IMF grants Mali $18m emergency loan

The International Monetary Fund agreed Monday to provide an $18.4 million emergency loan to Mali, a move likely to lead other donors to release more funds after having cut off aid following the March 2012 coup. The IMF executive board approved the loan under the Rapid Credit Facility aiming to help the government bridge a huge budget hole as its fights off an Islamist insurgency with French help. Mali mission chief Christian Josz said the fund was confident that the country, battered by drought, the March coup and a rebellion by Islamist militants in the north, would stick to efforts at reducing its fiscal deficit and implementing economic reforms. "We decided to go ahead with the board meeting (to decide the loan) in spite of the foreign military intervention because we could see that the authorities were still committed and eager to implement their program of fiscal prudence." "At the same time we could also see that donors were prepared to re-engage in Mali and considered this operation of the IMF with Mali a precondition to re-engage." Other donors include the World Bank, the European Union, the African Development Bank and individual countries. The IMF board said the government's economic program was well-founded and called a resumption of aid from all donors "critical to Mali's economic recovery." "The authorities' 2013 program appropriately reflects near-term priorities. It aims to maintain macroeconomic and financial stability by keeping spending in line with available revenues and avoiding the emergence of new arrears." Josz told reporters in a briefing that after the Malian economy contracted by 1.5 percent last year, growth could hit 4-5 percent in 2013 if conditions, like the weather, stay positive. The insurgency, which has drawn the intervention of French troops to help protect the government, remains focused in the north of Mali, while 95 percent of the economy, heavily dependent on cotton farming and mining, is in the stable south. "Of course there are many uncertainties. But we expect a recovery" this year, Josz said. The success of the military intervention has reduced uncertainty in the south, he added, allowing a new gold mine to go ahead as well as an important investment by a third mobile carrier in the country. Josz said the government had set a "minimalist" budget for 2013 that had not banked on foreign donors resuming aid. The budget includes around $300 million for security spending -- up 37 percent in two years -- that leaves it with a large shortfall of $110 million. "With this approval by the IMF board... there is hope that these donors will together cover at least the $110 million" fiscal gap, Josz said.