Mali Economic Update, Spring 2021 : Protecting the Vulnerable during the Recovery
The twin shocks of the pandemic and the coup pushed the economy into a recession in 2020. Real GDP is estimated to contract by 2.0 percent (4.9 percent in per capita terms) in 2020. The containment measures from mid-March to early May 2020 hampered...
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| Language: | English |
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World Bank, Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/en/608701628112019671/Mali-Economic-Update-Protecting-the-Vulnerable-during-the-Recovery-Spring-2021 http://hdl.handle.net/10986/36063 |
| Summary: | The twin shocks of the pandemic and the
coup pushed the economy into a recession in 2020. Real GDP
is estimated to contract by 2.0 percent (4.9 percent in per
capita terms) in 2020. The containment measures from
mid-March to early May 2020 hampered economic activity in
the sectors that source critical imports from abroad, depend
on international traveling and those more reliant on
face-to-face interactions for service delivery. On the
demand side, private consumption declined, due to lower
remittance inflows, households’ response to the health
hazard, and containment measures. Non-priority public
investment was curtailed to accommodate COVID-related
expenditures, and donor disengagement after the military
coup. Inflation picked up in May and continued to rise due
to low cereal output and supply chain disruptions. The
fiscal deficit increased to 5.5 percent of GDP in 2020. The
pandemic’s economic toll and the slowdown in international
trade slowed domestic revenues. Authorities responded with
an ambitious COVID-19 emergency response plan (2.3 percent
of GDP). Therefore, both the spending increases, and revenue
shortfalls contributed to a higher fiscal deficit.
Meanwhile, external support from international communities
were delayed after the military coup. Public debt
subsequently increased to 44.1 percent of GDP.
Notwithstanding this increase, Mali remained at moderate
risk of debt stress with some space toabsorb shocks (joint
IMF/World Bank Debt Sustainability Analysis (DSA), February
2020). The crisis offers an opportunity to build back
educational systems stronger and more equitable than before.
As rules around social distancing are gradually relaxed,
systems need to ensure that schools reopen safely, student
dropout is minimized, and learning recovery starts. An
immediate policy option to focus on is the development and
implementation of remedial education, accelerated learning
programs, and revision of the academic calendar and
examination schedules to allow effective school continuity
particularly in poor and conflict areas. Medium-term
policies in the aftermath of the pandemic will be the: (i)
enhancement of the immediately established remote learning
platforms within the ministry of national education and (ii)
development of digital teaching content for each education
level in full alignment with the existing curricula. Longer
term policies would be to establish a virtual library with
an inventory of national and international teaching
resources to be used for remote learning programs to be
delivered through existing channels (radio, television,
mobile phone, and internet). These policies would make the
country resilient to future disruptions. Given limited
resources, policy prioritization, effective implementation
should be emphasized and in line with a general framework of
medium-term fiscal consolidation. A COVID-19 response plan
was put in place in April 2020, with an uneven level of
implementation. Lessons should be learnt with improved
oversight of COVID-19 fund execution. Meanwhile, the
enduring structural deficit and increasing resort to
domestic short-term financing add to the risks on fiscal
sustainability, which is further aggravated by the 2020 twin
crises. The broad direction for fiscal policy changes points
to the need to mobilize more domestic revenue and reform
public spending to increase the fiscal space for higher
quality services and investments, while reducing the overall deficit. |
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