VZCZCXRO3320
RR RUEHMA RUEHPA
DE RUEHBP #0771/01 3342105
ZNR UUUUU ZZH
R 302105Z NOV 09
FM AMEMBASSY BAMAKO
TO RUEHC/SECSTATE WASHDC 0924
INFO RUEHZK/ECOWAS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 BAMAKO 000771 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD EINT EAGR EAID ML
SUBJECT: IMF REVIEW: CONTRASTING VIEWS ON MALI'S 
PERFORMANCE UNDER POVERTY REDUCTION FACILITY 
 
REF: BAMAKO 349 
 
¶1. Summary: On November 11, the International Monetary Fund 
(IMF) completed the third review of Mali's performance under 
the poverty reduction and growth facility (PRGF) and gave 
Mali a generally clean bill of financial health.  The IMF 
noted that the GOM was well positioned to reach its 2009 
targets: it has a low budget deficit, a low inflation rate, 
and has shown progress on structural reform.  Others in the 
donor community who provide direct budget support and focus 
on different benchmarks before disbursing development aid 
gave a more nuanced assessment.  Opposition political parties 
in Mali have in recent weeks decried what they describe as 
irregular methods used by the GOM to account for revenue from 
privatizations.  End summary. 
 
----------------------- 
High Marks From the IMF 
----------------------- 
 
¶2.  From October 30 through November 11, a visiting team from 
the International Monetary Fund (IMF) conducted its third 
review of Mali's performance under the poverty reduction and 
growth facility (PRGF).  The review focused on Mali's 
macroeconomic performance in 2009 and the proposed 2010 
budget.  The IMF praised the GOM's prudent economic policies, 
which they projected would allow Mali to reach its 2009 
targets.  Inflation is projected to remain below two percent, 
comfortably lower than the Central Bank of West Africa 
(BCEAO) ceiling of three percent.  Mali's budget deficit is 
projected to be 1.5 percent for 2009, lower than the 1.8 
percent previously forecast (reftel).  GDP growth in 2009 is 
expected to be 4.3 percent, higher than the world average in 
spite of the global economic downturn.  The IMF attributed 
Mali's relative macroeconomic success to limited exposure to 
global financial markets and to favorable rains, allowing 
better grain harvests.  The IMF also praised the Malian 
government for its progress toward structural reforms, 
notably the completion of the privatization of the 
telecommunications company, SOTELMA, earlier this year. 
 
-------------------------------------- 
Donor Partners Describe A Mixed Record 
-------------------------------------- 
 
¶3.  The IMF's review was coordinated to some extent with 
Mali's bilateral and multilateral donor partners, who rely on 
the IMF's assessments in making determinations for the 
disbursal of aid.  Mali has a large donor community that 
provides direct budget support to the government, and 
assistance is contingent on the GOM's attainment of a number 
of benchmarks.  In 2009, the donor group set 38 benchmarks, 
including the adoption of anti-corruption legislation and the 
strengthening of capacity of the accounting section of the 
Supreme Court.  Mali's performance under the PRGF is also a 
benchmark, and for this reason, the donor group has pushed 
toward greater coordination with the IMF during periodic 
reviews.  Of the 38 benchmarks, the donor group reported 14 
had been met, 5 partially met, and 19 not met.  These 
shortcomings could impede the disbursement of aid in the 
first quarter of 2010. 
 
¶4.  Donors cited the irregular way in which the GOM is 
accounting for the revenue from SOTELMA's privatization. 
Rather than counting the revenue as current receipts in the 
2009 budget, it is instead be held in an irregular bank 
account and included piecemeal in the national budget over a 
multi-year period.  In 2010, 25 billion CFA of the total 180 
billion CFA has been allocated toward pension payments for 
SOTELMA employees laid off during privatization. The 
remaining funds are to be held in the bank account until the 
GOM decides to allocate it in out-year budgets.  Donors 
feared the SOTELMA revenue would not be used to encourage 
economic growth, as they believe it should, and worried about 
a lack of transparency. 
 
------------------------------------------- 
Opposition Political Parties Raise Concerns 
------------------------------------------- 
 
¶5.  In a November 23 meeting with Poloff, Konimba Sidibe, 
National Assembly Deputy and from the opposition party 
PARENA, sounded similar concerns about the proceeds from 
SOTELMA's privatization.  Sidibe said the National Assembly 
had no control in future years over whether the funds would 
be allocated according to the GOM's initial pronouncements. 
By way of illustration, he said that when the Banque 
Industrielle du Mali (BIM) privatization generated 39 billion 
CFA in 2008 the GOM promised 10 billion CFA would be used in 
2008 to finance the internal deficit, 20 billion CFA would be 
budgeted for use in 2009, and the remaining 9 billion CFA 
 
BAMAKO 00000771  002 OF 002 
 
 
would be budgeted in 2010. While the first two tranches of 
the money had been used as stated, the remaining 9 billion 
CFA did not appear in the 2010 budget.  Sidibe complained the 
GOM kept cash sitting in a bank account while Mali operated 
under a deficit.  In 2009, the government failed to service a 
significant amount of domestic debt.  Sidibe said the GOM had 
26 billion CFA 3 months in arrears, 20 billion CFA 3 to 6 
months in arrears, and seven billion CFA more than six months 
in arrears.  He asserted that these payment delays had forced 
certain domestic service providers into bankruptcy (reftel). 
Additionally, Sidibe worried that the SOTELMA sales revenue 
could easily be manipulated by the GOM in the months leading 
up to the 2012 elections. 
 
¶6.  Comment: Concerns expressed by some donors and opposition 
elected officials are not without merit.  Yet more striking 
to us is that the Malian system is sufficiently transparent 
that such concerns, including that over the SOTELMA 
privatization funds, are the subject of lengthy analysis in 
the press and discussion in the National Assembly.  The issue 
in that case is less one of alleged corruption than a dispute 
over whether the government should have broad discretion in 
how and when to allocate the funds and whether its choices 
are the right ones.  Such debate suggests the beginnings of a 
healthy open system, one that would be envied by many others 
in Africa and elsewhere.  End comment. 
MILOVANOVIC