IMF reach agreement with Mali on emergency funding to address economic instability News
Arensond, Public domain, via Wikimedia Commons
IMF reach agreement with Mali on emergency funding to address economic instability

The International Monetary Fund (IMF) announced a staff-level agreement with Mali on Tuesday, providing emergency funds to address food insecurity in the central and northern regions of Mali. The agreement follows extensive discussions between IMF officials and Malian authorities in Washington DC, as well as a visit by IMF economists to Bamako, Mali’s capital, earlier this month.

The IMF and Malian authorities have reached an agreement on emergency financing through the Exogenous Shock Window of the IMF’s Rapid Credit Facility (RFC). Upon approval by the IMF Management and the Executive Board this arrangement would result in the disbursement of $120 million, equivalent to 0.6 percent of Mali’s GDP. The RFC is designed to provide swift financial assistance to low-income countries experiencing urgent balance of payment needs. This support is adapted to the specific circumstances of each country, with the overarching goal of the RFC being to help implement economic policies that foster a stable and sustainable macroeconomic environment, ultimately contributing to poverty reduction.

According to the IMF’s announcement, policy discussions with Malian officials have focused on addressing Mali’s urgent balance of payments needs, aimed at facilitating food and cash transfers to alleviate food insecurity. The financial assistance will also cover expenditures in education, housing, non-food items, clean water access and investments in health and sanitation infrastructure. 

This financial assistance is necessitated by several economic shocks experienced in recent years in Mali and has become increasingly urgent against the backdrop. Moreover, the absence of External Budget Support and stricter financial conditions in the West African Economic and Monetary Union (WAEMU) have also increased Mali’s borrowing costs.

Mali’s economic development stands to benefit from the recent IMF agreement. As a low-income country, Mali is susceptible to fluctuations in commodity prices, rapid population growth, and the adverse effects of climate change on agriculture, all contributing to widespread food insecurity. Additionally, the nation is grappling with a severe increase in extreme poverty with a reported poverty rate of 90 percent.

Since gaining independence from France in 1960, Mali has been experiencing considerable instability, characterized by numerous coups and military conflicts. The most recent period of unrest began with a 2012 military coup, which ignited conflicts between ethnic Tuareg groups and Malian armed forces in the northern parts of the country. The conflict has led to significant instability and a continued humanitarian emergency, impacting approximately 8.8 million people as of August 2023. Although a peace agreement was established in 2015, its implementation has faced ongoing challenges. More upheaval followed in 2021 with another coup, resulting in Assimi Goïta taking power as the interim president of Mali.