The Executive Board of the International Monetary Fund (IMF) approved a new arrangement for Niger under the Extended Credit Facility (ECF) in an amount equivalent to SDR 78.96 million (about about US$120.97 million). The Board’s decision will enable an immediate disbursement equivalent to SDR 11.28 million (about US$17.28 million).

The authorities’ program is aimed at maintaining macroeconomic stability while increasing resilience to shocks; strengthening public finance and debt management; putting in place a transparent legal and supervisory framework for the mining and petroleum sectors; and supporting private and financial sector development.

“The 2012 budget is well aligned with the authorities’ growth and poverty reduction program. Medium-term fiscal policy is rightly geared towards creating the fiscal space for increased development spending, while maintaining debt sustainability.

“Rising receipts from oil production and strengthened domestic revenue should primarily finance the planned investment. It will also be important to step up efforts to seek grants and concessional financing for large infrastructure investment and other projects. Non-concessional loans should only be contracted for well-assessed, high-yield projects,” observes Naoyuki Shinohara, Deputy Managing Director and Acting Chair.

“A significant build-up of government reserves at the central bank will provide flexibility in budget execution and bolster Niger’s resilience to exogenous shocks.

“Important structural reforms are underway. Measures to strengthen budget execution, reduce the number of tax exemptions, and modernize tax and customs administration will help maintain fiscal stability. At the same time, steps to strengthen and develop the financial system and improve the business climate will promote private sector development and diversify the economy,” Shinohara added.

Niger is emerging from a prolonged period of social unrest and from military rule. A democratically-elected government came into power in April 2011. Building on the poverty reduction strategy, the government has adopted an ambitious development program.

Economic activity in recent years has been affected by large swings in agricultural production. Following a year of serious food shortages, economic growth recovered quickly in late 2010, driven by an excellent harvest and the expansion of services related to agriculture.

The authorities’ medium-term policy framework is based on a favorable growth outlook driven mainly by the oil and mining sectors. With the startup of a new petroleum project, GDP is projected to expand by13.4% in real terms in 2012. Investments in a large new uranium mine and the development of the petroleum sector should sustain economic activity in the years after 2012

Niger’s medium-term prospects are nevertheless subject to various risks. The country is vulnerable to exogenous shocks, including recurrent, weather-related food crises and fluctuations in commodity prices. The deteriorating security situation in the region is another factor adding to Niger’s vulnerabilities.

Medium-term fiscal policy will aim at maintaining debt sustainability while creating room for increased development spending. At the same time, the objective to strengthen government cash balances to increase the resilience of the budget to unexpected shocks. In light of these objectives and the current projections for external donor aid, the authorities intend to keep the basic fiscal deficit below 1.5 percent of GDP during the program period.

The government is committed to further strengthening public oversight of the natural resources sector in 2012 through the Inter-ministerial Committee for natural resources assessment, which will ensure appropriate information flows and coordination between government representatives in each natural resource company. In addition, the government intends to undertake a study on its overall strategy and policy in the petroleum and mining sector, including the policy to maximize the government’s petroleum resources and the structure of government oversight in that sector. This study is to be completed by end-December 2012.

A key objective for the medium term will be to bring the Investment Code into line with best practices. In collaboration with the World Bank, the authorities are planning to undertake a comprehensive review of the Code in 2012.

Image Courtesy of   http://www.flickr.com/photos/imfphoto/

The article New IMF Program Arranged to Alleviate Niger appeared first on The Toonari Post - News, Powered by the People!.

A credit program will be reinstated for Afghanistan, its government stated on Tuesday, by the International Monetary Fund. This should restore the stream of international aid that had been suspended due to the Kabul Bank crisis. The Kabul Bank was the largest financial institution in the country and had sustained major losses of around $300 million USD. It almost collapsed from mismanagement and bad loans.

The IMF has not backed up Afghanistan for more than a year, while some nations who had previously been donors decided to stop authorizing payments to Afghanistan. Now that credit has been reestablished, the country’s international partners can now enlist once again in its development plans. The IMF approved a three -year loan for $129 million, said the Afghan Finance Ministry.

This will permit the government to take on crucial reforms in the financial and banking sector, it will further fiscal amendments in customs and revenue departments, and public financial management will be improved.

No mention of the Kabul Bank was made by the ministry, though it is now a symbol of the corruption in Afghanistan. The matter is being scrutinized by the Afghan people and Afghanistan’s international donors because it is an indicator of the government officials’ promise to eradicate patronage and show accountability to the financial institutions of the world, like the IMF.

Last October, Afghan lawmakers said they would reimburse the central bank of Afghanistan since they bailed out the Kabul Bank. A bill was passed to grant up to $825 million, which will be dispersed for the next eight years. The money will help recapitalize the central bank.

The Kabul Bank has been divided into a “good bank” and a “bad bank”. The Afghan Finance Ministry is running the “good bank,” while the “bad bank” is riddled with bad loans worth hundreds of millions of dollars. The division and the refinancing of the Kabul Bank partly satisfied the IMF conditions to provide more credit to the country.

However, the IMF has asked the Afghan government to fortify the regulation and supervision of the bank sector and to prosecute the people blamed for the downfall of what used to be the country’s largest bank. Seventy million dollars has been recovered out of over $800 million in falsified loans given out by the Kabul Bank, says the finance ministry.

Three hundred and fifty million of the amount has been restructured for repayment, while $110 million in the assets related to the loans were held and transferred to the government. Some of the fraudulent loans were used to buy mansions and invest in malls and other risky projects. Criminal investigations have begun for many bank officials and the top two executives of the Kabul Bank, Sherkhan Farnood and Khalilullah Ferozi.

The two executives each used to own 28 percent of the bank’s shares, while President Hamid Karzai’s brother owned 7 percent of the bank’s shares and was the third largest shareholder. Afghan officials claim that Karzai’s brother and Haseen Fahim, a shareholder and brother to one of Afghanistan’s vice presidents, have repaid most of what they borrowed from the bank.

The article IMF to Rekindle Credit Program, Afghanistan Says appeared first on The Toonari Post - News, Powered by the People!.