Niger Second Laying the Foundation for Inclusive Development Policy Financing

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This document proposes a Development Policy Financing (DPF) that supports Niger’s response plan to mitigate the impact of the COVID19 pandemic while sowing the seeds for resilience and faster economic recovery. This is the second and last operation in a single‐tranche disbursement of a programmatic DPF series to be disbursed in calendar year 2020. The proposed operation was adjusted to consider COVID-19 emerging needs. It has three pillars: (i) reducing gender gaps and protecting livelihoods; (ii) expanding access to electricity and potable water; and; (iii) improving debt transparency and debt management capacity. These pillars are consistent with the WBG COVID‐19 Crisis Response Approach Paper and with the pillars of the FY18‐FY22 CPF for Niger. The proposed operation combines an International Development Association (IDA) Grant of US125 million dollars equivalent on standard IDA Grant terms, an IDA Credit of US125 million dollars equivalent on standard IDA regular credit terms with maturity of 38 years including a grace period of six years. The first operation amounting to US350 million dollars was approved by the Board in December 2019. Niger’s macroeconomic policy framework is adequate for the proposed operation. The post‐ COVID‐19 medium‐term economic outlook shows a rebound from 2021 onwards even under a downside scenario. Non‐resource GDP will lead growth supported by investment in infrastructure (ICT, electricity) and agricultural productivity. The advent of crude oil exports in 2022 will provide further boost to growth and exports. Building on satisfactory performance under the International Monetary Fund (IMF) Extended Credit Facility (ECF) since 2017 and its Rapid Credit Facility (RCF) of SDR 86.3 million to help cover estimated external and fiscal financing gaps brought by the COVID‐19 pandemic the macro policy framework is underpinned by the continued implementation of sound macroeconomic policies. These policies support debt sustainability and macroeconomic stability and might be anchored in the current ECF extended beyond its expiration at end‐July 2020 or by a new ECF program. Niger’s membership in the West African Economic and Monetary Union (WAEMU) also offers an anchor of the macro framework. It is in this context that Niger would reach the WAEMU fiscal target in 2022 and the risk of external and overall public debt distress remain moderate.