November 15, 2012 / 12:40 AM / 5 years ago

IMF reaches $18 million loan deal with Mali

WASHINGTON, Nov 14 (Reuters) - The International Monetary Fund said on Wednesday that it had reached an $18 million loan agreement with Mali.

The loan to the land-locked African country comes under the IMF’s Rapid Credit Facility, a quick-disbursing fund for poor countries recovering from natural disasters or conflict. Mali descended into chaos after a military coup in March.

The agreement is subject to approval by the IMF’s board early next year.

Mali received a $46 million loan from the IMF last year but cancelled it after soldiers toppled the president and al Qaeda-linked militants seized northern cities.

A leading producer of gold and cotton, Mali faces a budget shortfall in 2012, especially since the European Union and the United States suspended aid after the coup.

“Mali’s economy is traversing a difficult period,” Christian Josz, head of the IMF’s mission, said in a statement. “Already under stress from the very poor 2011-12 harvest, it was severely affected by the March 2012 coup d‘état and its aftermath.”

The IMF said national income should shrink 1.5 percent in 2012 before rebounding to 4 percent or 5 percent in 2013.

The Fund said that the government did well to cut public investment and reduce subsidies on oil and cooking gas, resulting in a “modest” budget deficit.

For 2013, Mali faces a budget shortfall of $110 million, but it will freeze spending unless it is able to plug the gap with development aid from donors, the IMF said.

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