1 AID AND THE BUDGETARY GAP : THE CASE OF MALI Abdoulaye TOURE Director General du Budget

2 Context Vast country with a surface area of 1.2 million km² Population : 10 million inhabitants Continental country with 7 borders Economy characterized by a predominance of the primary sector Affected by the issue of completion of the PPTE initiative in 2003 Access to the initiative for cancellation of multilateral debt

3 External Pressure The pressure of the multilateral monitoring of Budgetary Policies of the West African Economic and Monetary Union (UEMOA) and the management of monetary policy. Pressure of the economic and reform programmes with Bretton Woods institutions.

4 CSLP I CSLP 1 (2002 – 2006) had the following strategic themes: 1. To ensure institutional development and the improvement of governance and involvement 2. To develop human resources and access to basic social services. 3. To develop basic infrastructures and productive sectors

5 CSCRP The Strategic Framework for Growth and the Reduction of Poverty (CSCRP 2007 – 2011) has three strategic directions 1. The development of the productive sector 2. The pursuit and consolidation of reforms of the public sector 3. Growth of the social sector

6 UEMOA Convergence Criteria Critères de convergence UEMOA Critères de premier rang: Ratio souhaité Ratio du solde budgétaire de base / PIB m 1/ >=0% Taux d'inflation (IHPC Bamako) <=3% Ratio de l'encours de la dette intérieure et extérieure / PIB m <=70% Variation des Arriérés de paiement intérieurs (en mrd. FCFA) <=0 Variation des Arriérés de paiement extérieurs (en mrd. FCFA) <=0 Critères de second rang: Ratio de la masse salariale sur les recettes fiscales <=35% Ratio invest. publics financés sur ress. internes sur rec. fisc. 2/ >=20% Ratio déficit extérieur courant hors transferts publics / PIB m <=5% Taux de pression fiscale (= Recettes fiscales / PIB m) >=17% 1)Recettes (hors dons) moins total des dépenses (y c. prêts nets) (hors dépenses en capital à financem. ext. et hors PPTE) / PIBm 2)2/ ici seulement invest. BSI

7 The main sources of Tax revenue VAT Customs duties Characteristics Poor flexibility of tax revenue in comparison with GDP Membership of the UEMOA limits rate-linked reforms Relative importance of the informal sector

8 The Structure of the Budget and the Main Ratios of the CBMT Public finances Moyenne Moyenne Estim.Prév PIB aux prix du marché (mrd. FCFA courants) 2550,313205,833419,443653,003895,034196,874493,793931,63 Taux de pression fiscale (= Recettes fiscales / PIB m)14,6%14,7%14,9%17,0% 17,2%16,6% Taux de fiscalité (recettes courantes, hors dons, en % du PIB) 17,2%16,8%17,0%19,7% 19,9%19,2% Taux de fiscalité (recettes courantes en % du PIB sect.formel) 47,7%49,0%49,5%57,5%56,3%56,9%57,7%55,6% Total des dépenses et prêts nets, en % du PIB23,8%27,0%27,3%27,0%26,9% 27,1%27,0% Solde opérations courantes (épargne publ. nat.) en % du PIB7,3%40,5%8,1%10,6%10,5%10,6%10,7%10,1% Solde opérations courantes (épargne propre) en % du PIB3,9%3,5%3,6%6,4%6,5% 6,6%5,9% Solde budgétaire primaire (FMI), en % du PIB1,4%0,6%0,2%2,9% 3,0%3,1%2,4% Solde budgétaire primaire (UEMOA), en % du PIB0,2%-0,6%-1,3%1,3%1,4%1,5%1,6%0,9% Solde global (base engagements), hors dons, en % du PIB-6,7%-10,2% -7,3%-7,2%-7,1% -7,8% Solde global (base caisse), en % du PIB-2,5%27,3%-5,3%-2,8%-2,9%-2,8%-2,9%-3,4%

9 CBMT and the Convergence Criteria

10 CBMT by type of expenditure 1/2 En milliards de FCFA

11 Expenditure Represents on average 27% of the GDP Internal financing about 59% External financing 40%

12 CBMT by type of expenditure 2/2 % of GDP RUBRIQUES P E R S O N N E L4,1% 4,2%4,3% MATERIEL & FONCTIONNEMENT1,8%1,9%2,0%2,1% 2,2% DEPLACEMENT ET MISSION0,9%1,0% COMMUNICATION ET ENERGIE1,0%0,9%1,0% 1,1% AUTRES DEPENSES1,6%1,9%1,6%1,5%1,4% B O U R S E S0,2% 0,1% EQUIPEMENT & INVESTISSEMENT1,3%1,2%1,3%1,4% TRANSFERTS ET SUBVENTIONS2,6%2,7% 2,6% 2,5% D E T T E S3,0%1,9%1,6%1,5%1,4% PERSONNEL PPTE0,6% 0,7% MATERIEL PPTE0,0% EQUIP. & INVESTIS. PPTE0,0%0,1%0,0% TRANSFERTS & SUBVENTIONS PPTE0,2% 0,1% BUDGETS ANNEXES CPTES & FONDS SPECIAUX0,2% BSI FINANCEMENT INTERIEUR2,7%2,9%2,8% 2,7%2,6% BSI FINANCEMENT INTERIEUR PPTE0,2% 0,1% BSI FINANCEMENT EXTERIEUR7,3%7,2%7,4%7,5%7,6%7,7% APPUI BUDGETAIRE1,5%1,4%1,0%0,8% ENSEMBLE DES DEPENSES29,2%28,6%27,8%27,7%27,5%27,7%

13 Division according to type of expenses (% GDP) SECTEURS D'ACTIVITE POUVOIRS PUBLICS ET ADMINISTRATION GENERALE 3,61%3,43%3,54%3,43%3,40%3,42% DIPLOMATIE ET AFFAIRES ETRANGERES 0,52%0,59%0,56% 0,57% DEFENSE NATIONALE ET SECURITE INTERIEURE 2,15%2,21%2,12%2,14%2,24%2,27% EDUCATION DE BASE 3,72%3,59%3,72%3,57%3,47%3,55% ENSEIG. SEC. SPERIEUR & RECH. SCIENTIFIQUE 1,22%1,21% 1,23%1,24%1,27% CULTURE JEUNESSE ET SPORT 0,41%0,40%0,41% 0,40% SANTE 2,27%1,91%1,92%1,86%1,91%1,95% SECTEURS SOCIAUX 0,87%1,07%1,06%1,00%0,98%0,97% EMPLOI 0,24%0,23%0,21%0,18%0,19%0,20% AGRICULTURE 3,69%3,84%3,65%3,75%3,78%3,80% MINE HYDRAULIQUE ET INDUSTRIE 1,68%2,00% 2,05%2,03% URBANISME ET TRAVAUX PUBLICS 3,09%3,37%3,27%3,39%3,35%3,37% TRANSPORT 0,33%0,40% 0,41%0,43%0,45% COMMUNICATION 0,28%0,32%0,33% 0,32% DETTE INTERIEURE 0,05% 0,04% 0,03% DETTE EXTERIEURE 1,92%1,00%0,94%0,93%0,90%0,93% INTERET DETTE EXTERIEURE 0,55%0,34%0,28%0,25%0,22%0,19% DOTATIONS NON REPARTIES 2,59% 2,18%2,14%2,05%2,00% TOTAL 29,19%28,56%27,83%27,66%27,54%27,69%

14 Prospects Control of expenses Improvement in efficiency of expenditure by means of an analysis of its management and a plan of action for improving it. Since 2005, Mali has adopted a plan of action for the improvement of the management of public finances; A change, in the medium term, of the objectives of benefits in order to comply with he trends of the new Strategic Framework for Growth and the Reduction of Poverty 2007/2011.

15 De-concentration of Budgetary allocations (in thousands of CFA Francs) Dépenses budgétaires pourcent. 2006pourcent Budget général ,42% Pouvoir publics et administrations centrales ,67%85,56% Financement interieur ,67%57,01% Financement extérieur ,00%28,55% BSI extérieur ,95%25,18% Appui budgétaire sectoriel ,05%3,37% Administrations déconcentrées ,76%13,86% Financement interieur ,76%12,19% Financement extérieur ,00%1,67% BSI extérieur - - 0,00% Appui budgétaire sectoriel ,00%1,67% Budgets annexes comptes & fonds spéciaux ,58% Budget d'Etat ,00%

16 The flow of Aid and takeover The National Strategy for the mobilization of aid is to invert the current trend which is approximately 70/30 in loans and donations. Effective takeover occurring through reforms of the institutional framework of the management of public finances, moving from a greater sense of responsibility through decentralization and de- concentration. The application of the Paris declaration regarding harmonization and alignment of aid.

17 Indebtedness profile

18 The profile of indebtedness Situation and Preliminaries Respect of criteria for takeover. Reality of the existence of a budgetary gap after the IADM, which reduced the volume by 1085,2 billion, that is a 60% reduction with a debt going from 1617,0 billions to 629 billion between 2005 and Systematic recourse to loans at preferential rates

19 CHALLENGES REVIEW OF THE FRAMEWORK OF MONETARY AND BUDGETARY MANAGEMENT AND POLICIES IN THE MATTER WITH A VIEW TO THE ACHIEVEMENT OF THE MILLENNIUM GOALS TO IMPROVE ECONOMIC AND FINANCIAL GOVERNANCE TO STRENGTHEN PRIVATE PARTNERSHIPS TO STRENGTHEN THE CAPACITIES OF NATIONAL PRIVATE INDIVIDUALS.