BAMAKO, Mali, July 28, 2023-/African Media Agency(AMA)/-The Malian economy has shown signs of resilience despite sanctions from the Economic Community of West African States (ECOWAS), the high food inflation and pest infestations which affected cotton production. According to Note on the economic situation of Mali in 2023 of the World Bank entitled “Strengthening the financial resilience of pastoralists in the face of drought”, GDP growth is estimated at 1.8%, supported by the recovery of subsistence agriculture and the resilience of gold and telecommunications . Average annual inflation has increased to 9.7% in 2022, mainly due to rising food costs.
In terms of projections, the report highlights that the outlook for 2023 is subject to risks related to the electoral calendar and tighter financial conditions. The increase in the cost of financing on the regional market appears over the past 12 months as a significant risk given Mali’s high gross domestic financing needs. The tightening of monetary policy resulted in higher yields on 6-12 month Treasury bills and 5 year Treasury bonds for the countries of the West African Economic and Monetary Union (UEMOA). Liquidity and refinancing risks and the resulting difficulties in public finances could weigh on the wider economy and society, reducing social spending and investment and potentially increasing the accumulation of arrears.
The report devotes its second chapter to disaster risk financing and insurance instruments to reduce the negative socio-economic impacts of climate shocks. It shows that Mali suffered at least 40 major climatic shocks between 1970 and 2020 and that the drought is estimated to have affected around 400,000 people per year and reduced crop-related agricultural income by $9.5 million per year. However, it would be possible to strengthen financial resilience in the face of this drought through the establishment of instruments to protect sectors as important as pastoralism and agriculture.
Disaster risk financing and insurance provide mechanisms that aim to reduce the negative socio-economic impacts of climate shocks. “These mechanisms can provide timely and targeted financing in response to or in anticipation of a shock; 15% of Mali’s area is well suited for index-based disaster risk finance and insurance for pastoralists, while a further 10% could be after further analysis”explain Daniel Pajank, senior economist and coordinator of the Note on the economic situation of Mali in 2023.
Distributed by African Media Agency (AMA) for World Bank.
Source : African Media Agency (AMA)