The strife-torn West African nation, Mali, has been approved to receive an $18.4 million loan from the International Monetary Fund (IMF) to help stabilize its economy over the next 12 months, the IMF said on Monday.
The Fund said approval of the loan, under its Rapid Credit Facility, will not fulfill all the government’s needs but should send a signal that Mali’s economy is on the right path, prompting other donors to offer financial assistance.
The IMF first announced in November that it had agreed on a loan with Mali, subject to board approval.
“The disbursement … is designed to help Mali deal with urgent balance of payments need and catalyze financial support from Mali’s international partners, which is critical to Mali’s economic recovery,” the IMF said in a statement.
Other donors that often support Mali include the World Bank, the African Development Bank and France, the IMF said.
The facility is a quick-disbursing fund for poor countries recovering from natural disasters or conflict.
The United States and the European Union are backing a French-led intervention in Mali against al Qaeda-allied militants they fear could use the West African state’s desert north as a springboard for international attacks.
“Mali’s economy is traversing a particularly difficult period as a result of the 2011 drought, insurgent attacks in the north of the country and political instability in the wake of the military coup in March 2012,” the IMF said.
However, the IMF’s mission chief to the West African country, Christian Josz, said Mali is making an effort to improve its economy, which should expand by 4.5 percent this year after contracting in 2012, especially if the weather is favorable to crops.
“But of course there are many uncertainties,” he told reporters on Monday.
Mali received a $46 million IMF loan in 2011 but canceled it after soldiers toppled the president in March 2012 and al Qaeda-linked militants seized northern cities.
A leading producer of gold and cotton, Mali faces a budget shortfall, especially since the European Union and the United States suspended aid after the coup.
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.