IMF Staff and Nigerien Authorities have reached an agreement at the staff level on the fourth and fifth reviews of Niger's economic program under the Extended Credit Facility (ECF) and the first review under the Resilience and Sustainability Facility (RSF); The economic outlook is promising over the near and medium term, with growth projected at 10.6 percent this year, driven by oil exports and the lifting of sanctions. But this positive outlook is subject to downside risks, in particular those linked to the security situation and vulnerabilities to climate shocks; Measures to enhance domestic revenue mobilization are crucial to increase fiscal space for priority social and security spending. In that context, the authorities’ ongoing efforts to simplify the tax system and adopt an oil revenue management strategy aiming at insulating the budget from fluctuations in international oil prices are key reforms.

An International Monetary Fund (IMF) staff team led by Mr. Antonio David held meetings from May 20 to June 1, 2024, on the fourth and fifth reviews of the arrangement with Niger supported by the Extended Credit Facility (ECF) and the first review of the arrangement under the Resilience and Sustainability Facility (RSF).

At the end of the mission, Mr. David issued the following statement:

“The Nigerien authorities and the IMF team reached a staff-level agreement on the fourth and fifth reviews of Niger’s economic program under the Extended Credit Facility and on the first review of the arrangement under the Resilience and Sustainability Facility. The staff-level agreement is subject to IMF Management and Executive Board approval. The Board meeting is expected to take place in July 2024. The ECF reviews’ completion would allow the disbursement of SDR 19.7 million (about US$ 26.1 million, or 15 percent of Niger’s quota) to cover external financing needs. In turn, completion of the first review of the RSF would allow for the disbursement of SDR 34.2 million (about US$ 45.3 million, or 26 percent of Niger’s quota).

“Growth is estimated to have decelerated to 2.4 percent in 2023, mainly because of the effects of sanctions and a relatively unfavorable agriculture season. The economic outlook is promising over the near and medium term, despite the uncertainty over the economic effects of the decision to leave ECOWAS. Real GDP growth is projected at 10.6 percent in 2024 due to the start of oil exports and ensuing spillover effects across the economy, the lifting of sanctions, as well as increased production in the agricultural sector. The last two factors should also help to contain inflationary pressures in 2024. Nevertheless, this positive outlook is subject to downside risks, in particular those linked to the security situation and vulnerabilities to climate shocks.

“The fiscal deficit outturn for 2023, at 5.4 percent of GDP, was marginally higher than programmed in part due to revenue shortfalls. Going forward, the deficit trajectory is calibrated to adhere to the authorities’ commitment to reach the WAEMU regional convergence criterion of 3 percent GDP by 2025. As a result of the sanctions imposed after the military takeover, Niger incurred external and domestic debt service arrears. The Nigerien authorities are pursuing commendable efforts to fully clear these overdue obligations.

“The arrangement under the Extended Credit Facility aims to reinforce macroeconomic stability and lay the foundations for resilient, inclusive, and private sector-led growth. Program performance was mixed. Most quantitative objectives at end-June, end-December 2023, and end-March 2024 were met, despite the difficult context faced by Niger last year. But some structural benchmarks under the program were not met, while others were implemented with delays.

“Measures to enhance domestic revenue mobilization are crucial to increase fiscal space for priority social and security spending. In that context, the authorities’ ongoing efforts to simplify the tax system, promote the digitalization of revenue administration, and adopt an oil revenue management strategy aiming at insulating the budget from fluctuations in international oil prices are key reforms. In addition, boosting the quality and efficiency of government spending is needed to improve the delivery of public services.

“The Nigerien authorities are cognizant that private sector development is vital to expedite and sustain the economic recovery and are pursuing efforts to enhance the investment climate. The authorities have restructured the country’s anti-corruption institutional framework with the creation of the Commission against Economic, Financial and Fiscal Crimes (CoLDEFF). The authorities should continue to make progress on the governance agenda, including by strengthening the Anti-Money Laundering and Combating the Financing of Terrorism framework.

“RSF financing supports efforts to advance reforms and investments to address rising risks and challenges associated with climate change, thereby building resilience and safeguarding livelihoods. The Nigerien authorities made significant progress in implementing reforms aiming at enhancing the management of risks linked to natural disasters (including fiscal risks) as well as promoting renewable energy sources.

“The mission met his Excellency Prime Minister and Minister of the Economy and Finance, Mr. Ali Mahamane Lamine Zeine and Minister of Foreign Affairs, Cooperation, and Nigeriens Abroad, Mr. Bakary Yaou Sangare. The mission also held working sessions with the Deputy Minister of the Economy and Finance, Mr. Moumouni Boubacar Saidou, the National Director of the BCEAO, Mr. Maman Laouali Abdou Rafa, as well as other senior government officials, private sector representatives, and development partners.

“The team would like to thank the authorities for their cooperation, and for the constructive and productive discussions.”