By Our Correspondent

Lagos (INVESTADVOCATE)-The International Monetary Fund (IMF) Monday said it has approved about US$18.4 million an amount equivalent to SDR 12 million for Mali under the Rapid Credit Facility (RCF).

This is contained in a Statement from the IMF and made available to www.investadvocateng.com in Lagos Nigeria.

The IMF said the amount is to support the authorities with policy advice and financial support to maintain macroeconomic stability and growth during the next 12 months, as part of a broad-based support by Mali’s development partners.

The Statement said the IMF’s Executive Board noted the authorities’ cancellation of the previous arrangement under the Extended Credit Facility (ECF), which was approved in 2011 for the equivalent of SDR 30 million (then about US$46.3 million); designed to cover 2012-14, but was derailed by the March 2012 coup d’état in that Country and its aftermath.

According to the IMF, in November 2012, its mission reached understandings ad referendum on the components of an economic program that could be supported by the Rapid Credit Facility (RCF). “The RCF will also pave the way for renewed donour support following the events of early 2012” the Statement said.

Min Zhu, Deputy Managing Director and Acting Chair, following the Executive Boards decision said Mali’s economy is traversing a particularly difficult period as a result of the 2011 drought, insurgent attacks in the north of the country and political instability in the wake of the military coup in March 2012.

Zhu affirmed that Economic activity contracted by 1.5 percent (1.5%) in 2012, inflation was pushed up by escalating food prices, and a balance of payments deficit has emerged. “Fiscal stress intensified as a result of weakening tax revenues, the suspension of donor budget support, and upward pressure on social and military spending. The government responded with fiscal austerity. The tight liquidity situation has led to the accumulation of arrears to external creditors in the amount of 0.5 percent of GDP” he said.

 He further affirmed that the authorities’ 2013 program appropriately reflects near-term priorities; and aims to maintain macroeconomic and financial stability by keeping spending in line with available revenues and avoiding the emergence of new arrears.

“Steadfast implementation of tax policy, tax administration, cash flow management, and energy policy reforms will be essential to maintain macroeconomic stability. The ambitious tax revenue targets in 2013 will need to come from an increase in taxes on oil products and progress in tax administration through systematic cross-checking of information by the tax, customs, and procurement administrations Ãƒâ€šÃ‚» Zhu affirmed.

He said prudent expenditure execution and tight cash management will be needed to meet the deficit target and avoid the accumulation of arrears. While electricity tariff adjustments are needed to bring the sector back to a sustainable path, a clear reform, a public communication strategy, and targeted measures to protect the poor will be essential to gain the population’s acceptance.

The disbursement under the Rapid Credit Facility is designed to help Mali deal with urgent balance of payments need and catalyze financial support from Mali’s international partners, which is critical to Mali’s economic recovery.”

The RCF provides rapid concessional financial assistance with limited conditionality to low-income countries facing an urgent balance of payments need.