Document of The World Bank FOR OFFICIAL USE ONLY Report No. 37969-ML INTERNATIONALDEVELOPMENTASSOCIATION PROGRAMDOCUMENT FOR A PROPOSED FIRST POVERTY REDUCTION SUPPORTCREDIT (PRSC-1) IN THE AMOUNT OF SDR 30 MILLION (US$45 MILLION EQUIVALENT) TO THE REPUBLICOF MALI February 7,2007 Poverty Reduction and Economic Management 4 CountryManagementUnit Francophone Western 2 Ahca Region This documenthas a restricted distributionand maybe used by recipients only in the performance of their official duties. Its contentsmay not otherwisebe disclosed without World Bank authorization. MALI- GOVERNMENT FISCALYEAR January I -December 31 CURRENCY EQUIVALENTS (ExchangeRate Effective as of August 25,2006) Currency Unit CFAF US$1.OO CFAF 510 Weights and Measures Metric System ABBREVIATIONAND ACRONYMS AAP HIPC ExpenditureTrackingAssessment and Action Plans ADB Asian DevelopmentBank AfDB African Development Bank AFD Agence Fran~aisede Ddveloppement AFRITAC Africa RegionalTechnicalAssistanceCenter (of the IMF) AGETIC Informationand Communication TechnologyAgency (Agence des Technologies de I'Information et de la Communication) ANPE National EmploymentPromotionAgency (Agencenationalepour la promotion de I'emploi) BCEAO Central Bank of (Francophone)West African States BHM Malian Housing Bank (Banque de ['Habitat du Mali) BIM InternationalBank for Mali (BanqueInternationale pour le Mali) BRVM Regional Stock Exchange of francophoneWest Afi-ica(Bourserkgionale des valeurs mobilidres) BSI Special(annual)InvestmentBudget (Budget Special dlInvestissement) CARB Budget reform support unit (Celluled'appui la reforme budgdaire) CARFIP Public Finance ReformSupportUnit (Cellule d 'appuia la reforme des finances publiques) CAS CountryAssistance Strategy CCSJSFD MFI control and supervisionunit (Cellulede contr6le et de suivi des systgmes financiers dkcentralisks) CFAA CountryFinancialAccountabilityAssessment CFAF Franc of the French Communityof Africa CMDT Mali Textile Development Company (CompagnieMaliennepour le Ddveloppement des Textiles) National Center for Promotionof Artisanal Activities (CentreNationale de Promotion de I 'Artisanat) MFI Promotionand SupportUnit (Cellule depromotion et d'appui des systt?mes$nanciers dkceniralisds) CPAR CountryProcurementAssessment Report CPIA CountryPolicy and InstitutionalAssessment CRM Mali Retirement Fund (Caisse de Retraite du Mali) CSCOM Community Health center (Centres de sante communautaire) CSREF Health Referral Center (Centre de santd de rdfdrence) DAF Administrativeand FinancialDepartmentin each Ministry(Division Administrative et FinanciGre) DPC DevelopmentPolicy Credit (the Bank's budget support instrument) DGMP General ProcurementDepartment (Direction Gdnkrale des Marchds Publics) DNR National Roads Department DNTCP National Treasury and Public AccountingDepartment (DirecfionNationale du FOR OFFICIAL USE ONLY Trksoret de la ComptabilitkPublique) DNT National TransportationDepartment DRB RegionalBudget Departments (DirectionRegional du Budget) DSA Debt SustainabilityAnalysis EDM Mali Electricity and Water utility company (Endrgiedu Mali) EMCES Mali Economicand Social Surveyof 1994(EnquEteMalienne de Conjoncture Economique et Sociale) EMEP Poverty Assessment Surveyof 2001 (EnquEteMalienne sur I'Evaluation de la Pauvrete? EPPFMC EconomicPolicyand Public Finance Management Credit(the first DPC) ESW Economicand SectorWork EU EuropeanUnion GDP GrossDomestic Product GNP GrossNational Product GPRSF Growthand PovertyReduction StrategyFramework (the 2"dPRSF) HIPC Heavily Indebted Poor Countries HIVtAIDS Human ImmunodeficiencyVirusIAcquired Immune Deficiency Syndrome IBRD International Bank for Reconstructionand Development IDA International DevelopmentAssociation IFC International Finance Corporation IMF International Monetary Fund rNPS National SecurityAgency (Institut Nationalpour la Prkvoyance Sociale) ISDS Integrated SafeguardsDatasheet JSAN Joint Staff AssessmentNote Km Kilometres LDP Letter of DevelopmentPolicy MAD Customsbonded warehouse(Magasinsous Aire de dkdouanement) MDGs MillenniumDevelopment Goals MDEAF Ministry for Public Domain and Land Affairs (Ministkredes Domaines de I'Etat et des Affaires Foncidres) MDRI Multilateral Debt ReliefInitiative MDS SocialDevelopmentMinistry (Ministdrede Dkveloppement Social) MEN Ministry of Education (Ministgrede I'Education Nationale) MEF Ministry of Economy and Finance MFI Micro-Finance Institution MIC Ministry of Industry and Commerce (Ministgrede I'Industrie et du Commerce) MOH Ministry of Health MTEF Medium-Tern Expenditure Framework (sectors) MTBF Medium-TermBudgetFramework MS Health Ministry (Ministkrede Santk) MSIPC Ministry for Domestic Securityand Civil Protection(Ministgrede la Securitk Intkrieure et de la Protection Civile) NWSP National Water and SanitationProgram OCDE Organization of Economic Cooperationand Development OHADA Organizationto Harmonize BusinessLaw in Africa ON Office du Niger PACR Rural CommunitySupportProject (Projetd 'Appuiaux ComitksRurales) PAGAM Action Plan for Modernizing and StrengtheningPublic Finance Management (Pland 'Action Gouvernementalepour la Modernization et le Renforcement de la Gestiondes Finances Publiques) PASAOP Agricultural and ProducerOrganizationProject (Projetd 'appuiaux services agricoles et aux organisationspaysannes) PCDA Agricultural Competitiveness and DiversificationProject (Projetde compktitivitk et de diversification agricole) PDSF Financial SectorDevelopment Project PEFA Public Expenditure and FinancialAccountability This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. PEMFAR Public Expenditureand Financial Accountability Review PER Public ExpenditureReview PFM Public Finance Management PHRD Japan Policy and Human ResourcesDevelopment Trust Fund PRED Economic ReformProgram for Development (Programme de Rkfome Economiquepour le Dkveloppernent) PRSC Poverty Reduction SupportCredit PRSF Poverty Reduction StrategyFramework PSIA Poverty and Social Impact Analysis PTF Donor group (Partenairesfinanciers et techniques) PTI Triennial Investment Program RWSS Rural Water SupplyAnd Sanitation ROSC Report on the Observanceof Standardsand Codes SA Limited liabilitycompany(Socibti Anonyme) SAC StructuralAdjustmentCredit SAC IV Fourth StructuralAdjustment Credit SDR SpecialDrawing Rights SFD MicrofinanceSystem(Systimesfinanciers d6centralis6s) SGI An investment bankhroker (Sociktk de Gestion d'Interm6diation) TRIE InterstateRoad Transit Facilitation System(Transit Routier Inter-Etat) UEMOA West AfricanEconomic and MonetaryUnion (Union Economique et Monttaire OuestAfiicaine) UNDP United Nations DevelopmentProgramme USAID United StatesAgency for InternationalDevelopment WAEMU West African Economic and MonetaryUnion (a.s.a UEMOA) Vice President: Hartwig Schafer(Acting) CountryDirector: James P. Bond Sector Director: Sudhir Shetty SectorManager: Jacques Morisset (Acting) Task Team Leader: ChristinaA. Wood REPUBLIC OF MALI FIRSTPOVERTYREDUCTIONSUPPORTCREDIT(PRSC-1) TABLEOFCONTENTS 1 . INTRODUCTION ........................................................................................................................................1 2 . COUNTRY CONTEXT ...............................................................................................................................1 RECENTECONOMICDEVELOPMENTSMALI............................................................................................ 3 IN Poverty Dynamics and the MDGs.......................................................................................................... 4 MACROECONOMICOUTLOOK AND DEBT SUSTAINABIL~TY ........................................................................ 6 3. THE GOVERNMENT'S PROGRAM .......................................................................................................8 4. BANK SUPPORTTO THE GOWRNMENT STRATEGY ..............................................................9 LINKTO CAS ............................................................................................................................................. 9 ELATIONS SHIP TO OTHER BANKOPERATIONS .......................................................................................... 10 COLLABORATION THE IMF AND OTHERDONORS WITH .......................................................................... 10 LESSONSLEARNED .................................................................................................................................. 11 ANALYTICALUNDERPINNINGS ................................................................................................................. 11 5. THE PROPOSEDMALI PRSC-1 ........................................................................................................16 OPERATIONDESCRIPTION ..................................................................................................................... 1 6 POLICYAREA............................................................................................................................................ 18 Component 1:Budget framework.poverty reduction strategy. and PFM............................................ 19 1A. Macroeconomicframeworkand public expendituremanagement ........................................................... 19 1B. Procurement.............................................................................................................................................. 22 Component2: Supportto Growth........................................................................................................ 23 2A. Financial Sector........................................................................................................................................ 24 2B. Private Sector Developement ................................................................................................................... 29 2C Transportation and transit facilitation....................................................................................................... . 33 2D.Energy Sector........................................................................................................................................... 38 2E. Cotton Sector............................................................................................................................................ 43 2F.Ofice du Niger Irrigation Zone ................................................................................................................ 47 Component3:Access to Basic Social Services................................................................................... 50 3A. Health and Social Development............................................................................................................... 50 3B. Potable water supplyprogram (outside the EDM area)............................................................................ 55 INDICATIVETRIGGERS PRSC-2......................................................................................................... 57 FOR 6. OPERATION IMPLEMENTATION .......................................................................................................59 POVERTY AND SOCIALIMPACTS ............................................................................................................... 59 IMPLEMENTATION.MONITORING EVALUATION AND .............................................................................. 59 FIDUCIARYASPECTS ................................................................................................................................ 59 DISBURSEMENT AUDITING AND ................................................................................................................60 ENVIRONMENTALASPECTS ...................................................................................................................... 60 NSKS AND RISKMITIGATION ................................................................................................................. 6 1 ANNEXES ANNEX 1:LETTER OF DEVELOPMENT POLICY ......................................................................................... 63 ANNEX 2: EVALUATION OF TRIGGERSFOR THE PRSC-1 ...................................................................... 105 ANNEX 3: MATRIX OF POLICY ACTIONS................................................................................................... 108 ANNEX 4: DONOR HARMONIZATIONPROCESS.................................................................................... 118 ANNEX 5: PUBLICEXPENDITURE AND FINANCIALACCOUNTABILITY (PEFA) .............................. 121 ANNEX 6: FUND RELATIONSNOTE............................................................................................................. 122 ANNEX 7: PROGRESSON THE MDGs........................................................................................................... 125 ANNEX 8: MALI COTTON SECTORREFORMS: CURRENT STATUS, ISSUES AND RECOMMENDATIONS...................................................................................................................... 128 ANNEX 9:COTTON PRODUCTION, MALI'S ECONOMY AND POVERTY.............................................. 135 ANNEX 10:SIMULATING THE EFFECTS OF AN OIL PRICE SHOCK:A SOCIALACCOUNTING MATRIX FRAMEWORK .................................................................................................................... 137 ANNEX 11:COUNTRY AT A GLANCE.......................................................................................................... 140 COUNTRY MAP # IBRD 33443 BOXES Box 4.1:Mali's Growth determinantsand prospects4EM findings ......................................................... 14 Box 5.1:Prior Actions for the Mali PRSC-1.................................................................................................18 Box 5.2: Good Practice Principles for Conditionality.................................................................................. 19 Box 5.3:IndicativeTriggers for the Mali PRSC-2 ........................................................................................ 59 TABLES Table 2.1: Mali: Selected Economic Inhcators and Medium-Term Economic Outlook, 2004-10................. 4 Table 2.2: Trend in poverty using per capita consumptiondata, 1989-2001................................................... 5 Table 2.3:Trend in poverty/inequalityafter the devaluation,Mali 1994-2001.............................................. -6 Table 2.4: EstimatedExternal Debt Buden Indicators(in percent)................................................................. 8 Table 4.1:Summary of Relevant Lending Operations and Key Analytical Underpinnings.......................... 15 The Mali First PovertyReduction Support Credit (PRSC-1) was prepared by an IDA team comprisingChristina A. Wood (TTL), AbdoulayeKonate (public finance management), Alain Catalan (public finance management),Boulel Tourt (debt sustainability analysis), Andre Ryba (financial sector), Djibrilla A. Issa (financialsector), Fran~oisNankobogo (private sector),D. Youssouf Thiarn (private sector), Abdoulaye Tour6 (cotton and Ofice du Niger), YCyandC Sangho (cotton and Officedu Niger), Alain Ballereau (transportand transit facilitation), Siele Silue (transport), Fabio Galli (transit facilitation), Cheick TraorC (procurement),Asha Ayoung (procurement),Mahine Diop (water supply and sanitation, and electricity),Christophe Prevost (rural water supply and sanitation), Tonia Marek (health), Kofi Ekouevi (electricity),Jeff Ramin (results framework assistance),Glaucia Ferreira (team assistant), Safiatou Dicko Ba (team assistant), SameenaDost (lawyer),and Renee Desclaux (disbursement).Peer reviewerswere Alessandro Magnoli Bocchi (EASPR)and Neeta Sirur (LCCGT).Advisors included Nils 0.Tcheyan (Regional Operations Director), James P. Bond (Country Director),Alassane Diawara (Country Manager),and Robert R. Blake (Sector Manager). The PRSC-1 team worked closely with the IMF team headed by Jean-Pierre Chauffour and with EU and bilateral donors in the budget support group for Mali. REPUBLIC OF MALI FIRST POVERTYREDUCTIONSUPPORT CREDIT(PRSC-1) CREDITAND PROGRAM SUMMARY 1 Borrower Governmentof Mali ImplementingAgency Ministry of Economy and Finance (MEF) coordinates the implementation in close associationwith several line ministries. Amount SDR 30 million (US$45 million equivalent). Terms StandardIDA terms (40-year maturity & 10-yeargrace period). Tranching Singletranche, to be released upon effectiveness,expected in March 2007. Description The proposed First Poverty Reduction Support Credit (PRSC-1) is the first in a series of operations supporting implementation of Mali's Growth and Poverty Reduction Strategy Framework (GPRSF), through the followingthree components: The first component focuses on strengthening the links between the GPRSF and the macroeconomic and budget frameworks, and strengthening public finance management (includingprocurenient). The second component comprises growth-enhancing measures in the financial sector, private sector, transport and transit facilitation, electricity, cotton, and the Office du Niger irrigation zone. The third component focuses on improving access to basic social services, notably health and social development and rural water supply and sanitation. The proposed operation is an integral part of the Bank's Country Assistance Strategy (CAS) to Mali. Benefits The proposed operation would contribute to financing the Government's 2007 budget aimed at pursuing the objectives of the GPRSF. The operation would provide the incentive to implement key economic, social and institutional reform to strengthen overall economy performance, growth and poverty alleviation. Implementation of the PRSC-I program would also contribute to strengthening oversight of public finances and the procurement system, thereby enhancing efficiency and effectiveness of public sector spending. The operation would contribute to enhancing shared private-sector- led growth, by lowering administrativeand financial costs of doing business, by easing restrictions and costs of starting a business, and easing export-related costs on handicraft products. In agriculture, the operation would contribute to laying the foundations for vii enhanced performance and growth in the medium term of the cotton sector and the Ofice du Niger irrigation zone. As regards the basic social services (health and rural water supply), the operation will strengthen the links between the sector strategy and the budget, and lay the foundations for improved quality of service delivery. Over the medium term, the operation would contribute to reducing transport and transit costs, by ensuring regular road maintenance and lowering the cost burden (in money and time) on the private sector of customs administration. The Credit would lower the costs of financial services (and therefore enhance access to credit) through cleaning up non-performing loans fi-om bank balance sheets. It would also improve access to longer term resources vitally needed to stimulate private sector led growth, through strengthening the prospects of institutions with long term assets whether financial (pension funds, housing bank, insurance companies) or physical (leasing companies). Risks The operation faces external, political and budget risks. External risk sterns mainly from Mali's vulnerability to climatic/natural shocks (drought, avian flu), exchange rate and commodity price fluctuations (cotton, oil) and regional developments (persistent C6te d'Ivoire crisis). Mitigating these risks over the horizon of the proposed operation remains a challenge: it depends on the economy's capacity to adjust in the wake of the shocks, and the Government's continued ability to manage the impact of the shocks. The operation would help strengthen both these capacities, through policy measures that contribute to economic growth and diversification, and further strengthen public finance management within a sound macroeconomic framework. Additionally, the overall country dialogue would allow for some budget flexibility to address crisis-related expenses within the context of a prudently managed budget that supported priority growth and poverty reduction programs. The introduction of predictable and timely support through the PRSC series, and continued progress with donor coordination, will also be important elements for mitigating the external risks. Political risk, linked to the upcoming presidential elections in April 2007, is that the pace of program implementationcould slow or that the Government's current commitment to some reforms (such as bank restructuring, social security reform, cotton) could wane as the election approaches. This risk, which is low to moderate, is mitigated by the front loading of the policy measures, to be completed before submission of the Credit to the Board. The country team is monitoring this risk on a continual basis in order to detect problem areas early on, so as to be able to adjust the Bank's response as needed. Budget risk stems from ongoing financial crises in the cotton and electricity parastatal companies (CMDT, EDM) which could potentially require government transfers to cover the large projected deficits in those sectors. Although this risk is moderate to high, the 2007 budget includes no provision for possible transfers to these two companies: for cotton, the Government indicates that the required recapitalization of CMDT (equivalent to 1.3 percent of GDP) will be covered through debt conversion rather than cash transfer (and thus with no treasury impact); while for electricity the Governmenthas not yet formally acknowledgedthe company's need for a cash infusion during 2007 (amounting to about 0.2 percent of GDP at least, and 0.8 percent of government expenditures) in order to remain viable.It is thus possible that actual implementation of the government budget during 2007 could be significantly different from the afiproved budget. This risk is being mitigated through the strengthened financial management in both companies and close monitoring of their respective financial and cash positions. Additionally, a financial evaluation of the CMDT will be undertaken in the first half of 2007 to better understand the nature of the losses and devise corrective measures. Operation ID Number PO83803 INTERNATIONALDEVELOPMENTASSOCIATION PROGRAM DOCUMENT FOR A PROPOSED FIRST POVERTY REDUCTION SUPPORTCREDIT (PRSC-1) TO THE REPUBLIC OF MALI 1 INTRODUCTION 1.1 The First Poverty Reduction Support Credit (PRSC-1) is a single-tranche operation of US45 million, ensuring budget support for the 2007 component of the Government's medium-term program. The PRSC-1 initiates programmatic support by the Bank to Mali's Growth and Poverty Reduction StrategyFramework (GPRSF), consistent with the Bank's Country Assistance Strategy (cAs)'. The PRSC-1 is the first in a programmatic series of annual loans supporting Mali's poverty reducing efforts outlined in the GPRSF~, building on the program in the Economic Policy and Public Finance Management Credit (EPPFMC, approvedby the Board in January 2006). 1.2 Mali's current economic trends are broadly favorable. While 2004 and early 2005 were a difficult period due to a terms of trade shock and the effects of drought and locust invasion, the outlook began to improve during the second half of 2005. As a result, Mali's real GDP grew by about 6 percent in 2005-reflecting a favorable cereals harvest and improving terms of trade-and is projected to grow 5 percent in 2006. However, Mali's economy remains vulnerable to inadequate rainfall impacting on agriculture sector performance. Furthermore, the high cost of doing business in Mali (reflected in elevated cost of transport, transit, electricity and compliance with regulations) negatively impacts domestic and foreign direct investmentprospects. 1.3 The PRSC-1 comprises the following three key issue areas:(i) strengthening of the links between the GPRSF and the macroeconomic and budget frameworks, and strengthening public finance management (including procurement); (ii) growth-enhancing measures in the financial sector, private sector, electricity, transport and transit facilitation, cotton, and the Office du Niger imgation zone; and (iii) improving access to basic social services, notably health and social development and rural water supply and sanitation.The Credit is an integral part of the 2003 CAS base case comprising annual policy-based lending, complemented by specific sector operationsand initiation of programmatic lending in the final year of the CAS. The Credit will be fullyintegrated into the next CAS, currentlyunder preparation. 2. COUNTRY CONTEXT 2.1 Mali's recent economic and policy performance has been solid and the country achieved important gains in the fight against poverty; it also received substantial 'The current CAS was discussed by the Board in FY04 and the next CAS, under preparation, is scheduled to be discussedby the Board in FY08. The first PRSF (adopted in 2002) presents a general framework for the Government's policies during 2002- 2006, and the second PRSF (the GPRSF, adopted in December 2006), covers the period 2007-2011. The second annualprogress report covering 2003-2004 period accompanied by a Joint StaffAdvisory Note was distributed to the Executive Board for informationin early 2006. amounts of aid. Despite being battered by exogenous shocks, real growth averaged 5.7 percent over the past decade and a half, and poverty declined from about 73percent in 1989to 68.3 percent in 2001.3 Overall, policy performance has been good and gradually improving so that, currently, Mali stands among the better African performers on a broad range of economic policies (Mali's 2005 CPIA was 3.7 against the Sub-Saharan Africa average of 3.2). As a result, Mali has been receiving substantial amounts of external assistance averaging about 15 percent of gross national income a year over the past decade. The Bank has been closely coordinating with other donors, providing the Government in recent years with annual support of US$25 million. The PRSC-1 would increase the Bank's budget support to Mali to US$45 million. 2.2 Mali favorable economic performance has been due to progressive market- oriented economic reforms and broad-based political reforms over the last 25 years that spurred private sector development and enhanced civil society participation. Mali benefits fiom a stable and inclusive political environment, having successfully concluded four successive presidential elections since 1990 and two sub-national elections since 1997. The next set of presidential and parliamentary elections is scheduled during the period end-April through July 2007. 2.3 Despite the achievements over the past decade and half, Mali faces significant economic and social challenges. Over 60 percent of Mali's population lived below the poverty line in 2001, and Mali's social indicators remain among the lowest in the world-it is ranked 175 out of 177 countries in the Human Development Index compiled by the United Nations Development Programme (UNDP). This partly reflects the fact that Mali is a vast landlocked country with a relatively narrow natural resource and human capital base. It is the largest country in West Africa (1.22 million square kilometers), covering twice the size of Texas. With a population of about 12 million, population density is very low (10 persons per square kilometer4) resulting in high cost of public service delivery, difficulty in accessing nomadic communities as well as some segments of the rural population, and high transportation costs for agricultural inputs and other goods. Gross national income per capita (atlas method) increased fiom US$240 in 1994 to US$380 in 2005, a 4.0 percent average annual increase, translating into reductions in poverty (paragraph 2.9) and inequality (paragraph 2.10). 2.4 Mali's economy remains fragile in view of the economy's vulnerability to climatic conditions and commodity price fluctuations (primarily of cotton, oil, gold). The economy is dependent on agriculture and gold production, and exports are highly concentrated, with gold and cotton together comprising over 90 percent of export revenues. As a land-locked country, Mali faces challenges due to weak development of infrastructure and transportation services, and to economic and political conditions in neighboring countries. The business environment-notably road transportation but also investment prospects--continues to suffer from the protracted socio-politicalcrisis in CBte d'Ivoire. As with other low income countries, administrative capacityis also weak. 3The last national household expendituresurvey was completedin 2001. A new survey was undertakenin 2006. The next largest West Africancountryby land area, Nigeria, covers 0.9 million square km.With a population of 129million people, its population densityis 142personsper km2. 2 2.5 A significant social, structural and macroeconomic agenda remains for Mali to consolidate the gains of the past to sustain broad-based growth, further entrench market- oriented forces in the country, and advance the poverty reduction program. The PRSC-1 contributesto that agenda. 2.6 Following adverse shocks during 2004 and an economic rebound in 2005, Mali had a respectable economic during 2006. There was continued GDP growth (at 5 percent following 6.1 percent in 2005), due to favorable rainfall levels which enabled a good cereal harvest, higher gold production and increased services sector growth. Adequate cereal supplies enabled inflation to fall fi-om6.4 to 2 percent. The terms of trade continued to improve during 2006, reflecting continued increase in international gold prices and slightly moderating oil prices. The lower inflation contributed to a depreciating real effective exchange rate and improving external trade and current account balances. 2.7 Fiscal performance in 2006 was solid. Early in 2006, fiscal revenues were initially under pressure of weaker customs revenues, but the authoritiestook steps to combat evasion, improve customs valuation, and strengthen exemption controls. Also, they increasingly enabled greater links between local pricing of petroleum products and world prices, which helped increase excise revenues from these products. Compared with the Government's program targets, the overall fiscal deficit (excluding grants) of 8.5 percent of GDP was lower by 1percentage point of GDP, largely due to better-than-anticipated revenue performance and under-execution of capital expenditures. Similarly, the overall fiscal cash balance (including grants) improved. Buoyant customs duty revenues (including unexpected compensation from WAEMU for lost customs revenues fiom previous years) and higher payments fiom the mining sector resulted in higher overall fiscal revenues. Overall current expenditures were kept within the program levels. 2.8 Progress with structural reforms, however, is mixed. On the positive side, the restructuring of banks and key public enterprisescontinue, despite some delays. In the cotton sector, the new timetable for privatization of CMDT was agreed among the shareholders, and preparations are underway to split the CMDT into four regional cotton companies. The new, improved cotton pricing formula approved under the Mali SAC IV program continues to be applied satisfactorily: in April 2006 the cotton price setting committee (with concurrence of sector stakeholders) set the 2006-07 initial purchase price at CFAF 165/kg, a level consistent with a small, manageable loss of the CMDT (about 0.1 percent of GDP) based on contemporaneous projections of cotton prices and exchange rates. On the less positive side however, the CMDT's losses for 2006 are now projected to be thrice the initial estimate, about 0.3% of GDP (or US$22 million equivalent). To stem the losses and minimize the potential risk to the public treasury, CMDT's cash position is reviewed monthlyby a committeechaired by the Ministry of Economy and Finance, and an evaluation of CMDT's accounting and financial situationwill be undertaken in the first half of 2007. Table 2.1: Mali: Selected Economic Indicators and Medium-Term Economic Outlook, 2004-10 Prel. Proiections (Annual percentage changes, unless otherwise indicated) National income andprices Real GDP 4.7 2.2 6.1 5.1 5.4 5.6 5.2 Consumer price index (annual average) 1.4 -3.1 6.4 1.9 2.5 1.9 2.5 Terms of trade (In percent of GDP, unless otherwiseindicated) Investment and saving Gross domestic investment Government Non-government Grossnational saving Gross domesticsaving Government Non-government Central governmentfinance Total revenue and grants 19.3 21.4 22.0 56.9 22.4 21.5 21.1 Total expenditureand net lending 22.1 24.0 25.2 25.6 26.0 25.3 24.9 Current expenditure 11.9 13.4 13.3 13.1 13.5 13.0 12.8 Capital expenditure 9.1 9.3 9.5 11.4 12.6 11.2 11.1 Overall balance (payment order basis, -7.1 -6.6 -7.3 -8.5 -8.9 -7.8 -7.7 excluding grants) fiternal sector Currentexternalbalance, includingofficial -7.5 -8.3 -8.8 -7.2 -5.9 -6.1 -5.5 transfers Currentexternal balance, excludingofficial -9.4 -10.3 -10.9 -8.7 -7.5 -7.0 -6.4 transfers Debt-serviceto exportratio afterdebt relief 8.5 6.4 5.8 4.4 3.6 3.5 3.6 Gross internationalreserves (in millions of US$) 455.0 861 942. 1,182 1,267 1,327 1,388 (in months of next year's imports) 4.9 6.5 6.0 6.0 6.1 6.5 6.9 Externalpublic debt 86.2 63.1 65.4 27.1 28.4 30.4 31.8 Sources:Malian authorities;and IMF staff estimatesand projections. Note: 2006-10 data is after adjustmentfor MDRI.(IMF, IDA, and AfDB). Poverty Dynamics and the MDGs 2.9 Poverty has clearly fallen in Mali irrespective of the methodology used. Two household surveys were used to estimate the measures of poverty shown in Table 2.2: the Enquite Budget Consommation for 1988-1989 and the Enquite Malienne sur 1'Evaluationde la Pauvretk (EMEP) for 2001. Poverty levels and trend: Table 2.2 suggests that according to the food energy intake method applied by the National Statistics Department (DNSI)~,the share of the population in poverty in Mali in 2001 was 68.3 percent, a decrease of about four percentage points versus the level observed in 1989. With the cost of basic needs method6 the share of the population in poverty in 2001 is lower than the DNSI estimate (at 56.5 percent), and the decline versus 1989 is somewhat larger (at around 7 Under this methodology,households not meeting minimumdaily nutritional requirement of 2450 kilo-calories a day are consideredpoor. 6This method which estimates the price of a bundle of goods that meets pre-determined basic needs, is itself based on a caloric requirement. percentage points). The share of the population declaring having difficulties to meet food needs correlateswith the poverty level. Geomaphic characteristics: As expected, poverty is much higher in rural than in urban areas. There are also large differences between regions, and one surprise in this respect-the Sikasso area appears to be very poor. This is surprising given that the region benefits from better climatic conditions than other areas which permit, among many other crops, the cultivationof cotton. One hypothesis for this outcome is that the region may be attractive for migrants, thereby resulting in population inflows that reduce standards of living per capita. Also, at least in 2001, cotton prices were low and cotton farmers produced less than in previous and immediate subsequent years, which may have resulted in higher poverty in the survey year. Still, the situation of Sikasso warrants further investigation, especially considering that according to the subjective poverty indicator presented in Table 2.2 (last column), households seem to be better able to meet food needs there than in other regions (but again, research has shown that child malnutrition rates in the Sikasso region are relatively high, which adds to the puzzle). Table 2.2: Trend in poverty using per capita consumption data, 1989-2001 DNSI method World Bank method Subjectivepoverty (food energy intake) (cost ofbasic needs) (insufficientfood) 1989* 2001 1989 2001 2001 National 72.8% 68.3% 63.8% 56.5% 57.5% Urban 40.6% 32.8% 32.5% 24.6% 54.5% Rural 79.5% 80.9% 74.9% 67.9% 58.6% Kayes 60.1% 67.9% 64.8% 60.0% 68.5% Koulikoro 61.7% 83.5% 77.2% 70.3% 64.8% Sikasso 84.1% 81.8% 84.0% 77.8% 47.2% Segou 83.9% 65.2% 58.5% 48.6% 48.2% Mopti 90.0% 78.5% 67.0% 60.4% 55.8% Timbuktu 74.8% 54.4% 43.9% 33.4% 90.6% Gao 66.9% 48.2% 41.3% 29.5% 70.0% Nidal 37.2% 34.0% 39.9% 34.0% 76.1% Bamako 72.8% 27.5% 28.9% 22.5% 47.6% Source:World Bank staff. 2.10 The reduction in poverty has been larger since the 1994 devaluation than during the 1990s as a whole. Table 2.3 provides estimates of poverty and inequality using per capita consumption data from the 1994 Enquete Malienne de Conjoncture Economique et Sociale (EMCES) and the 2001 EMEP. These estimates are based on the cost of basic needs method. In addition, measures of asset-based poverty are provided on the basis of the 1996 and 2001 Demographic and Health ~ u r v e ~The s . ~first row in Table 2.3 suggests a decrease in poverty of close to 15 percentage points between 1994 and 2001, which is due in part to an apparent decrease in inequality. The second row shows the expected decline in poverty since 1994, There, the methodology entails pooling together data from the two DHS in order to use a common weighting system to construct an asset index. Because asset ownership is much higher in urban than in rural areas, we construct separate indices for each, and use an asset-basepoverty line that provides levels of poverty in urban and rural areas similar to those observed using per capita consumptionin the 2001 EMEP. National poverty measures are obtained by pooling together the urban and rural DHS data and rescaling the latter by the ratio of the urban and rural assetpoverty lines. solely on the basis of growth observed in the National Accounts and assuming no change in inequality. In this case, the share of the population in poverty decreases by more than 11 percentage points. Finally, the asset-based measures of poverty in the last row also suggests a decline in inequality and a reduction of poverty of about 12 percentage points, which is again large. Data on household assets tend to confirm a general improvement in standardsof living. Table2.3: Trend in povertylinequalityafter the devaluation, Mali 1994-2001 Poverty Inequality (Headcount index) (Gini index) 1994196 2001 1994196 2001 National, per capita consumption (1994 and 2001) 71.1 56.5 45.4 40.1 National, consumptionadjusted for growth (1994 and 2001) 66.9 56.5 40.1 National, asset index (1996 and 2001) 69.0 57.0 24.0 22.0 Source:World Bank staff using 1994EMCES, 1996DHS, 2001 EMEP, and 2001 DHS. 2.11 Despite rapid progress since the devaluation, it will still be difficult to achieve the MDG target of reducing poverty by half in 2015 versus the 1990 baseline. As noted in the November 2004 report Rapport de suivi de la mise en oeuvre des Objectifs du Millbnairepour le Dkveloppement (OMD) prepared with support from UNDP, the rate of progress in reducing poverty since the early 1990sis insufficient to reduce poverty by half in 2015, and it is unclear whether Mali will be able in fbture years to reap similar benefits as those obtained since the 1994 devaluation. In rural areas, faster poverty reduction will require improving productivity, diversifying rural activities, breaking the isolation of certain production areas, and developing commercial trade. In urban areas, the focus should be on promoting earnings and creating employment, among others, through good governance and higher productivity in the private sector. Poverty reduction also requires the strengthening of social networks supporting the most vulnerable and attacking social exclusion. The magnitude of the challenge represented by poverty can be illustrated with the following statistics: in 2001, according to the DNSI method for estimating poverty, the cost of eradicating poverty (i-e. the value of a transfer ensuring that all households have a level of consumption at least equal the poverty line) has been estimated as CFAF 462.5 billion in 2001 (US$873 million), or 32 percent of the total consumption of the private households. Further information on progress toward the MDGs is in Annex 7. 2.12 Mali's macroeconomic outlook appears favorable; but there are risks of lower rainfall, unfavorable terms of trade, and slow implementation of structural reforms. Based on the latest Bank and Fund assessments,Mali could average a broad-based 5.5 percent annual growth in the medium term, assuming broadly unchanged terms of trade, no major extended supply shocks (e.g., droughts, avian flu) and continued, solid policy performance (Table 1.I). All key sectors-agriculture, mining, and services-are expected to contribute to medium-term growth. Broadly balanced growth in domestic and external demand is also anticipated. Strong performance of gold mining and granting of debt relief have recently strengthened the medium-term outlook. On the policy front, this scenario assumes progress with structural reforms, especially in the performance of infrastructure utilities (electricity, water, telecommunications) needed to support higher investments and growth. High gold prices bode well for Mali's export earnings and fiscal revenues, but because of its enclave nature the gold sector aloneis unlikely to contributesignificantlyto povertyreduction. 2.13 The 2007 budget suggest continued fiscal prudence. For 2007, the authorities currently aim for the same fiscal balance share of GDP, excluding grants, as in 2006. Revenues are expected to increase due to higher gold earnings. And the authoritiesreached an agreement with the civil service unions on a fiscally prudent level of inflation adjustment of salaries (2.6 percent in January 2007). The fiscal deficit in 2007 is expected to be financed from committed external sources, implying zero net domestic financing. Moreover, consistent with Paris Declaration on Aid Effectiveness, the authorities made progress in strengthening aid predictability and harmonization with key donors by signing a framework agreement in March 2006 on financing and evaluation, and improving the public finance information systems. Discussions are underwayto align the Bank's budget support with the harmonization process (starting with the PRSC-2 if possible), as discussed in Annex 4. To support monitoring of the PFM reforms, a Public Expenditure and Financial Accountability Study (PEFA) was undertaken in November 2006, to establish baseline values of the monitoring indicators, presented in Annex 5. 2.14 While the balance of risks is currently favorable, Mali faces potential downside risks of exogenous shocks (e.g., drought and avian flu). Vulnerability to rainfalls is a constant threat to Mali's agriculture, which is not expected to change. A potentially more serious threat in the short term is the avian flu (which has been registered in neighboring CBte d71voire and Burkina Faso). The budget does not currently contain provisions for its potentially large social and fiscal impact. 2.15 The last joint IMF-World Bank debt sustainability analysis (DSA), completed in December 2005, shows that external debt sustainability is broadly achieved under baseline projections in relation to the policy dependent debt burden thresholds.' Thus under the IDA 14 criteria Mali is a "green light" country, receiving its entire allocation in the form of credits rather than grants. Adverse external and internal shocks, however, could result in breaching the thresholds over the medium term, despite implementation of sound macroeconomic policies and prudent debt management. Accordingly, Mali is assessed as having a moderate risk of debt distress. The multilateral debt relief under the G8 initiative (MDRI) applicableto Mali in July 2006, reduces Mali's nominal debt and debt service by half in the medium term, but would approach the indicator level in the baseline over the long term. Thus while the risk of debt distress in the MDRI scenario is low over the medium term, it returns toward the moderate risk level assessed in the baseline. Table 2.4 summarizes the debt indicatorsprior to and post MDRI at the end of 2006. Preliminary results of the 2006 DSA indicatethat with the MDRI Mali now has a low risk of debt distress over the full 20-year horizon of the analysis. The 2006 DSA will be circulated soon to the Board once it is finalized. Mali's CPIA score was 3.7 in 2005, placing it at the top end of the medium performance category (3.75issance ct du rEduire la pauvret;, ail cours de la piriode 2007-201 1. Celte nouvelle watkgic r;*appuicsur les attentes majcures dicoulnnt de I'&valua~ionda la mise en Euvre du CSLP 2002-2008et polrtccssct~tiellcmentsur les points suivants : {i) le nlainfierl d'une stabilite dc l~cnvirant.icrnentn?acro&cunomiqueet I'itablissctnent d'urrs coherence tsntre Irs previsions n~acraecoi~omiyt~es budgciaircs. air~si quc les ilpports extirieurs de ct financentent ; (ii) urle rncillcurc adkquntion entre Ies strat&gies, Its prioritis ct Ics programmations budgLitnircs du Cadre Rudg61aire 6 Moyen Tenne (CBMT) ct ccllcs dcs Cadrcs dc Dipcnses 6 Moyen Tern~e(CLlM'f) sectoriels, ilotaflltnci~tau ~kivenudes plans d'actions et clt! linmcema~tsectoriels dk~aillb;{iii) urrc ritduction sensible de la pauvretk rt de la Fain7 surtout daus lc: nlondc rural, gricc 6 Lln r&dd&vt~~ppt%nr~t la s6curit0 de alimentairc : (iv) I'ambliorarion dc l'ktat de santC dcs populations, notamment Ics plus PJUV~CS ;(v) Line anlklioralion significative de la quantiti et de la qualitt dc I'offrrc ddc amclinration de I'allocation iutra scctoriclles de ressources ciblkes sur Ics ob~ectifs de dlveloppernent poursuivi dans Ies palitiques sectoriclles (Cadre dcs Depcnses :d hioyeo ternle dans lcs secrews tie la sante, de l'tducation et des infsastructurcs) ct, (iii) rcnforcement tfe la cohkrence C'SCRPILoi dc Finances). Ces tnesures s'inscsivent dans un caclre d"approfondisscmcn1des actions ritjji soutenues par lcs dcux spbalions pricide~ltcs afin dc dorlncr A ccttecornpusante line visibilitt d'cnsemble sur Its politiques publiqucs ct la politique budghaire li moycn tertnc dms la perspective d'un passage progressif cfe l'aidc projet au Mali vers I'appui budgitaire, 9. Alin dc rcnforcer le cadre organisationtiel pour IYint6gratiancntrc lc proccssus CSLP et le pmcessus budgktairc. un cadre Iogique a it6 adoptk ppur assurer une plus gmnde lrohlre~~ce entrc LC budget. le cadrage n~acrodconanlicluc,les prirrrites sectorieiics et Ic proccssus CSLP. 10. Les dernl&resannkes ont 6t.6 niarqu6es pi la rt5aIisatton d'un ensemble d'ihldcs cx dc d~agnustictiqui ant pcnnis de mieux upprkhender lcs forces et les hiblesses du systkme budgctairc clu hlali, S'sppuyant stir ces consrats et ltss recommandations dc rkformes su_cg&rkes,le Gouvernernent a &labor&ut adopt&le Man $'Action G~uvememc~~tal pour I'.4rn~liari~tionet la Modcrnisatian de la Gestion dcs Firlances P~~bliques (PAGAMGFP) qrli propose sur tc rnoyerr ternlc (2006-2008) dcs rBf'onnes de Fond ct qui dunnc par la mZmu occasion une perspcctivc h la s6curissttion du processus budgktaite. Le PtZGA~ICFYest stnlcturLS en cinq axes. : (i) zmtliorur la qualitti de prkpnration ct d'exicution du budget, (11) developper I'cffrcadtk des administratioas fiscalcs ct financikrm, (iii) irrtkgrer les financcrncnts estkrieurs aux proddwcs burlgtimires natronales;, (iv) accruitre I'cfficacitri: et la transparetice dcs proebdures dt:passation des nrarchls publics d (v) rent'orcer la gouvemancect la uanspxalce. 11. Le prograilmc dc rkforrnmcs sourenu par le Credit d'llppui ;Z In Str;~tigiede Kiduction de la Pauvrctt s'insrrit clans le cadre dc cc PAGAMGFP el du Cadre StratSgique pour 1" Croissance ct la Reduction de la Pauvrcd 20fi7-201I. 11 a pour ubjtc;riKs, Jans sa con~pc~cante gestiou dcs fil~anccspubliques de : [i) ret~forccrle lien entre la strategic?dc lutle conrre la pauvihctkut les strdtigiessectoriclles:(ii) amkliorer et moderniser la _ c c s ~ r i des finances publiques :et {iii) renforcer Ic suivi de I'ex6cutial1 budgttairc. Lcs actions sorlt dkcnte~dnns la rnstricc des Incsurcs annex& i la prksenic lcrtro cie polit~quedc d6veloppement. 4.1.1 Les progks accotnpljsau caurs dus dernikres ariilCes et 2006 12. Lcs progres ont ite sensible(; dans le: dornaine de la gestian budgkluire dans sun onscmblz. Le Gouvcrnctr~crrta poursuivi au cours dc l'annfe 2006 la mise a1 ccuvrc d t ~ PAGAMGFP qui cnnstitue le cadre dc rifircrlcc pour l-appui de tous les panenairtss ruchniques et financiers dat~s1c dclntaine tie la gcstion dcs iinances ptlbliques. Le PAGAMGFP devra coaritluor dc hire I'ubjet d'une attention particulitre au cours des prochai~~esam~dcsdarks le contexta de la mise CIIcxuvrc dc la stratdgie de r2duction dr la pauvrclk dc sccondc gl?nkratiun (CSCKP 2007-201 I). Sut I'ensemble des trois objectlfs poursuivi3 dam le cadre du CASRP-1, lcs progrts o11tdtt: globalement satisfaisants. Lcs actions pour l'an116c2006 ant toutes 4t4 rtilisies et les pcrspoctivcs sun1 f';lvwables pour la paurs~iitr:du prosrimme sur les annkes 2007 et 2008. 2.1.1.1 Lz cadre macro~conomiqueet la politiquefiscale etbudgktsire. 13. Depuis quclques annPes Ic Gouvcrncn~cntpoursuit unc politiqut: de prudence dans sa gcstion rnacrcsiconon~ique.I1 privilkgie dans sa sfistion,la srabilisation de la ca~~joticturu tconomique et la priscrvation dcs allocations de ressourcesaux secteurs sociaux rnalgrk Is vulnCrabilit6 dc 1'Cconornie aux aICas clin~atiqueset aux fluctuations de i'environnement intcrr~ational (rnatieres premieres et produits pbtroliers notamnient). Ccttc gcstion rnacroecanotl~iqucrlgaurcusc sera poursuivie sur la pCriode 2007-201I ct le projet de budgct 21107 adaptti par 1'Asscrnblee &ationale unduit ces principes. Sa orientations sent cuhirentes avrc les perspectives iconomiqoes de I'nnnke 2QQ7, 2.1.1.2 Z,tl gcstion badghtnire. 14. Sur la basc du dispositit' inslituiiunnel propost pour la mise en cxulrre du PACihMGFP, le Gouvernerncnt a nlis eu a.uvrc dcs actions spiciliques dant l'i~i~ixict sLIr lc ~ C U C ~ S S U S d'e~~~cnlble ddtcrminant : (i) il a installi tous Izs arganes dc pilorage c i sera d'oricmaticm (cornit6 lechn~clue.et Cellule d'appui h [a reforme des finances publiques [CARFIP) dont le coordinateur a ttd nornmb) ; (ii) il a adopt6 le cadre logique pour sa mise en cruvrc cr son suivi :(iii) ilx nlis en e u w e les actiotls programnldes da~lsIt: ~irdre dc la iranthc 2006 du plan d'actiaix. Par ailleurs, lc Gouvernementa r6aIisC avec I'appui des prtenaires terhniqucs cr financiers, unc Cvaluat~ondu cadre institutiontlel afin d'itahlir la situation di: r i f i ~ r ~dcc 13. performance des finances p~rlbliquessilr la basc dc c la m6thndologie du cadre dc mosurc ddc Ia perromance des finances publiquc du grnupe PEFA. Cettc sitiiativt~de rkfcrencc a irk mlidie au debut dc I'antlCc 2007, IS.Dans Le donmine de la prdparation du,budu,ct, dans I'abjectif dc disposrtr d'ir~strulnerltspamlottant d'assurer la cohirenc~enwe les politiqucs publiyues et le budget dc I'Etat, It; Gauverr~emcnta dcvc1oppC ct i~uroduitdivers instruments dans Ie processus budgktaire. L'optiquc qu'il a prise en 1998 cle fonder la gestion budgetaim sur Ics r4sultats a i t i rcnffircCe ct confbrtk et ceci s'est tmd~ritnotammctlt par des avanckes significatives en matiire de processns des Uadrcs du DCper~scssi Moyrn Trrme dt~nsIr: processus dc forn~ulatio~i budget dc I'Etiit : ddu - Au nivuau globill. rt dans la perspective: dc la ~nist.etl cfuvre du CSLP 2007-2011, le Gau~ernernenra ClnborC u1.t Cadrc Budghtairu it Moyen Terme (CBMT) paur la periodc 2007-2011 ; cclui-ci se fonde sur I'evolution macroAconorniguc rkcente du Mali oz svr Ics perspectives sur Ic nlaycn tcrtne rcllcs que envisagees dans Ic CSCW, comprc tenu dc I'cnvironncrnerri dcs pays au niveau de I'Unio11 Econor~~iquoer Morlg~airo Ouest Africaine (UEMOA) ct dcs contraintes li4es au cuntcxte international ;il eEectue des prCvisiorrs dc ressources budg6taires sul-la ptriodc 2007- 1011 (rcssourco~proprcs ul rcssources esttrieures) er rlitertrrinc d a allocatims pr&visionncllcsde dPpenses qui reflktcnt d'une pan Ics contraimes rrtacr~Cconon~iqurs du pays ct tf'autre part les priorires sectorislles Cnor~cbtspour Im ssecttlurs sociaux rtt 1csSecreurs de soutien b la production. - h u nivcatl scctoriel, 1cs CUMT pour ICE; secteurs dc I'l:ducatiott, dc In sanii et du dii,cloppcment social, dt: la refomre de I'Etar, de la dbccntralisa~~nn, l'iyuipemcnt de et des transports ct dc I'administratian hxritc~ririalesont opiratiunnels et font ]*&jet d'actunlisntion :cclwi du Ministhe dt. 1'Ernplui ct de fa Fonnation Profcssiot~ncllcesl cn cours dtapprobation ; ceux chsrgis d t ~sectcur rural, de I'cau ct a~sainisscntent.de I'induwrie el du comtncrcc, dc la promotion dc la kmme dc I'enfant rt de la furnillr:et de l'artisanat et du tourisrnc sort1cn couss de prip~ration. - S'inspirant de 1"cxcmplcdu Prugwmnw dicmnal de d&veloppcmcntsanitaire et social (PRQDESS) et du Proganlme dkcennal de dCvcloppcmcni dc I'tducation (PRODEC), un cadre institutionnel a it& adaptti crianx la synergie entrc le Ministcrc dcs Finances st Ics n~inistCresscutoricls pwr soutenir leur action dat~sl'clabaration des CDMT. 16. Dans le domainc de I'esCrution budgetaire, lzs actions engagkes ont concern6 pow I'essentiel I'informatisatb~des flux d'inforniations budgdtaires. Cwi sc fonde sur ies progres dkji rkalistk duns le dumaine cie la normalisation des proc&hres et de Icur diffusion auptths des rtcteurs Ju prnccssils budgktaire. Ces actions lites A 17inforrnntian huclgltuirr: ont Gtt: entamPes dsns le cadre du credit pr6cPda1t et se sant poursuivius dans Ir: cadre dn CASKP, Ainsi, cn 2006. des amiliorations ant kt& app0~4esau systkme ~nfomatiqucutilid au niveau de la Directio~lGdnEralc du Budget et dus ordonnateurs sccondajres {Direction Administrative et Financibre (DAF) des dtpa~tcrnenrsministiricls sectoricls). La version iiam&liort!c)>(PRED4) a dti itendue h la Dircctjon Ktltionale du Contrhlc Financier et a la Direction h'ationale du Trksor ct dc la Cnmptabilitt Puhlique. Conlbmdrnent au chronogramme qu'il s'esr fix&, Its Gauvernernent a entarni la misc ell rbenu dc quatrc (4) DAF cl dc quatrc (4) Directions Rtgionates du I3idget (IDRB) sur la base de l'infrastructure dkveloppepar 1'Agence des Technologics de I'Infbmatiun et de la Comrnunimticm(AGETIC). 17. Hans Ic domalnc du contrQle budgttaire, Ic Gouvernctnc~~t rcste convaincu de la nkccssit6 de n~aintenirle rcnforccnrcnt dc la fo~~ction contrdle sous tokites ses farn~cs dl: fad~ninistratif.interne, extcrne,juridictionnrl et Itgislatif).11a beaucoupprognsse dans cc scus : (i) l'lnspucriual dcs Finances et le Contriile GQlral dcs Services Publics ont itt. cfotks de ressources gtobalcnlent conhrmcs aux :&suE~ats nttendus de ces structures cn ternles de missions de contrdic crt de qualit6 des rapparts de co~~trdlc dans la Iol dc ftnnnccs 2006 ;(ii) la Section des Comptev a pu disposer de rcssources dkrerrninles sur la base du programme tie travail adopt6 pour I'antllc 2006 ; (iri) la relecture des textes ldgislrttifb nicessaires 13QllI' porter I'cFfcctif de la Section des Cornptes d c 15 a 67 niagistrats a Cti engag& ct Ics ndgociatirms son1en co111-spour I'tlabaration d'un statut des rnagistrats dc la SecLinil tlrs Cn~nptes. 18. En matikrc de transparence et de mltranisn~cspour rendre compte de I'exCcutiaa du budget, dcux aspccts unt fait I'objet dc progres sensiblcs. L'abjectif visk s i t t la pmductlon systkmatique t t dnns dcs Jilais raisonnables,de I'informatiun budgktaire afin ti'srnCliorer la gestion publiquc et $a transparence . IJ s'agit : (i) dc la publicatiorl dcs infarmations Lconomiqucs cl iinancikxs sur ie site internet du 'tlinistkrede I'Ecal~nrniect des Finances qui me1 ainsi a la disposition du public les pl-incipales donnkes de ItcsPcuricm dn budget de I'Etat \te t [ii) dc I'aniPlioration du contenu dc la 11otu trin~estricllesur Ics iinanccs publiques. Pour renforcer ss respuusabilisation dans la gcstiars des deniers publics, Ie Gcruvernemcnt a rattrap6 lcs rctards dans la production des projets cde lcri de &glenrent. 11 a ainsi actuelltlrnent produit et adopt6 lc projct dc loi dc rkglcmunt pour I'CXUW~CC budgelaire 2005. Ces actions sesont rcnfosckcs pendant toutz la pCriodc du crCdit en vi~anla rkdrrction dcs dklais dc production. t 2.1,I -3 f ,B passation des marchb publics. 19. La Banque Mondialc a rdalise one revue des procidures de yassatio~rdcs ruarchks publics du :Mali (CPAR) ut Curmuli un certair~nombre de propositions atln de terlt'nrt-er Ie cadrc rlplernentaire ct institutionnel d'cxicution dcs march& publics et dYam6liorerles prr3ckdures. Ce rapport (CPAK) a Ctd. adoptc en Coi~seildes Mir~istresau ddbut 2007. LC conritd chargi. tlc la Caordinrttion el du Suni de la Refornlc: des Marcllis Publics (CNCS) est installti ct fonctionnel. Le Gauvcrnc~nunta kgalcrnent realist une base de donnkes 1 rclaiivr:aux divcl-sesphases be passation des marshis. I I 2.1.2 Lcs actionsprCvues sur le rnoyen termc 20. Le progrdrnme dc rCfo~-mesqui sera soutienu par le deuxikrne et Ic troisitllle GASRP ont les td~ncsobjcctifs quc le CASRP-I &ns sa cconlposantc gesrion des finances pubiiqucs, tel que dicrit dans It: paragrephc I1 dc ct. document. Les actions spkcifiquement appuyCespar fc CASRP sotlt d&ctitc;s&ns la matrice des lncsurcs al~rlcsfc 5 la pr6sentc lettrc de politiquc dc dbv610ppen1c~nt. Ce renfurcemeat des liens entre la stratEgie de lutte contre la pauvtetk et ICS strattgics sectorielles. 21. Le Gouvemerne~itpo~lrsui\met renforccm au cuilrs des dcux procllaines annecs los ac~ionsd6ja lengagers dans tc domairre de 13. pdparation du budget ct de son licr~avec Is stl-atkgle dc riduction ds la pauvreti. 11 s'agira de practider a on %largisse~i~cnt du processus CDMT et d'opilxtionixaliscr Ic cadrc logique n~isen place pour per'mcttrc utre meilleure atticulution enrrc Ic?;dipartcments sectoriels et le Ministirc dc 1'Economie et des f:inanccs datts la pt'rspective de la nirse en celrvre du CSCRP. kes aorirrns qui scront rnises crl @uvre regrouperont notanxment : (i) 17dlargissementdu prucessus COMT ti t;rz s6cuiiic' nlimentaire et I'envir-onnemcnt ct I'actualisazion annuelle de tous Ics CDMT exishnrs ($ant& iducation, agrtculiurc, i'lcvage et peche, eau et assainisscmcnt) pour 2008-2010 d'ici fin scptcmbru 2007 ;fii) IYlargissement du praccssus CDMT h au rnoins dcux scctcun par all, 1wI en maintenant le psincijx dc I'actualisatiun rle taus les CUMT existants sur la ptriodc 2009-201 1 d'ici fir) scpzem3rt:2008. L3smEIiorationetla it~odernisatioodc la gestian des flnntlces yubliques. 22. Pour ce qui conreme le PAGAMGFP, Ic Ciouvernen~entrendra fanctionnels tous lus ~ndcal~isrnesinstitutionncls rctctlus cn vuc de sa ndse en cawre. Les rnCcanismes de suivi- evaluation tcls que dkfinis dims le cadre lagiquc kccmmcnr adopt4 seront fonctio~inclsavcc la rialisation de revues conjointes enue le Gnus;e3nenrent et Ics panmaires techniques ct firlnt~cicrsafiii d't%alucr sa mist: en auvre pour l'atrde consid&&. Les chrono$rarnrncs allnuels drs activitis seront for~r~cllctmcnt adoptks par le Gotnite tcd~niqucdu PAGAMGFP au caurs du rrlois de janvicr dc c h q u e mnie et ce cl~rooognmmesera n ~ eni ~oeuvre datis I'atlaec guis tivalue par le cadre du coiniti technique du YAGAMGFP, Par ailleurs, le catire de mesure des perforrnarlccs dc la gcstion dcs tinahccs pubriyucs sera utilisd scion une pkriodicitt5 dc trois an?pour appricier lcs pmgrb arccln~plispar rapport itla siturttia~idc rdf&renuecn cuurs be r&aiisation,Les aclions rr~duitesdam la knatricc dcs mesures du CASRP sont :(i) i'tlabaration, l'adoprion (jsnvier 2007) et la misc en euvrc dc la programmation 2007 actualisdc du PAGAMGFP (2007); tii) I'dlabotatian, I'adoptiun Gar~vier 2008) et fa misc cn muvre de la prograolniaticr~r2008 ac6u;llisle du PAGAMGFP 12008). 23. Lc: Gouverrizn~etrt cnntinuera de rnett-rtt en auvre Ics actions cnp:ag&es ~ u r I'irtforrnatisa~ioner la n7is.t:en rkseau des actem c l b dc la chainc de la dkpjpanse publique : (ifil rzndra oplrationnelle la lniscctl ttscau dc yuatrc (4) BAF et quawe(4) DRB sur la base de I'jnfrastnrcturr ACiETIC en 2007 ; (ii) entrimera le processus d'extcnsion du riscau aux ri-giuns cn sctptembre2007 et ;(iii) finalisera Is miso cn rkscau opi.rtrrtonnelle dc I'errsernble des DAF st rcigiuns cn septcmbrc221)U. privatisation relatif a la cession cies parts de I'Etm dans la BIM, dans le cadre dkun plan d'actions pour sa restruchration, peut disornlais &re poursuivi ; en we de rcnforcer la solvribilitl de 11efficacit6de la BTM des rnesttres de rcstnrcturatition ant dtC rnises etl auvn. - lc Gout~rnement cu i ~nettn.cn place un csmitk pour assurer le suivi dc la mist2 m a ceuvre des raoinmandations de I5$hldesur la domiciliation des polices d'assurance. D&jAdcs rncsures unt etO pnses au ~tiveaudc I'asuaance automobileobligatoire. - dalrs le donninu de la micro tinanca, le plan d'act~onadopt6 pour la pdriocle 2005- 2008 est mis cn cuvre ; les aotivites de supervisiorlct dc proniotion ant Iliskpages : la supervision sondurlt. par la CCS/SFD relevant de la tutelle riu Minisrkrt: dt. 1'Econarnieet des Finances er la prornotiorr (objct du CPASFD) du Minisrtre dc Ia Prurnotion et des investissements et des petites et moyennes entxcpriscs. Lc budset 3007 a pris cn char~eunc parliedes ffrais d'opiration dc la CCS/SFD et du CP,e"SFD, - la relccturc du codc des pensions:de la CF&9 a etk finaliskc cn aaiir 2004. Par ailleurs, suite au rappofl d'unc ltude actuariellc, le Cotlscil dcs Minisrres a approuvl, It: 21 juin 2006, un bouquet de rkforrncs pnmrnktriques du systtme dc retraitc dc ta fottction ~>tihliquc va e6duirc.progres.sivement le dkilcit financier dc la Caissede Retrdite du qui Mali (CRM) 5nloyen xerme. Cette reduction sc fccra 6 tmvcrs dilTireots pard~riktrestels quc Ic taux de cotisation, 1';3ge ddc la retraite et tc nivcau des prestations. LCS ~~Pgocmtions avec les yarterlaires sociaux sont en cours en vue dc dkposer au p:irlerne~itun prajct:de h i autnrismt les rifames param6triques. - en n-tars2006, uric khdc actuarielle de I'lnstitvt National de PrJvoymcc Socidtfe pour ies cmployb non li>nctionnairesdu sectcurpu61icet du scctturprivii a It6 achevie*LC plan d'apurement des criances nCgocii ct sign6 avea le Gouvernen~enta cunnu un dibut d'exkcution. 2.2.1.2 Les rtiformcs sur le nlayen ternw 28. Your la ptriodc 21107-2009, Irsactions concerrlcrotlt : (i) la pour~uitedes ntgociations avec Its hanques commerciales en ruc de dkgagcr des str;ltGgies banque par banquc afin Lie mettrs: en place des rncsur-esd'atnalyse, d'octrui, de su~viet dc recouvmncnt drs pr2ts ct la poursuitc dc l'apurcmsnt cles cr2ances en soiitfrancc ; (ii) le renforcen-rent des co11zrBles dans le donmini: des assuranrcs ab1igatoire.s; (iii)la poursuite du plan dc restsuctunttion de la BIlM ; (iv) la poursuite du plan de restnrcturatiotl dc la BIM y co~nprissa privatisation: (v) la relecture des textes sur 1'INPS et letlr adoption par le iiouvcrnement en avril 2007; [vii) prcscnlatic2n du la nuuvelle loi sur la CKM au Parla~~ent avril 2007, autorisant les rCfurn~vsparart~itriqueset adoption d'un decret de en mise en muvre. 29. airns te domainc, ies actions zngagkrs par le Gouvrrnement dans tc cadre du prtse~~t credit ont pour ohjectif cir conrribuer h l'am&liorationdu clinlat d'investissernent et au dLw:weloppemrntdes exportations. Ces actions concement natzknmrent La facilitation dc la creation d'cntrcpriscs, la misc un aukre des recummandations du cadrc intCgre d'assistat~cctuchnique like au onrnrnerce, I'Climiuation de la raxu d'expcrtiuu sur I'txporta~iofldcs prcrduits artasaniiux, I'adoption de nortncs dc qualit6 pour les produirs d'expor~ntinnet en particrliier lcs pmduits d'originc agricolu. 2.2.2.1 Les actionsengagiies en 2006 1 I 30. Afin de rkduire la complcxitt5, Ic temps ex Ie coat die crktion d'cntrepfise, te Gouvernen~enta dkidb d'adopter me lai pennettant de combiner cinq procbdures impliquanr cinq ildmirtistrarionsdirfkrenxesen une seulc. A cct effet, le ParIenitnt a adopt6 enjuillrt 2006 la Ini portanr institution du nulnhro d'identilic-ation nationale des personnes physiques et rnorales, et cdte lo1a %t6promulguie le 1 1 aout 2006, 31. Pour encourager les exportations, un mEtC inteinlinis~trieildes Miilistrcs chargks dc I'artisanat et dc in culturc qui Bliminc {i)la taxe d'expertise sur les sxportations de produits at-~rricana~u (i~) et Itobligation d'autorisatian prealable d'exportatian du [nuke nal~ot~al &tG si& a en Octobre 2006, Cctze action sera largement rclayie A travcrsunc canipagne dc co~ntuunica~iorli'sensibili~ati~~ndirection des artisatrs. De plus, te en Couver~lemcnta cntreptis de preciser les critkres de d@tcrn:inatiandcs biuns culturels et le rritrstc natlonal ne pertrevra plus qu'une rctdcvarlcc de service pour les prcstatio~ls d"e~perrise lui auront i t i demand:^. yui 2.2.2.2 1 ~ ri.formcssur le moyea ternbe s 32. Lcs mesures suivantes seront nliscs en acuvrc :(i) fomultr et adopter des norrncs de qualire pour Irs filikres d'exportation notamalent pour leu prodrrits d'ariginc agricolc ;(iij mcttre en placc un guichcr unique opiritionnel bask sur les nouvcawc trxm d'application sur lc guichct unique tenant cornptc de la loi sur l'idcntifiant unique ; (iii)supprimer la patcntt. au titre de Ia prerniire annie civile pour toute criation d'entreprises :(iv) rkduirc dawntage lles prwidurcs, le tcnlps crt le coGtzle crkation d'emrepriscs :(v) riduirc ie droit d'enregistrcment dc Ia prcspritn6 pour les imrner?l>lesacquis par Ics cnkt-eprises dsns le ca&c dc: l ~ u exptoitation par la promulgaticm du nouveau code gCniral des imp&, ct r rnener rles actions visa~rtA rkduire lcs f'tais addilionnels ;(vi) iiaborer uric Ctude sur la fiscalit4 d'entreprisc au Mali portant sur I5investissement. les revclius du capital,1'Qparpe ct les rcbenus cles salaries, et mnettre cn mtvre lcs recommandations au cours dc 2008 1 (vii) conduire une etude sur la compititivitk du illarche du travail et engager IPS canecrtaliat~spourla mise en ceuvre des recouunar~datiorltrr 2008 ; (v~i)soutmir le dl.vcloppcment des filitres dkexportation tmvcrs le partage dd'inforn~ation. fbrnlatiol~ la er I'amlliol-ation dt la chainc locjsaiquc; {viii) adopter des textes pomnt r6gulation ct gestiun des zones industriellcs. 2.23 Le transport et la facilitation du transit 2.23,I Les actions engagties m2006 33. Dans le donlaine du transport, Ics eflbris ont surtout kt6 col-lcentrds sur L'cnrrcticn courant rauticr. Uans le cadre dc la loi de finances 2006, Ic Gouvemement a porte It: nivcau des ressnurces consaer6cs a l'entretic~~ coural~tdcs routes Ei I 1.5 milliards de FCFA crsnlbrrnement aux engagements qu'il avait pris dans le cadre du programme sectoricl t~unspo~t. Toutefiiois, la part dcsKCSSOU~CCY propres de I'AutoritC Routiire qui dcvrnienr errr de 30% dans Ic iinnnccment de I'ent-rrtiert routier ilc serait qirc d"crrviron16"/;;(1.7 milliards dc FCFA au lieu de 3.5 milliards). Afin dc sEcuriser pour 2006 la rialisation et'fectike de I'entrctien routicr, le Gouvernc~nenta financt I'kcafl det 1.8 milliards FCFA sur les charges communes intmi~listStiellesau cour;jd~ I'exkcution du budgut 2UO6. 34. Pour itne tneillcure prkvisibilit6 des ressaurces de 1'Autoritt Rvutikre et aittcindrc gr~ducllctl~ei~t I'c~bjectifconvenu Jans les lettres de politiques pr6cCdentes de 40% de rcssourccs proprcs pr4Iuv&es sur ICS wagers de la route, le Gouvemlr~cntn crdC unE lignt: 1 pour la rcdevancud'usage de la route dans la stnlcture dcs prix dcs carbwints, I 35.Afin d'arnkliol-er la cotnpkitivit&et la qualit6 des transports routiers, des TDK ont Ctt- Claborks punanr (i) sur l'etudtf clr. la fiscaliti et de la parafiscalitk du sccteut';(ii) ~ u r t'itude de crkation d'unc bourse de fret. 36. S'agissanr de I'arn&l~urilriondu, temps de rotarion des vdbiculos dc uailspon, ties mcsure;e!:ont etk plrises pour reduire le temps cIe passage sous rlouane deb v6hit;ules: (i) reduire le no~nbredcs dkisrations s6lcctionrl6cs en circuit rouge en fonction de l'analyse dcs rdisqucs+[ii) dbcharger les vkhieules dans les Magasirls et Aires de Di-dauat~crnuntctu dcla dc 72h d'lmmobilisdtion, (iii) pennettre la perception dcs draits Ics vendredis aprks midi7 sitmedis et dimanclics, c't (iv) supprinler ICS cscnrtes pour les vtl~icuics conventionnbs, 37. Un audit diagnostic de In Dircctiatl (itinirale des Dowanes a kt& r&dis6 rn 2000 par l*Orga~~isatiort Mondiale des Douaneh (OMD). 38. En vwc d'atniliorer la gouvcmance sur les corrihrs de tratlsports, la dircisian ri kt& prise dc mettre I'accent sur (1)I'applicatiall des textes sur fa rbgularion dcs contri~leset des hawages routiers li l'intilieur du pays afin dQassurcrle passage sans contr6te du trafic conventiorrni; (ii) la priparation dcs insirucrioms, les budgets et campagnes dc setlsibilisatiotlsqui scront mis ctr euvre supes des agents et des usagers. 2.2.32 Les rkfors~lessur le mayen tcrrnc 39. Pour la p9node 2007, le Gouver~zelnentpreqdra Ies mmesures afin de rcnforcer Ics rcssourccs proprcs de t'Autorit6 Rnutikrc: pour idteindre i'objectif de 40% du budget 2008 de l'cntrcrtia~roulict, 40. Your ameliorcr la carnpkzitivitk et la yualitC des twnsports, le G o u ~ ~ e r ~ l cadoplcmn t ~ ~ ~ c ( i ) lcs projcls dc tcxles Sur Ies mesures fiscales rt parafiscales assonits dbun calefldtier de mise en euvre ;(ij) dtudiera le mCcanismc ct dkfittirrt unc opitstiun pilote de bourse de fret qui sera o~~~ratirrnnelle2007. en 41. S'agissanL de ta rkduction du ddai de transit des vihicu1e.s saus doua~e,les rccammnndatiol~sdc l'audit cxtcmc dc I'OMD en 2006 scront mises en cerrvre et un audit inren~c sera et'fectuk inclwknt en particulier lc temps dc dCdouancmen1 et dc I'irnznobiIisiiti~~~ canlions dam les ccntrcs dc douanr tie FaladiE et de la Garc des fcwoviairc. 12. Afin d'smiliorcr la goitvcrnanccsur 16s corridorsde transport el a~cilererles temps de parcours ct de rutattons sur lcs corridors daacc$sdu Nati, le mandat et irs tr~oyctlsdu comitC t~atior~al Ihcilituticrn seront rmfc~rcls,ainsi que le suivi bcs programmes da dc sorlsibilis;ition des diV6rents coqx. Lcs sratistiqucs des temps scruIrr callrut~rspar I'Obselvataire drs transports sur Ics pratiques anormales et Its MEF et MET femnt un audit aniiuc1sur l a ri-sultars. 2.2.4 L'GIectricitO et I'cau potable un milieu urbain 43. Ides dkfis majeurs i reicvcr par les stmttgics ct lcs politiqucs dans Ie secteur des energies. qui a pour ubjcctif In fourniturc des services L.ner$&tiquesaccessibles au plus grand notnbrc {pop~~latrort unit& ~ndustnrilus)ct sur tout It: tenitwire B rnoindre codt, ct Sent: - le Gauvcnlcmcat a cfSeciu6 une premiere attribution des parcelles du pdrinittrc ~xpCrirt~cntrrI Kaurnnuna au secteur prive ;cornpte tenu de cornmenraires rc$us dc de la part dcs partemires techniques ct financiers une malyse approcondie dcs r6sultats a kt6 et'ftctuse. t'nvis de ~nanifcsrationa L.16 rclanck et I'ouverhlre des u f h s rtillisie le 14janvier 2007 . - la Cellule dtt gestion foncitre a Ltk dircctemenr rattachkc i la dircction ginQralede I'Oficrs en vtic dc rcnforccr sscs pt?rlbmtances. - une Ctude coniplkmenrairca bt& lanctc en vue de renforcer la partic financen~entdc I'itudr: sur le mkcanisme de financement privt! dc lUirrigationafin d'accruitre les superficics arnknag&csde I'Ofice du Nigcr avcc des fonds privGs. - a611d'ameliarcr la gestion des pcrrfbm;mccs de I'Officc du hliger diins un cadre dc dkveloppsmcnt dc la zone, tm audit arganisationncl a fti. &alis$. 2.2.6.2 La suite des rbformrrs 55. Les mesures suivantcs seronl mises en rerr5rI.e : (i) adoption par It: Ciunseil des Mirlistres du prajct de textt: portant crkation dc la structure de gestion du finaaccrncnt du l'irrigalinn ;(ii)adoption p r Ic G~uvctncn~unt schema directeur dc la ;Iorlede I'Off~ce du du Niger; [iii)adoption par le conseil d'administration du plan d' action de I'audit 01-ganisatia~mcl(iv) rnisc en place la stntcture dtf gcstiortdcs financements dc I'irrigation : et des cessio~~s foi.rcitrcs; misc en cEuvre des dkcisions du co~~scil d'administration conccrtlanr lc plan cl'acrion de l'autdit organisationnel tk I'Ofict- drr Nigcr ;(Y) poursuite dc la n~isecn oeuvre du piail d' action dc l'audir organisationnel. 2.3 ~ O M P O ~ A ~3T:EI,'ACCEYAUX SERVICES SOCIAL'X DE U.4SE 56. Eile constitue une ptiori~ddu cadre strategiquc dc croissanct: et de riducfian da Ia pnuvrotf, E11c cornprend deux progranzmcs :programme de la srtnti ct du d6valoppcn1ent social et pfOgRlmMe de I'cau polable (hws pkri~ne~re EDM). 2.3.1 Actions cnvisagCesen 2006 57. S'agissant dc la mise en w s r e du programme dc la santk et du dtveloppcment sncial, Ics action>buivantes unt kt& cnvisagtes en 2006. Pour amtliorcr l'offrc ct la qualiri des sen~iccsde santd. cllcs ~mrtcnlsur :(i) la finalisatiat~du canttat type de prrfonnancc 3vcc ies 1tBpitauli :(ii) la dCfinition d'un plan dc mrlfu~ernent&s senrices de planificatian pdmiliaie au niveau CSCOM el CSREF ;[ill) la colifirn~ationdcs dispositions prises pour houcler Ic plarr op6ritionnel 2007 du Ministkre de la Santti- et cclui du DCvcloppct~~cl~t Social :(ir)et i1auLpentarionde la proponion de?;rcssources ricurrcntcs transf%riesuus scnqicea~lkco11centr6s. 2.3.2 Actions sur le moycn terme 58. Au titie du prograrnrno de la Sant2 et du DCveIoppcnlcnt Social, lzs actions suivantcs seronr m i x en auvre : 59. Pour sm2liort.s Ifoffredc la qualit6 des sen~icesde sar~t@~actions puflcronr s i x (j) les la mist urt ccuvre des contrats de perfonnamces avcc iles h6pitaus ; (ii) I'adoption du budget ;innuel pour ves secteurs sur la basc des CDMT des derlx ministk~s,incluant pour 2008 une cane sanitairc prCvistonnelle prenant en carnptc Ic scrtcur privd pour l'etat des Iieux ;(rii) et ta poursuitc dc I'augrncntation des ressources rkcurruntes ttarlsf6r&e?;aux services diconccnk6s ;et (iv)l"aup~entiltiondu nombrc dc CSCOM opi-ratio~~nels. 60. Pour augmentcr l'utilisation ties services publics ct pdvCs dc ~afrle,I ~ sactions poi-tcront sur: ti) la linalisation des contlats types pour les ONG et le sectcur privC (MDS);et (ii)I'augrnentationdu la cmvcrturr:par 1esmuruellesde sante, 61. En ce qui col~cernele progranlrne de l'oau potabic (hors pl.rim6tre EDM), In prioriti- du tifiuccmemetrt esl de mettre en r~uvrcIc Plan Katiunal dlAccis $ l'Eau Po~ablc (PKAEP) visi~nti stteindre los Objcctifk de D&vcioppementdu MillCnnirc, c'ust-a-dire de Lbunir i75% de la populatiotl un accks i I'eau potahleert 2015. LCPNAEP va $[re tsaduit dans un cadrc i11lCgrC avcc la stratkpe mise i jour pour l'ossainissement. Les objectifs du PNAEP sont : (i) hurnir ilrous les villages au nloins un point d'eau potable (actucllemcflr 7.WOQ villages ne disposcnt pas cncon. d'un paint d'caii potable) ;(ii) mctjrlt cn place: Is politiquc dc rccouvrcrnent des couts your assurer la durabilitP des points d'eau (actuellement 30% des 25.000 points nu so111pas fonctionnels);(iii)apportcr un appui oux tnminunes pour leur permcnrc de plamfier, executcr ct gbrcr clllss-rncrnes ies infrasrn~cmrcs:(iv) promouvc)ir la dlllgatiun de gcstion dos syst&mesd'adduction d'cau h dcs opirateurs priv$s lacar~x: et t7nalcmcnt (ti) rnieux internox In promotion dc l'assainissement et I*hygienedatls Ici; prograttlmes Eau afin d'augtcntcr I'impact sur la santk des ppoyulations. 62. Les actions stlivantes seront engagkescn 2007 pour arnLliorer tbacck dc la poputatiod idessel-vicesd'eaupotabledurablesetahordables.Ellcsprtcrontsu:(i)larcleoruredes tcrtcs dc la DNH en incluant la mission de programmatian et de suivi du progralmnc secrnricl eau ; et (ii) la firlaiisation dcs la ~c+,uvellt:stmtkgii: de rnsintcnance des infrastn~cturt?~d'carr potable dont E'objectif est d'anaeliorcr la durabilite des i nfrastnic~urcs,dc programmer la rihabilitatiotl des X.OOU points d'eau non fonctionncls cr du prcrmuuvoir la d2legdtiu11de gcstion dcs systtmt-,~d'adductiun d'eau patable a travers Ic partenaricttpublic/l~rivd, LESCilVl DU PROGRAMME DE REFOKSIES 63. Pour rcnforcer le suivi de la matrice dcs tnczurcs, la coordina~ionson assurie par le Secrktariat GPniral d t ~Mi~listtrcde I'Ecunornie et des Finances (MEI;) en liaison avcc lcs D@parteinentsco~~ccmks. Pour un rneilleur srrivi du Programrnc par I'ensemble du Gouvcn~ctncnt,mutes ies actions relatives aux actiot-1spr6alablcs pour le CASRP-heronr inscritirs dans le Prr~gramme dc Travail Gouvernernental. Elles scrunt suivics rnensuellement et assortics dus oomprcs-rendus cles riunions. Quant aux sutrcs n?esures elks scront suivics trimesttieliemertt par le MEF en relatioli avec lcs rninisttros cuncemes. 6 t s i t n ~ ~ ! ~ ) ~ ~ l f r : !{$!I;U~.XII:~%I~~~I~~.IIIR~~$XUI~U / i ~ ~ a $3"(28 - X ( A ~~ a ~ $ ~ r ~ u n ~ l ~ ~ ~ ~ ~ l ~ x ~ l ~ l(:xl,.rihy,'ii[n< $a[ q i i u j lpq / / . T J & I Z I ~ ~ I & ~ W ~ ~ ~ M A E I Y E w ~&\J-IJ~ n i l n ~ & ' .xq.r> J( )a q~!&~kur I 7 1: t I &a11n'~4.1vra1a.w[+ 'Uo!af:.t!ap>~ ~ l ~ ~ $ $ $ ~ ~! . 'v~~~\lzs;!~~Ia.?IL>P~~> >a,w ' ~ x ~ , ~zq I I (I r i ~ c l j > p a q c c , . y1 *anips!r~I;.ud!rv>o)l? .?lsvr) I1~41,)u l ~>uicnun fl~uuquu>ma g~+i.~I~U: >r.bqulart SI:#!IC!~ t&qcz,]-J: I.FI~c~;x I> ~urruzuuuiihua,~ i(%uu.dcl i d S,].~VXQ raqlspnu aqnn u i r f l ~ ) numr!rz 1zurulz-x xn~pYUEWU nt! ~satr~ilawigr ?:urt>?sI:, g CIJPLJf [ ~ FIr 7 1 i$(1.> ~ ~ ~ m rKf gG%.itj:.\x i I I I b ; j I I 7 I ? . I *.vu ~ ~ ~ n i i d ,q?ndi-3u.j i d rrjs1~8pnqI* +lr.vg mb[r!fpclq ta '+nhpuouo~gu~~rtu ar(wa arlr ~~~,lra.r.~~ajua?~ *y j wnhlrpd vaaueug rap tlrr!)u;l q r p ~~HII.~.I.J~)II-LU: t )r(rrarlut~~.ji adrncdlu rap xa!.~$t!l(.- {I , J ~ s v *?laJ.tnej~ ) rl ap Irrl!lsnp+U ap a!Y?rs.Its r:l c: !nddv.p l!p,?l.) .~rafwald---!lel~ ,5 , .j/ t u n G sag ,sedg 22 9.' f r , 9 ANNEX 2: EVALUATION OF TRIGGERS FOR THE PRSC-1 Triggers for PRSGf identined under the EPPFMC Prior Actions for PRSC-1 Implementation Statns of the Prior Actions (grouped by previous component headings) (grouped by new component headings) Component 1:Strengthening the Macroeconomic Framework and Component 1: Strengthening the Macroeconomic Public Finance Management Framework and Public Finance Management 1.A. Strengthening the Macroeconomic and Budgetary 1.A. Strengthening the Macroeconomic and Frameworks Budgetary Frameworks, and PEM Prepare the Medium Term Budget Framework (MTBF) for Action fulfilled, but the measure has been excluded as an 2007-2009 consistent with the macroeconomic framework of the explicit action in the policy matrix in the process of 2nd generation PRSF, and that provides resource allocations by streamliningof the matnx. Ministry, sector and expenditure type (April 2006). 1.B. Poverty reduction strategy and Growth Make the draft 2007-2011 PRSF available for the arbitrage Action fulfilled, but the measure has been excluded as a session for the 2007 budget (July 2006). prlor action in the process of streamhning of the matr~x. Component 3: Strengthen public finance management 3.A. Budget reform program Implement mechanisms for monitoring and evaluation of the Implement the 2006 measures of the Action fulfilled. The CARFIP is the new structure Government's public finance action plan (from January 2006); Government's Public Finance Management succeedingthe CARB which has been in place for some and implement the actions in the plan (2006). action plan; and make the CARFIP operational. years. The CARFIP coordinator was officiallynormnated In October 2006. The authorities have been implementing the PFM action plan, although some key activities (namely the interconnection of the databases for the treasury,budget and financia1controls departments that will enable better monitoring of budget execution) is behind schedule. 3.E. Procurement 1.B. Procurement Adopt (by the Council of Ministers) the revised Action fulfilled. Adopt (by the Council of Ministers) the revised CPAR. CPAR. Triggers for PRSC-1 idenNied under the EPPFMC Prior Actions for PRSC-I ' Implementation Status of the Prior Actions (grouped by previous component headings) Qrouped by mew component headings) Component 2: Support to Growth Component 2: Support to Growth 2.A. Financial sector 2.A. Financial sector Conduct negotiations with each of the commercial banks with The authorities will: (i) invite the commercial Action fulfilled the view to finalize the respective strategies to clean up the bad banks to implement the consultant report's loans (by June 2006) (the negoclat~onsare to be conducting recommendations to strengthen loan processing between November 2005 and June 2006). procedures; (ii) facilitate the recovery of bad debts; and (iii) meet with the banks to agree on a strategy to clean up the bad loan portfolios. 2.B. Private sector: Export promotion and 2.C. Private sector: Export promotion and investment climate investment climate Adoption by the National Assembly (by December 2005) of a law Adoption by the National Assembly of a law Action fulfilled in August 2006. confirming that procedures pertaining to the attributing the confirming that procedures pertaining to the unique firm ID number supercede previous procedures applied attributing the unique firm ID number supercede by Statistics, Tax and Treasury, Social security and previous procedures applied by Statistics, Tax Employment departments. and Treasury, Social security and Employment departments. 2.B. Transport and transit facilitation 2.C. Transport and transit facilitation Confirm that the share of the road maintenance budget Inscribe a separate line item for the road user fee Action Fulfilled. The team detemuned that the origlnal stemming from fees reaches 40 percent in 2007 (end-September in the price structure for petroleum product measure would not be achieved. The Government's 2006); and determine the level of the fees (i.e., axle load fee, road imports. proposal to extracting a portlon of fees charged under the user charge on petroleum product imports, other fees) needed to pre-shipment inspectroncontract, if implemented,would reach the 40 percent target. allow the user fee share to lncrease to only 30 percent of the road maintenancebudget In exchange for waivlng the original tngger, which is a longstanding(but unachieved) action for securing sustainable financing for road maintenance, the team proposed the new measure aimed at achieving transparency of the existenceof the road user fee on petroleum ~mportsand pave the way for future increases in this fee. Notwithstandingthe Government's Initla1concerns on the potential impact of this measure in raising the retail petrol price, the Government decided to implementthe new measure on December 15,2006. Teggers fpr PKI identified under the EPPFMC Prior Actions for PRSC-1a , - [gMuped by"re:viouS ebmpdflent headings) .. Empiementation Statusof the Priorpctions (group& bgnew c~pponentheadings) .. * 2.C. Cotton sector reforms 2.E. Cotton sector reforms Continue implementation of the cotton producer price setting Continue implementation of the cotton producer Action fulfilled. mechanism (April and August 2006) with a view to limiting the price setting mechanism (April and August 2006). state budgetary risk of the cotton ginning company CMDT (permanently). Validation by the stakeholders (Gov't, DAGRIS, producers) of Validation by the stakeholders (Gov't, DAGRIS, Action fulfilled. Definition of the zones has been the definition of the zones (3 or 4) to be privatized (by end- producers) of the definition of the zones (3 or 4) completed. Preparation of the operational plan for January 2006); and adoption by the Council of ministers of the to be privatized (by endJanuary 2006); and CMDT's privatization is in progress accord~ngto the final operational plan for the privatization of CMDT (by end- adoption by the Council of ministers of the final agreed schedule. September 2006). operational plan for the privatization of CMDT . (by end-September 2006). Launch the bidding process for the selection of the privatization Launch the bidding process for the selection of Action fulfilled. advisor (by end-July 2006). the privatization advisor (by endJuly 2006). 2.D. Office du Niger reforms 2.F. Office du Niger reforms Strengthen the report on the irrigation financing mechanism in Undertake a complementary study to strengthen Action fulfilled. line with the original objective of augmenting resources the financing aspects of the private irrigation allocated to irrigation through financial capital markets and financing mechanism (commenceby end-November private operators in the agriculture sector; and adopt the 2006). revised report (June 2006). This component was not previously included in the PRSC. Component 3 :Access to Basic Social Services 3.A. Health and Social Development Programs Provide written confirmation of the modalities Action fulfilled. for transfer of the additional resources required for the 2007 program of the health and social development ministries. ANNEX 3: MATRIX OF POLICY ACTIONS consistent with sector a11existing MTEFs environment) for 2009- Strengthen and Implementedthe 2006 Elaborate and adopt Elaborate and adopt i MEF/CARFIP modernize public actions of the PFM (January 2007), and (January 2008) and finance management Action Plan implement the updated implement the updated (PAGAMGFP); and 2007 program of the 2008 program of the made the CARFIP PAGAMGFP (2007) PAGAMGFP (2008) Operational. Strengthen the Extended the cr improved)) OperationalizetheIT Finalize the Number of weeks 6 weeks 5weeks 4 weeks 3 weeks Execution: budget monitoring FRED4 version ,notably interconnectionwith 4 interconnection of MEF after the end of (2006) MEFIDGB, process integration of the sector ministryDAF units with all DAFs and each month to MEFIDNTCP, BudgetfCF(October 2006), and 4 DRBs based on the DRBs. produce the MEFIDNCF and Budget~CFlTreasury AGETZCinfrastructure; budget execution (by 31 December 2006) report (including Monitoring: functional, MEFIDGB economic and administrative c1assification)f 1B.Procurement Strengthen the The Council of Ministers Adopt (by the Council of Procurement No Yes Yes DGMP, CNCS. procurement system adopted the revised Ministers) the draft Decree Decree issued. (2006) CPAR. on the Procurement Code 1 1 1 I I (end April 2007) Adopt (by GOM)the drafl Establish the Regulation and No Yes Yes DGMP.CNCS. theprocurement department and established. regulatoiy department department to audit and depa-ent to audit procurement procurement transactions. Threshold for CFAF 10 >CFAF20 transactions. periodic reviews million million of the contracting (2006) Strengthen capacities and authorities responsibilities of the contracting authorities. Number of 0 4 All All New entities national (2006) resulting from the departments procurement reforms whose staff is trained. Installed a database in the Install a database with Begin using the CPAR Periodic 0 At least 2 DGMP with an integrated integrated procurement system of indicators and monitoring (2006) reports procurement management management system in performance standards reports including each year system, and extended to all four ministries (end-June (Baseline Indicators indicators contracting authorities 2007) Systems - BIS) (DGMP level--end- September 2006) Component 2: Support to growth ZA. Financiat sector Improve The authorities: (i) The commercial banks Implementthe po~tfolio Ratio of non- 29% 20% 20% Execution: performance of invited commercial banks implement the measures clean-up strategies. performing loans (as of 30 (April 2008) MEF, PDSF. banks to implement the for analysis, approval, in bank June 2005) recommendations of the monitoring, and recovery portfolios Monitoring: consultant report of loans, recommended in 9.1% 8% 8% MEFIDNTCP's regarding improvement the consultant's report. Rate of bank (3 1 verification report of loan procedures; (ii) margins December intervened to facilitate Adopt a strategyfor each 2005) recovery of bad debts; concerned bank to clean- and (iii) met with the up the bad debts in bank commercial banks to portfolios (June 20071. agree on portfolio clean- up strategies (by mid December 2006). Monitoring- Policy Measure Expected results . 1 + &sponslbleevaluationunit) PRSC-2(2007) Indicator Mediumterm PRSC-l(2006) PRSC-3(2008) (tndicativeprioractions Indicator@) referenre 2007 200% 2009 objectives (Prior actionsin bold) in italics) value (year) Implemented the Continue timely Reduce the GOM's share ~n 80% 80% 20% MEF and PDSF restructuring measures for implementation of the Government's share in BHM (end 2005) BHM to strengthen the restructunng actlon plan BHM (February 2008) bank's solvency, liqu~d~ty Gross share of 75.8% 75.8% 50% 40% and efficiency non-performing (end 2005) loans in the portfolio 11.7% 95% 80% 70% Operating ratlo (end 2005) Implementedthe Contlnue implementation Reduce the GOM's share 61.5% 20% 20% restructuring measures for of the restructunng actlon Government's share in (end 2005) BIM to strengthen the plan. BHM bank's solvencyand Ratlo of non- 35% 20% 15% efficiency Launch the call for blds performing loans (end for BIM's pnvatizat~on December 2005) Reduce the deticrts Subm~tthe new CRM law CRM deficit CFAF 18bn CFAF 21 CFAF20 bn CFAF 20 MDSSPA of the sac~alsecunty to Parliament, authonz~ng (2006) bn bn institut~ons the parameters reforms, and adopt the decree to implement thls reform MPS (old age, CFAF 6 3 bn CFAF 7.2 CFAF 6 3 CFAF 5.8 Adopt (by GOM) the new d~sab~lltyand (2005) bn bn bn texts pertaming to NPS health insurance plan) defic~t 2B. Private sector:Exports Promotion and investment climate enhancement Increase exports Slgned the ~nter-m~n~stenalFormulateand adopt Allocateappropnate Value of exports CFAF 431 12% 13% 14% M~nistryof decree dlst~ngu~shlng quality standards for resources for the other than gold billion lncrease lncrease increase Artisanal artlsan products from export industnes,notably developmentof export and cotton (2005) Activ~tiesiCNPA, antiquities. agricultural products ~ndustnesfor Mlnistry of information, training and Culture/The Conducted publ~c ~mprovement~nthe Natlonal Museum, awareness campaigns to supply chain MICiDNI, inform artisanal producers Apculture that the~rproducts are not mln~stry/CPS, subject to an expertise tax MPATIDNSI, and do not requlre export Chamber of authonzabon. Commerce that procedures stop windowfor investors management of the create an pertaining to the based on the new legal industrial zones. enterpnse INPS attributing the unique texts and taking account firm ID number the new lawfor the single Time taken to 42 days 20 days 12 days 8 days ANPE supercedes previous identificationprocess create an (2006) procedures applied by (first half of 2007)l enterprise MPIPME Statistics, Tax and 100% Treasury, Social security Cost of creating 202% 180% 150% and Employment an enterprise (% (2006) departments. of GDP per capita). MEFJDNI Improve enterprise In the context of a new Implementmeasures to Taxes and fees 20.7% 12.7% 12% 11% taxation (to align it general tax code, reduce further reduce property other than (2006) with WAEMU best thepropee registration registration fees. registration tax. practice) fees for property acquired byfirmsfor operational purposes. MEF, Ministry of Conduct a study of Align the corporate tax Number of 60 36 20 15 Gov't Lands, corporate taxation in Mali. regulation with the payments (2006) recommendations of the MPIPME tax study Time taken to effectuate 270 hours 198 150 100 payments Taxes 50% 50 45 45 Minisby of Work, Enhance the Conduct a study on labor Adopt and Implementthe Number ofjobs 35,000 35,000 35,500 36,000 Ministry of competitiveness and market competitiveness recommendations of the in the formal flexibility of formal labor market study sector. Employment, MDS, MPIPME labor contracts Monitoring- Policy Measures Expectedresults exalwtion +s (Respoasible unit) % " > PRSC-2 (2007) Indicator Medium-term PRSC-1 (2006) PRSC-3 (2008) Ondicative prior actions Indicatotfs) referenee 2007 2008 2009 objectives (Prior actions in bold) in italics) value (year) 2C. Transport and transit facilitation Strengthen the road Inscribed a separate line Implement measures to Implementmeasures to Share of user fees 15% 40% 40% 40% Execut~onMEF, maintenance for the road use fee in the increase the share of increase the share of road ~nthe Road (2006) Monitoring: The financial and petrol import price revenuesfrom road user user fees to 40% of the Authonty's Road Authonty ~nst~tutlonal structure (December fees lo 40% of the 2008 2009 budget of the Road budget (RA) framework 2006) road maintenance budget Authonty (end- (end-September2007) September 2008) Share of the road 65% 66% 67% 68% Execut~on network that 1s AGEROUTE,RA malnta~ned Monitonng: SDR Improve the Conduct a study on Adopt (by the Counc~lof Tax burden on 50% for Single tax MEF/DGI, compet~tivenessand taxation and specla1levies Ministers) the draft texts transport formal sector reame for METIDNTTMF quality of road on (road) transport for the new measures operators companies all firm transporters operators, wth emphas~s regardmg taxes and types, and on reduc~ngtax burden, levles on transport 18%for tax burden number of taxes, and on operators, and adopt the informal on the measures encouraging implementation schedule sector transport small transport operators for the reforms. (2004) f i m less to remain ~nthe informal (Apnl2008) than 30% sector (end-October 2007) Implement the new measures on taxes and lev~esfor the transport sector Conduct a study toward Expand the scope of Number of 0 5 50 150 Execut~on creatlng a competltlve products covered by the contracts (2006) METIDNTTMF, freight exchange (based on frelght exchange process, established CMC pre-selection and call for to Include transit vathln through the blds) to enable shippers Mali as well as for export freight exchange their own selection of (Maltan warehouses in transporter to use (July the ports) Monitoring: CMC, 2007); and Implementthe CMTR pllot freight exchange Set up electron~cl~nks operation covenng a between the freight selection of products exchanges Identifiedby sh~ppers(end (September 2008). 2007) customs declarations custom centers. Prepared the instructions, budgets, and the public awareness campaigns for staff of concerned monitoring report of the staff awareness abnormal practices authorized vehicles; I MoniOring- evaluation Policy Measures Expected results (Respohsibleunit) fRSC-2 (2007) hdicator Medium-term PE3C-1 (2OB6) PRSC-3 (2088) (Indicativeprior artlons Indleator(s) reference 2007 2008 2009 objectives (Prior acaons in bold) Initalics) value (year) I MET on OT 2D. Electricity and Urban Water Supply National Energy Validate the conclusions Department efficiency and studies identified in the of the studies identified in management entities for with the new the strategic plan for electricity and urban operato@) for National Water of EDM. management of elecbicity management of electricity water (December2008). electricity and Department and water services (tariff and water services urban water study, institutional study, (Institutional study of the Apply the new tariff supply are EDM o~timalelectricity electricity sector; tariff policy for electricity and operational investment plan). study, Study on optimal urban water (1" January CREE capital investment 2008). program for electricity; Ratio of gross and Technical and Adopt (with the donors) operating profits financial audits of EDM the optimal capital to sales revenue. for 2000,2004,2005. (By investment plan for the June 2007 for the last three electricity sector. studies, and October for Technical losses the I" study). Adopt an economic and in the electricity financial model for the distribution Preservethe financial sector that is acceptable network viability of EDM. to all stakeholders (June 2E. Cotton SectorReforms Improve the 1Continued implementing I Organizemonthly ITransfers to the 1management and 1the cottonproducer price 1meetings of the Treasury I ICMDT billion viabiky of the setting mechanism (April ~ o n i t i r i Committee for n ~ (ZOOS) cotton sector and and August 2006). the CMDT CMDT CMDT's cash CFAF 43 bn Make available the CMDT deficit (2005) accounting and financial evaluation (June 2007) to privatize, that are producers' share (2006) validated by the principal in the cotton stakeholders companies (Government, producers, DAGRIS) The Council of Ministers adopted the final operational scheme for complete CMDT privatization 2F. Support for reforms of the Oflice of Niger (ON) Increase the ON area Undertook a Adopt (by the Ministers' Establish the department Number of 0 834 3000 ON developed through complementary study to Council) thedrafCtexts to manage inigation hectares (2005) private funding strengthen the financing for the creation of the financing and transfer of developed with aspects of the private department charged with land titles. private funds irrigation financing managing irrigation 0 14 At least 60 mechanism. financing (October 2007) Number of professional cultivators (larger than 30 ha) Improve the Adopt (byGOM) the Cultivation 1.2 1.5 ON management and Master Developmentplan intensity rate performance of the of the ON zone (March ON within a 2007) framework for Completed the ON Adopt (bythe ON Board) Pursue implementation Irrigation 50% 80% ON development of the organizational audit. the action plan of the ON of the action plan of the maintenance (2005) ON zone organizational audit (April organizational audit. ratio (comprising a part 2007) of the SBgou,Mopti and Timbuktu regions) Component 3: Access to Basic Social Services 3A. Program for Health and Social Development Improve supply and Finalized the standard Implementthe hospital Number of 0 2 7 12 MSIANEH quality of health performance contract for performance contracts contracts signed (2006) Evaluationreport of services hospitaIs. with hospitals the results obtained performance contracts Defined a plan to Make the FP services Make the FP services Number of Data strengthen family planning operational in half of the operational in all couples-years o f collected 96,050 112,058 128,066 MS/SNIS (FP) services offered by CSCOM and CSREF CSCOM and CSREF contraceptive from 2007 community health centers protection (CSCOM) and health referral centers (CSREF) Provided written Adopt a budgeffor the Adopt a budget for the Current resources MS: 10.18% 10.69% 10.73% 10.8% MS/DAF confirmation of the 2008program based on 2009 based on the two allocated to (2005) modalities for transfer of the MTEFs of the huo minishies' MTEFs health and social MDS: 5% 6.01% 6.08% 6.10% MDS/DAF the additional resources ministries, including a development as a (2005) required for the 2007 provisional health map share of the program of the health taking into accounf the Government and social development private sector in the current ministries. statistics of existing expenditures health centers Increased the share of Transfers to sub- 27% >=30% >=35% 2=35% MS,MDS current resources national central (2005) transferred to sub-national government central government units units, as a share of current expenses of the MS and MDS. Increase the use of Finalize the standard Establish the contract Rate of assisted 51% 55% 57% 59% MSiSNIS the health services contracts for engaging system and contract childbirths, (public and private) NGOs and private sector monitoring, including for including by entities NGOs trained traditional midwives Finalize the plan to extend Extend the coverage of Share of 1.4% 1.9% 2.1% 3% MDS/SISO community health community health population (2006) insurance programs insurance programs covered by (mutuelles) community health insurance programs Monitoring: Annual report of the DNH's functioning potable water delivery systems et development PPP f o ~ for promotion of PPP. Number of piped 2 5 15 30 piped water systems water systems (2005) managed under PPP ANNEX 4: DONOR HARMONIZATION PROCESS 1. Since the 2003 Donor Round Table held in Geneva to mobilize resources for implementation of Mali's poverty reduction strategy(PRSF 2002-2006), the Governmenthas expressed its willingnessto establish a framework for public policy management conducive to a transition toward increased budget support. This is part of Mali's agenda for implementing the Paris Declaration on Harmonizationand Alignment. DONORORGANIZATIONIN MALI(CONSULTATION MECHANISMS) 2. The following consultation mechanisms exist in Mali for Government-donor and intra- donor dialogue: The Mixed Mali-Donor Commission meets quarterly comprising Government and donor representatives.It is co-chaired by the Minister of Economy and Finance and the lead donor agency (designated for a six-month term rotating alternatively between bilateral and multilateral agencies); Intra-donor consultation occurs monthly. The meeting, which is chaired by the lead donor agency supported by the preceding and subsequent lead donor agency, discusses current developments in Mali and specific themes relating to PRSF implementation; Donor thematic groups, which meet more regularly as needed, provide feedback to the monthly meetings. Each thematic group meeting is chaired by a designated lead donor and comprises donors involved or interested in the group's theme. The thematic groups comprise technical staff but occasionally include donor agency heads for information sharingand decision making purposes. BUDGET SUPPORTAS AN INSTRUMENT OF HARMONIZATION 3. In principle, all donors involved in the donor consultations subscribe to the Paris Declaration, and seek ways with the Mali Government to operationalize it. A thematic working group on harmonization that has been in place since 2004, focusing with the Government on defining the mechanisms for implementing common budget support fi-arneworkby Mali's donors. Furtherwork is needed to reach the harmonizationobjectives. 4. Current progress toward harmonization comprises the signing of the following between the Government and donors: A Framework Arrangement for budget support (MOU) expressing the commitment of the signatoriesto adopt a common set of general principles for budget support to Mali; six donors including the World Bank signed the MOU with the Government in March 2006; Specific Arrangements for budget support to the education and health sectors (The Netherlands) as well as to support the decentralization process (European Commission); the World Bank is not a signatoryto the specificarrangements. 5. Sector budget support (i.e., the specific arrangements for health, education and decentralization) enables: (i) donors to establish a programmatic approach in the main priority sectors using national procedures for public finance management and procurement; and (ii) enhanced donor coordination on program design and conditionalityas well as the institutional framework for monitoringand evaluation of program implementation. 6. Currently, a specific arrangement for general budget support (i.e., not earmarked to a sector) is being finalized, together with donors providing budget support or balance of payment support. The PRSC falls into this categoryof arrangements. fie WorldBank's role 7. The World Bank is the lead donor in Mali on public finance management and budget support. The Bank led the technical discussions that culminated in the signature of the Framework Arrangement for budget support to Mali. The Bank is currentlyworking with the Malian authorities and other donors to finalize the specific arrangement for general budget support,and is overseeing the donor support PEFA exercise. General architecture of budget support to Mali A framework arrangementthat outlines the general principles for budget support to Mali Specific arrangements aimed at clarifying: (i) the practical modalities for implementing the framework arrangement for general budget support, consistent with Mali's budget cycle and minimizing the transactions costs in terms of design, monitoring and evaluation (predictablity, joint evaluations, coordinated policy matrices); (i) common mechanisms for provision of sector-specificbudget support consistent with Mali's budget cycle and national implementationprocedures . Principlesfor general budget support 8. Discussions on the general principles for implementing budget support are ongoing between the donors and the Government.The followingpartial agreements havebeen reached: Announcement(predictability of budget support). Joint annual announcements of donor support over the medium term would be made by end April at the latest, to enable updating of the medium term budget framework. The announcements would be confirmed in September/October to provide advance information for the subsequent year's budget preparation process. Disbursements would be made preferably during the first or third quarters of the calendar year. Monitoring and coordination would be made through a committee comprising representatives of the Ministry of Economy et Finance (chair), Ministry of Planning and Land Management, PRSF Unit and donors signatory to the Arrangement; the committee would meet twice a year (in JuneIJuly and November) and on an ad hoc basis as needed: 1. The June/July meeting would review progress in implementing the conditionalities to enable donors with disbursements programmed for the third quarter of the year to assess whether to disburse; update the list of conditionalities for the subsequent year to enable the second disbursement that is based on the review of PRSF indicators and structural and sectoral reform programs; updating of the list of conditionalities for the subsequent year, to clarifL key actions (exclusive of progress on PRSF indicators) required for release of the first quarter disbursement; 2. TheNovember meeting would review the conditionalities (based on outcome of joint missions and the 2"d IMF mission) to assess whether to release the next year's 1stquarter disbursement. Missions would preferably be joint so as to minimize the transaction costs for the Government, and preferably scheduled in line with Mali's budget calendar and PRSF reviews. TeE PRSCAND THE GOVERNMENT'S AGENDA FOR ALIGNEMENT ET HARMONISATION 9. The PRSC is expected to be consistent with the general principles above as well as with national priorities, given that the Bank's is a signatory to the general budget support Arrangement with the other concerned donors (Sweden, France, The Netherlands, Canada, African Development Bank, and European Commission). It should also be made consistent in time with the final arrangement that emerges from the ongoing discussions. 10.In line with the principles above, the PRSC process could be structured according to the proposed schematic,which takes into account Mali's budget cycle, the PRSF process, and the Government's preference for disbursements to be made in either the first or third quarters of each year. The schematicincludestiming of missions and disbursements for PRSC's 1,2 et 3. ASw'MKX5: PUBI,IC EXPENDITURE AND E3NA&NGfA t ACCOt;NTA&fl,IJ"Y QPEFA) This &hlcrcpraduccs An~~exof the preliminafy &%&Xievaluation report agreed with A PPlFA the authoritieson fatlrkary t 8, 2007. tI,,".."I PI- i 1Chltxltrt-iiiirssand parilcipahvn in tiK.--nnnuei hdgd pxxss I 1"-i 2 1Muld-WYSperspdve injisal planning,evpcnditiiregalicy and hidgctrng lql-22 i'irralintss and rcguiartgof'acctx~nts~.e~clnulial;rn ---. ,",,.,-.,-, - PI-2.X jA\rc$hbilityd'i!rfrrnrmaitrn ~wwlccsiz~civsdby st~t-~dcliv~zyunis - 037 c c "-"*.- - -- , -,, -,--,-"A IFl-24 1Q~ml!llrriit)i&r~ritjr;lclir~sciC ~n.).ciarbudkxct np)axs -- D+ -.-m.m,-,.-,.-..- 1 Lf-1 PrcxlictrtbiirycttU l r ~Dadgel Soppjrt ~ r 1 .... 1, +&;; -.,-,-,m-,-- i%yition ~ m - i d cby cfo??cx~for bt~dgcti~ig wfx>rtingon p~gectzr~! d and ni ..tn.c%Xa:!?.iil_ *.-,--*,,,.--.-.- ,m..,,~","...,w.. 2 Plrpotltot~ofaid that is nirttvzgcdby uw il:Df'n~Siiln~$ pr.txx:cItzrm / C -,,,-,,,,-,,,-, ".i *..- ANNEX 6: FUND RELATIONS NOTE Mali-Assessment Letterfor the World Bank January 30,2007 Further to the completionof the fourth review under the PRGF arrangement on a lapse of time basis in July 2006,16this note provides a preliminary assessment of Mali's macroeconomic conditionsand outlook as well as an update on relationswith the IMF.'~ Mali's reform and stabilization efforts since 1996 have been supported by the Fund through financial and technical assistance. This includes support under two three-year Poverty Reduction and Growth Facility (PRGF) arrangementsduring 1999-2003and the current three-year PRGF arrangement, which was approved by the Executive Board in June 2004. Mali reached the completionpoint under the enhanced HIPC Initiative in March 2003 and received SDR75 million in debt relief under the MDRI from the Fund in early January 2006. In November 2006, a mission concluded ad referendum discussions on the fifth review under the current PRGF arrangement, with a possibleBoard meeting in February 2007. Mali's recent performance under the PRGF program has been uneven. The authorities have met all quantitativeperformance criteria for the fifth review but missed most of the structural benchmarks. Prudent fiscal policybacked by developmentpartner support, includ- ing MDRI, has secured reasonablegrowth, low inflation, and a sustainable external debt position. In contrast, lackluster structuralrefoms have left the country highly vulnerableto exogenous shocks. The authorities kept their fiscal program on track through the end of September by taking new measures.A shortfall in revenue (0.8 percent of GDP at the end of September)prompted the authoritiesto curtail non-povertyrelated spendingplans (0.6 percent of GDP) and, startingin September, to implement additionalrevenue measures.As a result, the authoritiesmet all the PRGF's program's quantitative performancecriteria for the end of September2006. However,the poor revenue performance meant that the indicativetargets for tax revenue and the basic balance were not met. Mali's external environmentwas favorablein 2006. Terms of trade strengthened,as higher gold prices more than offset the rise in internationaloil prices. Thanks to MDFU, externaldebt sustainabilityremained well within the threshold levels and is expectedto strengthen further. 16See Mali--FourthReview Under the Three-YearArrangementUnder the PovertyReduction and GrowthFacility and Request for Waiver of Nonobservance of Performance Criterion,EBS/06/83, June 30,2006. " Based on information availablethrough November 2006. rn Owing to an improved external environment, the economy is maintaining momentum and inflation is falling. Real GDP growth is projected to grow by 5 per- cent in 2006, as a result of a good 2005106 cereal harvest, higher gold production, and emerging growth in services. Tracking developments in food prices, the inflation rate is projected to decrease to less than 2 percent in 2006. Mali's favorableinflation differential with its trading partners has partly offset the nominal appreciation of the CFA franc against the U.S. dollar. However, progressin structural reforms has been slow since the fourth PRGP review was completedin July. In particular, there are continued delays in (i) intro- ducing a petroleumpricing mechanism linkedto world prices; (ii) presenting civil servicepension (CRM) reform legislation to the National Assembly; (iii) attracting private sector interest in the recapitalization of the Banque de I 'Habitatdu Mali (BHM); (iv) progressing with privatization of the Banque Internationale du Mali (BIM);and (v) proceedingwith the studiesnecessaryto preparethe stateenergy companyEnergie du Mali (EdM) for reprivatization. The Council of Ministers (i) approvedin June a package of parametric reforms that would--once the decree is issued-gradually reduce the projected deficit of the civil servicepension; and (ii) adopted in October an operationalplan for the privatization of the state-owned cotton ginning company (CMDT) in 2008. The authorities have expressedtheir renewed commitmentto the objectives of the PRGP, which expires in June 2007. The 2007 fiscal framework is reasonablyprudent and should not require recourse to domestic financing. Its implementationshould be facilitated by the authorities' decisionto allow for a full pass through of internationaloil prices into domestic prices. Another key commitmentthat would impact public financesin the years to come is the decisionto submit to parliament legislation to reform the CRM. Furthermore, the authoritiesrecognizethat strengtheningthe financial system and reinforcing governance of state-ownedenterprisesare the immediate stepsneeded to realize Mali's growth potential. In the banking sector, priority will be given to strengthening the balance sheets of a number of public institutionsand increasing the role of the private sector. The authorities are committed to fully support the restructuringplan of BHM, in consultation with the World Bank, but will not issue any new loans or guarantees in its favor. Privatization in the banking sector should continue in 2007-08 and a comprehensive financial sector development strategyshouldbe launched. At CMDT and EdM, the priorityis to address governance problems to improve productivityand safeguardpublic finances.The authoritieswill strengthen their surveillanceof CMDT's and EdM's cash flow operationsto limit their operating lossesin 2007. The staff emphasizedthe importanceof ensuringthat these companies remains commerciallyviable in preparation for their planned privatization in 2008. Beyond the period covered by the current PRGF, the authorities are committed to improving Mali's difficult business climate. The second-generation PRSP (2007-11) appropriatelyplaces private-sector-led growth as the cornerstone of the development strategy. If forcehlly and consistentlyimplemented in an action plan that refocuses the state in its core functions, Mali could confidentlycontemplatea higher pace of economic growth than the current 5percent trend rate and achieve a significant reduction in poverty. Main policy risks center around effective implementation of key structural reforms to improve governance and avoid an energy andlor cotton crisis. Failure to implement much needed structural reforms would discourage investmentand possiblydonor support,generate socialpressures, and undermine Mali's medium-term economic and social objectives.Policy- making in the immediate future will be furthercomplicated by the political calendar, as well as by the continued volatile situationin the northernpart of Mali and in neighboring C8te d71voire.Mali will also remain vulnerable to exogenousdevelopments,notablypotential drought and terms of trade shocks. ANNEX 7:PROGRESS ON THE MDGs Progress to date for various indicators suggest that Mali may not reach some of the MDG targets. There are eight MDGs in the declaration adopted by the United Nations. The first seven MDGs can be grouped into four categories: a) eradicating extreme poverty; b) eradicating hunger; c) Achieving universal primary education and promoting gender equality; and d) improving health outcomes and ensuring environmental sustainability. The eighth MDG relates to the development of a global partnership for development. Data on the progress achieved so far for the indicators related to these goals are given in Table A7.1. A more detailed discussion (together with explanationson the data sources used for the estimation) is availableas well as in the November 2004 report entitled Rapport de suivi de la mise en oeuvre des Objectifs du Millknaire pour le Dkveloppement (OMD) and prepared with the support of UNDP. Eradicating extremepoverty (Goal I). The first MDG includes two objectives, the first one of which is the eradication of extreme poverty understood as the inability for households to generate enough resources in order to meet their basic needs. To monitor progress, the target is to reduce extreme poverty by half between 1990 and 2015, and the main indicator is the share of the population living below a Purchasing Power Parity poverty line of US$1 per day. In practice, rather than using the US$l poverty line, it is better to rely on a country-specific methodology for the estimation of poverty in order to track progress towards that goal. Estimates prepared by DNSI suggest relatively slow progress towards reducing poverty, with the share of the population in poverty declining from 72-73 percent in 1989to 68.3percent in 2001. Alternative estimates based on the cost of basic needs method suggest faster progress, with the poverty headcount reduced from 63.8 percent in 1989 to 56.5 percent in 2001. In fact, the reduction has been larger since the 1994 devaluation, and this is confirmed using data on assets owned by household in repeated demographic and health surveys. But even then, achieving a reductionby half of poverty by 2015 will require higher growth rates in the future as comparedto the (already relatively good) performance observed in the 1990s. Eradicating hunger (Goal I). The second objective in the first MDG is the eradication of hunger, with as target a reduction by half the share of the population which suffers from hunger. The indicators for this target are the prevalence of child malnutrition, as well as estimates of the share of the population without adequate dietary energy consumption.Data on child malnutrition are available from the nationally representative Demographic and Health Surveys. Child malnutrition as measured by stunting actually increased between 1991 and 2001, from 27.1 percent to 38.0 percent, but other indicators such as wasting showed an improvement, from 42.9 percent to 33.0 percent. Overall, despiteprogress in some indicators, it remains unclear whether a reduction in the various indicators of malnutritionand hunger by half in 2015 versus 1990levels is likely. Achieving universal primary education and promoting gender equality (Goals 2 and 3). The next two MDGs are to achieve universal primary education and promote gender equality. The target for universal primary education is the completion of a full course of primary schooling by boys and girls alike. There are three indicators to measure progress: the net enrollment ratio in primary education, the proportion of pupils starting grade 1 who reach grade 5, and the illiteracy rate of 15-24year-olds. The target for gender equality and the empowerment of women is the elimination of gender disparities in primary and secondaryeducation by 2005, and for all levels of education by 2015. The four indicators suggested for monitoringprogress over time are the ratio of girls to boys in primary, secondary and tertiary education, the ratio of literate females to males of 15-24 year-olds, the ratio of women to men in wage employment in the non-agricultural sector, and the proportion of seats held by women in national parliament. The data in Table A7.1 suggests significant progress. For example, the gross enrollment rate in primary school increased fiom 26.0 percent in 1990to 67.0 percent in 2003, and the ratio of girls to boys in primary schools increased from 0.62 to 0.73 over the same period. As for the literacy rate among the population aged 14 to 25, it has increased fiom 18.8percent in 1991 to 41.5 percent in 2001. A continuation of this trend might enable Mali to reach the MDGs. Improving health outcomes and ensuring environmental sustainability (Goals 4 to 7). The fourth and fifth MDGs are essentially to reduce child and maternal mortality. The targets for child mortality are to reduce by two thirds, between 1990 and 2015, the under-five mortality rate (with three indicators: the under-five mortality rate, the infant mortality rate, and the proportion of one year old children immunized against measles). The targets for maternal mortality are to reduce by three quarters, between 1990and 2015, the maternal mortality ratio (with two indicators: the maternal mortality ratio itself and the proportion of births attended by slulled health personnel). Unfortunately, as shown in Table A7.1, progress is fairly limited in the indicators for infant, child, and maternal mortality. Today, only a minority of women benefit from a medically assisted delivery. The sixth MDG is also related to health: it consists in combating and reversing the spread of HIV/AIDS, malaria, and other communicable diseases. There, some progress is achieved, in so far as Mali has been able to avoid high rates of HIVIAIDS infection. The seventh MDG is to ensure environmental sustainability. While there are many indicators here, an important one consists in halving by 2015 the proportion of people without sustainable access to safe drinking water. Strong progress has been achieved here, with the share of the population with such access increasing from 38.0 percent to 54.1 percent. Building a global partnership for development: Selected indicators related to this goal are also provided in Table A7.1. After the adoption of its PRSF, Mali became in March 2003 the 7' countryto achieve the completion point for debtrelief under the HIF'C initiative, which has enabled the country to reduce key debt ratios, including the debt service to export ratio which has been reduced by more than half. In line with the priorities established in Mali's PRSF, resources from debt relief are being allocated to priority social sectors and poverty reduction activities. More generally, during the period 1993-2002, about 60 percent of development assistancewas allocated to basic social services. Table A7.1: Key goals, targets, and indicators related to the MilleniumDevelopmentGoals Objective 1 Goal I Indicator I Circa I Circa I 1 1990 2001 Halve, between 1990and Proportion of the population I DNSI 72- DNSI 2015, the proportionof livingbelow the line 73% 68.3% people whose income is W.B. W.B. 1.Eradicateextreme below the poverty line 63.8% 56.5% poverty and hunger Halve,between 1990and Percentageof children less Stunting Stunting 2015, the proportionof than 5 years old who are 27.1% 38.0% people who suffer from undernourished(stunting) Wasting Wasting hunger 42.9% 33.0% 2. Achieve universal Provide all childrenthe Proportion of children who Primary Primary primary education I means to completeprimary I have completedprimary education school 3. Promote gender Eliminate gender disparities Ratio of girls and boys In equality and the in primary educationby 2005 primary, secondaryand empowerwomen and at all levelsof education tertiary by 2015 4. Reduce chlld 66% reduction in child Shareof chlldren dying Mortality mortality rate between 1990 before 5 years of age I and - 2015 5. Improve maternal 175% reduction in maternal I Maternalmortality rate Health mortality between 1990and 1 1 1 2015 Stop the spread of HIVIAIDS Prevalencerate of 6. Fight HIVIAIDS and reverse the currenttrend HIVIAIDS NA 1.7% and other major diseases Manage the spread of malaria Malaria related mortalityrate and reverse the currenttrend Integratethe principles of Percentage of land devoted sustainabledevelopment in to forests the national development policy 50% reduction of proportion Proportionof the population of the population without having accessto safe 7. Ensure access to safe drinking water drinkingwater environmental by 2015 sustainability Improve access, for as many I Proportionof the population people as possible, to decent having access to a better and affordablehousing drainage system Proportionof the population having access to decent housing 8. Build a global Commitmentto the needs of Proportion of ODA for partnership for PMA social servicesand basic development infrastructure Viability of debt Debt sewice/export ratio Source: Compiledfrom U DP and Republicof Mali (2004) and World Bank estimates. ANNEX 8: MALI COTTON SECTOR REFORMS: CURRENT STATUS, ISSUES AND RECOMMENDATIONS I. Background on Cotton Sector in Mali 1. In 1999-2000the cottonparastatal company,"Compagnie Malienne deDkveloppement de Textiles" (CMDT), which has had a history of periodic deficits and public bailouts (1986, 1991-1992), was confronted by yet another severe financial crisis. The drop in world cotton prices since the beginning of 1998 precipitated the last crisis and also revealed the serious mismanagement of the company during the previous years, as shown by an increase in overheads, lack of cost monitoring and control, misprocurement, and inappropriate investments. A comprehensive cotton sector recovery and reform program was designed by the government of Mali in 2001, with the help of the World Bank, the French Development Agency (AFD) and the Dutch cooperation, to respond to the crisis faced by the CMDT and the Malian cotton sector. The crisis resulted in heavy financial losses (CFAF 56 billion, i.e. close to US$100 million at the time), leading finallyto a new bailout of CMDT. 2. Since the mid-1990s, CMDT had been enjoying huge cash flows and making large profits as a consequence of the devaluation of the CFA Franc (CFAF) in 1994. During the same period, farmers were receiving a relatively low price for their cotton seed, compared to neighboring cotton producing countries. During the period between 1994 (first year after the devaluation of the CFA Franc) and 1998 (drop in world price for lint) they received on average 37% of the export price (see attached table). This, combined with their awareness of CMDT's mismanagement, cotton farmers engaged in boycott of the sector in 2000-01 with almost fifty per cent of them opting not to cultivate cotton, therefore dividing by two the country's production and aggravatingthe sector's economic and financial crisis. 11. Implementationof the Cotton Reform Program under SAC I11 and SAC IV 3. In August 2000, the Prime Minister of Mali, aware of the gravity of the situation, requested the assistance from the Bank to help design and implement a comprehensive restructuring program for this key sector of the country's economy. This entailed both short- term measures (technical and financial audits, firing of the PDG, implementation of a financial recovery plan, audits and studies, establishment of an authoritycalled MRSC to lead the design and implementation of the sector reform program, etc.), as well as institutionaland policy reforms to address the structural deficiencies that had been put in evidence. A national forum on cotton was organized in April 2001 to help restore confidence between stakeholders regardingthe sector's futuredevelopment.The government of Mali acknowledgedat that time that the sector model-a monopsony entrusted to CMDT, a parastatal-had clearly shown its limits and needed to be replaced by a new organization of the sector. This entailed divestment from the state, introduction of competition and greater involvement of the private sector. 4. The objectives of the reforms, as described in the LPDSC, included: (i) the containment and reduction of production costs, in order to align ex factory prices with the price of fiber on the world market; (ii) an improvement in crop yields by strengthening extension services to cotton producers, the implementation of soil fertility restoration techniques and observance of the different technical schedules; (iii) the promotion of grassroots organizations, most notably through the creation of cotton producer associations; (iv) a strengthening of the role of the private sector, producers and decentralized communities in achieving the objectives of the cotton sector; (v) an increase in the sector's contribution to the national economy; (vi) a contributionto the fight against poverty and the improvement of revenues and the population's quality of life; and (vii) price determinationin the sector based on £feenegotiationamong actors. 5. Three broad strategic orientations were identified in the Letter of Cotton Sector Development Policy (LPDSC) approved by the Council of Ministers in October 2001. A first strategic orientation consisted in redefining CMDT's role in core cotton producing activities. This focused on the progressive withdrawal of CMDT fiom: (i) public service programs; (ii) agricultural extension; (iii) supply of inputs and equipment; as well as (iv) progressive withdrawal of CMDT from transport;and (v) rationalization of the use of human resources. A second strategic orientation consisted in increasingparticipation of producers and the private sector in managing the cotton sector. This included: (i) opening up CMDT's share ownership to producers and workers; and (ii) the increased mastery by producers of the provision of services they need, such as rural advisory services, input supply, rural equipment and transport. The third strategic orientation consisted in liberalizing the cotton and oil-seed sectors. This included: (i) the Government's commitment to liberalize the cotton and oil-seed sectors, and to open them to competition in order to increase their competitiveness, their profitability and to increase the value of these products and their by-products; (ii) the creation of a competitive framework for those functions from which CMDT is going to withdraw; (iii) the privatization of HUICOMA; and (iv) the liberalizationof the marketing of by-products. 6. A strategy to privatize and make a progressive transition to a liberalized cotton sector was designed and agreed upon through several studies and technical discussions with government teams, farmers7representatives and development partners during two and a half years. This strategy was embedded in the action plan of LPDSC, endorsed officially by the Council of Ministers in November 2003. It included as a key element the creation of 3 or 4 new cotton ginning companies by sale of CMDT's existing assets to strategic private investors. Negotiations were initiated with a view to engaging the International Finance Corporation as Financial Advisor to the Government of Mali for the implementation of the privatization scheme and assistanceto the process. 7. SAC JII,a three-tranche structural adjustment loan of $75 million was put in place in 2002 to support the program implementation. Tranche disbursement conditions included progress in government's retrenchment fiom CMDT (OHVN zone) and Huicoma, the oil seed processing subsidiary of CMDT. Following an open and transparent bidding process, two foreign companies, Dunavant of Switzerland and SOMDIAA of France were designated as provisional awardees for the respective transactions. However, after lengthy negotiations it was not possible to reach closureon these privatizations. 8. In line with the LPDSC and in order to reduce the excessive overheads in CMDT, a social plan was implemented in 2003. One-quarter of CMDT7sstaff was declared redundant and severancepayments were made. 9. In July 2004 however, the President of Mali indicated his intention to postpone the deadline for the privatization of CMDT to 2008. In the view of Mali's authorities, the two impedimentspreventing the implementation of the agreed reform agenda were: (a) the need to strengthen and reorganize producersy organizations, and (b) the difficulties that the Government of Mali has had to face in the recruitment of the advisors for the privatization. Mali's President Tour6 underlined that once these two issues were solved, the agreed privatization scheme,which aims to re-organize the market in fourregional monopolies,could go ahead. 10. In order to move ahead with SAC N,the critical conditions that were set by the Bank for appraisalwere: (i) a satisfactoryplan to cover CMDT's forecasted deficit for 2004105 ;(ii) a credible proposition to reform the pricing mechanism and bonus payments; and iii) a credibleupdate of the timetable for the privatization of CMDT. 11. In January 2005, the Government set up a new price mechanism to correct the bias against producers by linking the producer price to international market conditions, and de- linking farmers7revenues from CMDT management performance. A protocol governing the new price setting mechanism was signed by the Government, farmers and the CMDT, to be in effect through the privatisation of the CMDT in 2008. A particular feature of the new mechanism is its objective of maximizing farmers7revenues and minimising budget risks through: (i) the requirement that the initial price (set in April) at the beginning of the crop season be in the range of CFAF 160-175 per kilogram, and that the price be revised in August if world prices fall significantly); and (ii) a pre-determined distributionof the sub-sector gross income between producers (60%) and CMDT (40%). During the post-privatizationperiod the cotton "inter-profession" agency, to be created to include farmers and the new private companies,will be in charge of taking decisions on the price settingmechanism. 12. In November 2005, the Prime Minister of Mali visited Washington and requested the Bank to send ajoint mission to Mali aimed at resuming the dialogue on the cotton sector and boosting the reform process. Farmers' representatives and the main donors supporting the sector hlly participated in the mission. The main conclusions of the mission were: (i) the Government confirmed its commitment to engage a comprehensive reform of the sector by 2008; (ii) a revised timetable for the cotton sector reforms prepared by the Government was agreed upon; (iii) a set of benchmarks were selected to follow up on the timetable implementation; and (iv) a steering committee including farmers and donors representatives was set up to meet regularlyto monitor the timetable implementation. The revised timetable for the cotton sector reforms 13. The November 2005 revised timetable for Mali Cotton sector reforms is stated in the Government document entitled <( Chronogramme rkvisk du processus de reforme du secteur coton (adoptkpar le conseil des rnznistres en sa skance du 9fkvrier 2005) w. The Bank and the core group of partners (AFD, Dutch and EU) committed to support the revised timetable for the cotton sector reforms and decided to finance its implementation mostly through their budgetary support. The revised proposal timetable was designed took into account the increased role to be played by the farmers organized into cooperatives in the sector and lessons learned through the sub regional countries experiences in reforming the cotton sector. The main objective of the reforms as stated in the document was to improve the contribution of the cotton sector to the country economic and social development. It included 6 specific objectives: Ensure the financing and the adequate organization of the cotton crop seasons during the transitory phase: regular monitoring of the financial situation of CMDT by the Ministry of Economy and Finance Supportthe start up of the privatized HUICOMA activities; Achieve the privatization of CMDT: preparation of an operational privatization scheme- recruitment of the investment Bank-adoption of the privatization law by the Government and launching of the bids; Set up the regulatory structuresof cotton sector: including the cotton stock exchange, the cotton qualityranking office and the interprofession agency; Ensure that necessary accompanyingmeasures are taken into account for the efficiency of the reforms: - stabilization fund- price mechanism- communication campaign- design of a strategicframework for cotton sector development;and, Empower farmers' organization to play an increased role in the sector management: - Structuring of cotton farmers associations in cooperatives and implementation of a capacitybuilding program. The implementation timetable 14. The reforms monitoring steering committee organized a quarterly meeting to review the reforms implementation progress. Overall the timetable implementation is satisfactory. The reforms are conducted in a participatory manner with the involvement of all stakeholders. A lot of analytical studies have been conducted and shared with farmers and development partners. 15. Privatization operational scheme: A study was conducted by the firm AIDVlC2G Conseil. The study analyzed several privatization schemesand confirmed that the best scheme is the division of CMDT into four blocks. It also confirmed the pertinence of the regulatory bodies proposed to accompany the privatization except the Cotton stock exchange that may not be an incentive for the private sector. The studywas widely discussed among stakeholders including farmers' representatives. The Government (Council of Ministers of March 9th) adopted the Privatization operational scheme whereby the CMDT will be divided into 4 blocks to be privatized and is processing the recruitment of the privatization adviser (investment Bank) whose contract is expected to be signed by February 2007. Due to the importance of the production and its distribution over the south and west of the country, it was decided to split the company in 4 balanced zones in the operational scheme of privatization adopted by the Government in October 2006. The capital of the private companies will be sharedby private owners (61%), producers (20%), State (17%) and CMDT workers (2%). 16. Implementation of the price mechanism: It has been implemented successfblly so far for two crop seasons, resulting in additional price payments to the farmers. During the 2005- 2006 crop season, the application of the price mechanism led to the payment of 160CFAF for the first grade cotton to the farmers and an additional price of 8.99 CFAF per Kg (a total of about CFAF 5 billion) at the end of the crop season. This mechanism should be kept till the privatisation of CMDT and its management transferred to the interprofession agency in the post-privatisationperiod. 17. Stabilisationfund: Fanners are setting up a price stabilisationfund with the support of the EU, which will be operational during the 2006-07 crop seasons and will strengthen the price mechanism by securingprices paid to farmers. The EU will provide CFAF 5 billion and f m e r s will provide 40% of their additionalprice equivalentto about CFAF 2.1 billion. 18. Empowering farmer organizations: The Government is implementing a comprehensive capacity building and communication program to support the establishment of farmer organizations and the building of their capacity to participle in and benefit from the privatization process. Almost all village associations have been transformed into cooperatives and federated at the commune level. The last step is the establishment of the national federation of producer organizations. The Government has committed to finalize the establishment of producers organization federation by January 2007. Fanners' representatives are participating in all the discussion related to the reforms and their views and concerns are taken into account in all the decisions regarding the reforms. 111. CMDT deficits (2004-05 and 2005-06 crop seasons) and current issues 19. The weak performance of CMDT: Although the implementation of the reforms is considered satisfactory, a new issue was identified. Following the 1999-2001 crisis, the company has been experiencing a new financial crisis due to the fall in world cotton prices and weak management of CMDT. Both the CMDT privatization operational plan (Schema operational de privatization de la CMDT) and the 2005-06 crop season outcome report (Rapport bilan de la campagne 2005-2006) stressed that CMDT's ginning factories are deteriorating due to a lack of regular and adequate maintenance; the company is facing a huge deficit amounting to CFAF 43 billion for 2005 and CFAF 11 billion for the 2005-06 crop season; the CMDT's treasury gap is up to CFAF 86 billion; and, CMDT's capital assets decreased to a minus CFAF 33.79 billion comparedwith a social capital of CFAF 32.5 billion in 2005. 20. According to OHADA rules, a company with such a performance is bankrupt and should be liquidated or recapitalized within two years. The Government therefore decided to recapitalize CMDT after the 2004 losses by increasing its share in CMDT by 15%. The French shareholderDAGRIS did not participate in the recapitalizationand agreed to reduce its share in the company from 40% to 25%. But the problem still remains with the new 2005 deficit. It is therefore urgent that this issue be adequately addressed through safeguard measures in order to maintain an adequate and attractivecompany to investors. 21. To mitigate the effect of CMDT weak management, the Government decided to recapitalize CMDT in 2005 to comply with the OHADA regulation, and provided CMDT with a loan amounting at CFAF 28 millions from the national budget, disbursed in 2005 (CFAF 20 million) and 2006 (CFAF 8 million). In addition to these measures, the Government committed to undertake close surveillance of CMDT operations through the organization of monthly meetings of the treasury committee set up to advise CMDT on treasury management and the establishment of a "comite de suivi des diligences" chaired by * the Minister of Economy and Finance. It will furthermore undertake an evaIuation of CMDT situationbefore privatization. 22. The tablebelow presents some figureson the current financialsituationof CMDT. 1. Deficit of the Crop Season Year Deficit (billionFCFA) ProducerPrice 2004-2005 39.9 210 2005-2006 11 160 2006-2007 14 (projected) 165 2. Annual Balance Sheet (fiscalyear deficit) Deficit (billionFCFA) Producerprice 2004 18.5 210 2005 43 160 2006 165 3- Provision of loans to CMDT by the Government through a cash transfer from the national budget to absorb the 2004-2005 crop season deficit equal to CFAF 20 billion in 2005 and CFAF 8 billion in 2006. IV. Challengesfor the cotton sectorin Mali and Bank recommendations 23. CMDT has been bankrupt for several years. It has survived the 1999-2000 crisis thanks to public subsidies and indirectly donor funds. As a corporate entity, CMDT does not exist anymore since its shareholders are either unable (the Malian government) or unwilling (DAGRIS) to recapitalize the company and enable it to operate on a sound economic and financial basis by reconstituting its working capital. This places a heavy burden on the financial system in Mali. The risk of contingent liability on the State budget remains latent. The monopsony system has led in the past to indirect taxation of the producers when world prices were high like in the mid-1990s, and it keeps them in a non transparent, inefficient and finally uncertain environment, in which they have lost confidence, as shown by the cotton strikeof 2001. Unfortunately,today they have no alternative. 24. In addition to the short-term financial risks, Mali faces a major risk which is that its cotton economy will become uncompetitive in the medium to long term if the reforms are not correctly implemented. The world market for cotton on which Mali is exporting a large share of its production is very open and highly competitive. The long-term price on the world market will be determined not by temporary market distortions due to OECD subsidies however important they may be in the short-run, but by the ability of producers and ginners to offer a qualityproduct at a competitive cost. 25. Critical parameters of future competitivenessare not being dealt with appropriatelyin the current system: (i) Mali is lagging behind in research and technology (delinting of seeds, testing of genetically modified organisms (GMOs), productivity improvements, quality management, etc.), including at farm level where productivity and yields have been declining for 15 years; (ii) because of the total absence of private sector involvement in the sector,there is a dire need of capital investment in modernization of the agro-industrial tool, applied research (varieties, pest resistance, soil fertility improvements), technology adaptation and transfer, innovation capacity, capacity-building at all levels; (iii) incentives are not there for the various actors to take risks, innovate and invest in productivity improvements. Diversificationof cropping systemshas been timidly supported. 26. Fortunately, the Government is showing a firm commitment to reforming the sector. The Bank and the core group of partners (namely AFD, Dutch and EU) are supporting, and should continue to support, the implementation of the timetable for the cotton sectorreforms. 27. The main issue today is the deterioration of the financial situation of CMDT and the need to adequatelyaddress this issue in order to make the reforms successful. ANNEX 9: COTTON PRODUCTION, MALI'S ECONOMY AND POVERTY (Preliminary findings)'' This annex provides estimations of the potential impact of different levels of cotton production and producer prices on Mali S economy, and on cotton producers. Following the agreement signed between the Government,producers, and CMDT onJanualy 13, 2005, the baseline price levelfor the campaign 2005-06 was set at 160 CFAF/kg, a sharp drop versus the price of 210 CFAF/kgthat had been provided to producers in 2004-2005. This reduction in price is not expected however to lead to an immediate reduction in production, as totalproduction is expected to reach 600,000 tons in 2005- 2006, an increase over the previous year. This annex provides some background to explain this apparently surprising outcome and documents what might happen if; under sustained lower prices, producers would decide to reduceproduction in thefuture. 1. Why do farmers continue to produce so much cotton despite lower prices? Five main reasons may explain the paradox. First, to produce cotton gives producers the certitude they will get a monetary income at a predetermined moment. This income helps them to face current and unexpected expenses (health, education). Cotton production offers them a certain security despite the price decrease, with the guarantee that CMDT will buy the whole production and that they will be paid relatively quickly (an advance of 80 percent of the production value as soon as the CMDT receives the production and 20 percent at the end of the season). Second,to produce cotton gives them access to credit. Producers need this credit to get access to inputs but also to improve their productive material or for consumption purposes. In the cotton areas, the banking system and the micro-finance institutions do not deliver credits to farmers who do not produce cotton. The access to credits usually goes through guarantees linked to cotton production. Third, to produce cotton gives farmers access to inputs. The CMDT no longer delivers inputs for cereals production. Farmers need those inputs for the cotton production but also for the cerealsproduction. That is the reason why some farmers decide to produce smallplots of cotton and use part of the CMDT-providedinputs for their cereals fields, which are the basis of food self-sufficiency.Fourth, to produce cotton gives farmersaccess to training and education concerning new varieties, technical improvements, etc. Finally, cotton production in any given year has positive "after effects" on cereal yields in the next year as the use of chemical andlor natural inputs needed for cotton cultivation improves soil fertility at crop rotation time. In other words, to belong to the "cotton club" brings many advantages to farmers, which may explain why most of them will continueto produce cotton at least for some time, despite the fallingprices. 2. Is cotton production profitable at the existing lower prices? Few data are available to assess how profitable cotton production is to farmers. Preliminary analysis of a survey of cotton producers implemented in the summer of 2004 suggests that only those producers who are better equippedmake substantial gains on their production. More precisely, while in the 2003-2004 crop season the nominal price paid to producers was 190 CFAFkg, the net price received was of the order of 100 CFAFkg. The main costs that explain the difference between the nominal and net prices are the costs of inputs (estimated at about 70 CFAFkg in the survey,but other data suggest that this cost may reach up to 90 CFAFkg, whish is fairly high), and the reimbursement of loans, most probably to CMDT at about 15 CFAFkg. Other costs include cotton land maintenance costs, cotton harvest costs, and cotton transportation costs, as well as broader investment costs, production costs, and taxes and fees. The total "non-CMDT" costs vary from 43 CFAFIkg to 131 CFAFkg depending on the method used for allocating part of these costs to the production of cotton, and depending on the type of producer considered. The key finding was that producers belonging to the better equipped groups (groups "A" and "B" in the CMDT typology) were the most profitable. For poorer households who do not have good equipment, cotton production is less advantageous. This means that poorer households could very well be those who will stop producing cotton if prices remain low for extended periods of time. l8Based on a surveyof cottonproducers implemented in the summerof 2004. 135 Now, one important feature of the new price mechanism is that producers will benefit from a higher share of the world price. This means that they will not have to suffer from the full impact of the drop in prices for the present season. 3. What may happen to the economy and poverty in case of a reduction in cottonproduction over time due to low prices? Two types of simulationswere implementedusing recent data for Mali. Using a Social Accounting Matrix, the impact of a hypothetical 25 percent drop in production and processing of cotton was analyzed. The extent of the impact on the economy and various household groups depends in large part on the extent to which areas cultivated under cotton would affect other crops. For example, if a 25 percent drop in the cotton sector were compensatedby a 5 percent increase in production of food crops and livestock, the impact on aggregate output would be of the order of 2.1 percent of GDP. Aggregate household income/consumption would be reduced by 1.9 percent. Interestingly, apart from rural households in cotton producing areas, the most affected groups would be industrial households engaged in the ginning and value added process. This means that it is not necessarily the poorest households who would be affected the most. Additional work was conducted with an agricultural model for Mali. The simulations assess the impact of a decrease in producer prices up to 155 CFAFkg. Under such pricing structure, the land area under cotton cultivation is reduced by about 30 percent, while the area for other crops is increased.The model makes it feasible to estimatethe impact on the FA0 measure of under-nutrition, by computing the amount of food available in the country from domestic production and imports. The total availability of food combined with household survey-based estimates of the inequality in food consumption provides estimates of the probability of under-nutrition which are of a similar order of magnitude as existing estimates of child malnutrition. Because food production would increase after a drop in cotton prices, and because this would help to reduce food prices, the net impact of the loss of income from cotton production and prices would be fairly small at the national level, but the situation of households in areas such as Sikassowould be threatened. The conclusion from the above simulations is that the impact of the drop in producer prices on poverty and Mali's economy is not necessarily straightforward. On the one hand, the reduction in prices implies a loss in income and profitability of cotton production for producers, but so far these have not reduced their production for a number of different reasons. If prices were to remain low for some time, some producers may quit producing cotton, which would have a negative impact on GDP, poverty, and under-nutrition. Yet the magnitude of this negative impact need not be very large, as producers would probably shift to other crops or livestockproduction, which may have other potential benefits, for example in terns of food security. Perhaps the key message of the work is that close monitoring of the impact of changes in prices and production is required, so as to be able to provide compensatorymeasures for producers if and when needed. ANNEX 10: SIMULATINGTHE EFFECTS OF AN OIL PRICE SHOCK: A SOCIALACCOUNTING MATRIX FRAMEWORK Rising fuel prices have not generatedhigh levels of inflation in Mali, in part because of a reduction in the taxes imposed on a range of oil-related products. This annex provides an estimation of the impact that the increase in oil prices might have had on the Malian economy and on specific groups of households in the absence of such measures and other adjustments that may have taken place in the economy. As such, the results can be interpreted as a first very rough estimation of the impact and benefit incidence of the measures that have been taken in order to avoid large increasesin prices. Some previous studies of the impact of oil price changes on households have used models based on input-output (10) tables in order to estimate price changes for commodities caused by a shock in the unit cost of oil. These studieshave then relied on household expendituresinformation fiom household surveysto derive consumption shares of differentcommoditiesby expenditurepercentiles.Combining these two pieces of information, for example, yields data on changes in expenditure of various household categories that can be used to assess impacts on poverty. The methodology used here is based instead on a SAM-multipliermodel, which can be used as a price formation model. We use a SAM frameworkfor two main reasons: (i) to fully exploit the interactionbetween sectors,factors, and institutions contained in the SAM; and (ii) to track and quantify the intensity of the most important paths through which the effect of a price change on household expenditure unfolds. Based on a 2001 Mali SAM constructed with support from the Belgian Poverty Reduction Partnership program, we simulated the effectson sectoral prices and the cost of living of householdsof a 34 percent increase in the price of petroleum in Mali. The results are presented in Tables A10.1 and A10.2. Table A1O.l shows the impact of the oil shock on other production prices in the economy in the absence of policy response and adjustment in the economy. A 34 percent price increase in the petroleum sector leads to a 15percent increase in the price of Utilities, an 11.5 percent increase in the price of Agricultural services, and 10 percent in the producer price of Other manufactures. The price effect of the shock on agriculture, except agro-services (i.e., Food crops, Export crops, Livestock, Forestry, and Fishery) ranges from 2.3 to 2.8 percent. This is not surprising since petroleum accounts for 0.0 percent to 12.8 percent of agriculture's intermediate inputs compared to 54 percent for Agricultural services. Meanwhile, the secondary (industry)experiencesa price response ranging from 2.2-15 percent. Finally, the price effect on the tertiary (services)goes from 2.7 percent in Trade to 6.6 percent for Transport and communication. The so-called direct effects in Table A1O.l reflect the shares of petroleum as an intermediate input in various sectors. Besides Utilities, Agricultural services, and Other manufacturing, Transport and Communications, and Education exhibit a high direct effect as a proportion of the price change. A similar pattern is conveyed through the petroleum intensity of sectors. In fact, in general, sectors with heavy reliance on petroleum are mostly affected. Change in producer prices (weighted average of price responses, with shares of aggregate GDP as weights) is estimated at 3.48 percent which should be considered an upper bound given the fixed consumption shares assumption inherent in SAM modeling. Around 25 percent of the price change is explained by direct effects,the rest being due to other interactionsbetween sectors. Table A10.1: Impact of a 34 percent increasein oil prices on prices in other sectors,Mali Petroleum Aggregate as share of Price Direct Direct / intermediate Shareof Sector change Effect Total inputs aperegateGDP Food crop production 2.39 0.03 1.1 2.3 15.39 .. Export crop production 2.44 Livestock keeping & hunting 2.37 Providing ag.- livestock& related services 11.46 Forestry & related services 2.81 Fishery 2.31 Mining 3.63 Livestock & fishprocessing 2.45 Milling cereals, flour & rel. products 3.41 Other foodprocessing 3.96 Beverage and tobaccoproduction 4.18 Textiles and garments production 3.28 Leather & skin & relatedproduction 2.20 Wood- paper &printing 2.85 Petroleum 34.00 Other manufactures 10.00 Utilities 15.00 Building & real state services 3.96 Trade 2.74 Repairs 4.16 Lodging and restaurantservices 4.28 Transport and communication 6.63 Financialservices 3.85 Business services 3.54 Public administration 4.22 Education 6.57 Health and social services 4.70 Other personal and collectiveservices 2.80 Change in PPI 3.48 Source:World Bank staff estimatesusing SimSIP SAM. Table A10.2 gives the price changes faced by households.The two household categories that are most affected are households whose head works in Public services in Bamako (4.92 percent increase in cost of living), and those in Urban - Other activities (3.93 percent). These households are also characterized by highest average per capita consumption levels and exhibit high shares of petroleum in total consumption (as is reflected in the higher direct effects). The impact on the rural (poorer) households is smaller and around 2.0 percent partly explained by lower shares of petroleum in final consumption. The total change in households' cost of living index (inflation) is 2.99 percent with roughly 25 percent explainedby direct effects. Two main conclusions can be learned from the analysis. In part thanks to policy measures such as reduced taxation, Mali has not suffered from higher inflation due to the increase in oil shocks, as would have been predicted on the basis of the SAM analysis. On the other hand, because those households who would have been most affected by the increase in oil prices tend to be better off, it can also be argued that the reduction in taxes of oil-relatedproducts have benefited disproportionately a segment of the population that was already better off. To the extent that the reduction in tax revenues may have at the margin an impact on the ability of the authorities to deliver in other areas, including the social sectors, this poses a difficult dilemma between protecting the population from price increases, but in so doing transferring a larger share of the reduction in taxes to groups of households who may not be poor. Other better targeted measures could potentially have been considered in order to ensure a more pro-poor distributionof the protectionmeasures implemented. Table A10.2. Impact of a 34 percent increase in oil prices on cost of living for households, Mali Shareof Change in Averageper petroleum in cost of Direct Direct / capita total Category living Effect Total consumption* consumption Bamako in Industrial Sector 2.81 1.21 43.0 271.7 6.69 Bamako in Public Services Bamako in Private Services Other Urban Industrial Sector OtherUrban Public Services Other Urban Private Services Other Urban Activities Rural Agriculture-Sahel & Sahara Rural Agriculture-Soudano-Sahel& Delta Rural Agriculture-Soudano Guinean Other Rural Activities Change in CPI 2.99 0.74 24.9 Source: World Bank staff estimatesusing SimSIP SAM. * In thousands of local currency. ANNEX 11: COUNTRYAT A GLANCE Mali a t a glance 26/01/2007 Sub- Key DevelopmentIndicators Saharan Agedbblbutlon,2005 Mali Africa Male Female Population,mid-year (millians) 70.74 Surfacearea (thousandsq. km) Mbl Populationg m h (%) -51 Urbanpopulation(%dtotal population) 4044 3aJl GNI(AUas method. US$billions) GNI perwpita (Atlasmethod. US$) 20-24 GNIperwpita (PPP, international $) 10-I4 M GDPg r M (%) 20 10 0 10 20 GDPperwpita growth (%) percent (mosireceniestimate, 2000-1005) Poveltyheadwunt ratioat $1 a day (PPP. %) I lUnder-5mortality rate(per 1,000) Povertyheadawnt ratloat 52 a day (PPP. %) Lifeexpectancyat birth(yeas) Infantmonallly(per 1.000llvebirths) ChIdmanutntlon(% ofdsldren ~ndef5) Adult literacy,male(% of ages 15and older) Adult literacy,female(%ofages 15and older) Grass pnmaryenrollment, male(% of age grwp) Gross primaryenrollment, female (%of age grwp) Access to an Improvedwater source (% of population) Access to ~mprovedsanitaDonfacilities(% of population) o Mali o SubSaharanAfrica Net Aid Flows 1980 (US$ millions) Net ODA and offidal and Growthof GDPandGDPper capita (%) Top 3donors(in2004): France 15 Netherlands UnitedStates 10 5 Aid (% of GNI) Aid percapita (US$) 0 a Long-Term EconomicTrends 10 90 95 W 05 Consumerprices(annualOh change) GDP impliat deflator (annual % change) +GDP -GDP percapila Exchangerale (annualaverage, localper US$) Terms of trade index (2WO = 100) 198&90 199&2OW ZWO-05 (averageannualgmwth %) Population.mid-year(millions) 8.9 11.6 GDP (US$ millions) 2.421 2.422 (% of GDP) Agriculture 45.5 41.6 Industry 15.9 20.6 Manufacturing 8.5 3.8 SeMceS 38.6 37.9 Householdfinal consumption expenditure Generalgogt final consumption expenditure Grosswpital formation Expo~tsof goodsand services lmpwts of goodsand services Gnss sannp Nde: F~guresinitalics are for years OVler than lhmespecified. 2005data are prelimlmryestimates. .. indicatesdata are not available. a. Countrypovertyestimateisfor 1994, b. A d data are for 2004. DevelopmentEconomics, DevelopmentData Group(DECDG). Mali Balance of Payments a n d Trade 2000 2005 Governance Indlcamrs, 2000 and 2004 (US$millions) Total merchandiseexpods(fob) Total merchand~seimpolts (cif) Volman0 amuntability Net trade in gocdsand services Pol~ticalnabilily Workers' remittancesand wrnpensation of employees(receipts) 73 154 RegulaOfy quarry Rule01law Current acmunl balance as a % of GDP Cantmlof mrmption Reserves,lnduding gold 381 929 0 25 50 75 I W mZW4 Countr/spercentilerank (0-1W) Central Government Finance 02000 h@er*m&Mwnbng (Xof GDP) Revenue Swms KaufmannKfa3yManruu1.Woffl Bank Tax revenue Expense Technology a n d Infrastructure 2000 2004 Cash surplus/deficit Pavedroads(% of total) H~ghestmarginaltax rate(%) Fixedline and mobilephone lndivldual subscriben (per 1.000 people) corporate Hightechnology exports (% of manufacturedexports) External Debt and Resource Flows Environment (US$millions) Total debt outstandingand disbursed Agricultural land (%dlandarea) 28 28 Total debt service Forest area (% of landarea, 2000and 2005) 10.7 10.3 HlPCand MDRl debt relief(expected:flow) Nationallyprotectedareas (% of landarea) .. 3.7 Total debt (%of GDP) 123.0 67.9 Freshwaterresources per capita (cu,meters) Total debt service (% of exports) 13.0 7.2 Freshwatermthdrawal(X of internalresources) Forelgndlrect investment(net inflows) 82 180 C02emissionspercaplta (rnt) Portfolioequity(net inflows) 0 1 GDP per unitof enemvuse (2000 PPP $ per kgbf oil equivalent) Composltlon of total external debt, 2004 Energyuseper capita (kg of 011 equivalent) IBRD T&l debt outstandingand disbursed Disbumements Principal repayments Interest payments US$ millions IDA Total debt outstanding and disbursed Disbursements Private Sector Development 2000 2005 Total debt service 14 33 Time requiredto start a business(day;) - 42 IFC(fiscalyear) Cost to starta business(% of GNIper capita) 190.7 Totaldisbursedand oubtandmgpoflfdio 78 9 Time requiredto registerpmperty(days) -- 44 of w h ~ IFCown account d 57 9 Disbursementsfor IFC ~ r amm n t 0 2 Rankedas a rnajwmstraintto business Pwtfd~osales, prepaymentsand (% of managerssurveyedwhoagreed) repaymentsfw IFCown acawrnt 9 I Cost of financing .. 57.3 Acoess to financing .. 56.3 MlGA Gross exposure 0 16 Stock market capitalization (% of GDP) New guarantees 0 0 Bank branches(per 100,000 people) Note: Rgures in itallcsarefor years other thanthose specified. 2005 dab are preliminaryestimates. 26/01/2007 ..indicatesdataareno1available. -indicates observationisnotapplicable. DevelopmentEoonomhcs. DevelopmentData Group(DECDG). Millennium Development Goals ~ a f ~ Goal X: halve the rat@ fcn It adaypcrvwiyandw i n u r n Pemty MatlcaiicnM'ln8151 a (fey (PPP, %no' pwulalriai) Pove~tvhe~tL"wn$ratin at ncaiffinlaipcxwny me-(%irl~w~&%wx) Snamofiitcoina racmfltirnptlontfl Iha puwes: qunlsto (YI PrweiC*w@ matg*utnt.Dnj54 (f13tu!@r8nu&r ai 6 ) Goal 2: wsure miatchildrenareabletcrcompleteprimary sfiroclfng Pninary ~@r'aIaniidlnmt in*< $9:) Prtmsry empter un ra& (%of r@Ewnlage prwpl SscandaryscW wrailment [grw.;, Xk Vadh/1fWd~/rate(*'a OI pew&?ages 1524) Goef 3: eflminita gender dlsprtty In @ducattan and empower woman Ratio dg a s cuM p rn prrr~rparid ~ e m r ~ d d n j ~ (%Iz t l ~ ~ c Woman arnp&ed $17 the owwg~cleiti~ial s~.n& d nomgr~arPrurslenp)aymem) (36 P r ~ ~d~~ lat dnhhodhy 1 m 6in~nabanal padramem(%i Godl 4: rduce w a d manstf/@Wa-thlr& U.xiar-5 mwt8rrtyra9e{per ! 2%3 233 224 218 !n%ntrhomitivrale(per I cWO livehr!h,) la0 131 124 1: i klvs~iia~rnrntinr+!a 7 8 Ino&rrmoftubli%ulos~& @er 1(W z?W( z q ? i @ ~ 304 2Bl lubwt&&s cawsdeterredunesfI)Ci'S {*a! td f.5 '2 Goal 7: halveh propamon of peoplewlthout susta~nablcace%%.to h 0d r i - - - - - - -- - * * A&-w%.rla a? mpanvmasrvsleescrliecp{l rdpapidatlor: 31 $0 Act%% 10impaiz^.dBm+"ilm ta~i.lsnb<%dpw.'?rlatrwl $6 48 ~ w wat m (%ofI ~ I a-e-3) 91 4 $33? tn 7 MtrnrvIrpra~wtarla r w i (% k,afInal Bndarm] 2 7 CCr;" pm,$s~ars(nntnc Lor18pclr raprta) 130 i3 0 0 0 00 G W per wit d orarvy us*. {rurhtJnrZcO'Ki FPPP $ par 4 oi oilewua mf? Goai 8: dwlelopitpiabafpafrnorshrpfur Llsvcbpmmt Flu& !