INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL MONETARY FUND NIGER Joint World Bank-IMF Debt Sustainability Analysis July 2019 Prepared jointly by the staffs of the International Development Association (IDA) and the International Monetary Fund (IMF) Approved by Marcello Estevão (IDA) and David Owen and JohannesWiegand (IMF) Niger: Joint Bank-Fund Debt Sustainability Analysis Risk of external debt distress: Moderate Overall risk of debt distress Moderate Granularity in the risk rating Moderate risk tool: Limited space to absorb shocks Application of judgment No Niger’s risk of external and overall public debt distress is rated “moderate” as in the previous DSA. While all thresholds are observed in the baseline, the PV of PPG external debt-to-exports ratio breaches its threshold under stress test scenarios. Debt-carrying capacity continues to be rated “medium.” The analysis shows that Niger has limited space to accommodate negative shocks and remains vulnerable to adverse developments of its exports. The DSA is predicated on the government continuing to implement its reform program: fiscal consolidation; structural reforms, including revenue mobilization efforts; contain expenditures and improve spending quality; and timely completion of several large-scale projects, in particular the construction of a pipeline for crude oil exports. Identified weaknesses call for further strengthening of debt management, including by broadening the coverage of public debt, prioritizing concessional borrowing, and strengthening private-sector development to support economic diversification and mitigate the risks associated with commodity price fluctuations. PUBLIC DEBT COVERAGE 1. The coverage of the public sector in the DSA is in line with fiscal accounts (Text Table 1). It covers the central government but excludes local governments, the social security fund, and extra budgetary funds. State guarantees extended to the private and public sectors for external borrowing are included. Publicly-guaranteed private debt is limited to the guarantee issued to the China National Petroleum Company (CNPC) for the construction of the refinery SORAZ.1 SOEs do not directly borrow from abroad but benefit from debt contracted by central government and on lent to them. This includes electricity (NIGELEC), water (SPEN), and telecom (Niger Telecom) companies, and ABK, a public administrative entity set up for implementing the Kandadji dam project. Domestic debt of SOEs is excluded due to data constraints, but the authorities are working with the World Bank to improve the availability and quality of financial information for SOEs. External debt is defined on a currency basis.2 Table 1. Niger: Coverage of Public-Sector Debt and Design of Contingent Liability Stress Test Subsectors of the public sector Sub-sectors covered 1 Central government X 2 State and local government 3 Other elements in the general government 4 o/w: Social security fund 5 o/w: Extra budgetary funds (EBFs) X 6 Guarantees (to other entities in the public and private sector, including to SOEs) X 7 Central bank (borrowed on behalf of the government) X 8 Non-guaranteed SOE debt 1 The country's coverage of public debt The central government plus extra budgetary funds, central bank, government-guaranteed debt Used for the Default analysis Reasons for deviations from the default settings 2 Other elements of the general government not captured in 1. 0 percent of GDP 0.0 3 SoE's debt (guaranteed and not guaranteed by the government) 1/ 2 percent of GDP 2.0 4 PPP 35 percent of PPP stock 0.0 5 Financial market (the default value of 5 percent of GDP is the minimum value) 5 percent of GDP 5.0 Total (2+3+4+5) (in percent of GDP) 7.0 1/ The default shock of 2% of GDP will be triggered for countries whose government-guaranteed debt is not fully captured under the country's public debt definition (1.). If it is already included in the government debt (1.) and risks associated with SoE's debt not guaranteed by the government is assessed to be negligible, a country team may reduce this to 0%. 2. The contingent liability tailored stress test is calibrated to account for the debt coverage gaps highlighted above (Text Table 1). First, the default shock of 0 percent of GDP is kept for other elements of the general government not captured in the baseline stock of debt since (i) the authorities indicated that the strong financial position of the social security fund (CNSS) removes material fiscal risks; (ii) the authorities confirmed the absence of extra-budgetary funds; and (iii) local governments solely contract short-term debt with the domestic banking sector. Second, the contingent liabilities shock from SOE debt is set at the default value of 2 percent to reflect risks associated with domestic borrowing by SOEs. Third, with the stock of public-private partnerships (PPPs) signed under the new PPP law of May 2018 well below the 3 percent-of-GDP limit according to the authorities and PPPs under the 1 CNPC extended a US$880 million (9.5 percent of GDP) loan for the construction of SORAZ refinery in 2008, of which US$352 million (3.8 percent of GDP) is guaranteed by the government. The outstanding stock of US$161 million (1.7 percent of GDP) at end-December 2018 is included in the baseline stock of debt and is expected to be fully repaid by 2023. 2 Niger’s DSA follows a hybrid approach, with financing from BOAD, the regional development bank, considered as foreign despite being local-currency-denominated. 2 previous PPP law already counted as part of the public debt stock in the baseline,3 no contingent liability stress test for PPPs is necessary. Fourth, given the small size and depth of the financial sector in Niger, it does not exhibit significant vulnerabilities warranting an upward adjustment of the default minimum value of 5 percent of GDP. BACKGROUND A. Evolution and Composition of Debt 3. Niger’s public and publicly-guaranteed (PPG) debt stood at 53.8 percent of GDP at end- 2018 (Text Figure 1). This is somewhat higher than in the previous DSA owing to the revision of historical debt stock data by about 5.1 percent of GDP.4 External debt dropped from an average of 70 percent of GDP during 2000–05 to 14.7 percent of GDP in 2006 following debt relief granted under the HIPC initiative. It hovered around 20–25 percent of GDP in the following years, before increasing markedly from 2015. Domestic debt has also been on a declining trend since 2000 and averaged 4 percent of GDP over 2008–14, before starting to rise in 2015. Debt service follows a similar pattern, with principal and interest payment on domestic debt surpassing debt service on PPG external borrowing from 2016. Figure 1. Niger: Public and Publicly-Guaranteed Debt, 2000–18 Public and Publicly-Guaranteed Debt Stock, 2000-18 Debt Service, 2007-18 (percent of GDP) (percent of GDP) 120 9 External debt 8 Amortization on PPG external debt 100 Publicly-guaranteed external debt Domestic debt 7 Interest on PPG external debt Amortization on domestic debt 80 6 Interest on domestic debt 5 60 4 40 3 2 20 1 0 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sources: Nigerien authorities, and IMF staff estimates. Note: Domestic debt includes debt associated with commercial PPPs in 2017 (4.7 percent of GDP) and 2018 (4.2 percent of GDP). 3 These so-called commercial PPPs amounted to CFAF 218.8 billion (4.2 percent of GDP) at end-December 2018. They are expected to be fully repaid by 2033. 4 The authorities had inadvertently omitted some domestic loans from commercial banks, as well as concessional external loans contracted in the past. Also, the previous debt stock figures did not reflect ongoing securitization operations with commercial banks to clear domestic payment arrears. To avoid such lapse in the future, the authorities are setting up a dedicated debt management unit in the Treasury. 3 4. Niger’s PPG external debt accounted for 65 percent of the total debt stock in 2018 (Text Table 2). Multilateral creditors represent the lion’s share of external debt, with Niger borrowing most from the World Bank (IDA) and the West African Development Bank (BOAD). Official bilateral debt is dominated by China and France (AFD). While external debt is mainly foreign-currency denominated, exposure to exchange rate risk is relatively low given the CFAF’s peg to the euro. External debt is generally on concessional terms, with an average weighted interest rate of 1.6 percent and remaining maturity of 21 years at end-2018. Table 2. Niger: Public and Publicly-Guaranteed Debt, 2016–18 2016 2017 2018 CFAF percent of CFAF percent of CFAF percent of billion GDP billion GDP billion GDP PPG External Debt 1,513 33.5 1,668 35.3 1,808 35.0 Multilateral 1,071 23.8 1,271 26.9 1,394 27.0 of which: IMF 91 2.0 110 2.3 128 2.5 of which: World Bank 444 9.8 564 11.9 634 12.3 of which: BOAD 204 4.5 240 5.1 245 4.7 Official Bilateral 295 6.5 293 6.2 323 6.3 Paris Club (France) 46 1.0 54 1.1 62 1.2 Non-Paris Club 250 5.5 239 5.1 261 5.0 of which: China 108 2.4 116 2.5 119 2.3 Publicly-guaranteed private debt 146 3.2 104 2.2 92 1.8 Domestic debt 501 11.1 902 19.1 971 18.8 Tbills and bonds 422 9.4 519 11.0 679 13.2 Bank loans 2 0.0 50 1.1 19 0.4 Domestic arrears 44 1.0 89 1.9 42 0.8 Other 32 0.7 244 5.2 231 4.5 Total PPG debt 2,014 44.6 2,570 54.4 2,780 53.8 Source: Nigerien authorities, and IMF staff calculations. Note: Domestic debt includes debt associated with commercial PPPs in 2017 (4.7 percent of GDP) and 2018 (4.2 percent of GDP). 5. Domestic debt consists mostly of short and medium-term Treasury securities, with the share of arrears and statutory advances from the regional central bank declining over time as Niger clears its domestic payments arrears and gradually repays loans from the BCEAO. From 2017 onward, the stock includes debt related to commercial PPPs contracted before the 2018 PPP law, and representing 4.7 and 4 4.2 percent of GDP in 2017 and 2018, respectively.5 The average weighted interest rate on domestic debt was 6.4 percent in 2018. 6. The estimation and analysis of private external debt is complicated by data issues and requires further follow up. The regional central bank (BCEAO) does not yet compile external debt stock statistics. Efforts to gather information on the coverage and composition of private external debt will continue, with technical support from the IMF’s Statistics Department. B. Macroeconomic Forecast 7. The baseline scenario is predicated on macroeconomic assumptions reflecting recent economic developments and expected effects of ongoing and new policy measures (Text Table 3). The framework remains broadly unchanged from the previous DSA. It assumes fiscal consolidation in line with the government’s ongoing reform program, including the goal to meet the deficit target of 3 percent of GDP of the West African Economic and Monetary Union (WAEMU) by 2020. The fiscal deficit is projected to average 2 percent of GDP from 2024 onward. Similar to the previous DSA, the commencement of crude-oil exports and the resumption of activities at the Imouraren uranium site are projected for 2022 and 2025, respectively. Annual economic growth should pick up to average 7 percent over 2018-24 on the back of privately-financed projects catalyzed by the hosting of AU summit this July, and large donor-financed projects. As in the previous DSA, revenue mobilization is expected to gather steam with the implementation of performance plans for revenue administrations, the collection of tax arrears, the consolidation of tax exemptions, the fight against petroleum smuggling, computerization of revenue authorities, and improved cooperation between tax and customs administrations. On average, inflation is projected to remain at 2 percent in the longer-term. 8. Financing assumptions imply a gradual shift from domestic funding sources to foreign ones. In the short and medium term, Niger is expected to benefit from continued foreign support, including from the pledges made during the December 2017 donor roundtable and investors’ forum in Paris. 6 With fiscal consolidation reducing overall financing needs, the domestic debt ratio is thus projected to decline from 17.8 percent of GDP in 2019 to 5.4 percent of GDP in 2029. 9. The composition of foreign and domestic borrowing is also assumed to change over time. For foreign debt, new disbursements are expected to be covered by external funding sources based on historical financing patterns. Over the longer term, the weights of external creditors are adjusted so that external borrowing moves toward less concessional financing and toward commercial loans. For domestic borrowing, debt instruments are assumed to gradually shift from T-bills to medium- and long- term bonds. Consistent with the borrowing terms of recent government securities issuances on the regional market, the average interest rate on domestic debt is assumed at 6.25, 6.5 and 7.5 percent for 5 In the government publication, PPPs enter the domestic debt stock only when the goods and services are delivered to the State. Instead, staff included the entire stock of PPPs contracted before the new law was adopted to capture risks associated with PPPs. 6 Niger obtained more funding than sought for its five-year economic and social development plan (PDES 2017 –2021), with a total of US$12.7 billion pledged by official bilateral and multilateral donors while private investors expressed a commitment of US$10.3 billion. 5 bonds maturing in 1 to 3, 4 to 7 years and beyond 7 years, respectively. The interest rate on T-bills is set to 6 percent. Table 3. Niger: Key Macroeconomic Assumptions, 2016–39 2016-2017 2018-2024 2025-2039 /1 Real GDP growth (percent) DSA 2019 4.9 7.0 6.0 Previous DSA 4.9 6.7 6.0 Inflation (CPI) DSA 2019 0.2 2.1 2.0 Previous DSA 1.3 1.8 2.0 Primary fiscal balance (percent of GDP) DSA 2019 -4.9 -1.7 -1.2 Previous DSA -4.9 -1.9 -1.3 Total revenue excluding grants (percent of GDP) DSA 2019 14.3 18.1 21.1 Previous DSA 14.3 17.7 19.7 Exports of goods and services (percent of GDP) DSA 2019 16.9 19.2 23.0 Previous DSA 16.7 19.7 25.6 Oil export price (US dollars per barrel) DSA 2019 42.8 50.7 57.4 Previous DSA 45.4 58.5 60.2 Uranium price (Thousands of CFAF per kg) DSA 2019 54.2 44.1 43.9 Previous DSA 54.2 38.5 71.2 Source: IMF staff calculations. 1/ Averages for the previous DSA are up to 2038. 10. Realism tools do not flag significant deviations from historical experience. • Drivers of debt dynamics (Figure 3). The contributions of past and projected debt-creating flows remain broadly unchanged, although prices and exchange rates are expected to negatively contribute to external debt accumulation relative to historical experience. The projected contribution of real GDP growth to public debt reduction is higher than what the past five years would suggest, due to an upward revision of medium- and long-run growth. Continued fiscal consolidation should curb the contribution of the primary deficit to public debt accumulation more than in the past. For PPG external debt, past forecast errors were mainly driven by unexpected price changes and the residual. For public debt, unexpected changes in the primary deficit and prices were chiefly responsible for past forecast errors. A comparison with the distribution of past forecast errors for LICs shows that unexpected changes to Niger’s debt are within the interquartile range for both public and PPG external debt. • Realism of planned fiscal adjustment (Figure 4). The projected 3-year fiscal adjustment in the primary balance (1.5 percentage points of GDP) lies below the top quartile of the 6 distribution of past adjustments to the primary fiscal deficit (above 2 percentage points of GDP) derived from the sample of LICs, hence alleviating possible concerns about the credibility of baseline assumptions. The realism of the expected adjustment is predicated on the authorities’ commitment to boost revenue mobilization through the implementation of existing and new measures, to clear domestic payments arrears, to contain expenditures, and increase spending quality. • Consistency between fiscal adjustment and growth (Figure 4). The projected growth path for 2019 and 2020 is broadly in line with the multiplier-based projections. • Consistency between public investment and growth (Figure 4). The tool shows a similar contribution of public investment to growth in the previous and the current DSAs. Public investment is expected to remain at around 15 percent of GDP over the medium term. C. Country Classification and Determination of Stress Test Scenarios 11. Niger’s debt-carrying capacity remains rated “medium” according to the April 2019 vintage of the World Economic Outlook (WEO). The methodology relies on a composite indicator (CI) combining the CPIA score, external conditions as captured by world economic growth, and country- specific factors. Based on data from the April 2019 WEO vintage, it yields a CI value of 2.94, reflecting positive contributions from the CPIA (44 percent) but also international reserves (33 percent), and country and world real growth rates (6 and 16 percent, respectively) (Text Table 4). This score falls within the medium debt-carrying capacity thresholds defined as 2.69 < CI ≤ 3.05. Table 4. Niger: CI Score Components Coefficients (A) 10-year average values CI Score components Contribution of (B) (A*B) = (C) components CPIA 0.385 3.388 1.30 44% Real growth rate (in percent) 2.719 6.280 0.17 6% Import coverage of reserves (in percent) 4.052 39.075 1.58 54% Import coverage of reserves^2 (in percent) -3.990 15.269 -0.61 -21% Remittances (in percent) 2.022 0.727 0.01 0% World economic growth (in percent) 13.520 3.559 0.48 16% CI Score 2.94 100% CI rating Medium Source: IMF staff calculations. The CI cutoff for medium debt-carrying capacity is 2.69 < CI ≤ 3.05. 12. The debt sustainability analysis relies on the six standardized stress tests and a tailored commodity price shock stress test. The standardized stress tests use the default settings. While Niger does not qualify for the market financing shock stress test, the commodity price shock stress test is 7 relevant and helps assess the sensitivity of projected debt burden indicators to unfavorable developments in commodity export prices. DEBT SUSTAINABILITY External Debt Sustainability 13. External debt is projected to fall gradually, with public and private debt both declining in the long run (Table 1). Under the baseline scenario, PPG external debt is expected to increase from 35 to 37.1 percent of GDP over 2018-21 owing to significant foreign borrowing to finance Niger’s economic and social development agenda, before easing to 26.4 percent of GDP by 2039. The non-interest current account deficit remains the main driver of external debt dynamics, with the goods and services balance likely deteriorating in the short term due to high imports related to the construction boom ahead of the 2019 AU summit. In the medium term, large investment projects, including the Kandadji dam, a cement factory and the oil export pipeline, and MCC-funded investments in the agricultural sector likely entail higher current account deficits. Once the non-interest current account deficit, net FDI, and endogenous debt dynamics are accounted for, remaining drivers of external debt accumulation/reduction, such as components of the capital account, reserves accumulation, valuation adjustments, as well as price and exchange rate changes, are subsumed into the residual. 14. None of Niger’s PPG external debt indicators breaches thresholds in the baseline scenario (Figure 1 and Table 3). Similar to the previous DSA results, all indicators remain below applicable debt thresholds throughout the projection period. The PV of debt-to-GDP ratio is expected to hover around 24 percent of GDP in the longer term. After peaking in 2021, the PV of debt-to-exports ratio is projected to decline with the commencement of crude-oil exports following the completion of the export pipeline, and the expected resumption of the Imouraren uranium project after 2025. Both the debt service-to- exports and debt service-to-revenue ratios display similar patterns, declining in 2020 and picking up in 2021 owing to principal repayment on IDA and IMF loans, and decreasing gradually thereafter. For these indicators, the baseline scenario yields a debt path relatively close to that in the historical scenario. But longer-term projections of the PV of debt-to-GDP and PV of debt-to-exports ratios suggest rapidly accumulating debt if key macroeconomic variables remained at their historical averages. 15. However, the PV of external debt-to-exports ratio breaches its applicable threshold under the export shock stress test scenario, thereby signaling a moderate risk of external debt distress. The indicator peaks at 273 percent in 2021 before progressively receding below its prescribed threshold, helped by the anticipated large boost to oil exports. This outcome is consistent across DSA vintages and underscores Niger’s narrow export base concentrated on uranium and oil, generating structural vulnerability to unfavorable commodity prices and unstable export revenues. The threshold is also breached under the stress test combining adverse shocks to the current transfers-to-GDP and FDI-to- GDP ratios, albeit only in 2020 and 2021; the stress test combining the five standardized stress tests in 2020–21; and the tailored commodity price shock stress test over 2010-21. For the PPG external debt 8 service-to-exports ratio, the one-off breach resulting from the export shock scenario can be ignored for the debt distress ratings. 16. Niger’s “moderate” rating for debt distress is preserved in an alternative scenario where crude oil exports do not materialize (Text Figure 2). If the crude oil pipeline construction is not completed over the DSA horizon and the expected boost to exports does not materialize, the PV of PPG external-debt-to-exports ratio remains below its debt threshold applicable under the baseline scenario, so that the rating of external debt distress would remain “moderate.” The scenario involves lower economic growth in 2022 and subsequent years, lowered government revenue, and less space for expenditure increases. Figure 2. Niger: PV of PPG External-Debt-to-Exports Ratio Under Indefinite Delay of Crude Oil Exports 200 180 160 Baseline Indefinite delay DSA Threshold 140 120 100 80 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 Sources: Nigerien authorities; and IMF staff estimates and projections. Total Public Debt Sustainability 17. Public sector debt is projected to decline gradually, driven by both PPG external and domestic debt dynamics (Table 2). Public debt is expected to recede with the government’s commitment to fiscal consolidation and meeting the WAEMU deficit target by 2020. Accordingly, the primary deficit is projected to decline over time with the improvement of domestic revenue mobilization, enhancement of spending quality, and continued expenditure control, further helped by favorable automatic debt dynamics. 18. The PV of public debt-to-GDP ratio breaches its benchmark neither under the baseline, nor the stress test scenarios (Figure 2 and Table 4). Similar to the previous DSA, public debt indicators in the baseline scenario remain below their levels suggested in the historical scenario. Again, the 9 commodity price shock emerges as the most extreme stress test among all alternative scenarios, emphasizing the vulnerability of the public debt path to commodity price fluctuations. Debt Sustainability in a Debt-Reprofiling Scenario 19. The authorities requested a Policy-Based Guarantee (PBG) operation with the World Bank to reduce roll-over risk, which is being carefully assessed. The request is to set aside US$50 million in IDA funds for Niger to support a World Bank guarantee for borrowing from foreign commercial banks up to US$500 million, equivalent to 5.2 percent of GDP. These proceeds would retire one-for-one T-bills and obligations currently held by commercial banks in other WAEMU countries. The operation would substantially lengthen maturities and also lower the government’s interest bill. However, the substitution of foreign debt for domestic debt will worsen indicators of external debt sustainability. This underscores the need to carefully assess the associated benefits, costs, risks, and viability in close consultation with all stakeholders to ensure that any operation is compatible with maintaining Niger’s “moderate” rating for external debt distress. Risk Rating and Vulnerabilities 20. Niger’s debt sustainability analysis finds a moderate risk of external and overall debt distress. This mirrors the results from the previous DSA, with current external and public debt trajectories remaining very close to those of the previous DSA (Figure 3). The baseline scenario indicates a sustainable debt path for both PPG external debt and public debt, but the prescribed thresholds are breached in the event of a negative shock to export growth or commodity prices. 21. A granular assessment of the moderate risk rating shows that Niger has limited space to absorb shocks (Figure 5). This result is due to the PV of debt-to-exports ratio, which resides in the “limited space” region over 2019–21. The remaining indicators are in the “some space” region, albeit to different degrees. 22. Debt sustainability is contingent on the reforms built into the baseline being implemented. Commitment to fiscal consolidation and steadfast implementation of the structural reforms are instrumental to contain debt accumulation and preserve macroeconomic stability. The baseline also presumes that Niger’s large projects are successfully completed on time, especially the construction of the crude-oil pipeline for exports. Diversification and economic transformation supported by private- sector development and financial deepening is crucial for expanding the export base and mitigating the risks associated with commodity price fluctuations. Identified weaknesses call for further strengthening of debt management and sticking to a prudent borrowing strategy that prioritizes concessional borrowing. Public-sector debt coverage should also be broadened to allow for a better monitoring of borrowing by SOEs and local governments and of fiscal risks associated with PPPs. 10 Authorities’ Views 23. The authorities broadly agreed with the thrust of the DSA. They acknowledged the importance of diversifying the export base by raising the value-added content of existing exports but noted the challenges posed by informal trade of agricultural products and minerals. Developing manufacturing agro-industries and modernizing existing value chains would allow exporting transformed products instead of low value-added primary commodities. While highlighting the mitigating role of Niger’s access to WAEMU’s pooled international reserves, they also concurred that the timely completion of the crude-oil pipeline is instrumental for supporting public finances and better underpinning debt sustainability going forward. The authorities also intend to further strengthen debt management by establishing a dedicated debt management unit within the Treasury with a modern front- middle-back office structure by the end of 2019. 24. However, they emphasized a few points, especially regarding the tailoring of the contingent liabilities stress test. • First, they affirmed staff that the stock of PPPs contracted und the 2018 PPP law stood at a mere CFAF 33 billion (0.6 percent of GDP). Corroboration documentation would be provided. They also noted the difference in the recording of PPPs concluded under the previous PPP law, which the DSA counts toward in the debt stock, as they have the nature of installment payment plans, but the authorities so far do not in the debt management reports. They agreed to include a section discussing PPP arrangements in their quarterly debt reports, including the associated fiscal risks. • Second, they noted that the contingent liabilities stress test shock for SOE borrowing should be less than 2 percent of GDP. They argued that the much higher estimate of 25 percent of GDP from the World Bank report on the governance of SOEs covers the entire stock of liabilities of SOEs, including taxes owed to the central government, on-lending from the central government, and other cross-debts. Such debt was within the public sector and should therefore be disregarded in the DSA. While agreeing with the need to improve data on SOE debt to be able to allow for separating out debt to banks and arrears to suppliers. They underscored that SOEs are generally unable to contract external debt due to their small size and poor capacity to produce reliable financial statements. • Third, authorities explained that although the law allows local governments to contract debt directly, in practice borrowing is well contained as it requires approval by the municipal council and the Ministry of Finance. It is limited to short-term debt with the domestic banking sector, with only a handful of local governments having overdraft facilities to pay salaries and current expenditures. • Fourth, the authorities assured staff that they remain firmly committed to keep Niger’s “moderate” rating for external debt distress. 11 25. The authorities also communicated that they may wish to conduct a debt reprofiling operation. It involves repaying T-bills and obligations currently held by regional banks, which are recorded as domestic debt in this DSA as they are denominated in CFAF, with funds raised from foreign banks. The operation would be supported by a Policy Based Guarantee from the World Bank. Staff stressed that this would deteriorate the DSA indicator for external PPG debt relative to exports. The authorities assured staff that they would tailor the operation so that Niger’s risk rating for external debt distress would remain at “moderate.” 12 Figure 1. Niger: Indicators of Public and Publicly Guaranteed External Debt Under Alternative Scenarios, 2019–30 PV of debt-to GDP ratio PV of debt-to-exports ratio 50 300 45 250 40 35 200 30 25 150 20 15 100 10 50 5 Most extreme shock is Non-debt flows Most extreme shock is Exports 0 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Debt service-to-exports ratio Debt service-to-revenue ratio 20 20 18 18 16 16 14 14 12 12 10 10 8 8 6 6 4 4 A one-off breach excluded: Exports 2 2 Most extreme shock is Commodity price Most extreme shock is One-time depreciation 0 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Baseline Historical scenario Most extreme shock 1/ Threshold 1 Stress test with (the largest) one-off breach Customization of Default Settings Borrowing Assumptions for Stress Tests* Size Interactions Default User defined Shares of marginal debt No No External PPG MLT debt 100% Tailored Tests Terms of marginal debt Combined CLs No Avg. nominal interest rate on new borrowing in USD 1.8% 1.8% Natural Disasters n.a. n.a. USD Discount rate 5.0% 5.0% Commodity Prices 2/ No No Avg. maturity (incl. grace period) 27 27 Market Financing n.a. n.a. Avg. grace period 6 6 Note: "Yes" indicates any change to the size or * Note: All the additional financing needs generated by the shocks under the stress tests are interactions of the default settings for the stress tests. assumed to be covered by PPG external MLT debt in the external DSA. Default terms of marginal "n.a." indicates that the stress test does not apply. debt are based on baseline 10-year projections. Sources: Country authorities; and staff estimates and projections. 1/ The most extreme stress test is the test that yields the highest ratio in or before 2029. Stress tests with one-off breaches are also presented (if any), while these one- off breaches are deemed away for mechanical signals. When a stress test with a one-off breach happens to be the most exterme shock even after disregarding the one-off breach, only that stress test (with a one-off breach) would be presented. 2/ The magnitude of shocks used for the commodity price shock stress test are based on the commodity prices outlook prepared by the IMF research department. 13 Figure 2. Niger: Indicators of Public Debt Under Alternative Scenarios, 2019–30 PV of Debt-to-GDP Ratio 60 50 40 30 20 Most extreme shock is Commodity price 10 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 PV of Debt-to-Revenue Ratio Debt Service-to-Revenue Ratio 250 60 50 200 40 150 30 100 20 50 10 Most extreme shock is Combined contingent liabilities Most extreme shock is Non-debt flows 0 0 2019 2021 2023 2025 2027 2029 2019 2021 2023 2025 2027 2029 Baseline Most extreme shock 1/ Public debt benchmark Historical scenario Borrowing Assumptions for Stress Tests* Default User defined Shares of marginal debt External PPG medium and long-term 47% 47% Domestic medium and long-term 21% 21% Domestic short-term 32% 32% Terms of marginal debt External MLT debt Avg. nominal interest rate on new borrowing in USD 1.8% 1.8% Avg. maturity (incl. grace period) 27 27 Avg. grace period 6 6 Domestic MLT debt Avg. real interest rate on new borrowing 4.5% 4.5% Avg. maturity (incl. grace period) 3 3 Avg. grace period 1 1 Domestic short-term debt Avg. real interest rate 4% 4.0% * Note: The public DSA allows for domestic financing to cover the additional financing needs generated by the shocks under the stress tests in the public DSA. Default terms of marginal debt are based on baseline 10-year projections. Sources: Country authorities; and staff estimates and projections. 1/ The most extreme stress test is the test that yields the highest ratio in or before 2029. The stress test with a one-off breach is also presented (if any), while the one-off breach is deemed away for mechanical signals. When a stress test with a one-off breach happens to be the most exterme shock even after disregarding the one-off breach, only that stress test (with a one-off breach) would be presented. 14 Figure 3. Niger: Drivers of Debt Dynamics—Baseline Scenario External Debt Gross Nominal PPG External Debt Debt-creating flows Unexpected Changes in Debt 1/ (in percent of GDP; DSA vintages) (percent of GDP) (past 5 years, percent of GDP) Current DSA 100 80 Residual 20 Previous DSA proj. 70 DSA-2014 15 Interquartile 50 range (25-75) Price and 60 exchange rate 10 50 Real GDP growth 0 5 Change in PPG 40 debt 3/ 30 Nominal 0 interest rate -50 20 Median -5 Current 10 account + FDI -100 -10 0 Change in 5-year 5-year Distribution across LICs 2/ 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 PPG debt 3/ Contribution of unexpected historical projected -15 changes change change Public Debt Gross Nominal Public Debt Debt-creating flows Unexpected Changes in Debt 1/ (in percent of GDP; DSA vintages) (percent of GDP) (past 5 years, percent of GDP) Residual 60 Current DSA Previous DSA proj. 20 DSA-2014 Interquartile 80 Other debt 40 range (25-75) creating flows 15 70 Real Exchange 60 rate 20 depreciation 10 50 Real GDP growth 0 Change in debt 40 5 30 Real interest rate -20 20 0 Primary deficit 10 -40 -5 Median 0 Change in debt 5-year 5-year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Distribution across LICs 2/ historical projected Contribution of change change -10 unexpected 1/ Difference between anticipated and actual contributions on debt ratios. 2/ Distribution across LICs for which LIC DSAs were produced. 3/ Given the relatively low private external debt for average low-income countries, a ppt change in PPG external debt should be largely explained by the drivers of the external debt dynamics equation. 15 Figure 4. Niger: Realism Tools 3-Year Adjustment in Primary Balance Fiscal Adjustment and Possible Growth Paths 1/ (Percentage points of GDP) 8 2 14 Distribution 1/ 7 12 Projected 3-yr adjustment 3-year PB adjustment greater than 2.5 In percentage points of GDP percentage points of GDP in approx. top 6 10 quartile 5 In percent 8 4 1 6 3 4 2 2 1 0 0 0 2.0 -2.5 0.0 0.5 1.0 1.5 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 -4.5 -4.0 -3.5 -3.0 -2.0 -1.5 -1.0 -0.5 More 2013 2014 2015 2016 2017 2018 2019 2020 Baseline Multiplier = 0.2 Multiplier = 0.4 Multiplier = 0.6 Multiplier = 0.8 1/ Data cover Fund-supported programs for LICs (excluding emergency financing) approved since 1990. The 1/ Bars refer to annual projected fiscal adjustment (right-hand side scale) and lines show possible real GDP size of 3-year adjustment from program inception is found on the horizontal axis; the percent of sample is growth paths under different fiscal multipliers (left-hand side scale). found on the vertical axis. Public and Private Investment Rates Contribution to Real GDP growth (% of GDP) (percent, 5-year average) 36 8 34 32 7 30 28 6 26 24 22 5 20 18 4 16 14 3 12 10 2 8 6 1 4 2 0 0 Historical Projected (Prev. DSA) Projected (Curr. DSA) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Gov. Invest. - Prev. DSA Gov. Invest. - Current DSA Contribution of other factors Priv. Invest. - Prev. DSA Priv. Invest. - Current DSA Contribution of government capital 16 Figure 5. Niger: Qualification of the Moderate Category, 2019–301/ PV of debt-to GDP ratio PV of debt-to-exports ratio 45 200 40 180 Threshold 160 35 140 (1-X)*Threshold 30 120 25 100 (1-Y)*Threshold 20 80 15 60 40 10 20 5 0 0 2020 2027 2019 2021 2022 2023 2024 2025 2026 2028 2029 2030 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Debt service-to-exports ratio Debt service-to-revenue ratio 16 20 14 18 16 12 14 10 12 8 10 6 8 4 6 4 2 2 0 0 2028 2019 2020 2021 2022 2023 2024 2025 2026 2027 2029 2030 2025 2019 2020 2021 2022 2023 2024 2026 2027 2028 2029 2030 Threshold Baseline Limited space Some space Substantial space Sources: Country authorities; and staff estimates and projections. 1/ For the PV debt/GDP and PV debt/exports thresholds, x is 20 percent and y is 40 percent. For debt service/Exports and debt service/revenue thresholds, x is 12 percent and y is 35 percent. 17 Table 1. Niger: External Debt Sustainability Framework, Baseline Scenario, 2016–39 (In percent of GDP, unless otherwise indicated) Actual Projections Average 8/ 2016 2017 2018 2019 2020 2021 2022 2023 2024 2029 2039 Historical Projections External debt (nominal) 1/ 65.3 65.6 62.5 63.3 62.1 60.9 56.9 55.7 54.1 48.7 38.0 53.9 55.2 Definition of external/domestic debt Currency-based of which: public and publicly guaranteed (PPG) 33.5 35.3 35.0 36.5 37.1 37.1 35.3 35.1 34.7 32.9 26.4 25.3 35.0 Is there a material difference between the two Yes criteria? Change in external debt 3.8 0.3 -3.1 0.8 -1.1 -1.2 -4.0 -1.2 -1.5 -1.1 -1.1 Identified net debt-creating flows 9.2 7.7 4.7 9.4 10.0 8.7 2.4 4.5 3.4 3.5 2.9 6.8 5.1 Non-interest current account deficit 15.4 15.6 18.1 19.1 21.8 18.8 13.9 12.4 11.2 10.7 9.7 18.9 13.8 Deficit in balance of goods and services 22.4 24.5 25.5 29.4 25.5 25.2 15.6 15.2 14.5 13.3 -21.5 23.3 17.4 Exports 16.2 17.6 15.6 16.4 16.5 17.0 22.7 23.0 23.6 23.4 21.5 Imports 38.6 42.1 41.1 45.7 42.0 42.2 38.3 38.2 38.0 36.6 0.0 Debt Accumulation Net current transfers (negative = inflow) -3.7 -5.1 -5.2 -5.5 -4.9 -4.6 -4.2 -4.1 -4.5 -3.7 -2.9 12.0 39.0 -4.1 -4.3 of which: official -1.8 -2.8 -2.7 -3.0 -2.4 -2.2 -1.9 -1.9 -1.9 -1.9 -1.8 38.5 Other current account flows (negative = net inflow) -3.3 -3.9 -2.1 -4.8 1.2 -1.8 2.5 1.3 1.3 1.1 34.1 -0.3 0.7 10.0 38.0 Net FDI (negative = inflow) -3.4 -3.8 -5.2 -6.7 -8.9 -7.5 -5.8 -5.2 -5.0 -5.0 -5.0 -9.6 -5.8 37.5 Endogenous debt dynamics 2/ -2.8 -4.1 -8.2 -3.1 -2.8 -2.6 -5.7 -2.6 -2.9 -2.2 -1.8 8.0 Contribution from nominal interest rate 0.1 0.1 0.0 0.6 0.6 0.6 0.6 0.6 0.6 0.5 0.4 37.0 Contribution from real GDP growth -2.9 -3.0 -3.7 -3.8 -3.5 -3.2 -6.3 -3.2 -3.4 -2.7 -2.2 36.5 6.0 Contribution from price and exchange rate changes 0.0 -1.2 -4.5 … … … … … … … … 36.0 Residual 3/ -5.4 -7.4 -7.9 -8.6 -11.2 -9.9 -6.4 -5.8 -4.9 -4.6 -4.0 -3.1 -6.4 35.5 of which: exceptional financing 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.0 35.0 Sustainability indicators 2.0 34.5 PV of PPG external debt-to-GDP ratio ... ... 24.5 26.2 26.4 26.3 24.9 24.7 24.4 23.6 19.2 34.0 PV of PPG external debt-to-exports ratio ... ... 156.5 160.2 159.9 155.0 109.4 107.4 103.4 101.0 89.2 0.0 33.5 PPG debt service-to-exports ratio 3.3 3.2 4.5 12.1 11.5 12.7 8.9 8.4 7.6 6.6 6.8 2019 2021 2023 2025 2027 2029 PPG debt service-to-revenue ratio 3.7 3.9 4.2 12.4 11.0 12.1 10.5 9.9 9.0 7.4 6.8 Gross external financing need (Million of U.S. dollars) 999.9 1055.6 1300.4 1438.5 1612.0 1591.4 1382.4 1344.4 1302.4 1697.7 3175.3 Rate of Debt Accumulation Grant-equivalent financing (% of GDP) Key macroeconomic assumptions Grant element of new borrowing (% right scale) Real GDP growth (in percent) 4.9 4.9 6.5 6.3 6.0 5.6 11.9 6.1 6.8 5.9 6.1 5.5 6.7 GDP deflator in US dollar terms (change in percent) 0.0 1.9 7.3 -1.7 3.6 2.6 2.0 2.4 2.6 2.0 2.4 0.3 1.9 Effective interest rate (percent) 4/ 0.2 0.2 0.1 1.1 1.1 1.1 1.1 1.1 1.1 1.2 1.2 0.6 1.1 External debt (nominal) 1/ Growth of exports of G&S (US dollar terms, in percent) -7.1 16.2 1.8 9.2 10.9 11.2 52.9 9.9 12.4 6.9 8.4 4.1 13.4 of which: Private Growth of imports of G&S (US dollar terms, in percent) 16.2 16.6 11.7 16.2 0.9 8.8 3.7 8.2 9.1 7.7 -100.0 4.9 7.6 70 Grant element of new public sector borrowing (in percent) ... ... ... 38.3 36.6 36.8 36.6 36.6 36.2 35.4 35.4 ... 36.2 Government revenues (excluding grants, in percent of GDP) 14.3 14.4 16.7 16.0 17.2 17.8 19.3 19.7 19.9 20.8 21.6 15.5 19.3 60 Aid flows (in Million of US dollars) 5/ 799.0 863.9 1072.2 1220.1 1245.7 1185.3 1234.5 1260.6 1333.2 1742.7 3498.6 Grant-equivalent financing (in percent of GDP) 6/ ... ... ... 11.0 10.1 8.7 8.0 7.5 7.2 6.5 6.0 ... 7.9 50 Grant-equivalent financing (in percent of external financing) 6/ ... ... ... 75.5 75.6 75.5 74.7 74.3 74.0 77.0 78.9 ... 75.6 Nominal GDP (Million of US dollars) 7,610 8,136 9,300 9,713 10,672 11,567 13,203 14,347 15,718 23,299 51,506 40 Nominal dollar GDP growth 4.9 6.9 14.3 4.4 9.9 8.4 14.1 8.7 9.6 8.0 8.7 5.8 8.7 30 Memorandum items: 20 PV of external debt 7/ ... ... 52.0 53.0 51.4 50.1 46.4 45.2 43.8 39.4 30.8 In percent of exports ... ... 332.1 323.9 311.4 295.5 204.5 196.9 185.9 168.5 143.0 10 Total external debt service-to-exports ratio 7.1 6.8 6.8 14.3 13.5 14.6 10.1 9.6 8.7 6.8 6.9 PV of PPG external debt (in Million of US dollars) 2277.6 2545.9 2817.9 3039.3 3281.0 3538.3 3830.4 5501.0 9896.7 0 (PVt-PVt-1)/GDPt-1 (in percent) 2.9 2.8 2.1 2.1 1.9 2.0 1.6 1.1 2019 2021 2023 2025 2027 2029 Non-interest current account deficit that stabilizes debt ratio 11.6 15.3 21.2 18.4 22.9 20.0 17.9 13.6 12.7 11.8 10.7 Sources: Country authorities; and staff estimates and projections. 0 1/ Includes both public and private sector external debt. 2/ Derived as [r - g - ρ(1+g)]/(1+g+ρ+gρ) times previous period debt ratio, with r = nominal interest rate; g = real GDP growth rate, and ρ = growth rate of GDP deflator in U.S. dollar terms. 3/ Includes exceptional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets; and valuation adjustments. For projections also includes contribution from price and exchange rate changes. 4/ Current-year interest payments divided by previous period debt stock. 5/ Defined as grants, concessional loans, and debt relief. 6/ Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt). 7/ Assumes that PV of private sector debt is equivalent to its face value. 8/ Historical averages are generally derived over the past 10 years, subject to data availability, whereas projections averages are over the first year of projection and the next 10 years. 18 Table 2. Niger: Public Sector Debt Sustainability Framework, Baseline Scenario, 2016–39 (In percent of GDP, unless otherwise indicated) Actual Projections Average 6/ 2016 2017 2018 2019 2020 2021 2022 2023 2024 2029 2039 Historical Projections Public sector debt 1/ 44.6 54.4 53.8 54.2 52.7 51.0 47.0 45.3 43.3 38.3 34.1 33.5 44.8 of which: external debt 33.5 35.3 35.0 36.5 37.1 37.1 35.3 35.1 34.7 32.9 26.4 25.3 35.0 Definition of external/domestic debt Currency-based of which: local-currency denominated Change in public sector debt 4.8 9.7 -0.5 0.4 -1.6 -1.7 -4.0 -1.6 -2.0 -0.7 -0.4 Is there a material difference Identified debt-creating flows 4.5 -0.3 0.3 -0.2 -1.6 -1.3 -3.8 -1.4 -1.8 -0.8 -0.7 -0.1 -1.4 Yes between the two criteria? Primary deficit 5.1 4.7 2.8 2.7 1.6 1.3 1.2 1.2 0.9 1.2 1.2 4.2 1.3 Revenue incl. grants 20.3 21.2 25.0 24.8 25.4 24.9 25.7 25.6 25.7 26.3 26.7 21.4 25.7 of which: grants 6.0 6.7 8.3 8.8 8.2 7.1 6.4 6.0 5.8 5.5 5.1 Public sector debt 1/ Primary (noninterest) expenditure 25.4 25.8 27.8 27.5 27.0 26.2 26.9 26.8 26.6 27.5 27.9 25.5 27.1 Automatic debt dynamics -0.7 -4.9 -2.5 -2.9 -3.2 -2.6 -5.0 -2.6 -2.8 -2.0 -1.8 of which: local-currency denominated Contribution from interest rate/growth differential -1.8 -2.0 -3.7 -2.6 -2.8 -2.5 -5.1 -2.5 -2.7 -2.1 -1.8 of which: contribution from average real interest rate 0.1 0.1 -0.4 0.5 0.3 0.3 0.3 0.2 0.2 0.1 0.2 of which: foreign-currency denominated of which: contribution from real GDP growth -1.9 -2.1 -3.3 -3.2 -3.1 -2.8 -5.4 -2.7 -2.9 -2.2 -2.0 60 Contribution from real exchange rate depreciation 1.2 -2.9 1.2 ... ... ... ... ... ... ... ... 50 Other identified debt-creating flows 0.0 -0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -3.1 0.0 Privatization receipts (negative) 0.0 -0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 40 Recognition of contingent liabilities (e.g., bank recapitalization) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 30 Debt relief (HIPC and other) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other debt creating or reducing flow (please specify) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 20 Residual 0.3 10.0 -0.9 0.3 -0.4 -0.5 -0.1 -0.3 -0.3 0.2 0.2 3.6 -0.1 10 Sustainability indicators 0 PV of public debt-to-GDP ratio 2/ ... ... 44.2 43.8 41.9 40.1 36.5 34.8 32.9 28.9 26.9 2019 2021 2023 2025 2027 2029 PV of public debt-to-revenue and grants ratio … … 176.9 176.6 165.2 161.2 142.0 135.9 127.8 109.9 100.7 Debt service-to-revenue and grants ratio 3/ 10.7 18.9 28.7 36.8 36.0 40.1 36.0 34.2 30.3 17.8 18.2 Gross financing need 4/ 6.9 8.0 10.0 11.9 10.8 11.3 10.4 9.9 8.7 5.9 6.0 of which: held by residents Key macroeconomic and fiscal assumptions of which: held by non-residents 1 Real GDP growth (in percent) 4.9 4.9 6.5 6.3 6.0 5.6 11.9 6.1 6.8 5.9 6.1 5.5 6.7 Average nominal interest rate on external debt (in percent) 0.0 0.0 0.0 1.8 1.7 1.6 1.6 1.6 1.6 1.7 1.7 1.0 1.6 1 Average real interest rate on domestic debt (in percent) 4.0 6.2 2.0 3.2 2.3 2.9 3.6 3.2 3.4 4.0 4.0 2.7 3.4 Real exchange rate depreciation (in percent, + indicates depreciation) 4.0 -9.1 3.6 … ... ... ... ... ... ... ... 1.5 ... 1 n.a. Inflation rate (GDP deflator, in percent) 0.2 -0.1 2.6 1.5 2.5 2.1 1.4 2.0 2.0 2.0 2.4 2.3 1.9 0 Growth of real primary spending (deflated by GDP deflator, in percent) -16.0 6.6 14.9 5.1 4.0 2.4 14.7 5.9 6.2 6.2 5.5 8.6 6.6 Primary deficit that stabilizes the debt-to-GDP ratio 5/ 0.4 -5.1 3.4 2.3 3.2 3.0 5.2 2.8 3.0 1.8 1.6 -0.4 2.7 0 PV of contingent liabilities (not included in public sector debt) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 2019 2021 2023 2025 2027 2029 Sources: Country authorities; and staff estimates and projections. 1/ Coverage of debt: The central government, central bank, government-guaranteed debt. Definition of external debt is Currency-based. 2/ The underlying PV of external debt-to-GDP ratio under the public DSA differs from the external DSA with the size of differences depending on exchange rates projections. 3/ Debt service is defined as the sum of interest and amortization of medium and long-term, and short-term debt. 4/ Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period and other debt creating/reducing flows. 5/ Defined as a primary deficit minus a change in the public debt-to-GDP ratio ((-): a primary surplus), which would stabilizes the debt ratio only in the year in question. 6/ Historical averages are generally derived over the past 10 years, subject to data availability, whereas projections averages are over the first year of projection and the next 10 years. 19 Table 3. Niger: Sensitivity Analysis for Key Indicators of Public and Publicly Guaranteed External Debt, 2019–30 Projections 1/ 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 PV of debt-to GDP ratio Baseline 26 26 26 25 25 24 24 24 24 24 24 23 A. Alternative Scenarios A1. Key variables at their historical averages in 2019-2039 2/ 26 25 24 25 27 29 32 34 36 39 41 43 0 #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A B. Bound Tests B1. Real GDP growth 26 28 29 28 28 27 27 27 27 27 27 26 B2. Primary balance 26 28 30 29 29 29 29 29 29 28 28 27 B3. Exports 26 29 32 30 30 29 29 29 28 28 27 27 B4. Other flows 3/ 26 31 36 33 33 32 31 31 31 30 29 28 B6. One-time 30 percent nominal depreciation 26 33 27 26 26 26 25 26 26 26 26 26 B6. Combination of B1-B5 26 34 35 33 32 32 31 31 31 30 29 29 C. Tailored Tests C1. Combined contingent liabilities 26 29 29 28 28 28 27 27 27 27 27 26 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price 26 28 29 27 27 26 26 25 25 24 24 23 C4. Market Financing n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Threshold 40 40 40 40 40 40 40 40 40 40 40 40 PV of debt-to-exports ratio Baseline 160 160 155 109 107 103 98 101 102 101 101 99 A. Alternative Scenarios A1. Key variables at their historical averages in 2019-2039 2/ 160 152 143 112 118 125 130 143 154 164 175 183 0 160 170 172 130 130 129 124 128 129 126 124 119 B. Bound Tests B1. Real GDP growth 160 160 155 109 107 103 98 101 102 101 101 99 B2. Primary balance 160 169 176 127 127 123 117 121 122 120 119 116 B3. Exports 160 207 273 192 187 179 168 173 174 170 168 163 B4. Other flows 3/ 160 190 211 147 143 137 128 131 131 127 125 120 B6. One-time 30 percent nominal depreciation 160 160 127 90 89 87 82 86 87 88 89 88 B6. Combination of B1-B5 160 212 183 165 161 155 145 149 150 147 145 141 C. Tailored Tests C1. Combined contingent liabilities 160 173 171 122 121 117 111 114 115 114 114 111 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price 160 186 185 126 121 114 105 107 107 104 103 99 C4. Market Financing n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Threshold 180 180 180 180 180 180 180 180 180 180 180 180 Debt service-to-exports ratio Baseline 12 11 13 9 8 8 6 6 6 7 7 7 A. Alternative Scenarios A1. Key variables at their historical averages in 2019-2039 2/ 12 12 13 10 10 9 8 8 8 9 9 10 0 12 12 13 10 10 9 8 8 9 9 9 9 B. Bound Tests B1. Real GDP growth 12 11 13 9 8 8 6 6 6 7 7 7 B2. Primary balance 12 11 13 9 9 8 7 7 7 8 8 8 B3. Exports 12 14 19 14 13 12 10 10 11 12 11 11 B4. Other flows 3/ 12 11 13 10 9 8 7 7 8 9 9 8 B6. One-time 30 percent nominal depreciation 12 11 13 8 8 7 6 6 6 6 6 6 B6. Combination of B1-B5 12 13 17 12 11 10 9 8 10 10 10 10 C. Tailored Tests C1. Combined contingent liabilities 12 11 13 9 9 8 7 6 7 7 7 7 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price 12 13 14 10 9 8 7 7 7 7 7 7 C4. Market Financing n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Threshold 15 15 15 15 15 15 15 15 15 15 15 15 Debt service-to-revenue ratio Baseline 12 11 12 10 10 9 8 7 7 8 7 7 A. Alternative Scenarios A1. Key variables at their historical averages in 2019-2039 2/ 12 11 13 12 11 11 10 9 10 10 10 11 0 12 11 13 12 12 11 10 9 10 11 10 10 B. Bound Tests B1. Real GDP growth 12 12 14 12 11 10 9 8 8 9 8 8 B2. Primary balance 12 11 12 11 10 10 8 8 8 9 9 9 B3. Exports 12 11 13 11 11 10 8 8 8 9 9 9 B4. Other flows 3/ 12 11 13 12 11 10 9 8 9 10 10 9 B6. One-time 30 percent nominal depreciation 12 14 15 12 12 11 9 8 9 8 8 8 B6. Combination of B1-B5 12 12 14 12 12 11 9 8 10 10 10 9 C. Tailored Tests C1. Combined contingent liabilities 12 11 12 11 10 9 8 8 8 8 8 8 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price 12 12 13 12 11 10 8 8 8 8 8 8 C4. Market Financing n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Threshold 18 18 18 18 18 18 18 18 18 18 18 18 Sources: Country authorities; and staff estimates and projections. 1/ A bold value indicates a breach of the threshold. 2/ Variables include real GDP growth, GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows. 3/ Includes official and private transfers and FDI. 20 Table 4. Niger: Sensitivity Analysis for Key Indicators of Public Debt, 2019–30 Projections 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 PV of Debt-to-GDP Ratio Baseline 44 42 40 36 35 33 31 30 30 29 29 29 A. Alternative Scenarios A1. Key variables at their historical averages in 2018-2038 1/ 44 44 44 45 45 45 46 46 47 48 49 50 0 #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A B. Bound Tests B1. Real GDP growth 44 45 48 45 45 44 44 44 45 46 46 47 B2. Primary balance 44 46 48 44 41 39 37 36 35 34 33 32 B3. Exports 44 44 45 41 39 37 35 34 34 33 32 31 B4. Other flows 2/ 44 47 50 45 43 41 39 38 37 35 34 34 B6. One-time 30 percent nominal depreciation 44 47 43 38 34 31 28 26 24 22 21 20 B6. Combination of B1-B5 44 45 44 38 36 33 31 30 29 29 28 28 C. Tailored Tests C1. Combined contingent liabilities 44 48 45 41 39 37 35 34 33 32 31 31 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price 44 44 46 45 46 47 47 48 48 49 50 52 C4. Market Financing n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Public debt benchmark 55 55 55 55 55 55 55 55 55 55 55 55 PV of Debt-to-Revenue Ratio Baseline 177 165 161 142 136 128 120 116 114 112 110 108 A. Alternative Scenarios A1. Key variables at their historical averages in 2018-2038 1/ 177 174 179 172 173 172 172 173 177 180 183 185 0 36.8038 46.93892 56.16039 56.05961 56.03155 52.97844 49.90327 45.16453 44.3352 43.80802 43.67555 43.698253 B. Bound Tests B1. Real GDP growth 177 176 185 170 170 167 163 163 167 169 172 174 B2. Primary balance 177 182 194 170 161 151 141 135 132 129 126 123 B3. Exports 177 172 182 161 154 145 136 131 129 125 122 119 B4. Other flows 2/ 177 184 199 176 168 158 148 143 140 135 131 127 B6. One-time 30 percent nominal depreciation 177 191 178 150 137 122 109 100 94 87 81 76 B6. Combination of B1-B5 177 178 177 148 139 129 120 114 112 109 107 105 C. Tailored Tests C1. Combined contingent liabilities 177 188 182 160 152 142 133 128 125 122 120 117 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price 177 182 193 184 186 184 180 180 184 188 191 194 C4. Market Financing n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Debt Service-to-Revenue Ratio Baseline 37 36 40 36 34 30 26 21 19 18 18 17 A. Alternative Scenarios A1. Key variables at their historical averages in 2018-2038 1/ 37 36 44 43 44 42 39 34 33 33 33 33 0 36.8038 46.93892 56.16039 56.05961 56.03155 52.97844 49.90327 45.16453 44.3352 43.80802 43.67555 43.698253 B. Bound Tests B1. Real GDP growth 37 38 45 43 43 40 36 32 31 31 31 31 B2. Primary balance 37 36 47 47 43 37 30 24 22 21 20 20 B3. Exports 37 36 40 36 35 31 26 21 20 19 19 18 B4. Other flows 2/ 37 36 41 37 35 31 26 21 21 20 20 19 B6. One-time 30 percent nominal depreciation 37 36 41 36 35 31 26 21 20 19 18 18 B6. Combination of B1-B5 37 35 40 41 37 33 27 22 20 18 18 17 C. Tailored Tests C1. Combined contingent liabilities 37 36 50 42 40 34 28 23 21 20 19 18 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price 37 38 45 45 47 45 41 36 35 34 34 35 C4. Market Financing n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Sources: Country authorities; and staff estimates and projections. 1/ Variables include real GDP growth, GDP deflator and primary deficit in percent of GDP. 2/ Includes official and private transfers and FDI. 21