The improvement in Mali's neighborhood-within the West African Economic and Monetary Union-is particularly significant, with Cote d'Ivoire working hard to recover the ground lost after years of civil strife.
Mali benefits directly from improvement in the security situation in Cote d'Ivoire, as much of its trade moves through Abidjan. In addition, encouraged by the restoration of political stability and security and by the good performance of the government's policies supported by two loans totaling $33.8 million under the IMF's Rapid Credit Facility in January and June 2013, donors have pledged $4.4 billion in support of Mali's nascent recovery.
Progress against poverty
Mali was also one of the countries in sub-Saharan Africa that made the most progress toward the United Nations' poverty-fighting Millennium Development Goals. Between 2001 and 2011
- Primary school enrolment increased, with 7 out of every 10 children enrolled compared with 4 out of 10 in 2001;
- Literacy rates were doubled for both youth males and females;
- Child mortality was almost halved; and
- Important strides were made in reducing admittedly still high poverty.
Mali's immediate priority is twofold: deal with the legacy of the 2012 crisis, and resume the structural reform agenda that was interrupted by the crisis. Meeting the first objective will require advancing reconciliation between the south and the north of the country, improving governance, and consolidating the nascent recovery.
Besides unlocking access to IMF financial support, Mali's new Extended Credit Facility arrangement will act as a catalyst for mobilizing broader donor support.
Regular IMF program performance reviews should give the necessary reassurance to donors on the quality of domestic economic policies. The expected large donor support should help alleviate the country's fiscal pressures in the near term (see chart).
Three key priorities
Importantly, the loan arrangement will help promote policies that respond to Mali's current challenges. The 2014 fiscal program contributes to macroeconomic stability by keeping expenditures in line with revenues. The composition of public spending reflects the key priorities-national reconciliation, recovery, and poverty reduction.
To accelerate the pace of much-needed public investment, the government will create more room for spending in its budgets. It will do so by: mobilizing tax revenue through reforms of tax policy and tax administration, and a reform of fuel pricing and taxation; and by improving efficiency of spending through public financial management reforms.
The government will also take steps to improve the business environment. Entrepreneurs face one of the world's most challenging business environments in Mali, and improving the business climate thus becomes a priority.
Action areas include: combating corruption; increasing access to finance; and improving the quality of public goods, such as education, transport and irrigation infrastructure, power supply, and the judicial system.
The IMF's partnership with Mali involves more than financial support and policy advice. Mali has been an active user of IMF technical assistance over the years. Most recently, since the improvement in the security situation allowed it, the IMF has intensified technical assistance in public finance, debt management, statistics, and the financial sector.