Economic activity decelerated in 2011, with a real GDP growth rate of 4.2
percent following real growth in 2010 of 7.9 percent. This is largely explained
by a contraction in cereal production following drought conditions experienced
in 2011. Inflation remained contained for most of the year, but there was an
increase toward the end of the year on account of food prices, reflecting a
shortage of food supplies. The current account balance improved, reflecting
favorable terms of trade and sustained production of gold and cotton.
“The authorities improved revenue performance further in 2011, as a result
of sustained efforts to increase the efficiency of tax administration. Total
expenditures were lower than expected, given lower externally-financed
investment spending than programmed. As a result, the fiscal deficit narrowed
to 2.5 percent of GDP, from 4.5 percent in 2010.
Implementation of the macroeconomic policies and structural reforms under
the program remained strong in 2011, despite social unrest and political
turmoil in Cote d’Ivoire early in the year, and the drought in the second half
of the year. All quantitative performance criteria and most indicative targets
were met. Some structural reforms agreed under the program were met, while
others are in progress. Notably, current efforts by the government to minimize
the difference between domestic and international fuel prices are welcomed, as
this will help reduce significant losses being incurred by the state-owned oil
company.
For 2012, the government faces significant policy challenges, including
financing its comprehensive and well-targeted program to address the domestic
food security crisis, while hosting a large number of refugees who have fled
the recent political turmoil in Mali. In accordance with its new development
program, the SCADD (Strategy of Accelerated Growth and Sustainable
Development), the government is also financing an infrastructure investment
program to reduce factor costs and strategic interventions, especially in
agriculture, to encourage inclusive and sustained growth. Parliamentary and
regional elections planned for 2012 will also weigh on public finances. The
authorities will continue determined efforts to increase revenue collection and
contain non priority expenditure and donors have made strong pledges of
support, but residual financing needs are still anticipated.
Real economic activity is expected to rebound in 2012, in part due to the
growth policies of the SCADD. Real GDP is forecast to reach a 7%, supported by
a recovery in cereal production in the fall harvest, and sustained gold and
cotton production. In the meantime, inflation is likely to remain high, largely
due to ongoing food security issues. The current account deficit is expected to
deteriorate to 4.8 percent of GDP, due to higher projected imports for food and
the government’s investment program, as well as higher international fuel
prices.
The mission had fruitful and collaborative discussions with the authorities,
and reached understanding on a policy framework for 2012-13 that could form the
basis for completion of the fourth review under the ECF arrangement. The
Executive Board of the IMF is tentatively scheduled to discuss in May.
Release issued By:
IMF External Relations Department
