Post-Crisis PFM Reforms in Mali

Posted by Christian Josz[1]

This is the second article on the blog in a series aboutthe views of IMF area department staff on PFM reforms in “their” country. Inthis article Fiscal Affairs Department technical assistance advisor, BenoitTaiclet, speaks with  IMF mission chief for Mali, Christian Josz, about theimportance of PFM technical assistance in keeping the IMF program on track. 

Josz and Taiclet
What are the challengesof working in Mali at the present time? How resilient has the country been in the face of the recent politicaland economic crisis?

Mali ranks among the poorest countries in the world, and hasbeen under a succession of IMF programs for more than two decades. Externalfunding has always played a significant role in the country’s development withgrants reaching more than three percent of GDP. More recently, in 2011 the economytraversed a very difficult period when the country was hit by a drought and terroristattacks. Following the 2012 military coup, fueled by military defeats, persistentcorruption and failing institutions, donors suspended or dramatically reduced theirsupport.  By the end of 2012, despite thefiscal austerity measures taken by the government, including the cutting ofalmost all capital spending, substantial arrears had accumulated, and thecountry’s debt rose markedly.

Faced with such concerns, the Fund seized the opportunity oflast year’s slight recovery to re-settle in the country, with the reinstatementof our Resident Representative’s office in late 2012. We stepped up ourinvolvement in early 2013 when the military situation was resolved with thefielding of an international coalition against rebel separatists andterrorists.

In the first quarter of 2013, the recommitment of IMF supportthrough a rapid credit facility helped trigger the return of a number of donorswhose pledges for funding reached US$ 4 billion in May. Now we hope the economy willrebound, as the authorities move to overcome the challenges ahead, and the productionof gold and agricultural products increases. But political and security risks stillcast a cloud over the nascent recovery.

Do you think theassistance delivered by the Fund in the PFM area can help the country keep theprogram on track, and more generally contribute to the country’s recovery?

It has been instrumental.

Mali faces severe challenges inthe PFM area: the scarcity of public resources, with donors funding 14 percentof the budget; the great demand for public goods and services with a populationgrowing at 3.5 percent per year; the poor quality of public goods and servicesprovided; and severe corruption in the public administration hindering businessdevelopment.  

Every year since 2009, FAD hasfielded one or two major missions from headquarters plus half a dozenshort-term expert visits. It also assigned a long-term expert to the TreasuryDepartment of the Ministry of Finance. Thanks to this steady support theMinistry has made commendable progress. An MTBF, linked with the budget, hasbeen designed, implemented at central government level, and presented to theParliament in the context of a mid-year budget debate. Departmental programbudgets were reviewed in 2010-2011 and the authorities intend to complete the switchto a program-based budget in 2014. An inventory of government bank accounts wasprepared as an initial step in establishing a Treasury Single Account (TSA). Anew computerized accounting system has been developed, interfacing with budgetexecution, payroll and tax collection, and is progressively being rolled outacross the government.

Most recently, in February 2013,while military operations were still ongoing, FAD fielded a rapid-response missionto assist with urgent post-crisis needs in the TSA, cash management and the controlof arrears.  This mission was instrumentalin restoring the confidence of donors in budget planning and execution, andplayed a significant role in their decision to resume aid, culminating in thesuccess of the May 2013 conference in Brussels.

As Mali works its way out of thepresent crisis, PFM reforms will be central to the government’s strategy: arationalization and streamlining of public finances must create room for publicinvestment and better financial accountability, and should foster furtherimprovements in donor confidence.

How closely have youworked with FAD in the delivery of TA? Have FAD’s priorities in the PFM area always been in line with theprogram’s requirements?

Our collaboration with FAD is excellent. On a yearly basis, weexpress our priorities in a strategic note that helps determine FAD’sprogramming of resources. FAD is a regular participant in inter-departmental meetingsto discuss the harmonization of TA and lending strategies. We are closely involvedin the preparation of specific TA activities on PFM and other issues. We are incontact with FAD staff on a daily basis before, during and after missions tocoordinate the TA work and exchange ideas. Indeed, I would say that the Malimission chief and the chief of the PFM division in FAD are close colleaguesworking side by side toward the same goal.

Looking ahead, what are the key challenges in putting the PFM reformstrategy back on track, fostering the economic recovery, and rebuilding donors’confidence?

In the aftermath of the crisis,the PFM reform plan has fallen behind its original implementation schedule. Stepsneed to be taken to get the reform program back on track, building on pastachievements with respect to the MTBF, program budgeting, strengthened internalcontrol, and the computerized information systems. Inevitably, there has been aneed to adjust relevant deadlines. In 2013, work priorities include amendingthe PFM legal framework in compliance with the WAEMU directives, and resumingwork on establishing the TSA. In 2014, we plan to complete work on rolling outprogram budgets across government. Finally, during the next several years weshall start the process of moving the accounting system from a cash basis to anaccrual basis.

Have you any advice tofurther improve the future cooperation between FAD and the African Departmentof the IMF?

I do not think the modalities of our cooperation need muchimprovement! Nevertheless, we have to rethink the priorities of the TA, notonly in the area of PFM.

The previous AFR programto Mali focused on the quality of public investment by improving the selection,monitoring and ex-post assessment of investment projects, which we may want tointensify. We also have to continue reforms to simplify tax policy and improvetax and customs administration. In addition, however, there is a need to addressthe issue that public perceptions of corruption are too high. We believe thatthis issue has not been sufficiently addressed by Mali’s stakeholders anddevelopment partners, including the Fund, to the detriment of improved economicand fiscal performance. The next program should therefore do more to addresscorruption by focusing TA on how to raise government accountability, fostertransparency and good governance, and help the authorities implement anappropriate framework for dealing with this challenging array of issues.


[1]Mission Chief for Mali, African Department, IMF.

Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy. 
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