Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-5450-NIR REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED GRANT OF UP TO US$10 MILLION FROM THE DEBT REDUCTION FACILITY FOR IDA-ONLY COUNTRIES TO THE BANQUE CENTRALE DES ETATS DE L'AFRIQUE DE L'OUEST FOR A DEBT REDUCTION PROGRAM OF THE REPUBLIC OF NIGER DECEMBER 12, 1990 This document has a restricted distribution and may ke used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EquVAL1TS Currency Unit - CFA France US$1.00 = 261 CFA Francs 1/ PRINCIPAL ABBREVIATIONS AND ACRONYMS USED BCEAO = Banque Centrale des Etats de l'Afrique de l'Ouest GON = Government of Niger PESAP Public Enterprise Sector Adjustment Program PFP = Policy Framework Paper FISCAL YEAR October 1 - September 30 1/ As of October 1, 1990, the CFA Franc is tied to the French Franc (FF) in the ratio of FF 1.0 to CFAF 50.0. The FF is currently floating. FOR OFFICIAL USE ONLY BANQUE CENTRALE DES ETATS DE L'AFRIQUE DE L'OUEST REPUBLIC OF NIGER DEBT REDUCTION FACILITY FOR IDA-ONLY COUNTRIES TABLE OF CONTENTS PROGRAM SUMMARY ............................................. - I. THE ECONOMY ...... ................. 1 A. Economic Structure and Performance ............. 1 - Structure of the economy .................... 1 - The uranium boom and its aftermath ........... 1 - Government's economic adjustment program ..... 2 - Donor support ................................ 2 - Economic performance under adjustment program . 2 - Economic vulnerability ....................... 3 B. Economic Prospects and Policies................3 - Long-term development prospects..............3 - Medium-term outlook and policies.............4 - Economic prognosis............................ 4 - External financing .......... ......... 5 - Debt service assumptions ..................... 6 II. THE DEBT STRATEGY ................... .............. 7 - Paris Club ................................... 8 - France ........................... 9 - Non-OECD bilateral debt ...................... 9 - Private debt ................................. 9 - London Club .................................. 9 III. THE PROPOSED OPERATION .......................... 10 - Objectives ................................... 10 - The operation ................................ 10 - Eligibility ................................. 13 - Benefits ..................................... 13 - Risks ........................................ 16 IV. BANK GROUP STRATEGY AND OPERATIONS ................ 16 - Support to short and medium term adjustment ... 16 - Addressing longer term development issues .... 17 - Lending program ...................... 18 V. COLLABORATION WITH THE IMF AND OTHER DONORS ........ 18 VI. RECOMMENDATION ..................................... 19 This document has a restricted distribution and may be used b recipte. ts only in the performance of their official duties. Its contents may not otherwise be disclosed witinut World Bank authorization. ANNEXES Annex 1 - Key Macroeconomic Indicators Annex 2 - Balance of Payments Annex 3 - Status of Bank Group Operations in Niger Annex 4 - Timetable of Key Events AF5IE December 7, 1990 BANQUE CENTRALE DES ETATS DE L'AFRIQUE DE LOUEST REPUBLIC OF NIGER DEBT REDUCTION FACILITY FOR IDA-ONLY COUNTRIES PROGRAM SUMMARY Recipient: Banque Centrale des Etats de l'Afrique de 11Ouest (BCEAO) Beneficiary: Republic of Niger Amount: Up to US$10 million Terms: Grant Program Description: The proposed grant would provide up to US$10 million from the Debt Reduction Facility for IDA-Only Countries in support of the Government of Niger's commercial bank debt reduction program. Under this program, commercial banks would be able to exchange their eligible claims against Niger for: (i) short- term (60-day) non-interest bearing notes issued by the Republic of Niger with a face value equal to 18 percent of the principal amount outstanding and guaranteed by BCEAO, whose guarantee would be collateralised by a deposit financed by resources from the Facility and donors; or (ii) long-term par notes bearing no interest, issued by the Republic of Niger and guaranteed by BCEAO, whose guarantee would be collateralized by US Treasury zero-coupon bonds purchased by BCEAO. The maturity of the zerc coupon bonds would be such that the net present value of both options would be equivalent (21 years at 9 percent interest rates). The implementation of the program is contingent on acceptance of the offer by banks holding at least 70 percent of the principal amount of outstanding public debt. Bilateral donors would make available resources amounting to US$10 million to complement the Facility resources. The resources provided by the Facility and other donors will be used to acquire the collateral for BCEAO's guarantees. The full US$20 million would suffice to permit the exchange of Niger's total outstanding public commercial bank debt, the principal amount of which is currently the equivalent of US$111 million. Program Benefits: The implementation of Niger's debt strategy would lead to a reduction of non-multilateral public debt outstaading by two thirds over the next five years. Scheduled service of public debt in 1991 would be 60 - ii - percent lower than in 1989. Thus budgetary resources would be freed which will be employed in priority sectors in line with the country's adjustment program, and would materially enhance Niger's growth and developmtnt prospects. The net present value of the cash flow savings from the effective elimination of the commercial debt in its entirety would amount to US$79 million over 10 years (assuming an 80 percent participation rate). In the longer term, the debt reduction and regularization of claims supported by the program would improve the general climate for private investment and facilitate access to short-term credit, particularly revolving trade credit. Risks: The major risk is that an insufficient number of banks would participate and that the program would therefore not proceed. This risk is alleviated by providing two options responding to the differing fiscal and regulatory situation of creditor banks. Disbursement: The proceeds of the grant funds would be disbursed upon compliance with the conditions of effectiveness and disbursement for the purpose of acquiring collateral to serve BCEAO's guarantee of the notes to be issued by Niger in exchange for outstanding commercial bank debt. It is expected that disbursement will take place by February 1991. Rate of Return: N.A. REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED GRANT FROM THE DEBT REDUCTION FACILITY FOR IDA-ONLY COUNTRIES TO THE BANQUE CENTRALE DES ETATS DE L'APRIQUE DE L'OUEST FOR A DEBT REDUCTION PROGRAM OF THE REPUBLIC OF NIGER 1. I submit the following report and recommendation for a proposed . grant from the Debt Reduction Facility for IDA-Only Countries to the Banque Centrale des Etats de l'Afrique de 1'Ouest (BCEAO) in the amount of up to US$10 million, to help finance a debt reduction program for the Republic of Niger. The information memorandum on the proposed program was circulated to the Executive Directors on September 24, 1990. PART 1. THE ECONOMY 2. The latest Policy Framework Paper was distributed to the Executive Directors on August 20, 1990. Basic data are given in Annex I. A. Economic Structure and Performance 3. Structure of the economy. Niger, with a population of 7.5 million inhabitants, is one of the poorest and least-developed countries in the world. Per capita income has decreased by an average of two percent per annum since 1965, and as of 1989 stood at US$280. The country has a meager natural resource base, with fragile and degrading soils, low rainfall and periodic droughts. Population growth of 3.1 percent per year is relentlessly eroding this natural resource base The economy is dominated by the rural. subsistence sector: an average of 20 percent of GDP is derived from agriculture and 14 percent from livestock. The formal sector is dominated by government and public enterprises (14 percent of GDP, including the uranium sector), while the formal private sector consists of a few local and a diminishing number of foreign companies which together contribute about 5 percent to GDP. The country is dependent on uranium, which represented about 75 percent of export earnings and 11 percent of GDP in 1989. Niger's human resource base is particularly weak, and social indicators are low, even compared with other low-income Sub- Saharan countriest life expectancy is 44 years, the primary school enrollment ratio is 29 percent, and the literacy rate is less than 15 percent. Rapid population growth compounds the task of improving these social indicators. 4. The uranium boom and its aftermath. Between 1978 and 1981, the value of uranium exports increased by 60 percent (in US$) and reached a record of almost US$350 million in 1981. Because prospects for the uranium sector seemed bright, Niger had unprecedented access to commercial borrowing. This borrowing financed a considerable increase in public spending, which almost doubled between 1978 and 1981. It is the main cause - 2 - for Niger's high commercial debt. When the value of uranium exports fell by 25 percent to US$264 million in 1982, and continued to drop in subsequent years, the Government of Niger (GON) was unable to curb public spending comensurately. This in turn led to rapidly increasing balance of payments and budget deficits coupled with unsustainable debt service obligations. The impact of the fall in uranium prices was compounded by other adverse external shocks, namely: the sharp increase in world interest rates in the early 1980s and the appreciation of the US dollar starting in 1981 which increased the Nigerien debt burden, and the protracted drought of 1983-84 which substantially decreased GDP. In 1990, uranium export earnings have fallen by 12 percent in US dollar terms as compared to 1989, and further declines are projected for the foreseeable future based on production contracts and expected trends in world prices. 5. Government's economic adjustment program. In response to the economic crisis of the early 1980c, GON launched a macroeconomic adjustment program in 1982/83 including stabilization measures to reduce the internal and external deficits, while ensuring their financing on highly concessional terms. Stabilization measures included reduction of fiscal deficits, including limits on the government wage bill; maintaining tight monetary and credit policies; and limiting external financing to grants or highly concessional loans. Adjustment measures aimed at eliminating uneconomic public enterprises and stimulating private sector activity; restructuring of the banking system; reducing price and marketing distortions in the agricultural sector; strengthening the programming and implementation of public investment; elimination of monopolies arl price controls. 6. Donor support. The adjustment program was supported initially by the IMP with a series of stand-by arrangements beginning in 1983, followed by a Structural Adjustment Facility in 1986 and an Enhanced Structural Adjustment Facility (ESAF) in 1988. IDA has supported the reform efforts with a Structural Adjustment Credit in 1986 and a Public Enterprise Sectoral Adjustment Credit in 1987. Substantial amounts of adjustment financing have also been made available by bilateral and other multilateral donors, both as cofinancing for IA credits and as parallel operations. On September 13, 1990, an updated Policy Framework Paper (PFP) was reviewed by the World Bank Committee of the Whole, and the second annual ESAF arrangement was approved by the IMF's Executive Board on September 14, 1990. The PFP outlines the adjustment program for the 1990- 1993 period. (See para.10). 7. Economic performance under the adjustment program. Economic growth was hindered in the early years of the adjustment program by a protracted drought that decreased real GDP by 9 percent in 1983 and 1984. Real GDP growth resumed in 1935-88 at an annual average rate of 4.4 percent, though .. 1989, lack of rain led to a 3.3 percent fall in real GDP. Inflation, as measured by the GDP deflator, decreased by 2.3 on average annually since 1985, reflecting tight monetary policy. The current account deficit, excluding official transfers, was reduced from 15.2 percent of GDP in 1985 to a more sustainable level of 11 percent in 1989. Efforts to restructure the budget, reduce the current fiscal deficit, and restructure the banking sector have been less successful, in part because - 3 - of the political difficulty of implementing austerity measures at a time when the underlying trends in the economy have been unfavorable. The situation was complicated by an unsettled period of political activity since the death of the previous President in November 1987. Fiscal revenue has been stagnant, while expenditures have continued to rise, driven by a continued expansion of the civil service. By 1989, the overall fiscal deficit (on a commitment basis, excluding grants) reached 11.2 percent of GDP, while the current budget deficit rose to 2.3 percent of GDP. Efforts to contain the fiscal deficit in 1990 are also proving difficult, owing to a shortfall in revenue performance. The inadequacy of budgetary resources continues to be a major handicap for Government in its efforts to address longer-term social and economic problems. 8. Economic vulnerability. As demonstrated by the experience of 1989, the economy is highly vulnerable to external factors, including adverse climatic conditions, that constrain the effectiveness of internal adjustment measures. Niger's competitiveness was adversely affected when Nigeria, its trading partner, implemented an economic adjustment program that included * aeries of nominal devaluations to which Niger was unable to respond due L. its commitment to monetary stability as a member of the West African Monetary Union. Moreover, the continued fall in the price Niger receives for its uranium caused a deterioration in the terms of trade which declined by 10.2 and 9.2 percent in 1988 and 1989, respectively. B. Economic Prospects and Policies 9. Long-term development prospects. The longer-term growth prospects for Niger's economy are limited by its very weak human and natural resource base and its landlocked geographic position. Potential sources of growth include expansion of subsistence crops and selected export crops, such as cowpeas, through agricultural intensification; livestock development; small-scale manufacturing for the domestic market; and exploitation of regional markets through strengthening economic linkages with neighboring countries. This growth potential is barely adequate to halt the past decline in per capita incomes, and realizing even this modest target will be a difficult challenge, necessitating the alleviation of persistent long-term constraints, as well as resolution of immediate adjustment issues. -Accelerated human resource development is a prerequisite, emphasizing steps to ease demographic pressures, open up more widespread primary education opportunities, and improve basic health care delivery. To halt the degradation of natural resources and protect the agricultural base of the economy, concerted efforts are needed to introduce environmentally sound farming, rangeland and water management practices, while easing the pressure on land from the expanding population. More immediately, Niger's fragile fiscal situation makes it virtually impossible to achieve rapid progress in the critical long-term development areas. The fiscal situation will remain weak until Government is successful in improving revenue performance and containing the wage bill. To enhance the developmental impact of public expenditure, Government will need to give priority to activities such as basic education, preventive health, agricultural services and infrastructure maintenance. Moreover, there is a continuing need to lower the burden placed on the economy and on the budget - 4 - by debt servicet scheduled debt service payments still account for over 8 percent of GDP and around half of Government revenue. 10. Hedium-term outlook and policies. In order to be better placed to overcome the longer-term development issues that lie ahead, Niger's medium-term economic program, as reflected in the 1990-93 PFP, aims to address the issues of economic vulnerability and inadequate fiscal resources, while initiating steps to tackle longer-term concerns. The PFP outlines measures that are foreseen in the next three years, with an emphasis on internal adjustment through disciplined fiscal and monetary policies, combined with measures to improve the efficiency of public sector resource use. The key elements hinge upon a successful restructuring of the budget, including, in the immediate future, a reversal of the deterioration of the current budget deficit. The program includes weasures to simultaneously increase tax revenues, freeze the wage bill, and restructure the composition of expenditures in favor of developmental activities. In particular, these include expenditures for the social sectors, and expenditures to increase the efficiency of government services such as operation and maintenance of facilities, materials purchases, and basic items such as school books and medicines. Implementation of some components of this policy package, particularly those related to containment of the wage bill and increases in taxes are likely to prove politically unpopular and expectations should be modest in the near future. 11. Economic prognosis. For Niger to start reversing the past downward trend in per capita income, it is essential that two key elements be put in place: sustained adjustment efforts by Government, as outlined in the previous paragraph; and substantial flows of highly concessional financing from the international community, including implementation of a strategy to lower the burden on the economy implied by current debt obligations. An economic scenario assuming the combination of these elements illustrates the results that might be achieved in the coming decade. Under this scenario, for which key indicators are shown in Table 1 below, real GLP would increase by 3.2 percent annually, thus enabling per capita income initially to be stabilized and ultimately to begin increasing slightly faster than population. Given that the terms of trade are expected to decline by an average of almost 3 percent per year throughout the next decade, even this modest income growth would represent a substantial achievement. In line with the growth target, an increase in investment would be required, from 9.5 percent of GDP in 1989 to 11.5 percent in 1998. The low levels of investment now and in the future reflect both the weakness of the domestic savings effort as well as the low returns to many investments in the Nigerien context. Domestic savings could be expected to increase only moderately from 3.2 percent of GDP in 1989 to 4.5 percent in 1998. Domestic savings would thus finance only about 40 percent of investment during the period. To achieve the GDP growth target of 3.2 percent annually, resource gaps will continue to remain substantial at around 6 percent of GDP. - 5 - TABLE 1: Key Economic Indicators, 1988-98 (percent, except as indicated) 1988 1989 1990 1993 1998 In Constant Prices GDP Growth 7.0 -3.3 3.1 3.2 3.2 Consumption per Capita 1.2 0.6 0.1 0.0 0.2 Investment/GDP 11.1 9.5 10.5 10.5 11.5 Domestic Savings/GDP 6.9 3.2 3.2 4.2 4.5 Change in Terms of Trade -10.2 -9.2 -18.4 -4.6 -2.2 In Current Prices Current Account/GDP -9.2 -11.0 -11.4 -9.4 -9.1 Public Debt/GDP 58.0 50.6 49.5 47.5 33.2 GDP (in US$ million) 2329 2045 2329 2867 3730 12. On the external account, Niger's export earnings are expected to mirror closely the prospects for uranium earnings. Long-term contracts currently in place for uranium do not insulate Niger from international price trends, and even allowing for the continuation of favorable prices negotiated on a bilateral basis, earnings are likely to decline. Imports are likely to reflect the pace of investment in the economy, and the extent to which agricultural production is able to keep up with demand. Under these assumptions, the current account deficit would fall from 11 percent of GDP in 1989 to 9.4 percent in 1993 though it would widen to around 11 percent of GDP in 1998, reflecting the need for continuing expansion of imports of investment goods. 13. External financing. Niger's external financing requirements for . the next decade (including debt relief), on a disbursement basis, are expected to decline from 13.9 percent in 1990 to 10.3 percent in 1998 averaging more than 10 percent annually, based on projected current account deficits averaging 9.5 percent of GDP, a modest build-up of external reserves, and currently scheduled debt service. Financing flows of this magnitude would require both an increase in project and adjustment financing averaging 4 percent per year, and relief of much of the debt burden. Over time, an increasing share of external assistance would be available for capital formation, including human capital, as the share of adjustment financing and debt relief would gradually decline from around 6 percent of GDP in 1990 to 1 percent in 1998. - 6 - TABLE 2: Uses and Sources of Funds (percent of GDP, current prices) 1988 1989 1990 1993 1998 Uses of Funds 21.6 16.4 17.1 16.3 14.8 Investment 11.1 9.5 10.5 10.5 11.5 Scheduled Debt Service 8.7 8.3 6.4 5.5 2.8 Increase in Reserves 1.8 -1.4 0.2 0.3 0.5 Sources of Funds 21.6 16.4 17.1 16.3 14.8 Domestic Savings 6.9 3.2 3.2 4.2 4.5 Project Disbursements 7.4 8.2 8.0 8.6 9.3 Adjustment Financing 5.2 2.1 3.4 2.1 0.6 Potential Debt Relief from Bilateral Creditors 2.0 2.9 1.5 0.4 0.4 from Commercial Creditors 0.0 0.0 1.0 1.0 0.0 Memorandum Items Debt Service Ratio 48.0 48.0 41.4 37.5 20.3 Public Debt to GDP 58.0 50.6 49.5 47.5 33.2 14. Debt service assumptions. Lowering Niger's debt service burden to sustainable levels will require extensive debt relief on bilateral debt obligations, as well as the reduction of Niger's commercial debt obligations through the proposed operation. Currently scheduled debt service, including IMF repayments and repurchases, consumes about 40 percent of export earnings and would amount to around 37 percent of total goverrment revenue during the period 1990 to 1993. Scheduled debt service to pr-vate creditors amounts to more than 1 percent of GDP and about 10 percent of total government revenue. Through implementation of the various elements of the debt relief strategy outlined below, the debt service ratio would be lowered to 20 percent of exports by 1998, as shown in table 2 above. Budgetary resources averaging US$100 million annually could potentially be freed, over the period 1990-1995, for other purposes as a result of successful implementation of all parts of the debt strategy, and these resources could allow the Government to pursue its policy of redirecting resources to priority sectors such as education, health, agricultural services and infrastructure maintenance. - 7 - TABLE 3: Debt Indicators 1987 1988 1989 1990 Scheduled Debt Service/GDP (M) 8.8 7.5 7.4 6.0 Scheduled Debt Servicelexports (Z) 46.6 47.6 48.0 41.4 Scheduled Debt Service/per capita (US$) 23.0 22.0 15.0 19.0 Memo Item: Health and Education expenditures/per capita (US$) 22.0 22.0 23.0 22.0 PART II: THE DEBT STRATEGY 15. As of December 31, 1989, Niger's total debt (public and private) amounted to US$1,288 million or 63 percent of GDP. The public debt (direct loans and GON-guaranteed loans) amounted to US$1,115 million (87 percent of total debt), and the private debt owed by uranium companies (not guaranteed by GON) amounted to US$173 million. Scheduled public debt service (of which about 35 percent was actually paid) amounted in 1989 to 47.6 percent of exports. TABLE 4: Long-Term External Public Debt (US$ Million) 1984 1985 1986 1987 1988 1989 Official Creditors 514 695 893 1174 1263 1004 of which: - Bilateral 233 343 426 563 584 326 (of which France) (135) (225) (305) (430) (435) (183) - Multilateral 281 352 467 611 679 678 Private Creditors 161 167 157 148 126 111 of which: - Commercial Banks 149 157 152 144 124 111 al - Others 12 10 5 4 2 - Total 675 862 1050 1322 1389 1115 1/ Figures obtained after reconciliation with commercial creditors. 16. In view of its heavy external debt burden, GON has been pursuing, over the last years, a two-pronged external debt management policy aimed at ensuring a sustainable debt servicing capacity over the medium- to long-term. First, GON has limited its new external medium- and - 8 - long-term financing to grants and loans on concessional terms. Second, it has obtained debt rescheduling, or other forms of relief, from bilateral and commercial creditors. As indicated in the PFP, it will continue to limit external borrowing to grants and loans with a grant element of at least 70 percent, except for normal import-related short-term trade credits. Niger will also continue to seek debt relief from its various creditors, Paris Club, other bilaterals, London Club members, and pri-ate creditors. A key element of the strategy is to obtain comparable ti tment from all creditors. 17. Paris Club. GON rescheduled its debt with the Paris Club members every year between 1982 and 1986, in 1988, and in September 1990. At the September 1990 Paris Club meeting, creditors agreed to reschedule or refinance all direct government loans and commercial credits guaranteed or insured by governments or their official insurance agencies that had been extended to GON before July 1, 1983, with an original maturity of more than one year. The rescheduling also includes debt service resulting from five previous consolidations, with the exception of that resulting from the agreement dated December 16, 1988. The rescheduling or refinancing covers 100 percent of principal and interest (including late interest) due as of August 31, 1990, inclusive, as well as 100 percent of the amounts of principal and interest (excluding late interest) due from September 1, 1990, through December 31, 1992, inclusive and not paid on loans, credits, and the previous consolidations mentioned above. 18. The four participating creditor countries have agreed to provide debt relief under the Toronto options, as follows: (a) France chose to cancel one third of the amounts consolidated and to reschedule the balance over a 14-year period, with an 8-year grace period. (b) Spain and the United States elected to reschedule the amounts eligible over 25 years, with a 14-year grace period. (c) The United Kingdom opted to reschedule over a 14-year period, with an 8-year grace period, on the basis of the appropriate market rate reduced by 3.5 percentage points or by 50 percent, whichever is smaller. The bilateral agreements are to be concluded before February 28, 1991. 19. The interest rates on the rescheduled debt will be determined in bilateral negotiations with each creditor. The balance of payments projections assume that the interest rate agreed on most of the rescheduled debt would be around 6 percent on the average. 20. The amount of debt relief obtained from the Paris Club as a result of this consolidation is estimated at CFAF 12.9 billion (US$45 million) for 1990, including CFAF 2.0 billion (US$7 million) in arrears outstanding at end-1989; CFAF 12.4 billion (US$41.9 million) for 1991; and CFAF 13.0 billion (US$46.2 million) for 1992. - 9 - 21. France. Niger and France reached an agreement in 1989 cancelling all official development assistance loans under the debt cancellation measures announced in Dakar in May 1989 by the President of the French Republic. The debt cancellation amounted to US$371 million, of which US$267 million is principal. 22. Non-OECD bilateral debt. Niger has also initiated negotiations with its OPEC and other non-Paris Club creditors to reduce debt service due on outstanding debt totalling approximately US$105 million (as of December 1989). GON is seeking debt reduction or rescheduling from these creditors on terms comparable to those offered by Paris Club creditors. 23. Private debt. This debt (estimated at US$173 million as of December 31, 1989) is owed by uranium companies. Although much smaller than the public debt, it constitutes a relatively heavy burden for Niger. Even though paid by private entities, the service on this debt reduces the basis for royalty payments to GON by the uranium companies. Due to the high interest charges, payments on this private debt amounted to 11 percent of total exports and 15 percent of uranium exports in 1989 but has been paid consistently. A plan for restructuring the uranium sector is being completed, and will be reviewed with the shareholders of the uranium companies and the buyers of the uranium concentrate at a meeting scheduled for January 1991. The plan is expected to provide an array of measures aimed at reducing production costs and making Niger's uranium competitive, including the cancellation of approximately 40 percent of the private debt and the restructuring of the balance. 24. London Club. Medium- and long-term commercial debt owed or guaranteed by GON (London Club debt) amounts to US$111 million or about 9 percent of total debt. Commercial loans to Niger have been provided by 38 banks from OECD countries, mainly through their French subsidiaries. Approximately 60 percent of total commercial debt is held by French banks. Around 70 percent of commercial debt obligations are denominated in French Francs with the remainder denominated in US dollars. 25. GON serviced its commercial debt (principal and interest) from 1984 until December 1988. During this period it repaid FF 91.9 million (US$15 million or 21 percent of FF denominated debt) and US$19 million (31 percent of US$ denominated debt). Interest charges were based on the London Interbank Offered Rate (LIBOR) for US$ denominated loans and the Paris Interbank Offered Rate (PIBOR) for FF denominated loans, with an average spread of 1 7/16 percent. This was one of the highest spreads paid by a debtor country on medium term loans to commercial banks in the world. An agreement was signed in March 1989 with creditor banks for a restructuring of the commercial debt with a lower spread. GON was to make a downpayment for the agreement to become effective. However, with a weakened fiscal position and lower than expected external assistance, GON was unable to meet the terms of the new agreement. In December 1988, the secondary market price of the commercial debt was about 50 percent, one of the highest in Africa. With the tight financial situation, arrears emerged on the servicing of the debt and the secondary market price dropped to 37 percent by the end of 1989 and 26 percent in October 1990. - 10 - 26. GON's debt strategy includes a reduction of its London Club debt as described in the following section. PART III. THE PROPOSED OPERATION Objectives 27. The operation. The amount of up to US$10 million requested from the Facility would, with US$10 million from bilateral sources, support the debt retirement program described below. Under the proposal: (a) Eligible debt (including all outstanding principal, and unpaid interest, penalties and commissions) tendered would be exchanged for either short-term or long-term notes, at the option of the participating banks, as described below. Eligible debt consists of all London Club debt (para. 25). (b) All resources used to carry out the operation will come from foreign grants, as GON does not have the necessary resources. 28. Two options are being offered to creditor banks. The economic effect of each option is to discharge Niger's commercial bank debt at a price of 18 cents per dollar of principal outstanding. In the opinion of Niger's financial advisor, this price reflects the present financial situation of Niger and should result in acceptance of the offer by banks. Both options include a guarantee by BCEAO, the common central monetary authority between seven West African countries (Benin, Burkina Fasc, Cote d'Ivoire, Mali, Niger, Senegal and Togo). BCEAO has confirmed its willingness and ability to perform this operation. - In the first option, eligible debt will be exchanged against short-term notes issued by the Republic of Niger with a face value equal to 18 percent of the outstanding principal amount of such eligible debt. The notes will have a 60-day maturity and be non-interest bearing. Their payment will be guaranteed by BCEAO. This guarantee will be secured by the pledge by BCEAO of cash, in an amount equal to the face value of the notes, provided from the Facility and other donors. This cash will be used to pay off the notes at maturity. The participating banks will not have any recourse against BCEAO except to the extent of the collateral. BCEAO will not have any recourse against GON in respect of payment by BCEAO under the guarantee. The exchange of the notes for eligible debt would be equivalent to a cash buy back at a rate of US$0.18 per US$1.00 of principal of eligible debt. - The second option is an exchange of eligible debt for long-term, non-interest bearing par notes. Each bank choosing this option will receive US dollar denominated notes issued by the Republic - 11 - of Niger for an equivalent amount of the principal of eligible debt exchanged by such bank. Claims denominated in French Francs will be converted into US dollars. The repayment of the notes at maturity would be guaranteed by BCEAO. This guarantee would be secured by the pledge of US Treasury zero coupon securities of equivalent maturity and face amount purchased by BCEAO with funds provided from the Facility and donor grants. The proceeds from these bonds will be used to pay the notes at maturity. The participating banks will not have any recourse against BCEAO except to the extent of the collateral. BCEAO will not have any recourse against GON in respect of payment by BCEA0 under the guarantee. The maturity will be such that the current price of the zero coupon securities is equal to 18 cents per US$. The actual maturity will depend on the yields on the US Treasury zero coupon bonds prevailing at the time of the exchange and will be approximately 21 years. Debt tendered for long-term notes will be automatically converted into the short- term note option if an insufficient amount of eligible debt is tendered under the second option. 29. The operation has been designed as a two option exchange instead of a buy-back to achieve the highest possible bank participation, as well as for legal reasons. Niger's advisors believe that offering solely a cash buy-back, or equivalent instrument, would reduce bank participation because it would be unattractive to some banks for financial, tax or regulatory reasons. By contrast, offering the option of an instrument that preserves the principal amount of a bank's claim (i.e. the second option) would be attractive to some banks, which might thereby be able to avoid the need to record a loss. Moreover, from a legal perspective, it is not feasible to structure the operation as a cash buyback by Niger because such a buy-back would require waivers of the sharing clause in the agreements with some of the banks. Similarly, the pledge by Niger of collateral to secure payments due on exchange instruments would require negative pledge waivers from some of the banks. Such waivers would be needed from 100% of the banks that are parties to the relevant agreements, and Niger and its advisors believed that obtaining such waivers is not feasible. 30. In response to the sharing clause issue, the operation has been structured, on the advice of counsel to Niger's financial advisor, as a novation, i.e. the exchange of a new obligation for an old obligation, which thereby discharges the old obligation. In their view, non-accepting banks should not be able to recover payments made to the accepting banks on the basis of the sharing clauses. They have also indicated that it would be extremely difficult for such banks to recover damages from the accepting banks, the original obligors, BCEAO or the donors on the basis of other legal theories. In addition, because the collateral for the new obligations will be provided not by Niger but by BCEAO to secure its guarantee of the new obligations this structure does not violate the negative pledge clauses in the existing agreements. These concerns regarding the negative pledge provisions also require that BCEAO, and not GON, be the technical recipient of the proposed grant, though Niger remains the intended beneficiary. This represents a technical deviation from the - 12 - Bank and IDA Board resolutions pertaining to the Facility (Resolutions No. 89-13 and No. IDA 89-4) that state that Association members be the recipient of grants provided under the Facility. 31. Creditor banks would be able to exchange their existing claims through either of the two options described above. In order to simplify processing of the offer, the options will, however, be mutually exclusive: once a bank chooses to accept an option it must tender its total claim on Niger and will not be entitled to split its claim between the short-term and long-term notes exchange. 32. Creditor banks will be given three weeks to respond to the offer. The offer will be contingent upon the total eligible debt tendered by banks amounting to at least 70 percent of the overall eligible debt. GON may extend the acceptance period of the offer for banks initially electing not to participate. 33. It is anticipated that GON will receive sufficient contributions to effect the exchange of the entire eligible debt (US$111 million) in principal amount. The proposed amount of up to US$10 million provided under the Facility would be 50 percent of this amount and its availability would be contingent upon BCEAO receiving a total of US$10 million from other donors. Thus a total of US$20 million would be available for this operation, which would be sufficient to effect the exchange of the entire eligible debt at the rate of 18 cents per dollar of principal amount. The Facility resources may only be used pari passu with the other donor funds. 34. The funds being made available from the Facility and from cofinanciers will enable Niger to make payments to creditors that would otherwise not be feasible. It is considered likely, therefore, that the overwhelming bulk of the existing commercial debt will be extinguished or restructured under the terms offered. However, it is possible that some creditors will not tender their claims. As time and resources permit, Niger will attempt to reach a satisfactory resolution with the remaining bankers for restructuring the still outstanding debt. However, in view of our current appreciation of Niger's medium term prospects, it is not expected that banks not participating in this exchange would be able to obtain more favorable treatment than banks tendering their claims under this offer, which is being funded by specially allocated external grants. 35. The grant agreement contains the following conditions of effectivenesst (a) the offer and related agreements are satisfactory to the Association; (b) the Association has received satisfactory evidence that sufficient funding is available to carry-out the operation; and (c) the Association has received satisfactory legal opinions on the offer and related agreements, including opinions with respect to the sharing clause issue described above (para. 31); and - 13 - (d) the Association has received satisfactory evidence regarding the collateral for the guarantees. 36. The grant funds from the Facility would be disbursed for the provision of collateral to secure BCEAO's guarantee of the short-term and long-term notes. No disbursements from the grant account can be made unless: (a) the Association shall have approved the procedures for withdrawal; and (b) the conditions precedent to Niger's obligatian to issue the notes set forth in the offer, including the acceptance of the offer by banks holding 70 percent of the eligible debt, have been satisfied. The proposed grant's closing date would be June 30, 1991. 37. Eligibility. The Niger commercial debt retirement program meets all conditions for participation in the IDA Facility. Niger currently has a medium-term adjustment program acceptable to the Association as outlined in the Policy Framework Paper agreed with the Association and the IMF. As described above, Niger has a debt management strategy acceptable to the Association that includes substantial relief from official bilateral credits through an agreement with Paris Club (paras. 17-21), and includes a program for resolving Niger's commercial debt problem in a comprehensive manner based on funds provided by the Facility and other available resources. The strategy will materially enhance Niger's growth and development prospects as described below. Benefits and Risks 38. Benefits. The proposed operation is part of GON's comprehensive debt strategy, which aims at reducing significantly the public debt outstanding and debt servicing obligation. The expected outcome of debt relief measures by bilateral creditors and of the proposed operation (assuming an 80 percent participation rate) are summarized in the Table below. a/ - 14 - TABLE 5t Estimate of Niger's Future Public Debt Stock (in Millions US$) 1988 1989 1990 1991 1992 1993 1994 1995 Bilateral Creditors 584 326 281 265 219 189 175 155 Commercial Banks 126 l1 111 22 15 10 5 - Sub Total 710 437 342 287 234 199 180 155 Multilateral Institutions 679 678 650 637 655 695 760 810 Total 1,389 1,115 1,042 924 889 894 940 965 Estimated scheduled debt service 160 121 69 47 48 50 46 46 Source: Government of Niger a/ For the estimation of the future debt stock, the following assumptions were made: - 80 percent of eligible commercial debt would be offered under the operation. The remaining London Club debt would be gradually eliminated. - Paris Club rescheduling over the next five years is on similar terms to those of the 1990 agreements. - Multilateral institutions would maintain their disbursement levels over the next five years. - Bilateral disbursements would be primarily grants. As a result of its debt strategy, GON's public debt outstanding (except that portion due to multilateral agencies) would drop from US$437 million in 1989 to US$155 million in 1995. Scheduled service on public debt would drop from US$121 million in 1989 to US$69 million in 1990 and about US$48 million per year afterwards. 39. The financial impact of the debt reduction operation (assuming an 80 percent participation rate) is summarized in the table below: - 15 - TABLE 6: Debt Service Relief After the Program (US$ Million) Principal Interest Total NPV (10 years) 1990 4.4 8.2 12.6 79 1991 4.7 8.2 12.9 1992 11.8 7.8 19.6 1993 9.9 6.9 16.8 1994 9.0 5.8 14.8 1995 6.8 4.6 11.4 1996 5.6 4.1 9.7 1997 4.8 3.5 8.3 1998 4.6 3.0 7.6 1999 4.6 2.5 7.1 Sourcet Government of Niger. Cleaning the slate with the commercial creditors would also have a positive effect on the ability of Niger to get financing from private sources in the future. (a) Short-term trade finance in Niger is mainly provided by local subsidiaries of French banks through interbank lines with head offices. As these banks are also the largest creditors of the London Club debt, it is almost certain they would react to the buildup of arrears by cutting some of the lines or increasing the cost of these lines. In other African countries in the same situation, the margins on trade lines have been raised to levels as high as LIBOR + 7 or 9 percent. At the same time, some of these countries also experienced cuts of 50 to 70 of their trade lines, with inevitable consequences on the level of imports and growth. As short-term trade lines are granted on a revolving basis, the increase in cost could have a strong detrimental effect on the long-term financial needs of Niger. Until now arrears accumulated since 1988 have had no effect on trade line cost, because banks considered the arrears to be transitory. If arrears were to continue to accumulate, it is likely that commercial banks would revise their attitude and increase the margins. (b) Niger is restructuring its uranium sector to bring production costs to competitive levels. In the next few years it will be necessary to make new investments in this sector. Even though the uranium companies are private entities and negotiate directly with lenders, it is highly unlikely that bankers would assume any more Nigerien risk if there are substantial arrears. Any credit extended would be more costly. Unless orderly relations are reestablished with the commercial banks, such a - 16 - situation could undermine the financial benefits expected from the present uranium sector restructuring program. 40. The debt strategy is thus a key element in Niger's adjustment program. As a result, budgetary resources would be freed and devoted primarily to the recurring expenditures needed to sustain externally financed investments, primarily in infrastructure and human resources development. Without the comprehensive debt relief sought, and given its prospects for the rest of the decade and the targets of its adjustment program, Niger will not be able simultaneously to resume its service payments and to maintain the targeted level of development expenditures. 41. Risks. The risk associated with this operation is that the critical mass of participating creditors (para. 33) will not be attained and that the exchange will not proceed. It is alleviated by offering two options responding to the fiscal, financial and regulatory concerns of the various creditor banks involved. Also, the majority of the banks are French, and would have an inclination to participate in view of the support given to the operations by the French authorities. PART IV - BANK GROUP STRATEGY AND OPERATIONS 42. Bank group assistance to Niger aims at supporting the Government in its adjustment process and in addressing issues relating to medium and long term growth. IDA expects to play a continuing lead role in donor coordination to help the Government in obtaining external aid at appropriate levels and conditions, in the framework of the Special Program of Assistance for Debt-distressed Sub-Saharan African Countries (SPA), for which Niger is eligible. Support to Short and Medium Term Adjustment 43. Niger's development strategy in the short and medium term is to continue the process of economic stabilization and structural adjustment. 44. The next phase of adjustment will consolidate reforms realized. It will focus on public resource management, trade and banking sector reform. In addition to economy-wide structural adjustment lending, it is intended that IDA will provide assistance to the adjustment process through sectoral adjustment lending. The current lending program, which assumes a reprise of effort in the adjustment program, includes the adjustment operation in the human resources sector in FY91 and a second SAL in FY93. 45. Economic and sector work related to adjustment efforts is concentrated on activities that will assist IDA to: (i) provide policy advice and (ii) monitor the progress of reforms (in close collaboration with the IMF). Recent work has included an assessment of the potential of the private sector. IDA is also overseeing studies on trade and industrial incentives, on petroleum supply and distribution policies, on civil service reform, and on the banking system. These studies are designed to enable the Government to prepare the next phase of the adjustment program. In - 17 - addition, periodic reviews of the public expenditure program will be carried out. Addressing Longer Term Development Issues 46. To address longer term development issues, Bank Group assistance will continue to focus on alleviating the country's severe resource constraints, with particular emphasis on increasing agricultural production . and human resource development, while at the same time promoting population control. . 47. Even in Niger's marginal conditions for rainfed farming, produc- tivity can be improved by soil conservation and water harvesting techniques which would also have a posftive environmental impact. Promotion of these and other techniques will be sought by improving the delivery of technical services to farmers and communities. The Bank Group's stzategy also includes: (i) providing support to the establishment of a priority - national research program and its implementation (the National Agricultural Research Project, Credit 2122-NIG, and (ii) helping the Government to design, test and implement programs for more sustainable resource management. These activities will be complemented by continued policy dialogue with the Government on the need to improve the security of land tenure and access to water. 48. IDA and other donors are currently working with Government to develop an integrated approach to improved natural resource management which could eventually benefit from Bank financing. IDA is working with the Government to identify the principal issues and options for Niger, and the potential role of IDA in helping Niger tackle its most critical environmental problems. 49. In the field of human resource development, IDA will continue to emphasize the expansion of basic services such as primary education, rural health care and programs to control population growth. An Education Sector Adjustment operation aimed at extending the efforts begun under the SAL was appraised in July 1989. The policy focus of the operation will be to promote more efficient and effective use of education resources, while investment financed under the credit will aim at improving the quality of primary education. The reforms proposed in this operation have met with resistance from students and the labor unions. Negotiations of the credit are expected to take place after the Government reaches a consensus on a number of issues with these groups. 50. In population and health, sector work will prepare for a project aimed at assisting the Government with: (i) the institutional development and changes in knowledge, attitudes and practices required for the rapid and efficient expansion of ongoing population activities; and (ii) implementing a primary health program by means of an improved and expanded, decentralized and adequately funded health system. 51. Projects in the infrastructure sectors will focus on maintaining and making more effective use of existing assets with only selected - 18 - expenditures on high priority new investments. Sector work is under iay to design a policy package for a proposed transport sector credit. Particular emphasis will be placed on the economic aspects of transport sector policies and distortions. Lending Program 52. Thirty-five IDA credits have been approved for Niger as of November 30, 1990, for a total amount of US$527.1 million equivalent. There has been one IFC investment for US$2.2 million. Twelve IDA credits, amounting to US$120.8 million, were for the rural sector. Ten credits have been for transport. Eleven other credits covered telecommunications, employment creation, education, health, water supply, energy, industrial development, and technical assistance. There has been one Structural Adjustment Credit and one Public Enterprise Sector Adjustment Credit to support the Government's adjustment program. Special African Facility credits were approved for the SAL in February 1986 and for the PESAP in June 1987. Four credits were approved in FY88-90 for the following public enterprise institutional development, energy, small rural operations project, and agricultural research. 53. The IDA lending program for 1991-94 amounts to US$122 million of which 30 percent is adjustment lending, 16 percent for population, 12 percent for development of private sector irrigation and the remainder for municipal infrastructure. 54. The proposed lending program will be contingent on far reaching reforms especially in the areas of the composition of public expenditures and the size of the civil service. Slaggish implementation of a solid reform program could result in a slowdown in the preparation of IDA adjustment operations and cutbacks in the lending program. The Government needs time to build a consensus and show the political will to implement the agreed macroeconomic reform measures. In the event that adjustment comes to a standstill, the IDA lending program would be limited to investment in human resources, health, agriculture and specific interventions in infrastructure. Conversely, excellent adjustment performance would trigger increased lending, particularly in the productive sector. PART V. COLLABORATION WITH THE IMF AND OTHER DONORS 55. The IMF and other creditors and donors have been fully supportive of Niger's adjustment program, and collaboration with IDA has been very close. The Policy Framework Paper (1990-93), represents the most recent result of this collaboration, and provides a basis for both a shared understanding and analysis of economic issues as well as a framework for provision of financial support. The IMF is currently supporting Niger through a second annual ESAF arrangement which aims at strengthening the financial and fiscal management of the economy while giving priority in resource allocation to the key development sectors. IDA and the IMF expect to continue working closely together in providing support for Government's - 19 - adjustment efforts, while ensuring consistency between policy measures supported by each institution. 56. Niger's adjustment program has been supported by several bilateral and multilateral donors. Consistency in the reform program has required a major effort in donor coordination, which has been achieved through a variety of means, including routine briefings and visits for cofinancing partners, UNDP-sponsored Round Table meetings for macroeconomic policy (in 1987) and in several sectors. The bi-annual meetings under the SPA program have also served as a vehicle for exchanges of views on Niger's adjustment program. PART VI - RECOMMENDATION 57. I am satisfied that the proposed grant from the Debt Reduction Facility for IDA-Only Countries would comply with Resolutions No. 89-13 and No. IDA 89-4 of the Executive Directors except that the grant will be made to BCEAO rather than Niger as noted in Para. 31, and recommend that the Executive Directors approve the proposed grant on the terms and conditions proposed herein including the provision of the grant to BCEAO. Barber B. Conable President Attachments Washington, D.C. December 12, 1990 -20 - ANNEX 1 November 1990 NØR: ey lacroeconomic Indic*tør* 195 1986 197 198 199 1990 1991 1992 1993 1998 EDt Proj Proj Proj Proj Proj REAL MM RATS (X) CP 7.8 3.7 -0.7 7.0 -8.8 3.1 3.1 3.2 8.2 3.2 Gup par capite 4.7 0.7 -3.6 8.9 -0.8 0.0 0.0 0.1 0.1 0.1 Private Cnfumpblen 0.8 -2.1 -3.2 1.2 0.6 0.1 0.0 0.6 0.0 0.2 per capite or SMICE Døbt Sorvice(8) 141.7 178.3 190.8 174.0 182.8 141.8 145.4 150.8 12.0 104.4 a/ lnterest 54.5 68.1 85.8 78.2 683.4 59.1 61.2 60.2 8.1 39.5 %ebt ServlcejFS /1 51.3 48.7 46. 47.0 48.0 41.4 40.1 39.3 37.5 20.3 .%bt ServIce/0P 9.8 9.6 8.8 7.8 7.4 6.0 5.8 5.6 &.8 2.8 RATIMS T ®P oee Inveatent 12.7 9.8 8.8 11.1 9.5 10.5 10.6 10.7 10.5 11.5 Dommutic Savinga 2.9 5.0 4.8 8.9 3.2 8.2 3.8 3.9 4.2 4.5 Public Invetuen% 8.2 9.3 8.2 8.1 8.9 8.7 8.9 9.0 9.2 8.3 Private Invetent/2 4.4 0.2 3.4 8.0 0.0 1.8 1.7 1.7 1.3 3.2 Public Savinge -0.4 -0.2 0.2 -1.0 -2.3 -0.7 0.1 0.5 1.8 1.3 Private Saving 8.8 5.2 4.1 7.9 5.5 3.9 3.7 3.4 2.9 3.2 %overnaent Revenue 11.1 11.0 11.8 10.5 11.0 11.3 11.5 11.7 11.X 12.2 Government Expendituro 19.6 20.4 20.3 19.6 22.2 20.6 20.3 20.2 19.1 21.8 Overall DeflcIt(-)/3 Including grant* -8.7 -4.4 -4.3 -5.6 -5.7 -5.6 -3.9 -2.2 -1.6 -2.1 excluding grante -9.4 -9.2 -9.5 -10.5 -10.5 -11.6 -10.2 -8.5 -7.9 -8.0 MP Deflater -5.91 -4.21 1.7S -0.1% -2.91 2.01 2.01 2.0% 2.0% 2.01 Real Effec%ive ERate/4 -5.6 -5.85 -9.1% -5.7% -7." Export Greth Rate -15.21 2.01 -7.81% -8.41 -11.11 -2.6% 1.81 2.91 4.01 2.4% Emporte (feb 1P 17.41 17.8 19.01 15.81 15.01 13.01 12.8% 12.71 12.51 14.5 Import 0 Rate 14.7% -20.01 5.7% -4.51 -1.6 3.7% 0.81 8.4% 2.21 3.21 Import" (cif)/®P 21.5 19.9 20.8" 18.15 18.8 18.71 18.01 17.81 17.4% 17.11 Current Account Defilt In Dollare -219.5 -187.0 -21.S -214.5 -225.9 -265.0 -263.1 -270.3 -270.5 -338.8 Current Account/®P Including tranfera 4.01 2.1% 8.71 2.71 4.3% 3.61 2.71 2.21 t.6% 4.21 oxcluding tronofore 15.2% 10.01 10.21 9.21 11.01 11.41 10.51 10.11 0.4% 9.11 ee. Reervee (month" of importe) 3.9 8.5 6.3 6.9 5.8 5.8 8.9 8.8 5.7 S.1 1\ before reacheduling. Pigureo includø raulte of 1990 official debt cancelletion 2\ includen change in stockø en eøh baolo 4 weight* b~med en the relative cnaumer price index  21 - ANNEX 2 November 1990 Niger! Bulanco of Paye*nts (S Million) 1985 19W 18 1988 1989 1990 1991 1992 1993 1998 Est Proj Proj Proj Proj Proj ExLpr be of G 6 o NS 272.7 311.6 452.4 427.1 354.7 374.1 388.2 406.3 430.8 683.4 rchandice (fob) 246.8 282. 411.8 369.0 300.2 310.2 320.8 39.3 359.0 539.2 Ne.Pactor Servicec 25.9 29.0 40.6 58.1 46.5 63.9 67.5 66.9 71.7 144.2 Imorta of Unoda & NFS 412.1 382.7 546.2 525.2 483.7 s4.9 558.2 587.4 611.2 948.4 Narchandie (cif) 348.3 310.6 443.8 425.5 386.4 435,7 449.4 475.3 501.8 788.4 Non-factor Services 63.8 72.1 102.5 100.7 97.3 108.2 108.7 112.1 109.4 160.0 Renource Balanco -139.4 -71.1 -93.8 -99.1 -129.0 -169.7 -170.0 -181.1 -180.4 -325.0 Not Fector Incom -50.0 -65.9 -77.8 -71.6 -50.5 -51.0 -52.3 -50.4 -47.3 -41.5 Net Privat* 7eannfer* -31.8 -36.9 -49.9 -45.0 -40.5 -45.2 -43.3 -42.3 -41.2 -36.7 Current Account belane -221.2 -178.9 -221.6 -215.6 -226.0 -266.0 -265.6 -273.8 -269.0 -338.8 including official trenfere -31.2 -10.5 -79.5 -61.8 -88-8 -84.0 -66.1 -57.4 -44.8 -157.5 Long-Tr Capital 13.6 3.7 39.9 43.3 -4.1 34.4 35.0 83.6 53.4 109.6 Not Public Lo~na 25.6 13.8 55.9 58.4 13.2 52.0 52.3 69.8 71.4 109.6 Diabursementg 81.1 83.2 133.1 140.7 85.4 111.9 113.9 138.8 142.0 175.2 Repaymenta 55.5 69.4 77.2 82.3 72.2 59.9 61.8 69.1 70.7 65.6 Not PrIvate Loans -12.1 -10.1 -16.0 -15.1 -17.3 -17.7 -17.3 -16.2 -17.9 0.0 Diaburasnte 18.6 14.3 11.3 4.7 0.0 5.1 5.2 5.3 5.4 0.0 Repayments 30.7 24.4 27.3 19.8 17.3 22.8 22.5 21.5 23.3 0.0 Nat Short-Tera Capitel 4.8 -14.0 19.0 0.0 -13.5 -3.4 0.0 0.0 0.0 0.0 Errore and Ommissiona 0.9 3.4 51.2 47.7 60.3 0.0 0.0 0.0 0.0 0.0 D~66 Rel ief 43.8 49.2 51.2 47.7 60.3 .. .. Change in Not Reserven -6.8 -9.6 -13.6 -41.3 29.5 -7.1 -6.9 -6.7 -8.6 -12.1 Not Credit From INF 19.5 18.2 2.7 -18.1 -6.6 -4.4 9.0 2.5 -9.3 Sharen of ®P R -siurce Balance -9.8! -4.5% -4.39 -4.3! -6.3 -7.3! -6.8! -6.8 -6.3% -7.0% Total Scheduled Interest Pyments 3.8% 3.6% 4.0% 3.11 3.1% 2.5% 2.5% 2.3! 2.0% 1.12 Current Account Balantce -15.6% -11.0% -10.25 -9.29 -11.0% -11.4! -10.% -10.19 -9.4! -10.81 Long-Term Capital Infloms 1.09 0.2% 1.8% 1.9! -0.2! 1.3% 1.4% 2.0% 1.91 2.9% Not Credit From PMF 1.45 1.2% 0.1! -0.8! -0.3! .0.2! 0.4% 0.1! -0.3 . Nemorandum Items: ®P 1418 1584 2162 2329 2045 2329 2491 2671 2867 3730 Noninal Exchange Rate 456.2 406.3 300.6 297.8 318.6 294.0 288.8 283.8 278.8 278,8 - 22 - ANNEX 3 Run Time: 12/06190 at 16.01.20 Status Of Bank Group Operations In NIGER PFDBR25 - Summary Statement Of Loans and IDA Credits (LOA data as of 10/30/90 - HIS data as of 12/06190) Amount in US$ million (less cancellations) Loan or Fiscal Undis- Closing Credit No. Year Borrower Purpose Bank IDA bursed Date Credits 22 Credits(s) closed 201.24 C11510-NI 1981 NIGER EDUCATION I 21.50 3.58 06/30/90IR) C12250-NIS 1982 NIGER INDUSTRIAL DEVELOPME 16.00 3.84 12/31/90R) C12260-NIG 1982 NIGER FORESTRY II 10.10 .43 06/30/901R) C13090-N18 1983 NIDER WATER SUPPLY 6.50 .34 06/30/88(8) C13940-NIG 1983 NIGER HIGHWAYS IV 23.60 .85 06/30/91(R) C15110-NIG 1985 NIGER PONER ENGINEERING 7.50 1.61 12/31190(R) C16180-NIG 1985 NIGER IRRIGATION REHAB. 9.30 1.41 12/31/90 C16680-Ni 1986 NISER HEALTH 27.80 21.01 06130/93 C17060-NIG 1986 NIGER TRANSPORT.SECTOR CRE 15.00 .96 06/30/93 CA0310-NIG(S) 1987 NIGER P.E.SECTOR ADJUSTREN 20.00 1.07 09/30/90(R) C17400-NIS 1987 NIGER PRIM EDUC 0EV 18.40 14.72 06/30/94 C18330-NIS(S) 1987 NISER P.E.SECTOR ADJUSTHEN 60.00 7.34 09/30/90(R) C18380-N16 1988 NIGER P.E.INST.DEVELOPNENT 5.50 2.44 06/30/92 CI88OO-NIS 1988 NIGER ENERGY 31.50 29.19 12/31/94 C18900-0IS 1988 NISER SHALL RURAL OPERATIO 9.30 7.08 06/30/96 t C21220-KIS 1990 NIGER AGRIC. RESEARCH 19.90 21.59 12/31/95 TOTAL number Credits = 16 301.90 117.47 TOTAL$tt 503.14 of which repaid 8.!3 TOTAL held by Bank & IDA 494.60 Amount sold of which repaid TOTAL undisbursed 117.51 Notes: I Not yet effective 08 Not yet signed 9tt Total Approved, Repayments, and Outstanding balance represent both active and inactive Loans and Credits. (R) indicates formally revised Closing Date. (S) indicates SAL/SECAL Loans and Credits. The Net Approved and Bank Repayments are historical value, all others are market value. The Signing, Effective, and Closing dates are based upon the Loan Department offical data and are not taken from the Task Budget file. - 23 - Run Times 12/06/90 at 16.01.44 Status Of Bank Group Operations In NIGER PFDBR258 - List of Closed SALs and Secals Amount in US$ million (less cancellations) Loan or Fiscal Undis- Closing ;redit No. Year Borrower Purpose Bank IDA buried Date CA0120-MIS 1986 NISER SAL 40.00 .00 12131/87 C16600-MIS 1986 NIGER SAL 20.00 .00 12/31187 Total NIGER 60.00 .00 I ANNEX 4 SUPPLEMENTARY PROJECT DATA SHEET TIMETABLE OF KEY EVENTS (i) Time taken to prepare the program : 12 months (ii) Initial discussions with IDA September 1989 (iii) Appraisal mission November 1990 (iv) Negotiations December 1990 (v) Planned date of effectiveness January 1991 December 5, 1990