Debt Relief Yields Results in Niger
| Author | Emilio Sacerdoti and Philippe Callier |
| Position | IMF African Department |
| Pages | 28-29 |
Page 28
Debt relief from multilateral and bilateral creditors is showing results in Africa. In the landlocked western African country of Niger, lower debt service, together with continued significant budgetary aid and higher domestic revenue mobilization, is having an impact on spending in education, health, and the rural sector (see Chart 1). Budgetary allocations in these areas increased by 4 percent of GDP between 2002 and 2007. Debt cancellation yielded a drop in debt service of about 2 percent of GDP between 2003 and 2006. The external debt was trimmed by $1.3 billion, from 76 percent of GDP at end-2002 to 14 percent at end-2006.
The strong budgetary support, averaging 3.5 percent of GDP over the past four years, and higher domestic revenue because of a widening of the tax base (domestic budgetary revenue rose from 7.2 per cent of GDP in 1998-99 to 12.6 percent in 2007) have also increased the country's fiscal space. In addition to being used for higher-priority spending, the revenues have been used, in part, to reduce the large stock of domestic arrears accumulated through 1999.
The higher spending associated with debt relief has resulted in progress in improving Niger's key social indicators, which are among the weakest in Africa. The country is finally moving up in the rankings of the UN Human Development Index.
* The infant mortality rate dropped from 156 deaths per 1,000 in 1997 to 81 deaths per 1,000. Under-5 mortality is still among the highest in Africa.
* The primary school completion rate improved from 16 percent in 1997 to 28 percent in 2005. Overall primary school enrollment remains among the lowest in Africa.
* Access to potable water increased from 40 percent in 1996 to 69 percent in 2005.
With the restoration of political and social stability in the country in 1999 and the authorities' strong commitment to reform, growth performance has improved (see Chart 2). Average annual real GDP growth, which was lower than population growth in the 1990s, accelerated in 2000-06. It attained 4 percent, or about 1 percent in per capita terms. After a downturn in 2004 because of a severe drought, GDP growth picked up and, in 2005-07, is expected to average close to 5½ percent.
The restoration of...
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