Mali is a vast country with a population of almost 18 million (2016) and a highly undiversified economy. As such, it is vulnerable to commodity price fluctuations and, mostly desert with the Niger River bisecting it, the consequences of climate change. Although sparsely populated, with only 10% of its people living in the north, high population growth rates and drought have fueled food insecurity, poverty, and instability. The delivery of services in such a large territory is challenging, affecting geographic equity and social cohesion.
Mali borders Algeria, Mauritania, Senegal, Guinea, Burkina Faso, and Niger.
The political and security situation in Mali has been particularly volatile in recent years. In early 2012, there was a military coup and an occupation of the northern regions by armed groups. These events were followed by the deployment of French-led military forces in January 2013, which handed over to the United Nations Multidimensional Integrated Stabilization Mission in Mali (MINUSMA) in July 2013. In 2014, the French reorganized their anti-terrorist interventions in the Sahel, moving their operational headquarters to N’Djamena (Chad).
Two rounds of presidential elections were held in July and August 2013. Local government elections took place in November 2016. Peace negotiations between
While Mali experienced an overall drop in national poverty from 55.6% cent in 2001 to 43.6% in 2010, regional differences persist and, in 2013, the poverty rate rebounded to 45%.
Mali ranks 176th out of 188 countries on the United Nations Human Development Index for 2015. Poverty is much lower in urban areas, with 90% of all poor living in rural areas, and concentrated in the south, where population density is highest. Drought and conflict have only increased the incidence of poverty. With a lack of reliable estimates, there is a dire need to improve welfare measurements and data collection to better understand the livelihoods of poor households.
Despite deteriorating security, economic performance is strong, with robust growth and, more recently, an apparent drop in poverty rates overall. Robust performance in the agriculture and services sectors led to an estimated growth rate of 5.8% in 2016 (down from 6.0% in 2015) despite volatile security conditions. Regardless of the peace 2015 agreements, the north is still difficult for the government to control, and insecurity has spread to the center and south regions.
Primary sector growth accelerated from 6.9% in 2015 to 7.6% in 2016, thanks to good agriculture and rainfall, while tertiary sector growth has been robust (at about 6% since 2014) following renewed dynamism in the ICT sector. On the demand side, private consumption rose by 5.1%, driven by increased agricultural incomes in rural areas and stable food prices in urban areas. Meanwhile, gross fixed investment increased sharply by 14.9%, reflecting the government’s efforts to bridge infrastructure gaps, including those related to the Peace Agreement.
Inflation has dropped to -1.8%, due to falling food prices and low international oil prices.
Lower gold prices and increased imports for public investment contributed to
Substantial public investments have contributed to
But though debt distress is moderate, public debt rose by 3% of GDP from 2014 to 2016.
Mali is a member of the Western Africa Economic and Monetary Union (WAEMU). Monetary and exchange rate policies are managed at a regional level by the Central Bank of West African States (BCEAO), which keeps a peg between the CFA Franc and the Euro, a policy supported by the French Treasury.
In December 2016, the BCEAO increased the marginal lending facility rate from 3.5% to 4.5%, pushing up the cost of sovereign funds on the regional market. This measure was mitigated in March 2017, when BCEAO reduced the reserve requirement ratio from 5% to 3%.
Growth is projected to stay robust at about 5% over the medium term, in line with Mali’s long-run potential growth rate. Agricultural growth is underpinned by favorable weather and positive effects from input subsidy reform. Services growth will continue in telecoms, transport, and trade. Inflation is projected to be moderate for as long as agricultural production keeps food prices at bay.
On the demand side, investments may increase through the operationalization of the PPP law and the Sustainable Development Fund for regional development projects, especially in Mali’s north. The external current account deficit may reach 8.4% of GDP in 2017, but would gradually narrow to about 6.5% of GDP, in line with planned fiscal consolidation.
The deficit is to be financed by a combination of FDI and external borrowing.
Sustained efforts on fiscal adjustment—through the rationalization of current expenditure and improved tax revenue—would lower the fiscal balance from 4.3% of GDP in 2016 to 3.0% in 2019. However, debt sustainability is vulnerable to a tightening of financial conditions, such as lower remittances, lower foreign direct investment, or lower commodity prices.
Last Updated: Oct 12, 2017