International Monetary Fund (Washington, DC)

Mali at the Dawn of the New Year: From Crisis to Recovery

(Page 4 of 5)

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At the same time, it is crucial to embark on reforms to improve governance and public financial management.

Allow me to be frank: improving governance means addressing corruption. Malians themselves know best that corruption poses a threat to democracy, and undermines the rule of law. It discourages investment by hindering the development of fair market structures, and by distorting competition. And it frays the social fabric and undermines trust in the political system and government institutions.

That is why President Keita's call to make the fight against corruption a priority has received widespread popular support. Stronger institutions and improved governance will contribute to an environment where everyone can benefit.

In this context, persevering with reforms of public financial management is key. These reforms should help to tighten expenditure control; and reassure international donors about Mali's capacity to manage aid inflows, without jeopardizing hard-won gains in debt sustainability.
Mali has also benefited from debt relief granted under initiatives supported by the international community. Continuing to rely primarily on grants and concessional financing to support development projects will be crucial in preserving the fiscal space that has been created.

3.2 Unlocking Mali's Economic Potential—Private Sector Investment

So these are some priority issues for the public sector. What about the second "P"—the private sector? It also has a key role to play in unleashing Mali's potential.

But the right conditions need to be in place for the private sector to assume the role of the engine of growth. This will require an improvement in the business environment.

In the IMF's experience, financial sector development and increased access to financial services can be a critical factor in promoting private sector expansion and the economy's progress. By providing a larger pool of funding and more diverse products, financial development fosters private sector growth and can help meet infrastructure needs.

Let me give you one example that struck me. In Mali, only about 10 percent of the population has a bank account. If banks collected more deposits, they would have more stable resources to provide credit to the economy.

And if contract enforcement were stronger, banks would be more willing to provide credit. A more developed land titling system could also offer greater opportunity to use land as collateral for financing the development of agriculture.

These and other steps toward financial inclusion will not only improve the business environment but also the overall economic environment from which everyone will benefit.

3.3 Unlocking Mali's Economic Potential—Participation of All

This brings me to my last "P"—participation of all.

I am reminded here of a saying by Albert Einstein: "All that is valuable in human society depends upon the opportunity for development accorded the individual."

We need to ensure that overall growth is more equitable and inclusive; that everyone gets to participate in the benefits of growth.

The IMF's global experience indicates that a more balanced distribution of income generates more sustained growth and greater economic stability. So while Mali's agricultural expansion over the past few years has helped lift the incomes of many rural households, urban incomes seem to have lagged. Going forward, the benefits of economic growth need to be more broadly shared.

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