Mali, a vast Sahelian country, has a low-income economy that is undiversified and vulnerable to commodity price fluctuations. Its rapid population growth (a fertility rate of 5.88 children per woman in 2018 and climate change pose a threat to agriculture and food security.
The extreme poverty rate, which stood at 47.2% between 2011 and 2015 owing to the security crisis, fell to 42.3% in 2019 as a result of record levels of agricultural production since 2014. The 2020 health, security, social, and political crises have led to a 5% increase in poverty. Some 90% of the country's poverty is concentrated in the densely populated rural areas of the south.
Mali has been experiencing instability and conflict since the 2012 military coup and the occupation of the north by armed groups. The operations of the United Nations Multidimensional Integrated Stabilization Mission in Mali (MINUSMA) date back to July 2014.
Ibrahim Boubacar Keïta, who became president in 2013 and was reelected in 2018, was deposed by a military coup on August 18, 2020, after several weeks of demonstrations.
Mediation efforts led by the Economic Community of West African States (ECOWAS) paved the way for an 18-month transition period, with the appointment of a civilian President and Prime Minister in September 2020. A transition government and National Transition Council, serving as the National Assembly, were installed pending the organization of democratic elections.
Peace negotiations between the government and two rebel groups, the “Platform” and the “Coordination,” were concluded with the signing of an agreement in June 2015 that provided for greater decentralization, with the north becoming a special development zone. Problems have arisen with the implementation of this agreement.
Security, which is essential for economic recovery and poverty reduction, remains fragile, with armed groups continuing their attacks on UN peacekeepers, the Malian army, and civilians primarily in the northern and central regions of the country.
The pandemic and sociopolitical crisis resulting from the coup have tipped Mali into an economic recession. Real GDP is estimated to have contracted by 2% in 2020, reflecting the decline in global demand, supply challenges, and domestic restrictions. This situation is compounded by the decline in cotton production and the poor performance of the agricultural sector, factors that are exacerbating poverty, particularly in rural areas.
As an oil importing country, Mali benefited from lower crude prices while higher gold prices in 2020 boosted export revenue. This improvement in the terms of trade, combined with the drop in demand for imports, led to a reduction in the current account deficit in 2020, despite the decline in remittances, financial flows, and other foreign investment.
The Malian authorities adopted a CFAF 214 billion plan to address the COVID-19 socioeconomic crisis, which resulted in higher budget expenditure. The drop in fiscal revenue led to a government deficit of 5.5% of GDP in 2020.
The fiscal space for countercyclical policies has been reduced while expenditure needs related to domestic security, public health services, and education remain. In the short term, the authorities will have to step up tax administration reforms so as to improve performance in the areas of collection and public expenditure execution.
Last Updated: Apr 28, 2021