The Executive Board of the International Monetary Fund (IMF) approved a disbursement of SDR146.668 million (about US$200.4 million, 78.6 percent of quota) under the Rapid Credit Facility (RCF) to help address Mali’s urgent balance-of-payments and fiscal needs amid rapidly evolving pandemic. This follows the recent approval of debt service relief to the IMF in the next 6 months under the Catastrophe Containment Relief Trust (CCRT) of about US$10 million.
The COVID-19 shock hit the economy hard amid an already challenging social and security situation. The economic outlook has deteriorated significantly, and growth is expected to slow to below 1 percent, increasing already high unemployment and poverty. The authorities responded quickly with measures to contain the spread of the virus and to mitigate its social and economic impact. These emergency measures, along with the economic slowdown, will increase the fiscal deficit and the country’s financing needs. If unaddressed, these financing needs will impinge on much needed developmental and social spending.
Following the Executive Board’s discussion on Mali, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, issued the following statement:
“The COVID-19 pandemic is having a large adverse impact on Mali’s economic growth and public health, adding to the existing security challenges. The decline in economic activity, spillovers from global trade and financing shocks, along with fiscal measures to combat the crisis have created an urgent balance-of-payments and fiscal financing needs“.
“The authorities have responded quickly to the pandemic with containment measures, stepped up healthcare response, and emergency measures to support households and business affected by the outbreak. The regional central bank responded with measures to support liquidity in the banking system.
“The crisis and the policy response will lead to a temporary widening of the fiscal deficit. The authorities are taking measures to limit fiscal pressures through reprioritization of spending plans, but large additional financing will be needed to preserve macroeconomic stability and development gains.
“The emergency financing under the IMF’s Rapid Credit Facility, following the recent approval of debt service relief under the Fund’s CCRT, will support the authorities’ response to the crisis, but additional support from the international donor community will be needed to mitigate its social and economic effects. The authorities’ commitment to high standards of transparency and governance in the management of donors’ financial assistance is welcome.
“Once the crisis abates, a gradual return to the reform path under the ECF-supported program would be critical to preserving debt sustainability and achieving strong and inclusive growth. ”