IMF staff and the Malian authorities have reached a staff-level agreement on emergency financing through the Exogenous Shock Window of the IMF’s Rapid Credit Facility (RCF). IMF staff also completes the 2024 Article IV mission; Mali’s economy has been hit by multiple exogenous shocks recently, including Russia’s war in Ukraine, the Red Sea shipping blockade, and a regional funding squeeze. These shocks contributed to a rise in import costs for essential goods like food, fertilizers, and materials needed to support displaced populations; Consequently, these challenges have strained the state budget, elevated the cost of living, and heightened food insecurity, estimated to affect 24 percent of the population, up from 15 percent a year ago.

An International Monetary Fund (IMF) team, led by Ms. Wenjie Chen, visited Bamako from April 21 to 26, 2024, following high-level discussions with the Malian authorities in Washington D.C. during the Spring Meetings from April 15 to 17, 2024. Discussions focused on the economic outlook, macroeconomic policies and possible responses to the urgent balance of payments (BOP) needs, including the provision of IMF financing through the Exogenous Shock Window of the Rapid Credit Facility.

At the end of the visit, Ms. Chen issued the following statement:

“I am pleased to announce that the IMF team has reached staff-level agreement with Mali on emergency financing through the Exogenous Shock Window of the IMF’s Rapid Credit Facility (RCF). Upon approval by IMF Management and Executive Board, Mali would receive about $US 120 million (or about 0.6 percent of GDP).

“Policy discussions to address Mali’s immediate and urgent BOP gap arising from exogenous shocks centered on the government’s emergency response plan. The potential IMF financial assistance would support the provisions of food and targeted cash transfers to those facing acute food insecurity in central and northern regions. The disbursement would also cover expenditures on education, shelter, non-food items, and access to clean water, health and sanitation facilities.

“The IMF team also held discussions on Mali’s economic outlook and policies as part of the 2024 Article IV consultation. We estimate that Mali’s economy grew by 4.4 percent in 2023, showing resilience amid challenging circumstances and following multiple shocks in recent years. While higher gold and cotton prices boosted exports, heightened security concerns and frequent power outages have weighed negatively on growth. Headline inflation dropped to 2.1 percent in 2023 from 9.7 percent in 2022, but food costs remained elevated and contributed to rising food insecurity.

“The government’s fiscal deficit—estimated at 3.9 percent of GDP in 2023—largely reflects security spending, public wages, and the interest bill. Together, these consume over three quarters of fiscal revenues and risk crowding out growth-friendly spending on the social safety net and investment. The continued absence of external budget support, combined with tighter financing conditions across the West African Economic and Monetary Union (WAEMU), has increased borrowing costs and created a funding squeeze. Mali’s resource mobilization on the regional financial market was below expectations in 2023.

“The near-term outlook is uncertain and subject to substantial downside risks. Real GDP growth is projected to slow to 3.8 percent in 2024, reflecting severe electricity outages, negative effects of the MINUSMA exit on the service sector, lower projected gold production and uncertainty surrounding election delay and the ECOWAS exit, but is projected to increase to 4.4 percent in 2025. Significant downside risks include a continuation of power outages, security concerns, growing financial stability risks amid escalating government financing needs, volatile international commodity prices, tight global financial conditions, and climate vulnerabilities.

“Securing a stable and cost-effective electricity supply is Mali’s number one priority. Converging towards the 3-percent fiscal deficit ceiling of the WAEMU is also important amid tight financing conditions and high borrowing costs. To protect fiscal sustainability, improving domestic revenue mobilization is crucial. Broadening the tax base, reducing costly tax exemptions, and strengthening the revenue and customs administration could all contribute to raising receipts. It is also important to curb increases in the public sector wage bill and address fiscal weaknesses in SOEs on the expenditure side. The mission also emphasized the importance of protecting public investment to maintain medium-term growth prospects, and effective debt management, for debt sustainability.

“In addition, reducing policy uncertainty will help unlock Mali’s medium-term growth potential by creating a more predictable and stable investment climate. Along with strengthening governance and fighting corruption, this will be key to rebuilding confidence and attracting both domestic and foreign investors. Policies to address the effects of climate change also remain important in the long term.  

“The mission thanks the authorities and other counterparts for their close collaboration and productive discussions.”

The team met with the Minister of Economy and Finance, Mr. Alousséni Sanou, the National Director of the BCEAO for Mali, Mr. Barema Bocoum, Directors and staff of the main ministries and government agencies, development partners, and the private sector.