessional borrowings to
finance critical investments in the transport and electricity sectors.
5
2.5 Criterion 5 – Harmonization
2.5.1 The Bank is particularly active in the area of aid coordination and harmonization in
Mali. This operation was prepared in close cooperation with TFPs in order to improve the
harmonization of the different interventions. Thus, PARGE reforms are in synergy with those
supported by the World Bank (WB) and the European Union (EU) in their respective programmes.
All the reforms concerning budget support operations were discussed within the “Economy and
Finance” Thematic Group and during the last joint budget review carried out from 26 to 27 September
20163. There are ongoing discussions between TFPs, in agreement with the GoM, regarding the
preparation of a common matrix of reforms4. The preparation of this operation involved discussions
between the direct beneficiary entities, that is the departments of the Ministry of Economy and
Finance, in particular the General Directorate of Public Procurement, the General Public Service
Control Office, the Public Procurement Regulatory Authority, the General Directorate of Budget, the
National Directorate of Financial Control, the Investment Promotion Agency of Mali (API), the
Business Framework Reform Technical Unit (CTRCA), and civil society. The programme’s
implementation will be enhanced by the participation of these different stakeholders.
III. 2016 PROGRAMME - PARGE II
3.1 Programme Goal and Objective
3.1.1. By enhancing economic governance, PARGE aims to help create conditions for strong
and sustained inclusive economic growth driven by a better developed and more vibrant private
sector. PARGE-II has the same operational objectives as PARGE-I, namely to: (i) improve fiscal
decentralisation; (ii) enhance transparency in public procurement management; (iii) strengthen
internal control in order to improve the use of public resources; (iv) improve the business environm
ent; and (v) support private enterprise development and promote anchor investments.
3.2 2016 Programme Components
3.2.1 PARGE – II is a continuation of PARGE-I as it focuses on the same components,
namely: (i) Improvement of Public Expenditure Efficiency; and (ii) Support for Private Sector
Development. These two components are complementary and reinforce each other.
Component I – Improvement of Public Expenditure Efficiency
3.2.2 The objective of the first component is to create conditions conducive to the optimal use of
public resources to boost economic recovery that will help to effectively combat poverty in order to
ensure gradual emergence from the situation of fragility. Thus, PARGE-II, like PARGE-I, will cover
the following three areas: (a) fiscal decentralisation to local authorities (LAs); (b) improvement of
public procurement management in line with the relevant WAEMU directives; and (iii) strengthening
of internal control bodies and enhancement of their efficiency to ensure more transparent public
procurement.
3.2.3 Context: Fiscal decentralisation was adopted as a key component of the APRM signed in
June 2015 with an emphasis on the implementation of anchor regional development projects within
the framework of State-Region management contracts backed by the transfer of the necessary powers
and resources and the granting of more political and administrative autonomy to regions to address
longstanding grievances. It is within this context that PARGE was designed, in collaboration with
other development partners, to support Malian authorities in the gradual implementation of its fiscal
decentralisation strategy which has made significant progress since 2015. Regarding public
procurement, the review of the implementing order of the 2008 Public Procurement Code in 2014 has
helped to: (i) reduce procurement deadlines from 120 days to 80 days; (ii) reduce the time limit (from
3 The Joint Budget Review is a provision of the Specific Arrangement relating to General Budget Support Operations signed in February 2012
between the GoM and nine technical and financial partners (TFPs). 4The Economic Governance Support Project (PAGE) provides technical support to the GoM to that end.
6
November to September) for submitting the procurement plans provided for during the next financial
year to the Directorate General of Public Procurement and Public Service Delegations (DGMP -
DSP); and (iii) authorise the launching of competitive bids upon adoption of the draft budget by the
Council of Ministers. Concerning financial control, it should be noted that the gradual effectiveness
of fiscal decentralisation and the implementation of management contracts warrant the strengthening
of auditing and internal control mechanisms in order to enhance transparency and accountability in
public resource management. The National Directorate of Financial Control (DNCF) is, therefore,
implementing the new tasks ensuing from the application of WAEMU directives, namely the ex-ante
control of expenditure, the ex-post evaluation of programme performance and continuation of the
decentralisation of its activities.
3.2.4 Implementation of PARGE-I: the major reforms supported under PARGE-I were: (i) the
signing of two State-Region Management contracts for the regions of Sikasso and Ségou in 2015.
The GoM established regional development agencies in each region and in Bamako District in 2015
to support the implementation of its Management contracts and assist local authorities in the
supervision of regional and local development; (ii) the adoption of a new Procurement Code in
keeping with the relevant WAEMU directives; (iii) the transposition of WAEMU regional standard
bidding documents into Malian national law; and (iv) the establishment of financial control
delegations in all ministries to ensure that contracting authorities comply with the rules and
procedures for the procurement of goods and services. Financial control delegations were established
in the new ministries created after the cabinet reshuffle of January 2016 by Order No. 2016/MEF-SG
of 8 May 2016.
3.2.5 Measures supported by PARGE-II: the reforms initiated under PARGE-I will be deepened
under PARGE-II through: (i) the signing of three management contracts, in accordance with the Peace
Agreement; (ii) the adoption of an action plan for the transfer of powers and resources to local
authorities. The mechanism for the transfer of powers and resources is based on Instruction No. 0/-
003/PM-RM of 21 November 2008. The implementation of this instruction has yielded fruit in the
legal and institutional domains, particularly education, health, water supply, social development,
trade, sanitation, women’s empowerment, and tourism; (iii) issuance of the new Procurement Code’s
implementing orders/decrees; (iv) the conduct of annual audits of the contracts awarded from 2011
to 2015; (v) the preparation of a code of professional conduct in public procurement to govern public
procurement stakeholders; (vi) the establishment of financial control delegations in four public
administrative bodies (PABs); and (vii) the preparation of risk maps for ministries, with a target of
six ministries between 2015 and 2016.
Component II - Support for Private Sector Development
3.2.6 Malian authorities intend to make the private sector the engine of the country’s economic
growth in the medium term. To that end, Mali’s strategy mainly seeks to: (i) operationalise the Private
Sector Framework Act No. 2011-2018 of 30 December 2011 passed in 2011; (ii) create a more
favourable business environment for the development of social and economic activities, particularly
in priority sectors; (iii) promote the emergence of competitive industrial clusters in more competitive
growth sectors. The second component is designed to support GoM efforts to achieve this objective
through the above-mentioned actions. To that end, it will work closely with other development
partners to ensure better division of labour in order to: (i) improve the business environment; and (ii)
support the promotion of investment and the development of private enterprises.
7
3.2.7 Context: the authorities have recognized the need to improve the legal and regulatory
framework not only to better attract foreign private investments, but also to promote the development
of a dynamic local private sector that is capable of promoting the country's economic growth in a
sustainable manner. Following the outbreak of the political and military crisis in the country in 2012,
foreign direct investments (FDIs) fell sharply from USD 556 million in 2011 (about 5.2% of GDP)
to USD 142 million (about 1% of GDP) in 2014 and USD 122 million (about 0.8% of GDP) in 2015.
In 2016, FDIs are expected to increase slightly to USD 124 million, well below the pre-crisis levels.
To address this situation and given the role FDIs play in anchor public investments, particularly the
transport and energy sectors which are capable of removing the constraints on private sector
development, the GoM has accelerated the implementation of major reforms to better promote private
investment.
3.2.8 Implementation of PARGE-I: the major reforms supported under PARGE-I concerned: (i)
the adoption and implementation, in December 2015, of the Strategic and Operational Plan (SOP)
2015-2016 whose overall objective is to further enhance the business environment by improving
Mali’s position in the Doing Business ranking and the level of other business climate performance
indicators. The implementation of the SOP is satisfactory; (ii) the transposition of the WAEMU
Directive on the opening of Credit Bureaus (Law No. 2015-015 of 30 May 2015) which was
operationalised on 1 February 2016; (iii) the adoption of the bill reducing the tax on wages and
salaries; and (iv) the reduction of the minimum capital for business development.
3.2.9 Measures supported by PARGE-II: the reforms to be supported by PARGE-II are: (i) the
design of a State Property and Land Tenure Policy. The GoM has seriously embarked on
implementing this important reform by formulating a State property policy to clarify the main thrusts
of the new policy and adopt a road map, thus helping to better describe the methodology to be used
for the full implementation of the reform, and adopting, in 2015, the Agricultural Land Bill and
computerizing and operationalising the archiving system of government services in Kati, Koulikoro,
and Bamako District; (ii) the drafting of an Agricultural Land Bill; (iii) the digitisation of land titles
in Bamako and Kati. These reforms are consistent with the overall State property and land tenure
reform framework initiated by the country in 2014 which is a prerequisite for the establishment of a
land register. The securement of land rights by formalizing them and acknowledging the financial
value of land so as to facilitate access to financing (guarantees) will help to make long-term
productive investments (farm equipment) and enable the State to impose a tax on land to financially
support the country’s economic and social development; (iii) the adoption of a bill on Public-Private
Partnership (PPP). In a bid to promote quality and sustainable anchor infrastructure by leveraging
private sector participation, the authorities have launched a major PPP reform programme in order to
comply with international standards, particularly regarding the legal, institutional and budgetary
framework for facilitating foreign investment, particularly for PPP projects; and (iv) the adoption of
a National Investment Promotion Policy (PNPI). The aim of the PNPI is to promote and encourage
more foreign and domestic private investment for inclusive and sustainable growth.
3.3 Expected Programme Outputs and Outcomes
3.3.1 The implementation, in 2015, of the first phase of the PARGE-I Programme not only
contributed to creating conditions conducive to sustained economic growth which stood at 5.3% of
GDP against an initial forecast of 5% of GDP, but also to enhancing public expenditure effectiveness
and supporting the Malian private sector. The reforms to be implemented under the second phase,
PARGE-II, are aimed primarily at strengthening these achievements, while deepening reforms so as
to effectively operationalise them. Regarding public expenditure effectiveness, programme reforms
have contributed to: (i) improving the PEFA PI–19 indicator on “Transparency, Competition and
Complaint Mechanisms in Procurement” from a C score in 2010 to B+ in 2015; and (ii) improving
the rate of fiscal decentralisation to local authorities from 15.20% of total expenditure in 2014 to
15.79% in 2015. Concerning private sector support, the Programme helped to improve the level of
domestic credit to this sector by more than 2 percentage points between 2014 (20.5% of GDP) and
8
2015 (22.6% of GDP). Tables 2 and 3 indicate the level of attainment of the logical framework output
and outcome indicators, as presented in the PARGE-I appraisal report
Table 2: Progress towards achieving Programme outputs
Outputs - Reforms Achievements
Component I – Improvement of Public Expenditure Effectiveness
Output I.1 – Enhancement of fiscal decentralisation
Management contracts are signed at the regional
level: two (2) in 2015 and three (3) in 2016
Achieved: Two (2) contracts were signed in 2015 for the regions of
Sikasso and Sékou. Management contracts for the regions of
Timbuktu, Kidal and Mopti Goa were signed in 2016.
An action plan for the transfer of resources and
powers to local authorities (LAs) is adopted by the
Council of Ministers (CM) in 2016.
Achieved: The GoM adopted the plan in Council of Ministers.
Output I.2 – Improvement of public procurement management
A revised Draft Public Procurement Code is
adopted in 2015 and the related implementing
orders adopted in 2016 by the CM.
Achieved: The Public Procurement Code was adopted in 2015. It
should be accompanied by an implementing order and a decree of the
Prime Minister. These instruments were issued by the Minister of the
Economy and Finance and the Prime Minister respectively.
Regional standard bidding documents are
transposed into national law by order in 2015
Achieved: WAEMU regional standard bidding documents were
transposed into national law by order in 2015.
An audit report on the public contracts awarded in
2015 is prepared and published in 2016.
Output will not be achieved in 2016: The GoM signed the first batch
of contracts in 2015 for auditing the public contracts awarded from
2011 to 2014. The contract for auditing contracts awarded in 2015 was
delayed and only signed in August 2016. Consequently, the report on
the auditing of contracts awarded in 2015 will be available in the first
quarter of 2017.
Output I.3 – Enhancement of the role and efficiency of internal control
Six (6) additional risks maps are prepared in
ministries between 2015 and 2016. Achieved: Six maps were prepared in 2015 and six others in 2016.
Establishment of financial control delegations in
ministries and public administrative bodies (PABs)
in 2015 and sub-treasuries in 2016.
Achieved: The government established financial control delegations in
the seven (7) remaining ministries in 2015. Thus, all ministries have a
financial control delegation. It also established financial control
delegations in four public administrative bodies in 2015. In addition to
the PABs established in 2015, the Government has established 8
delegations in the sub-treasuries as at November 2016
Component II – Support for Private Sector development
Output II.1 – Support for investment promotion and private enterprise development
The bill on minimum capital for limited liability
companies is adopted in 2015.
Achieved: The Government adopted the bill on minimum capital for
limited liability companies in 2015.
The bill governing public-private partnership is
adopted in 2016.
Achieved: The bill on PPP was drafted and adopted in Council of
Ministers in October 2016.
A Three-Year Private Sector Development
Programme is prepared and adopted in 2016.
Output will not be achieved in 2016: The adoption of a Three-Year
Private Sector Development Programme, as initially formulated, is no
longer on the GoM’s agenda. However, the GoM committed to finalise
and adopt in 2016 a National Investment Promotion Policy.
Output II.2 – Improvement of the business environment
A Business Framework Reform Strategic and
Operational Action Plan 2015-2017 is prepared and
adopted in 2015 and operationalised in 2016.
Achieved: The SOP was adopted in 2015 and operationalised in
December 2015.
The WAEMU Directive on the opening of credit
bureaus is transposed into national law in 2015.
Achieved: The bill on the transposition of the WAEMU Directive on
the opening of credit bureaus into Malian law was adopted in 2015.
A National State Property and Land Tenure Policy
is prepared and adopted in 2016.
Output will not be achieved in 2016: The GoM adopted a National
State Property and Land Tenure Policy in August 2016. The
institutional framework for steering the State property and land tenure
reform was established by Decree No. 0177/PM-RM of 25 March
2016). The policy will be available by the end of the first half of 2017
and adopted by end-2017.
Sixty percent of land titles in Bamako and Kati are
digitised in 2016. Being achieved: The rate of digitisation at end-October 2016 was 45%.
9
Table 3: Progress towards achieving programme outcomes
Indicators Target Achievements/Comments
Outcome 1 – Public expenditure efficiency is improved
PEFA PI-23 on
“competition value for
money and controls in
procurement”
Revised:
PEFA PI-19 on
“transparency,
competition and
complaint mechanisms
in procurement”
From a C score in 2010 to B in 2016 in
the PARGE-I logical framework
Achieved: B+ score in 2016
The programme (PARGE-I report) used the
new PEFA 2016 codification. The PEFA
assessment used the former PEFA 2011
codification. Thus, the indicator corresponding
to the title in the former codifications is PI-19.
The final PEFA 2016 report approved by the
authorities concluded that significant progress
has been made in this indicator since 2010.
Rate of fiscal
decentralisation in
favour of local
authorities (% of
expenditure)
From 10.3% of expenditure in 2014 to
14% of expenditure in 2016 in the
PARGE–I logical framework
Revised: The data was updated in 2016 by
the authorities and the IMF: the baseline
situation was 15.20% in 2014, resulting
in an increase of the target to 16.5% in
2016.
Ongoing: 15.79% of expenditure in 2015,
representing a 45% rate of progress towards the
attainment of the 16.5% target in 2016.
The trend in the transfer of resources to local
authorities is positive with the signing of 4
management contracts between the State and
regions in 2016.
Outcome 2 – The private sector receives greater support
Domestic credit is
granted to the private
sector (% of GDP)
From 24.4% of GDP in 2014 to 27% in
2016 in the PARGE-I logical framework
Revised: An approximately 20% increase
in GDP following the adoption in January
2016 of the new economic accounts
approved by the authorities and the IMF:
the baseline situation was 20.5% in 2014,
resulting in a reduction of the target to
23% for 2016.
Ongoing: 22.6% of GDP in 2015, that is, an
84% rate of progress towards the attainment of
the target of 23% in 2016.
The trend in continued support in terms of
access to financing by Mali’s private sector is
positive.
3.4 Progress Achieved in Fulfilling PARGE-II Preconditions (List of PARGE-II Triggers
Defined in PARGE-I)
3.4.1 The evaluation of PARGE-I implementation helped to ascertain the effective
implementation of planned reforms in 2015 and to note the significant progress made in the
implementation of PARGE-II triggers (potential PARGE-II preconditions), as specified in the
initial Programme Appraisal Report approved by the Bank's Board of Directors on 4 November 2015.
PARGE-I identified ten (10) triggers for the second phase: seven (7) triggers, as initially defined,
were fully implemented in 2016, one (1) trigger was reformulated, and two (2) triggers will be
implemented with a delay in 2017. Major structural reforms have been proposed to replace the last
three triggers (§ 3.6.1 and Table 4).
3.4.2 The six (6) preconditions provided for under Component I have been fulfilled
satisfactorily (5 out of 6 have been fulfilled). First, concerning the operational objective of
enhancing fiscal decentralisation, the GoM satisfactorily implemented the two triggers provided
for. Second, the level of implementation of reforms – triggers for the improvement of public
procurement management – is fairly satisfactory. Only one of the two triggers provided for has been
implemented. The trigger concerning the preparation and publication in 2016 of an audit report on
public contracts awarded in 2015 will not be implemented this year due to a delay in the recruitment
of the auditing firm whose contract was signed in August 2016 with the objective of submitting a
draft report within six months. Third, concerning the enhancement of the role and efficiency of
internal control, all the preconditions have been fulfilled satisfactorily.
10
3.4.3 Under Component II, the four (4) preconditions have also been fulfilled satisfactorily
(3 out of 4 preconditions have been fulfilled). First, two triggers were provided for under support
for investment promotion and private sector development (§ 3.2.6). Due to changes in the new
national development policy reflected in CREDD 2016-2018, the Three-Year Private Sector
Development Programme trigger is no longer on the GoM’s agenda. Second, the implementation of
the triggers concerning the improvement of the business environment is fairly satisfactory (one out
of the two planned reforms has been implemented). There were commencement delays in the
preparation of the National Policy which is expected to be adopted during the first half of 2017.
3.5 Policy Dialogue
3.5.1 During the PARGE-II implementation period, dialogue with the GoM, through a
concerted approach involving other development partners with a view to supporting the
implementation of Mali’s new Vision reflected in CREDD 2016-2018, will focus on the main
thrust areas included in this operation (§ 3.2). These include: (i) the enhancement of public finance
management, particularly by improving fiscal decentralisation in order to ensure the effective
implementation of the Peace Agreement so as to bring about lasting peace and social cohesion which
is a guarantee for gradual emergence from the situation of fragility; the strengthening of the public
procurement management system as well as internal control to enhance public expenditure efficiency
through anchor investment programmes; and (ii) the promotion of private sector development by
encouraging domestic and foreign private investment and improving the business climate to boost the
sector’s contribution to the country’s economic growth.
3.5.2 This dialogue will be backed by analytical works to be carried out under the Economic
Governance Support Project, namely: (i) the study on the development impact of public investments;
(ii) the study on the implementation of programme- budgets; (iii) the study on the simplification of
internal control; and (iv) the study on the assessment of the SME business climate. This work will be
carried out in consultation with development partners. During the joint budget review on 3 October,
the TFPs agreed on: i) the establishment of the CREED monitoring framework, ii) the establishment
of a governance matrix ensuing from the action plans related to national laws or policies on combating
corruption and illicit enrichment, transparency, public finance reform (PREM), institutional
development (IDP) and results-based management (RBM). These elements will be the subject of
continuous and constructive dialogue with the Malian authorities.
3.6 Loan and Grant Conditions – Prerequisite Actions
3.6.1 The presentation of this second phase of the budget support operation to the Board of
Directors of the Fund is subject to the implementation of prerequisite actions (§ 3.4). All the
preconditions selected (3rd column of Table 4) have been fulfilled. Table 4 presents a summary of
PARGE-II prerequisite actions and their corresponding evidence.
11
Table 4: List of PARGE-II prerequisite actions
General preconditions fulfilled – Maintenance of a stable macroeconomic framework as shown in IMF reports or evaluations.
Evidence: Certified copy of the press release on the conclusion of the most recent review (less than six months old) of the ECF
programme.
Operational
Objectives
PARGE-II Triggers Defined
under PARGE-I PARGE-II Prerequisite Actions
Component I - Improving Efficiency of Public Expenditure
Improvement of
Fiscal
Decentralisation
Sign three (3) management
contracts in 2016
Trigger confirmed as prerequisite action Evidence: Certified copy of three (3) management contracts signed
between the Government and the regions
Adopt in CM an action plan for
the transfer of resources and
powers to LAs in 2016
Trigger confirmed as prerequisite action Evidence: Certified copy of the statement issued by the CM adopting
the action plan
Improvement of
Public Procurement
Management
Adopt the implementing order
and decree of the Public
Procurement Code adopted in
2015.
Trigger confirmed as prerequisite action Evidence: Certified copy of the implementing order and decree of the
Public Procurement Code adopted in 2015
Prepare and publish in 2016 an
audit report on the public
contracts awarded in 2015
Trigger not implemented and replaced
New prerequisite action implemented and confirmed a. Prepare and publish in 2016 audit reports on the public contracts
awarded between 2011 and 2014;
b. Sign the contract for the auditing of the public contracts awarded
in 2015.
Evidence (I) Certified copies of the audit reports on the public
contracts awarded between 2011 and 2014 and certified copy of the
screenshot of the publication on the websites of MEF and the ARMDS;
(ii) Certified copy of the copy of the signed contract for the auditing
of contracts awarded in 2015.
Enhancement of the
Role and Efficiency
of Internal Control
Establish financial control
delegations in four (4) public
administrative bodies (PABs) in
2015 and 8 sub-treasuries
Trigger confirmed as prerequisite action Evidence: Certified copy of the order issued by MEF establishing
financial control delegations in four PABs/ Certified copy of the
decision establishing finance control delegations by the Region’s
Governor in eight (8) sub-treasuries in 2016.
Prepare six (6) additional risk
maps in ministries between 2015
and 2016.
Trigger confirmed as prerequisite action Evidence: Certified copies of the six (6) additional risk maps prepared
in 2015 and 2016
Component II – Support for Private Sector Development
Support for
Investment
Promotion and
Private Enterprise
Development
Prepare and adopt a Three-Year
Private Sector Development
Programme in 2016
Trigger replaced New prerequisite action implemented and confirmed: Prepare and
adopt a National Investment Promotion Policy
Evidence: Certified copy of the statement issued by the CM adopting
the National Investment Promotion Policy
Adopt a bill governing public-
private partnerships and table
the bill before Parliament
Trigger confirmed as prerequisite action Evidence: Certified copy of the statement issued by the CM adopting
the bill on PPP and letter of transmittal to Parliament
Improvement of the
Business
Environment
Develop and adopt a national
State Property and Land Tenure
Policy in 2016
Trigger not implemented and replaced
New prerequisite action implemented and confirmed (i) Adopt the Agricultural Land Bill and table it before
Parliament; (ii) prepare and adopt a national State Property and Land
Tenure Policy; and (iii) prepare and adopt a national State property
and land tenure road map.
Evidence: (I) Certified copy of the statement issued by the CM
adopting the Agricultural Land Bill and Forwarding letter to
Parliament; (ii) Certified copy of the records of the meeting of the
Sectoral Group on National State Property and Land Policy of the
Technical Steering Committee for State Property and Land Reform in
Mali adopting the national State Property and Land Tenure Policy; (iii)
certified copies of the resolutions of the Steering Committee on the
adoption of the State Property and Land Tenure Policy road map.
Digitise and secure 60% of the
land titles in Bamako and Kati in
2016
Trigger confirmed as prerequisite action with an adjusted
achievement rate Evidence: A letter by MEF forwarding a report confirming the
digitisation of 45% of land titles in Bamako and Kati
12
3.7 Application of Good Practice Principles on Conditionality
The programme design, in compliance with Bank Group Policy on Programme-Based
Operations5, took into account the five good practice principles on conditionality. The
programme-based approach adopted in
this operation, which is the second and last
phase, is mainly aimed, within the context
of fragility, at creating a flexible and
inclusive framework to improve budget
resource predictability in keeping with the
smooth implementation of major
economic and structural reforms. Thus, to
ensure more effective support by the
Malian Authorities in this programme, the
good practice principles were followed: (i)
the GoM has assumed ownership of the
Programme for it was designed with the
active collaboration of the entities
concerned; (ii) coordination among
development partners was effective in order to improve complementarity of interventions in support
of GoM policies; (iii) the Programme, which is fully aligned with Mali's national policies, helps to
support the latter's strong efforts to create sustainable and inclusive conditions for the country’s
emergence from fragility; (iv) the conditions precedent to Board presentation of the Programme are
realistic, achievable, have been approved by the GoM and chiefly relate to major structural reforms
whose objective, given the country's fragile situation, is to significantly contribute to improving
public expenditure efficiency and providing sustainable support for private sector development; and
(v) PARGE-II is aligned with the country’s budget cycle, thereby allowing the GoM to include it in
its 2016 budget projections.
3.8 Financing Requirements
3.8.1 The resources of this operation support Mali's development efforts to the tune of more
than 18% of the external financing of the 2016 budget. This budget support operation, which is
the second phase of a two-year programme-based operation, is an integral part of the external sources
of financing that will help to narrow the 2016 fiscal deficit. The overall budget deficit (cash basis,
excluding budget support grants) is CFAF 434.5 billion in 2016 (Table 5). In order to meet these
requirements, the GoM will use domestic financing in the amount of CFAF 199.3 billion as well as
external financing of CFAF 234.2 billion. The Bank will provide CFAF 18.9 billion, or 18%, of the
external financing.
IV. PROGRAMME IMPLEMENTATION
4.1 Programme Beneficiaries
4.1.1 As explained in the PARGE-I report, PARGE-II will benefit the entire Malian
population by improving public expenditure effectiveness and creating a more dynamic private
sector. Improved public resource management will increase the delivery of basic social services and
facilitate countrywide access to them. The programme reforms will help to speed up fiscal
decentralisation which remains a key element of the Peace Agreement and reconciliation in Mali
resulting from the Algiers process. Private sector development support will not only attract dynamic
entrepreneurs with proposals for major projects, but will also create the right conditions for improving
access to financing and ensuring more effective contribution by the sector to the country's economic
growth.
5 See: ADF/BD/WP/2011/38/Rev.3/Approval of 29 February 2012.
Table 5: Financing requirements and sources (CFAF billion)
2016
Revenue and grants (excluding budget support) 1 487.3
Total revenue 1 395.3
Grants (excluding budget support) 92
Total Expenditure and Net Loans 1 919.6
Budget balance (grants, excluding budget support, included) -432.3
Changes in arrears -21.5
Adjustment (cash basis) 19.3
Budget Balance (cash basis) -434.5
Total financing, of which: 434.5
Domestic financing 199.3
External financing 234.2
Of which: Budgetary loans/grants 105.8
AfDB: UA 23.1506 18.9
World Bank: USD 40 million 23.5
European Union 55.8
FINANCING GAP 1.0 Source: Malian Authorities and IMF Forecasts, June 2016.
13
4.1.2 The implementation of Programme reforms will improve the living conditions of
vulnerable groups in general and women in particular. The improvement of fiscal decentralisation
and strengthening of internal control resulting in greater regional equity, and enhanced public
expenditure effectiveness and efficiency could help to improve Government action in favour of social
inclusion and equity which are indispensable for building lasting peace in Mali. This should primarily
benefit women and children, who are the vulnerable segments of the population, especially in the
northern regions which were hardest hit by the 2012 security crisis.
4.1.3 The programme as a whole will help to reduce gender inequalities in Mali. Indeed, the
2012 security crisis in the northern regions has resulted in the deterioration of women’s situation in
these regions. Effective implementation of the PARGE-supported State-Region management
contracts will help to create the right conditions for sustained and inclusive development through
multifaceted support to women who have suffered tremendously from this crisis. Moreover, support
for private sector development through investment promotion will facilitate women's access to
financing in general, and in the northern areas in particular, so as to develop activities that will
strengthen their empowerment and reduce gender inequalities.
4.2 Programme Implementation, Monitoring and Evaluation
4.2.1 The programme will be implemented by the Ministry of the Economy and Finance.
Coordination with the other ministries and State entities involved in the implementation of the
programme reform measures falling within their remit will also be carried out by the Ministry of
Economy and Finance. The routine monitoring and evaluation of the programme will be the
responsibility of the Directorate General of Public Debt (DGDP), which is also responsible for
implementation of all the partners’ programmes. This entity has satisfactorily implemented previous
Bank-financed budget support programmes. The results-based logical framework and reform matrix
will serve as framework for the Programme's monitoring and evaluation. The Bank will monitor the
programme through half-yearly reviews and continuing dialogue between the Malian authorities and
the Bank, particularly through the Bank’s Country Office in Mali (MLFO). Upon completion of the
programme, a completion report will be prepared jointly with the Government.
4.3 Financial Management, and Disbursement and Reporting Arrangements
4.3.1 Country Fiduciary Risk Assessment (CFRA): Despite the encouraging results achieved
regarding improvement of its public finance management system, the country’s overall
fiduciary risk as at June 2016 remained moderate. The fiduciary risk assessment is mainly based
on existing and available diagnoses on Mali's public finance management system, which revealed
that Mali's public finance management system has produced encouraging results. However, fiduciary
risks have been identified at the levels of: (i) internal and external control; and (ii) corruption in the
country. In the past two years, efforts have been made regarding: (i) external control, the accelerated
now-completed judicial auditing of government accounts from 1992 to 2008; and (ii) financial
transparency and fight against corruption, with the passing by Parliament on 23 July 2013 of Law
No. 2013-031 on the approval of the Public Finance Management Transparency Code, the
promulgation on 27 May 2014, by the President of the Republic, of Law No. 2014-015 governing the
prevention, control and punishment of illicit enrichment; and preparation, by the Prime Minister’s
Office, of a framework document on national policy on transparency in the public administration.
Despite these considerable efforts, the fiduciary risk remains moderate on the whole, but the
continuing implementation of the ongoing reforms keeps the national public finance system on track.
TA2 presents a detailed country risk analysis with proposals for country fiduciary risk mitigation
measures. The third phase of PAGAM-GFP dubbed “Public Finance Management Reform Plan -
PREM 2017 – 2021” adopted by the GoM in September 2016 intends to implement major structural
reforms in order to ensure long-term improvement of the public finance institutional and regulatory
framework in Mali.
14
4.3.2 Financial Management, Auditing and Disbursement Mechanism: The Programme's
resources will be used in compliance with national regulations on public finance, including the
procurement system. The Ministry of the Economy and Finance will be responsible for the
operation's administrative, financial and accounting management. The amount for the operation is
included in the 2016 Amending Finance Law under the heading “AfDB Support” covering the amount
to be disbursed for the operation in each financial year. The funds will be utilised through the
Integrated Public Finance Management System (SIGFIP). The second phase of these two operations
– PARGE-II – consists of a single-tranche disbursement of UA 26.26 million. This disbursement in
2016 is subject to the conditions precedent set out in § 3.6.1 above. PARGE-II will be audited in
accordance with the provisions of the general budget support framework arrangement, which provides
for use of the national system, i.e., the Audit Bench of the Supreme Court (SCCS) which controls
budget execution. The SCCS report on implementation of the 2016 Finance Law, as well as the
declaration of compliance, will be available in 2017.
4.4 Procurement Arrangements
4.4.1 This operation, which uses the budget support instrument, provides support for
structural reforms that will enhance economic governance in Mali. Its implementation does not
raise issues regarding the procurement of goods and services. Since 2008, the Government of
Mali has conducted far-reaching reforms of the national public procurement system. Public
procurement regulations have been changed/modified several times in order to adapt them to the
trends observed and, in particular, international norms and standards. The adoption of a revised Public
Procurement Code (Programme precondition) and the transposition of WAEMU regional standard
bidding documents (reforms supported under PARGE-I) into Malian law will allow for the complete
overhaul of public procurement regulations, thereby enhancing public procurement effectiveness. The
national public procurement system review conducted by the Bank in 2016, a summary of which is
provided in TA 2, concluded that, on the whole, the regulations comply with the relevant international
standards and Bank policy.
V. LEGAL FRAMEWORK
5.1 Legal Instrument
5.1.1 PARGE II will use three types of financing instruments, namely a TSF loan and an ADF
loan and grant. The TSF loan is UA 1.902 million, the ADF loan UA 9.3954 million and grant UA
11.8532 million. The Loan and Grant Protocols of Agreement between the Republic of Mali and the
African Development Fund will be signed by the parties concerned.
5.2 Conditions for Bank Intervention
5.2.1 Measures Precedent to Effectiveness: Prior to presentation of the grant and loan proposal
to the Board of Directors of the Fund, the Government of Mali will provide evidence of fulfilment of
PARGE-II preconditions, as stipulated in Table 5. Grant effectiveness is subject to the signing of a
Grant Protocol of Agreement between the Fund and the Republic of Mali. The Loan Agreement will
come into force on the date of fulfilment, to the Bank’s satisfaction, of the conditions set forth in
Section 12.01 of the General Conditions Applicable to Loan and Guarantee Agreements of the
African Development Fund.
5.2.2 Conditions precedent to the disbursement of resources under the second phase of the
programme-based PARGE-II operation in 2016. In addition to the conditions for effectiveness
specified in 5.2.1 above, the disbursement of resources is subject to the following condition: Provide
details of a Public Treasury Account opened at the Central Bank of West African States (BCEAO) in
Bamako to receive the grant and loan resources.
15
5.3 Compliance with Bank Group Policies
5.3.1 PARGE-II complies with Bank Group policies and guidelines on programme-based support
operations. No waiver of these guidelines has been requested for this operation.
VI. RISK MANAGEMENT
6.1. The major risks likely to affect the effective implementation of the programme's reforms
mainly relate to: (i) the security and political risk linked not only to the country's fragile situation,
but also to the management of the Northern Mali problem and good public resource governance; (ii)
weak reform implementation capacity; and (iii) the overall fiduciary risk which, in light of recent
budget management trends, remains significant. The GoM has undertaken to take appropriate
measures to mitigate this risk. As regards the security and political risk, the population elected a
President in August 2013 and a National Assembly in January 2014. Although the security situation
in the north of the country has improved tremendously compared to 2012, it remains uncertain. This
risk is mitigated by the signing of APRM resulting from the Algiers process by the Northern Mali
rebel groups in June 2015. The pace of implementation of the agreement is fairly satisfactory. MLFO's
contribution to policy dialogue with the Government and its participation in the different technical
and financial partner monitoring frameworks will help to monitor this risk. The risk of weak capacity
will be mitigated by all the technical assistance provided, in particular, the Bank's PAGE. The
ongoing institutional support project (PAGE) provides significant technical support to the various
entities responsible for implementing the various PARGE reforms. The fiduciary risk will be mainly
mitigated by strengthening public finance management through effective implementation of the
National Internal Control Strategy and the new Government Action Plan for the Improvement and
Modernization of Public Finance Management 2017-2021.
VII. RECOMMENDATION
Management recommends that the Boards of Directors approve the proposal to grant (i) a TSF loan
not exceeding UA 1,902,000; (ii) an ADF loan not exceeding UA 9,395,400; and (iii) an ADF grant
not exceeding UA 11,853,200 to the Republic of Mali to finance the second phase of the Economic
Governance Reform Support Programme (PARGE-II) for the purposes, and subject to, the conditions
set forth in this report.
I
Annex 1:
Government’s Economic Policy Letter
Mr Abdellatif BERNOUSSI
Director, West Africa Region
African Development Bank
Immeuble du Centre de Commerce
International d’Abidjan (CCIA)
Avenue Jean-Paul II
01 BP 1387, Abidjan 01
Côte d’Ivoire
Subject: Letter of Development Policy for the Economic Governance Reform Support
Programme, Phase II (PARGE-II)
Dear Sir,
1. I have the honour to submit to you this Development Policy Letter in support of the
Government of the Republic of Mali's request for assistance from the African Development
Bank Group (ADB) for Phase II of the Economic Governance Reform Support Programme
(PARGE) to improve economic and financial governance and help create the conditions for
strong, inclusive growth driven by a more effective and dynamic private sector. This
Development Policy Letter (DPL) outlines economic and social developments in Mali in
2015 and the outlook for 2016 and 2017. It is consistent with the Economic Recovery and
Sustainable Development Strategic Framework (CREDD) 2016-2018 adopted in April 2016,
and the Government Action Plan (GAP) 2013-2018. The main focus of the Development
Policy Letter is the implementation of the Government's priority reforms, which will be
supported by the Economic Governance Reform Support Programme that the African
Development Bank (AfDB) wishes to set up.
2. The Economic Governance Reform Support Programme, Phase II is a continuation of the
African Development Bank Group's support to Mali to help the authorities maintain
macroeconomic stability. To that end, it addresses two major concerns: (i) improving public
expenditure efficiency so as to heighten its impact on the country's economic and social
development; (ii) strengthening investment promotion and the development of enterprises in
the country by improving the business environment and establishing appropriate financing
mechanisms.
3. PARGE-II will support the continuation of ongoing reform actions and the implementation
of reform measures concerning the following two main areas: (a) public expenditure
effectiveness; and (b) support to private sector development. These two components relate
to reform measures to be implemented over the programme period. Component 1 reform
measures are drawn from the Government Action Plan to Improve and Modernize Public
Finance Management (PAGAM-GFP II). The measures under the second component fall
within the scope of the 2015 Business Climate Improvement Action Plan. The
implementation of these plans is supported technically by PAGE, the ongoing institutional
II
support project. All these measures are intended to ensure more effective public resource
use so as to heighten their impact on the country's economic and social development and, at
the same time, contribute to private sector development in order to allow it to fully play its
role as a driver of economic growth, job creation as well as reduction of poverty and
inequalities.
Salient Features in 2014 and 2015
Political, Social and Economic Context
4. Mali is gradually recovering from the 2012 crisis following the restoration of security, the
implementation of the Agreement for Peace and Reconciliation and the return of technical
and financial partners.
5. The redeployment of the French “SERVAL” force, which was replaced by the much more
regional Barkhane force, the European Mission for the Training of Malian Armed Forces
(EUTM) as well as soldiers from many countries participating in the United Nations
Integrated Multidimensional Stabilization Mission in Mali (MINUSMA) have helped to
rebuild the Malian army and contributed to the overall restoration of the central
Government's authority and integrity in Mali's northern regions. The Government also
adopted the Military Orientation and Programming Law, which demonstrates the
determination of Mali's highest political and military authorities to provide the country with
a defence tool that is capable of preserving the country's fundamental interests.
6. The Donor Conference to aid Mali's development, held in Brussels on 15 May 2013, and the
five follow-up meetings were highly successful, bringing together 80 countries and 28
international organisations that pledged EUR 3.3 billion, (USD 4.4 billion, CFAF 2 200
billion or 39% of GDP), 66% of which has already been disbursed and 33% disbursed
through the general government budget. The fifth and final follow-up meeting was held in
Bamako on 17 February 2015.
Macroeconomic Developments and Implementation of Emergency Economic Recovery
Measures
Macroeconomic Level
7. Economic recovery is gathering momentum as a result of agricultural and continued public
finance management improvement support policies. Real GDP growth was 6.0% in 2015,
against 7.0% in 2014. This sound performance was due to a rebound in growth in the primary
and secondary sectors. As a result of favourable rainfall and the implementation of
agricultural support policies, including the supply of agricultural inputs early in the crop
year, the promotion of mechanized farming and the granting of input subsidies, agricultural
production increased by almost 12% in 2015. In the tertiary sector, production was up by
more than 7.4% as a result of accelerated growth in the transport and telecommunications,
and financial and non-financial services branches. In contrast, the secondary sector recorded
negative growth. Consumer price inflation was only 1.4% as a result of the good crop year.
8. On the public finance front, the overall budget deficit (cash basis, including grants) rose to
3.2% of GDP, compared with 2.4% GDP in 2014. Revenue and grants totalled CFAF 1 481.1
billion (19.1% of GDP), showing an increase compared with projections due, among other
factors, to better taxation service performance with respect to the broadening of the tax base,
and revenue control and collection. Total expenditure and net loans stood at CFAF 1,622.3
III
billion (20.9% of GDP). The basic budget balance6 posted a deficit of CFAF 97.3 billion
(1.6% of GDP).
9. The balance of payments current account deficit (including grants) widened to 7.2 % of
GDP, compared with 4.5% in 2014, due to a higher increase in imports than in exports owing
to the economic recovery. The current account deficit was only partly financed by net
inflows of capital, mainly in the form of external assistance and foreign direct investment
(FDI). As a result, the overall balance of payments posted a deficit of CFAF 124 billion
(USD 353 million), financed by a drawdown of Mali’s foreign exchange reserves at the
Central Bank of West African States (BCEAO).
10. Money supply expanded by 13.2%, driven by a 14.6% expansion in credit to the economy.
Commercial banks benefit from the BCEAO’s accommodative monetary policy by using
central bank advances to finance the Malian economy and purchase securities issued by the
West African Economic and Monetary Union (WAEMU).
Implementing Emergency Economic Recovery Measures
Improving Public Management Governance
Improving Public Expenditure Quality
11. There is need for adequate basic social service delivery to improve the population's living
conditions. In order to address this challenge, the Government has continued its efforts to
improve public expenditure quality through basic social spending of about CFAF 402.2
billion on education and health, representing a 102.2% execution rate. This measure has
helped to build the central Government's capacity to provide the population with basic social
services, especially in education and health.
Strengthening Public Management Transparency Mechanisms
12. For several years now, the Government has adopted a policy to strengthen public
management transparency and make public administrators more accountable, particularly by
implementing the Government Action Plan to Modernize and Improve Public Finance
Management (2006-2010 and 2011-2015 PAGAM-GFP). To ensure constant improvement
of public finance management, the Government continued the finalisation in 2014, by the
Audit Bench of the Supreme Court (SCCS), of the auditing of public accountants'
management accounts from 1960 to 2008. As a result of this work, normal audits of accounts
from 2015 are updated, while strengthening judicial oversight of public management.
13. Furthermore, to help improve public management transparency in budget execution, the
Government signed Order No. 2014-2037/MEF-SG of 31 July 2014 determining the list of
expenditure items paid before authorisation to pay and the conditions for their settlement.
14. It also established a framework for contracts awarded and classified as pertaining to a
“defence secret” or “essential government interests” which are exempted from the selection
methods and controls of the bodies planned under the Public Procurement Code as stipulated
in Article 8 of Decree No. 08-485/P-PM of 11 August 2008 in accordance with Decree No.
6 Basic budget balance is equal to the difference between revenue and expenditure under the direct control of the authorities, that is, revenue
(including resources from the Heavily Indebted Poor Countries Initiative) plus general budget support grants minus current expenditure and internally financed capital expenditure.
IV
2014-0764 of 9/10/2014 concerning the procurement of goods and services excluded from
the scope of Decree 08-85/P-RM of 11 August 2008, which governs contracting procedures,
contracts execution, settlement of public contracts and public service delegations. This new
decree focused on public management transparency mechanisms, including those areas
pertaining to “defence secrets” or “essential government interests”.
Consolidating Economic Recovery
Support for Priority Public Investments
15. One of the main drivers of economic recovery is the promotion of public investment. In order
to increase the investment rate in its budget, the Government has included in its Special
Investment Budget under the 2016 Finance Law priority investment projects (social,
education, health, infrastructure, agriculture and water supply sectors) for an aggregate
amount of over CFAF 100 billion. This has consolidated support for the social, education,
health, infrastructure, agriculture and water supply sectors for the benefit of the population.
16. It is also essential to carefully select investments in order to make priority investments that
will support economic recovery. To that end, a single public investment project selection
consultative committee has been established to examine, assess and select the files of public
investment projects to be included in the Three-Year Investment Plan (TYI) and the Special
Investment Budget (SIB). In order to operationalise the Committee, the Government has
established a Technical Committee for the selection of public investment programmes and
projects in Mali. This more Technical Committee has improved the selection of projects to
be included in the Three-Year Investment Plan and the Special Investment Budget.
Support for the Recovery of Private Sector Activities
17. A buoyant private sector can act as a catalyst for economic recovery. This buoyancy depends
greatly on the prompt payment of government financial commitments to private suppliers,
particularly in key sectors such as energy (the example of EDM-SA), and the establishment
of business environment reform management and monitoring tools. To that end, the
Government has cleared payment arrears owed to its suppliers. Such clearance of arrears
owed by Government to its suppliers, particularly in key sectors such as energy (the example
of EDM-SA) and measures taken to accelerate payment at the Treasury have allowed private
enterprises to honour their commitments to the banking system and will enable the latter to
finance economic activity by granting more credit to the economy, especially in the priority
sectors of energy and water.
18. In its efforts to constantly improve the business environment, the Government revised
Decrees No. 2009-127 and No. 2011-142 on the establishment of the Joint Business
Framework Reform Monitoring Committee. This revision laid the foundations for the
recovery of private sector activities and revival of the economy on a sound footing in terms
of monitoring and steering reforms aimed at improving the business environment.
Outlook for 2016-2017
Macroeconomic Prospects
19. The efforts made by the Government, particularly in the agricultural sector, and the return
of technical and financial partners (TFPs), should help to maintain real GDP growth at 5.4%
in 2016 and 3% in 2017. These projections will depend on sound performances in the
agriculture, construction and services sectors.
20. The current account deficit (including grants) is expected to widen to 7.6% of GDP in 2016
due to a rise in imports, especially food products and capital equipment, and to be completely
V
financed through foreign direct investment in the gold mining and telecommunications
sectors, and external aid in the form of loans. The overall balance of payments is expected
to reduce sharply over the period 2016-2017.
21. The implementation of prudent monetary and fiscal policies should contain inflation in line
with the community convergence criterion of 3% per year, provided rainfall is favourable.
22. As regards fiscal policy, the Government adopted the 2016 Amending Finance Law tabled
before the National Assembly to reflect expenditure relating to the implementation of the
Agreement for Peace and Reconciliation, especially those contained in the Joint Evaluation
Mission in Northern Mali (MIEC) report. Revenue has also increased due to the expected
sound performance of the taxation and revenue collection services. The targeted levels of
revenue and grants is CFAF 1,562.4 billion, that is 18.8% of GDP, compared to CFAF
1,555.0 billion and 18.6% of GDP under the initial Finance Law. With these adjustments,
the new Amending Finance Law (LFR) will be built around a deficit on the basic balance of
CFAF 170.4 billion (2.0% of GDP), compared to 2.1% of GDP under the initial Finance
Law, and an overall deficit (including grants) of CFAF 357.2 billion (4.1% of GDP),
compared to 3.3% under the initial Finance Law.
Measures Envisaged to Enhance Governance and Boost Economic Recovery
Improving Public Expenditure Effectiveness
Strengthening Fiscal Decentralisation
23. In order to further enhance decentralisation, the Government in 2014 adopted the legal
framework for establishing State-Region management contracts. To that end, it signed three
(3) management contracts for three regions in 2016. The objective of this policy is to equip
the regions with adequate infrastructure financing management tools to ensure their
economic and social development.
24. In support of the process, it is the Government's intention to relaunch the process for
transferring powers and resources to local authorities. To achieve this goal, it has prepared
a plan for transferring powers and resources to local authorities. The plan was adopted at the
Cabinet Meeting chaired by the Prime Minister.
Enhancing the Role of Internal Control
25. Internal control plays a key role in improving transparency and economic and financial
governance. Since 2013, the Government has embarked upon a far-reaching project to
provide sector ministries with risk maps in order to better target controls and improve their
efficiency. It has completed the mapping for four (4) ministries and undertakes to do so for
six (6) other ministries in 2016. Financial control delegates were appointed in two ministries
and six public administrative bodies (PABs) by Order No. 2016/1385/MEF-SG of 18 May
2016. The process for recruiting a group of consulting firms is underway. The process for
preparing risk mapping began at end-July 2016. The interim reports should be ready at end-
September. The final report is expected in mid-October.
26. To strengthen internal control, the Government undertakes to complete the establishment of
financial control delegations in ministries before the end of 2015, and adopt instruments
relating to the establishment of internal audit services in ministries and specialised bodies in
VI
2016. Such establishment of audit services in ministries and specialised bodies will
contribute to improving public expenditure quality.
The instruments relating to the establishment of internal audit services in ministries and
specialised bodies are in the process of Government approval.
Improving Public Procurement Management
27. Public procurement management contributes to public expenditure efficiency and enhanced
public service delivery by government services. In order to adapt to community standards,
the Government revised the Public Procurement Code in 2015 to reflect the related new
WAEMU directives. In 2016, it issued implementing orders in accordance with the said
directives.
28. In order to reiterate the elementary rules of ethics concerning public procurement, the
Government adopted in 2016 a Code of Ethics and Deontology, which will apply to all actors
in the public procurement chain. This Code aims to improve public procurement
transparency and governance.
29. The Code was adopted in 2015 (Decree No. 2015 – 0604/P-RM of 25 September 2015). This
reform was a prerequisite action for PARGE – I in 2015. The implementing order of the
Code was signed by the Minister of the Economy and Finance in October 2015 (Order No.
2015 – 3721/MEF-SG of 22 October 2015 laying down the terms and conditions for
implementing Decree No. 2015 - 0604/P-RM of 25 September 2015). The Public
Procurement Regulatory Authority will prepare a public procurement audit report for the
2015 financial year in 2016 as it does every year.
30. The final reports on the 2011-2014 interim audits are available and will be approved by the
Government on 28 September 2016, and posted on the websites of ARMDS and MEFP. The
contract for the 2015 report was signed on 30 August 2016.
VII
Support for Private Sector Development
Investment Promotion and Private Sector Development Support
31. Addressing the challenges of the post-crisis period requires the promotion and relaunching
of investment in the country. That is why reforms to establish a coherent private sector
development programme, the facilitation of the development of limited liability companies
(LLCs), public-private partnerships and land security are projects that the Government will
embark on in 2016/2017. The Government intends to prepare and adopt a Three-Year Private
Sector Development Programme to promote a buoyant wealth-creating and revenue-
generating private sector. The Government has already adopted, at a Council of Ministers
meeting, the bill to establish the minimum capital for establishing an LLC. This law will
encourage the establishment of LLCs in order to promote the development of job-creating
small- and medium-sized enterprises. To provide the country with a public-private
partnership framework, the Government will adopt a bill on the institutional framework
governing public-private partnership. This instrument will help to promote PPP investments
in the country.
32. Land management is a challenge for the private sector. In that connection, the Government
will embark on the digitisation of 80% of land titles in Bamako and Kati. To improve
efficient land management, it will prepare a national State Property and Land Tenure Policy
in 2016.
33. A dynamic private sector spurs job creation and economic growth. To that end, the
Government transcribed the guidelines on the establishment of credit bureaus and adopted a
Strategic and Operational Action Plan 2015-2018 for the Business and Wage and Salary Tax
(ITS) Reduction Framework. To strengthen credit information management in order to
increase credit to the economy for the private sector, the Government in 2016 adopted
instruments relating to the establishment of credit bureaus. In a bid to constantly improve
the business framework, the Government adopted a Strategic and Operational Action Plan
2015-2018 to identify the actions required to improve the business environment.
34. Lastly, the aim of the measure to reduce the tax on wages and salaries (ITS) is to foster job
creation and make the legislation more attractive. To that end, the Government adopted an
instrument reducing the tax on salaries and wages (ITS). The adoption of a Three-Year
Private Sector Development Programme as formulated is no longer on Government’s
agenda. The issue is to replace it with a "National Investment Promotion Policy". A draft
document has been prepared and is being revised for finalisation. The policy is scheduled
for adoption at the Council of Ministers meeting of 5 October 2016. The public-private
partnership (PPP) strategy and draft bill were examined at a Cabinet Meeting chaired by the
Prime Minister. They will be adopted at the Council of Ministers meeting of 15 October
2016.
VIII
Improving the Business Environment (TO BE COMPLETED TOGETHER WITH THE
MATRIX OF REFORMS)
Programme Monitoring
35. The implementation of the Economic Governance Reform Support Programme (PARGE) will be coordinated by an Inter-Ministerial Committee chaired by the Ministry of Economy and Finance, and comprising the ministries responsible for investment promotion and justice.
36. The Government is convinced that, with AfDB's support through the Economic Governance
Reform Support Programme (PARGE), the satisfactory implementation of the envisaged
measures will help to improve the quality of expenditure and promote a dynamic private
sector that can contribute to economic recovery and poverty reduction.
37. The State property policy and a road map have been prepared and are pending adoption by
the Orientation Committee.
38. Sixty per cent of land titles in Bamako and Kati have been digitised.
39. Please accept, Sir, the assurances of my highest consideration.
Dr Boubou CISSE
Copies:
- AfDB Executive Director for Mali
- AfDB Resident Representative
IX
Annex 2
MALI – Economic Governance Reform Support Programme
Matrix of Programme Reforms
Specific
Objectives 2015 Measure 2016 Measure Output Indicators
Outcome
Indicators
Component I – Improving Public Expenditure Efficiency
Improve fiscal
decentralisation
Adopt and operationalise, at the
Government level, an action plan for the
transfer of powers and resources to local
authorities
Achieved: Action Plan for the transfer
of powers and resources adopted
before the end of October 2016.
Overall budget
appropriation
deconcentration
rate: Baseline
15.2% of
expenditure in
2014;
Target 16.5% in
2016
Sign (2) management contracts for
the regions
Sign three (3) management contracts for
the regions
- Achieved: 2 management contracts;
- 3 project contracts before the end of
October 2016
Transpose the WAEMU Directive on
the financial system of local
authorities into Mali’s domestic law
Operationalise/implement the new
financial system for local authorities in
the country’s 8 regions
Instruments relating to WAEMU
directives on the financial system
adopted by the CM for transposition
into the domestic law before the end
of 2016; Eight (8) of the country’s regions
apply the new financial system before
the end of 2016
Improve public
procurement
management
Have the Council of Ministers adopt
the revised Public Procurement
Code
Adopt the implementing orders in
compliance with WAEMU directives
Achieved: the revised Public
Procurement Code is adopted by the
CM before the end of October 2016;
The implementing orders of the Code
issued by the Minister before the end
of October 2016
PEFA PI-19 on the
preparation, value
for money and
public
procurement
control: Baseline
C in 2010;
Target B+ in
2016
Prepare a PP Code of Ethics applicable to
all public procurement actors
A PP Code of Ethics applicable to
public procurement actors is prepared
and adopted before the end of 2016
Transpose and adopt WAEMU
regional standard bidding documents
Achieved: WAEMU regional
standard bidding documents adopted
and transposed into Mali’s domestic
law
X
Specific
Objectives 2015 Measure 2016 Measure Output Indicators
Outcome
Indicators
Preparation of 2011 to 2014 public
procurement audit reports and posting of
the reports on the website of MEF or
ARMDS
Achieved: the 2011 to 2014 audit
reports are prepared and posted on the
website of ARMDS or MEF
Strengthen the
role and
effectiveness of
internal control
Finalise the establishment of
financial control delegations in the
ministries
Establishment of financial control
delegations in four (4) additional
specialised bodies such as public
administrative bodies (PABs)
Preparation of the quarterly progress
reports of financial control delegations
Achieved: all the ministries have a
financial control delegation;
- four (4)– PABs have a financial
control delegation before the end of
October 2016;
- 2 progress reports of the ministries
for the first two quarters of 2016
prepared before the end of October
2016.
Prepare of risk maps for 6 new ministries Achieved: risk maps for 12
ministries prepared before the end
of October 2016
Have the CM adopt the instruments on
the establishment of internal audit
services in the ministries and specialised
bodies
- Being Achieved: Instruments
adopted by CM before the end
of2016
Strengthen the control of the service
rendered by preparing an annual audit
report on internal control service delivery
Achieved: annual audit report on
service delivery [2015 report]
prepared before the end of October
2016
Component II – Support for Private Sector Development
Improve the
business
environment
Have the Council of Ministers adopt
the 2015-2018 Business Framework
Strategic and Operational Action
Plan
Implement the Strategic Plan Achieved: Strategic and Operational
Action Plan adopted by the Joint
Committee;
Report on the implementation of the
during the first half of 2016 available
before the end of October 2016
Domestic credit to
private sector (%
of GDP) : Baseline
20.5% of GDP
in 2014; Target
23% of GDP in
2016 Transpose into domestic law the
WAEMU Directive on the
Operationalise the credit information
bureau
Achieved: transposition instrument
adopted
XI
Specific
Objectives 2015 Measure 2016 Measure Output Indicators
Outcome
Indicators
establishment of credit information
bureaus
Quarterly reports on the
operationalisation of the credit bureau
available before the end of October
2016
Prepare and adopt a national State
Property and Land Tenure Policy/prepare
and adopt a road map on the national
State Property and Land Tenure Policy/
Adopt the Agricultural Land Bill and
table it before Parliament
Achieved: Agricultural Land Bill,
policy and road map of national state
property and land tenure are adopted
before the end of October 2016
Digitisation of 60% of land titles in
Bamako and Kati
Being Achieved: 60% of land titles
are secured before the end 2016
Support
investment
promotion and
private
enterprise
development
Reduce companies’ payroll expenses
[Have the CM adopt an instrument
reducing the tax on wages and
salaries (ITS)]
Achieved: instrument adopted
Have the CM adopt the bill on the
minimum capital for limited liability
companies
Achieved: instrument adopted by the
CM before the end of October 2016
Prepare and have the CM adopt a national
investment promotion programme
Achieved: Programme adopted by the
CM before the end of October 2016
Have the CM adopt and table before
Parliament a regulatory framework [bill]
governing public-private partnerships
Achieved: bill adopted by the CM
before end of October 2016
Launch the process to select projects
eligible for PPP financing
Being Achieved: Public investment
project selection system is established
before the end of 2016
XII
Annex 3 Outcomes Achieved Under Previous Budget Support Operations in Mali
Strengthening of Public Finance Management Reduction of the amount of central government transfers to CMDT from CFAF 23 billion in 2007 to a maximum of CFAF 15 billion in 2008 and CFAF 10 billion in 2009. Launching of competitive bidding for the privatization of the four CMDT branches retained no later than June 2009
The coverage rate of services (budget of interconnected services compared to total general government budget excluding external financing and accounts in annex) was 45.2% as at 31 March 2008, 48.1% at end 2008 compared to an estimated 50 %. In 2009, it was 83.5% compared to 75% i.e. an overrun of 8.5%. By the end of the first half of 2010, all expenditure services were interconnected except for Kidal region, which is being connected. However, the interconnection of revenue services is experiencing difficulties because the new management of the Telecommunications Company of Mali (SOTELMA) following its privatization, has called into question the programme to expand its fibre optic (F.O.) interconnection infrastructure to the Revenue Authorities. The Ministry of the Economy and Finance envisaged alternative solutions and has decided to establish an IT Master Plan for that Ministry which will ultimately ensure interconnection of revenue services. The regularisation of suspense and advance payment accounts was made mandatory at least in the first two months of year n+1 pursuant to Instruction No. 001 issued by the National Director of Treasury and Public Accounting on 29 October 2007 inviting all senior accountants to systematically settle accounts and provide ten-day accounting statements. This instruction has entered into force, and suspense and advance payment accounts will be regularised in the first two months of year n+1 as from 2010. Recruitment of financial judges for the Audit Bench to increase the number to 67 by the end of 2009 in order to ensure timely production and certification of State accounts. The Public Procurement and Public Services Delegation Regulatory Authority (ARMDS) was established by Law No. 08-023 of 23 July 2008 and its members appointed on 15 April 2009. ARMD's budget was CFAF 300 million in 2009 and CFAF 1.637 billion in 2010. From the commencement of its activities on 30 November 2010, ARMDS has issued 43 decisions, including 3 penalty decisions. The Authority has also trained 299 public procurement actors. However, ARMDS is faced with a number of challenges: (i) difficulties concerning the collection of dues, (ii) lack of financial resources, and (iii) the need to build human resource capacities.
In terms of value, the proportion of contracts awarded through direct negotiation represented 19.13% of total contracts awarded in 2009. Also, the value of contracts awarded by direct negotiation fell from CFAF 52,331,508,137 in 2008 to CFAF 42,858,612,239 in 2009, i.e. by 18.10%. In addition, the public procurement bulletin has been published on a regular monthly basis by DGMP since March 2007. In short, there is general satisfaction in this area. In 2014, the Government established by order the list of expenditure items paid without payment authorisation and the procedure for their settlement. The Audit Bench of the Supreme Court (SCCS) audited the management accounts of public accountants from 1960 to 2008: Law 2013/001- AN-RM of 15 January 2013; from 92 to 2008: 61 hearings organised, 186 public accountants’ accounts audited, and 46 decisions given. In the case of Local Authorities (from 1992 – 2008): 4,566 accounts of local authority (LA) public accountants audited and 54 decisions given.
The Government has issued a decree (No. 2014 – 0764/PM-RM of 19 October 2014) establishing the
system for the procurement of works, supplies and services excluded from the scope of Decree 08-85/P-
RM of 11 August 2008 which governs contracting procedures, the execution of contracts, settlement of
public contracts and public service delegations.
Promotion of Decentralisation
Adoption in 2010, by the Council of Ministers, of instruments on the revision of: (a) amended Law No. 93-008 on conditions for the administration of LAs; (b) amended Law No. 95-034 on Local Authorities’ Code; (c) Law No. 00-044 determining the tax resources of municipalities, districts and regions of Mali.
Effective utilisation of budget and accounting instructions, as well as the account operating guide from
2008:
XIII
As part of the establishment of transparent procedures, training programmes and appropriate technological
resources in order to strengthen territorial financial governance, the implementation of budget and
accounting instructions and availability of the account operating guide are effective since 2008.
Development of software for the needs of payment authorisation officers in 2009. Resumption of Normal Operation of Government Services and Rebuilding of State Capacity to Provide Basic Social Services
Budget allocations to the social sectors represented CFAF 386.43 billion in the 2013 Amending Financing
Law (AFL). The Government made budget allocations for the ANICT (National Local Authority Investment Agency) in favour of the decentralised communities for the rehabilitation and equipping of basic health centres and schools in the amounts of CFAF 10.1 billion and CFAF 14.778 billion in 2013 and 2014 respectively.
The redeployment of public service workers to the liberated regions was effective, especially to Gao and
Timbuktu.
The CPIA indicator score for “Service delivery and operational efficiency of public administration” rose
from 3.5 in 2012 to 4 out of 5 in 2014.
Support for the Creation of Appropriate Conditions for Economic Recovery
The Government has established a single consultative framework for the selection of public investment
projects and programmes (Decision 0027/MEFB-SG of 1 March 2013).
The Government had an independent audit conducted in 2012 for a comprehensive inventory of cumulative
domestic payment arrears.
The public investment rate rose from 4.8% of GDP in 2012 to 6.8% in 2013.
The Government has established and operationalised a Development Project and Programme Monitoring
Committee through the creation and operation of the Technical Committee for the Selection of Public
Investment Projects and Programmes in Mali. This Committee provides support to priority public
investments.
The Government included CFAF 7 billion allocation in the 2014 Amending Financing Law (AFL) for the
settlement of EDM-SA's arrears owed to suppliers.
The Government has revised Decrees 2009-127 and 2011-142 establishing the Business Framework
Reform Joint Monitoring Committee (Decree 2015 -0117/PM-RM of 25 February 2015).
XIV
Annex 4
Main Fragility Assessment Results
Introduction
1. Over two years after the security, political and institutional crisis which shook the country
and threatened the sub-region's stability, Mali is struggling to regain its former stability despite the
return to constitutional order and the establishment of new institutions following the democratic
elections considered to be transparent and credible by international observers. The coup d’état on
22 March 2012 in Mali plunged the country into one of its most serious crises since its accession
to international sovereignty with the 9-month long occupation of the northern regions by armed
groups. Mali's territorial integrity was thus threatened, rendering the Government and army
incapable of assuring the security of citizens and their property following the mutiny of a small
group led by junior officers which rapidly turned into an improvised coup d’état. The crisis resulted
in the weakening, and even collapse, of institutions and central government's capacity to provide
the population with essential services, as well as in the deterioration of the population's living
conditions, performance of the economy, infrastructure, governance and the business climate. The
political class discomfited itself by indulging in the pro and anti-putsch manoeuvres and rhetoric
and thus demonstrated its inability to depart from elitist and opportunistic rivalries to meaningfully
contribute to the quest for solutions commensurate with the challenges facing the country. The
efforts made both by the International Community and by regional institutions led to the retreat
and dispersal of the putchists and the formation of a Transitional Government. Following the
announced retreat of the putchists and the resignation of President Ahmed Toumani Touré, the
Constitutional Court certified the power vacuum and mandated the President of the National
Assembly, Mr. Dioncounda Traoré, to lead the transition period as from April 2012.
2. It was against this backdrop of transition and following the resumption of operations by
the Bank in October 2012, that the Bank fielded a mission of high-level experts to Mali in
November 2012 “to take stock of the Bank's portfolio in Mali and make proposals for its
restructuring”. On that occasion, the Bank agreed with Mali on an operations programme that
would allow it to support the transition process and, in particular, “contribute to strengthening the
resilience of the most vulnerable segments of the population, entrench the rule of law and lay the
foundations for a robust economic recovery to accompany the transition, pull Mali out of the crisis
and hence prevent or curb the spill-over of this situation to all the countries of the Sahel and
Saharan sub-region (ECOWAS and WAEMU)”. Mali's development partners established that the
crisis had not affected the macroeconomic fundamentals. However, its nature, scale and potential
threat to the entire sub-region suggests that Malians and the International Community should
endeavour to determine the root causes of an apparently sudden and brutal security, political and
institutional crisis in a country and institutions hitherto cited as an example of democracy and
stability. The disintegration of State institutions within a two-month period highlighted Mali's
degree of fragility and led Malians and external observers to reflect not only on external factors of
fragility, but also on internal factors specific to Mali.
Mali's Factors of Fragility
3. Even though many were shocked by the collapse of institutions in Mali in the wake of the
2012 coup d’état, it did not surprise many Malian citizens and other analysts who had long sensed
the growing frustration and tension related to poverty, inequality, corruption and sectarian
divisions. The challenge to the State's legitimacy clearly shows that the signs of democratic order
or economic growth masked uncertainty, which is often the major underlying problem facing the
authorities every day. Mali's factors of fragility may be grouped into 4 broad categories:
XV
I. Geographic and Demographic Environment
4. Mali is a country with an ancient civilization, whose geographical space is split between
the Sahel/Sahara, savannah and forest areas. The country suffers from vulnerability inherited from
balkanization, a hostile isoclimatic environment that is struggling to achieve sustainable economic
development that would contain endemic poverty. A vast Sahel-Saharan country (second only to
Niger in terms of size among its 7 neighbours), it is characterized by a desert area over 2/3 of its
territory and is landlocked within West Africa. These vast expanses located in the North of the
country are inhabited by various human groups (Songhaï, Fulani, Bella, Tamasheq, Arabs and
Moors). It is a region with no natural resources and its naturally weak nomadic pastoral economy
is subjected to severe climatic conditions. The country's relief is fairly flat. The very vast alluvial
plains are, however, dominated by some limestone and sandstone plateaux. The country has three
climatic zones: desert in the north (with less than 127 mm of water per year) through the forest
zone in the south (up to 1400 mm) to the Sahel zone in the centre (where rainfall varies between
200 and 550 mm). The cycle of droughts that hit the Sahel in the 1970s and 1980s deeply affected
the North of Mali, gradually eroded the population's living conditions and made the socioeconomic
system even more vulnerable. The region's marginalisation was exacerbated as a result as the
Government also acknowledged during the National Pact negotiations.
5. Mali's population has quadrupled since independence, despite high emigration, from 3.5
million in 1960 to 14.5 million in 2009. Population density, which is highly variable, ranges from
90 inhabitants/km² in the Central Niger Delta to fewer than 5 inhabitants/km² in the Saharan region
of the North. The population is, therefore, concentrated in the southern part of the country, while
the three northern regions (Gao, Timbuktu and Kidal) only account for 9% of the total population.
Overall, Mali's population is very young with the under-25 representing 65%. Furthermore,
children (especially girls) and women remain vulnerable as a result of violence (early marriage,
genital mutilation, fattening, etc.) against them. Rapid urbanisation drove the urban population (in
the administrative sense) up from 22% in 1987 to 27% in 1998 then to 35% in 2009, without the
urbanisation being triggered by growing industrialization. According to an economic survey
carried out in 2008, Mali suffers an annual loss in well-being and income equivalent to about 20%
of its GDP, i.e. over CFAF 680 billion (or almost USD 1.3 billion), caused by environmental
degradation and the inefficient use of natural resources and energy.
6. Drought: Drought causes a sharp reduction in cereal production and an increase in cereal
prices, a shortage of cattle fodder and environmental degradation, which is responsible for the
displacement of communities and the deepening of chronic poverty, further exacerbated by the
conflict/crisis. According to the United Nations Office for the Coordination of Humanitarian
Affairs (OCHA), a serious food and nutrition crisis is threatening the Sahel region, while over 10
million people are already affected by food insecurity and over a million exposed to acute
malnutrition. Five of the six countries in the region (Burkina Faso, Chad, Mali, Mauritania and
Niger) are concerned, with almost 800,000 farmers and stockbreeders vulnerable, experiencing a
series of recurring food crises. According to estimates, at least 15 million people are threatened by
food insecurity in the Sahel region.
Causes of Environmental Degradation
7. Mali's environmental governance performance is weak, which rank's the country in 156th
position out of 163 countries ranked (EPI Index, 2010). Population pressure on scarce arable land
in a fragile ecosystem is the most important factor, which accelerates environmental degradation
in Mali. The relatively high population growth rate in Mali occurs within an already fragile
biophysical and socioeconomic environment characterized by irregular and insufficient rainfall as
well as drought. There is only sufficient rainfall for rain-fed crops (estimated at over 600 mm per
year) in about 25% of Mali's total surface area, chiefly in the Sudano-savannah agro-climatic zone.
XVI
Moreover, arable land only represents one-third of the country's total area (1.24 million km2). In
light of these constraints, the unregulated interaction between population growth, the fragility of
the ecosystem and irregularity of rainfall have created serious environmental problems with
economic and social consequences for the rural poor, in particular women. The main
environmental problems are the degradation of land (agricultural land, forests and river shores),
surface and groundwater pollution, dwindling biodiversity, loss of archaeological and cultural
property, air pollution and drought.
8. Alongside this population pressure, other factors causing degradation include the lack of
economic alternatives, particularly for the agricultural and rural communities, the widespread lack
of environmental outreach, limited institutional capacity to ensure compliance with existing
regulations, no comprehensive policy on land use with land tenure rights and clearly defined
macroeconomic policies and the absence of general institutional standards. The lack of alternative
economic activities has resulted, among other things, in greater dependency on, and
overexploitation of, agricultural land. On the macroeconomic front, the loss of traditional livestock
export markets due to weaker international competitiveness, firewood pricing policies and an
inefficient forestry taxation system have indirectly contributed to the growing environmental
problem.
9. Even though some of the causes of land degradation are beyond human control, others,
such as the declining soil fertility, erosion or bush fires, are not. The main variables which cause
land degradation are determined by human behaviour in relation to the environment. This includes,
in particular, the reduction of fallow periods, inappropriate agricultural practices, overgrazing of
pasturelands, deforestation and use of firewood. Most of these variables have deeply rooted
institutional, legal, economic and social causes, which have resulted in environmental degradation.
10. In order to address this environmental problem, Mali and its development partners must
identify the main factors influencing degradation and develop strategies to: (a) stop the present
rate of degradation, (b) prevent future environmental deterioration, and (c) restore a functional
natural environment. These strategies will entail the preparation of coherent population growth
policies, the promotion of more efficient public resource management, training and increased
environmental awareness raising and stronger participation of community associations. The key
components of these strategies could, among other things, be local capacity building, i.e. for
community associations to encourage greater grassroots participation, appropriate incentive
measures and the revision and implementation of land ownership.
II. Structural Factors of the Economy
11. Mali's political and economic structures were built on the basis of models inherited from
the French colonial administration, which were not always designed for the benefit of the Malian
people. Until 2011, i.e. prior to the 2012 crisis, all the country's economic indicators were still
strong due to stable growth averaging 5.7% since 2005 and a sustainable budget deficit. Even
though this economy was one of the best performing economies in the WAEMU sub-region – due
to the fact that it is mostly based on activities carried out in the southern part of the country, under
government control, and where abundant rainfall stimulates the production of cotton and other
agricultural products, and where gold mining continues to grow – and has demonstrated its
resilience to environmental, security and political crises, the country remains one of the poorest in
the sub-region and its fragility cannot be ignored. With a projected population of 30 million by
2030, the country could be stifled by its very rapid population growth. Since under-15 youths
represent almost half the population, it is to be feared that a flood of young people will enter the
already sluggish labour market, which will have to deal with almost 300,000 additional jobseekers
per year by 2030. However, education and training, which are essential for such an inflow require
significant budget efforts which the country is unable to meet. The country is also faced with a
XVII
type of unbridled urbanisation – it is estimated that Bamako will have 5 million inhabitants by
2030 – which exerts stronger pressure on the public authorities that are experiencing great
difficulty in keeping up with the movement in terms of appropriate infrastructure, especially
sanitation, water and transport. If these difficulties are compounded by the recurrent problems of
insecurity with, as consequence, rising urban poverty and youth unemployment, it is possible that
the country will experience great difficulty in reducing its dependency on multilateral and bilateral
aid which limits government's ability to take initiatives as it represents one-quarter of the general
government budget and about 4/5 of public investments.
12. Agriculture, which remains largely family-type, employs almost 2/3 of the labour force,
while the country only cultivates 3.2 million hectares, i.e. thirteen times less than the amount of
arable land identified. Therefore, it is important to prioritize investments in more intensive and
rational use of water resources.
13. Mali's medium-term mining prospects are not bright. Almost all the companies mining
gold - the main source of export earnings – are of foreign origin. The contribution of the private
sector, in general, and the industrial sector, in particular, to GDP formation is low and the economy
is dominated by the informal sector. Unemployment tends to be structural and rural under-
employment is widespread. Rising urban unemployment and precarious informal activities are the
salient features of the employment landscape. The private and public formal sector only employs
6% of the labour force. Women are under-represented in the formal sector and socio-professional
categories which require a certain level of training and qualification.
III. Political Agreements and Governance
14. Mali, like most African countries, has experienced a long period of authoritarian regimes
and/or military dictatorships. However, unlike many of these countries, Mali's transition to a full
multiparty system and democracy has been atypical: the surge of social movements demanding the
establishment of multiparty democracy was brutal and claimed the lives of thousands of Malians.
This process was, moreover, accompanied by a group of officers considered as “soldiers of
democracy” who overthrew the existing regime (March 1991). This upheaval led to the holding
(in July – August 1991) of a Sovereign National Conference, which served as framework for
serious discussion between the elite and all society actors on the new policy, economic and social
directions of the future Mali. Unlike other countries, where the democratization experience was
called into question, Mali was able to stay the course (for 20 years) and continue to strengthen
democratic governance, in particular, normalization of the multiparty system underpinned by a
peaceful and credible electoral process, respect for political freedoms, etc. (even though the
participation of Malian citizens in elections has not been strong: in the last five Presidential
elections in the country's democratic history, the 40% turnout threshold was only reached or
exceeded once at the last presidential elections).
15. Analyses of Tuareg grievances indicate that the central government in Bamako has
generally failed to address these grievances in the North of the country. These communities
consider that they have not benefited from the distribution of the country's wealth and the dividends
of growth over the years, automatically creating tension. Many other signs of potential problems
could range from low political participation rates as mentioned above, especially in elections to
widespread corruption of the authorities. In recent years, Bamako has been identified by
international police sources as an increasingly important transit hub in the international drug trade
with high level complicity within the government.
16. On the social front, according to the most recently available assessments (2010 data),
Mali lags considerably in relation to the cut-off date for the achievement of the MDGs (2015), and
the challenges are considered “immense” especially in the areas of health and development
XVIII
financing, as well as recurring vulnerabilities linked to the environment, the structural fragility of
the economy and new governance and security-related challenges. With regard to health care
coverage, the high population growth rate has prevented any significant increase in the proportion
of the population with access to health care facilities despite the strides made at this level.
Significant progress has been made in the area of regional development: opening up of towns and
agricultural areas, improved access to drinking water and electricity, housing programmes with
40% of the houses allocated to women. It is considered that 76% of the road network is reliable.
IV. Security Factors
17. The security situation continues to remain a major concern in Mali, where sporadic attacks
by armed groups on the UN peacekeeping forces have already resulted in over twenty fatalities
since the start of Mission in Mali in July 2013. The security challenge, which particularly concerns
the North of Mali, is rooted in the country's colonial management. Indeed, in the wake of
independence, Mali was faced with constraints and recurring vulnerabilities stemming from the
balkanization which most African countries inherited. The border line between Mali and
Mauritania for example, has changed several times. The situation in Northern Mali reflects this
reality experienced by most African States and where borders delimit territorial spaces shared by
diverse ethno-cultural communities whose often conflictual historical social relationships had not
evolved sufficiently to the point of creating a homogeneous group in terms of identity or attained
a level of cohesion that might characterize a strong State and pluralistic nation.
18. It was noted that under the reign of the different empires, and especially under
colonization, some of these communities, the Tuaregs of Kidal region, in particular, enjoyed
special administrative status which protected their specificities, integrated their identity as a
parameter of legitimacy and the basis of their mode of social organisation. This situation of
selective autonomy in favour of several ethno-cultural groups sowed the seeds of a difficult
national integration and constituted a threat to Mali's social cohesion following independence.
19. From a military and security standpoint, the disorder in the defence and security forces is
not only the result of the Libyan crisis, contrary to some arguments. The state of FAMA (weakness,
lack of professionalism) as revealed by the 2012 crisis is perceived as the result of increasingly
poor governance in recent years, a period which a large segment of public opinion considers to
have been marked by unprecedented laxity in the management of the State. Despite the undeniable
and significant impact of the Libyan crisis on the rise of armed movements in Mali, this crisis was
certainly more of an accelerator than a factor of a relatively programmed collapse of an army that,
according to several observers, lacked a political and military strategy. Mention could also be made
of the absence of the rule of law, which is the result of poor management of a very large expanse
of land, as is the case with Mali.
XIX
V. Sub-Regional Aspect of the Fragility
20. Mali is at the centre of a geopolitical entity whose boundaries vary according to the
challenges of the moment. The Sahel/Sahara space was, until recently, known rather for its austere
climate and its impact on the ecosystem and inhabitants of the region, following years of severe
drought. This Sahelo-Saharan space has, for a few years, been described as the centre of all
trafficking, organised cross-border crime, the crossing point of large multinational mafias and
terrorist movements, as well as growing insecurity. The above Sahelo-Saharan space associated
with cross-border crime is said to include Chad and even Cameroon (northern part of the country),
in addition to Mali, Niger, Mauritania and Algeria (southern part of the country).
21. The crises that shook Northern Mali impacted or affected its neighbours to various
degrees. Within this context, it can be noted that two neighbouring countries in particular, Algeria
and Libya, have played (or are still playing) a key role in resolving the crises that have marked the
history of Mali to the point where some analysts do not hesitate to say that Libya, for example, "is
capable of influencing the beginning and end of irregular armed initiatives, including the Tuareg
uprisings in Northern Mali and Northern Niger." In this respect, it could be noted that Libya had
instituted the practice of welcoming fighters on its territory and "integrating" Malian and Niger
Tuaregs into its defence and security forces, and even making them special units. The massive
arrival of heavily armed fighters from Libya in Malian territory in 2012 is an example, even if it
has not been established that Libya condoned or gave material support to these rebellions.
22. It is generally accepted that the instability in Mali, Niger and Mauritania stems mainly
from the Maghreb area. The vulnerability of these countries (level of overall poverty, porous nature
of their borders, lack of technical capacity and/or incompetence or corruption of their intelligence
services, noticeable laxity in the command chain of their armies, etc.) is often considered as
conducive to the development or worsening of cross-border organised crime. At one time, the
tolerance of armed groups (increase in the number of hostages on the Malian territory with ransom
payments) or the impunity they seemed to enjoy made some neighbouring States and some partners
in Mali "suspect a non-aggression pact between Malian and terrorist forces”. Mali alone has the
three vectors of violence in the region, which shows and supports the idea that its institutions are
fragile: the country serves as a base for terrorism; it is a vital transit point for smuggling; and it is
the centre of Arab and Tuareg minority identity grievances. It is also mainly in Mali that security
cooperation initiatives materialize, particularly with France and USA.
23. At the humanitarian level, the countries in the sub-region are suffering from the
consequences of the Malian and Libyan crises, with the massive arrival of refugees on their
territories. It is encouraging to note that the Malian crisis triggered a strong reaction that, for the
first time, witnessed the general mobilisation of stakeholders (Governments, sub-regional
organisations, international community, and development partners) and, in principle, tackled the
root causes of the problems revealed by the crisis.
VI. Conclusion
24. The fragility factors identified and developed in this report outline the development
challenges facing Mali and which should guide the operations of TFPs in the country. This report
aims to strengthen Bank interventions in the country which seek to address some key aspects of
fragility in Mali.
XX
Annex 5:
Matrix of Fragility Factors
Fragility Factors
Identified through
Fragility Assessment
Situation, Challenges and Resilience Measures Supported by the Government’s
General Policy Backed by Technical and Financial Partners (TFPs)
Measures Supported by
AfDB Intervention under
PARGE (2016-2020)
Political,
institutional and
security factors
1. Legitimate Policies and Governance Policy (Legitimacy, Inclusiveness, State-Building and Trust in State
Institutions)
After two decades of relative stability marked by successful changeovers at the helm of
State, Mali, from the early 2012, experienced one of its most serious crises since gaining
independence in 1960. An armed rebellion, coupled with a jihadist invasion and
compounded by a coup d’état on 22 March 2012, plunged the country into an
unprecedented political, social, institutional, security and economic crisis situation. For the
first time, Mali’s territorial integrity was threatened, calling into question Mali’s internal
capacity to address innumerable challenges, including, first and foremost, to ensure the
physical security of persons and property. Concerned with the need to promote peace and
security and ensure Mali’s territorial integrity, the transition Government and some armed
groups, on 18 June 2013, signed an agreement as a prelude to presidential elections and
inclusive peace talks in Mali (the Ouagadougou Agreement). This triggered the post-crisis
process and laid the foundations for the organisation of presidential elections throughout
the country in a peaceful atmosphere. The proper conduct of presidential and legislative
elections in July/August 2013 and November/December 2013 respectively enabled the
return to normal constitutional life. Politically, efforts have been made by all the vital
forces of the nation towards negotiating a more or less consensual peace. From
Ouagadougou to Algiers, the stakeholders agreed to negotiate an agreement which was
supposed to put an end to the conflict. This agreement, finalised in June 2015 by all the
national parties, is the basis for the revival of all aspects of national life despite the fragility
regularly noticed in the north of the country and sporadically in the rest of the country.
PARGE seeks to support the
Government’s efforts to
consolidate the institutions of
the Republic weakened by the
22 March 2012 coup d’état and
the resurgence of jihadist
attacks. PARGE also seeks to
support Government action to
accelerate fiscal
decentralisation in order to
empower local governance and
improve citizen participation in
the regions.
2. Security and Violence Issues, and Capacity and Performance of the Security Sector
The rekindled hope notwithstanding, it should be acknowledged that the complete
end of insecurity is illusive. While, for several months, the Government, MINUSMA
and the signatory parties have made efforts to end fighting, jihadist forces have since
enhanced their vigour and capacity to wreak havoc. Attacks, ambushes, mine
explosions and mortar fires are perpetuated right up to the capital city. Even the
heavily armed MINUSMA camps are attacked by the emboldened terrorists. Inter-
community tensions caused by land-related disputes and theft of livestock, and
clashes have also resulted in many deaths and casualties, and show the fragility of the
social fabric. It should be underscored that the delay in the implementation of the
provisions of the Algiers Agreement explains the hesitation by the population of some
localities to turn a deaf ear to the views expressed by jihadists and their continued
refusal to cooperate in exterminating them. All these actions by the Malian
stakeholders and the international community augur well for the restoration and
consolidation of peace and security throughout the Malian national territory.
PARSEP-NM does not directly
address specific security sector-
related issues, but will support
Government’s initiatives in the
regions affected by insecurity
through management contracts
signed under the programme in
the regions of Timbuktu,
Kidal, Goa and Mopti.
3. The Justice Sector (Inclusive Access to Justice, Rule of Law and Independence of the Justice System, and
Check-and-Balance Mechanisms)
Mali has a relatively structured judicial system comprising 1 Supreme Court, 3 courts
of appeal, 16 courts of first instance, 3 commercial courts, 3 administrative courts, 42
courts of first instance with extensive jurisdiction, 11 labour courts, 8 juvenile courts
and 3 military courts. However, beyond this organisational nomenclature, some of
these courts are not functional or, when functional, do not have sufficient skilled
human resources to meet the expectations of Malian litigants. Despite the efforts
made by the Government to upgrade and beef up the staff, the judge-to-inhabitant
ratio is way below international standards, given that Mali has only one magistrate
per 7 000 inhabitants. This staff gap, coupled with precarious physical conditions of
work, greatly contributes to rendering procedures cumbersome and lengthy and,
hence, arousing the population’s mistrust of the institution. As a result of Malians’
mistrust of the judicial system and its restrictive access, it is one of the institutions to
which the populations hardly have recourse in the event of conflict.
PARSEP-NM will not directly
address any specific measures
in the justice sector. However,
it will indirectly contribute to
the sector through its impacts
and directly address the issue of
community justice by
improving fiscal
decentralisation which the
programme plans to support as
part of the economic
management programme.
PARGE supervision missions
will establish the necessary
linkages, in accordance with
Bank advocacy under the
SAFBR.
XXI
Economic and
financial factors
4. Strengthening the Economic Base and the Resilience of the Population (Equitable Access to Facilities and
Natural Resource Benefits)
In spite of economic recovery in the country, economic activities and natural
resources are largely concentrated in the south. It is therefore possible for the
projected growth trajectory to have limited impact on the northern regions which are
most affected by conflicts. Agriculture and industry respectively account for 36.8%
and 23.4% of Mali’s GDP. The main crops grown are cotton, millet and rice.
Industrial production mainly comprises gold in the form of raw material. The growth
of the industrial sectors of agriculture and gold mining can only benefit the north
through reinvestment of increasing State revenue in these regions. In addition, the
north should benefit from the return of aid flows and the activities of international,
humanitarian and nongovernmental organisations. However, these two sources of
secondary benefits do not directly address the main grievances of the population of
the north, namely: lack of economic opportunities and high unemployment rate.
PARSEP-NM will directly
contribute to reducing the
factors of economic and
financial fragility through the
implementation of Component
1 of the programme to generate
positive spill-over impacts in
terms of improving economic
and financial management
governance. Through the
“Improving Public
Procurement” and
“Strengthening the Role and
Efficiency of Internal
Control” thrusts, the country
could generate the additional
resources required to directly
finance infrastructure
construction, reduce the
country’s debt and ensure its
debt sustainability.
PARGE will also provide
support for priority public
investments and the recovery of
the economic activities of the
private sector to sustain growth
and provide the fiscal space
required to ensure inclusive
access to basic services.
Social factors:
poverty and
inequality
4. 5. Increased Resource Mobilisation to Create Employment Opportunities, Generate Income and Ensure
Inclusive Access to Basic Social Services Based on the Crucial Role of the State, Improved Financial
Governance and Appropriate Refocusing of State Functions
Inequalities: in addition to the issue of equity in access to resources and economic
opportunities, the issue of poor quality of delivery of public goods and services, especially
in the areas of justice, education, health and security, was amply raised as one of the
impediments to peace in Mali. The structural weaknesses relating to the delivery of health,
education, security and justice services of acceptable quality and accessible to all
everywhere in Mali provoke among the population a deep feeling of inequality, especially
between the northern and southern regions, and between the regions and the capital
Bamako. Each of these areas believes that the other is given preference with regard to
development financing by the State and technical and financial partners (TFPs),
infrastructure construction and, more generally, the consolidation of the State’s presence.
Public service delivery is highly unequal and insufficient despite the efforts made by the
Government. These structural gaps are both qualitative and quantitative, with great
imbalances between urban areas and rural areas, and between the capital Bamako and the
rest of the country. Trends in poverty indicators vary considerably according to region,
with progress in the western and southern regions, against stagnation and even
deterioration in the north. These inequalities were aggravated by the 2011 food crisis which
negatively and disproportionately affected households. In the north, for example, the
proportion of people living in households that lack food increased by 41% following the
2011 price and production shocks. Although budget expenditure in the education and
health sectors is in line with average spending in the other WAEMU countries, it is still
very unequal and biased. It does not benefit the most underprivileged population segments.
In addition, public spending on social safety nets to support the poor is still very low and
not always well targeted (a significant part of these resources does not reach the poorest
households).
Through its impacts, PARGE will
support poverty alleviation and
the reduction of gender
inequalities. It will also directly
support the equitable delivery of
basic social services using the
resources generated as a result of
efficient public finance and
expenditure, but especially by
mobilising domestic resources
and improving the business
climate.
Challenges Related to the Regulation of Competition for Resources and
Socioeconomic Opportunities: tensions are rife around access to natural resources
and economic opportunities, irrespective of regions and their respective
socioeconomic structures. Such tensions lead notably to strained intra-community
and inter-community cohabitation relationships and the erosion of trust in the
institutions.
XXII
Annex 6
NOTE ON RELATIONS WITH THE INTERNATIONAL MONETARY FUND (IMF)
IMF Staff Completes Review Mission to Mali
September 28, 2016
This favourable outlook is, however, subject to downside risks stemming mainly
from Mali’s fragile security situation.
New draft budget provides for resources to help finance the authorities Sustainable
Development Fund and incorporates higher public investment, including on the
implementation of the 2015 peace agreement.
A team from the International Monetary Fund (IMF), led by Lisandro Abrego, held discussions
with the Malian authorities in Washington DC from September 14–23 2016 and Bamako, Mali,
September 27−28 2016 on the sixth review of Mali’s economic and financial program supported
by the IMF under the Extended Credit Facility (ECF).
At the conclusion of the discussions, Mr. Abrego issued the following statement:
“Mali’s economy continues to grow at a strong pace, with a projected GDP growth of 5.4 percent
for 2016. Activity is being supported both by public capital spending and the regional central
bank’s (BCEAO) accommodative policy. Inflation is falling and is projected to decline to 0.5
percent by end-December. For 2017, GDP growth is projected to remain robust at 5.3 percent,
while inflation is expected to remain contained at 1 percent. This favourable outlook is, however,
subject to downside risks stemming mainly from Mali’s fragile security situation.
“The mission welcomes continued progress on program implementation. All quantitative targets
for June 2016 were met and structural reforms have continued to advance in most areas. The 2016
budget provides for a temporary loosening of the fiscal stance to accommodate higher public
investment and peace-related and security needs. Although public investment increased in the first
half of the year, the fiscal deficit was below target. While progress on tax administration and public
financial management (PFM) reforms has continued, the implementation of reforms to foster good
governance has been slower than envisaged, particularly regarding legislation to combat
corruption and unlawful enrichment.
“The mission welcomes the draft 2017 budget law, which targets further increases in tax revenues
and an overall fiscal deficit of about 4 percent of GDP. The budget provides for resources to help
finance the Sustainable Development Fund—for which the authorities plan to identify additional
financing sources—and incorporates higher public investment, including to implement the 2015
peace agreement. The program’s structural component includes measures to support revenue
mobilisation and strengthen PFM and governance, as well as other measures to support sustainable
long-run economic growth and poverty reduction.
“On this basis, the Fund mission and the authorities reached preliminary agreement on the main
elements of the 2017 economic program and the completion of the sixth ECF review. The IMF
Executive Board is tentatively scheduled to consider the program review in December 2016.
“The mission met with Prime Minister, Modibo Keita; Minister of Economy and Finance, Boubou
Cissé; National Director of the Central Bank of West African States, Konzo Traoré; and other
senior government officials. The mission also held discussions with the donor community and
private sector representatives.
“The mission thanks the authorities for their warm hospitality, and their excellent cooperation and
constructive dialogue.”