supplemental credit to the on-going SAC-3, provided that the G o M has outlined appropriate actions to take to respond to the situation.
This scenario assumes that the C8te d’Ivoire crisis would
further dampen economic activity and put upward pressure on domestic prices. It would be difficult to achieve the G o M revenue targets and higher expenditures would be neededto address security and refugee considerations. The economy would be affected through the direct impact o f higher transport costs on cotton competitiveness and by the indirect impact
f lower income on demand for domestic goods. Real GDP growth beyond 2003 could be
negatively affected by up to 2 percentage points. There would be a corresponding increase in the fiscal deficit, assuming the G o M was able to maintain the level o f social spending and public investment. Meanwhile, government revenue would remain stable relative to GDP but be lower innominal terms. Under this scenario, it i s likely that G o M would require additional assistance in calendar year 2004 to support the implementation o f the PRSP program.
Debt Sustainability. M a l i reached the Completion Points o f the Original and
Enhanced HIPC Initiatives in September 2000 and March 2003 respectively. The debt relief provided to M a l i under the Enhanced HIPC Initiative allows the debt to fall to an acceptable level, unless there i s a significant external shock. The net present value (NPV) o f Mali’s debt i s projected to decrease from $1.5 billion at end-December 2002 to $1.1 billion in2003. The debt-to-export ratio i s projected to drop to 119% in2003, rising to 142% in2014, and gradually declining thereafter. This assumes that the G o M will only take on new loans under
concessional or highly concessional terms and that these loans are targeted to support effective implementation o f the PRSP (see Attachment 3 for further details on debt sustainability).
PRSP Pillar 1: Promote Institutional Development While Improving Governance and Participation
The 2002 elections solidified the democratic process inMali, and the formation o f a
multi-party Government in October 2002 provided a strong platform to pushforward on further institutional reform under the leadership o f President TourC. Duringthe GoM’s first Council o f Ministers meeting, President TourC challenged all Ministers to implement a results-oriented development policy based on the PRSP and he emphasized that strengtheninggovernance would be his top priority. This confirmed recognition that M a l i had beenmaking important strides inimproving governance and reforming institutions in the
past and, with the adoption o f the PRSP, this was again placed at center-stage.
The challenge laid down by the President i s ambitious as the Malian administration
has been characterized to date by: (islow decision-making; (iiinsufficiently qualified human resources with a lack o f appropriate material resources; and (iiia poorly adapted development and institutional management framework, which has hampered the GoM’s ability to elaborate effective development policy and mobilize the necessary resources. Furthermore, planning and development structures are dispersedwithin different ministries
with inadequate coordination mechanisms betweenthem. The judicial system itself i s
characterized by: (icomplicated and costly procedures; (iiinadequate access, concentrated inBamako; (iiiirrelevant legislation and regulation unable to keep up with social, political, economic, cultural, and environmental changes; (iv) lack o f trained personnel combined with