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The news of Mali becoming a debt-free country has appeared on various social media platforms, including X (Twitter), and LinkedIn.
On 15th November, a popular celebrity and activist on X known as @AreaFada1, noted in a tweet that Mali is now a debt-free country.
In his exact words, he said: “Mali is now a debt free country. The country’s Finance Minister has announced, Mali becomes the first African country to be debt free. After the military took over, they sold all the assets belonging to the corrupt elites and sent them to jail including the former president’s son & Ministers. When will it be our turn?”.
The tweet which gained 5200 likes, 1700 retweets and 273k views went viral in the Nigerian social media space and attracted 413 comments (still counting).
Also, on LinkedIn, Emerging Alkebulan (Alkebulan Innovative Foundation), with 4,548 followers, made a similar post and gave details about the claim, emphasising that ‘Mali, under the leadership of General Assimi Goita, has achieved a significant milestone by becoming the first African nation to be debt-free.’
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He noted that Mali’s achievement in becoming debt-free is commendable and serves as a beacon of hope for other African nations.
The post has since then gained 76 comments and 46 reposts at the time of compiling this.
Where is Mali?
Mali known officially as the Republic of Mali is a landlocked country situated in West Africa. It is the eighth-largest country in Africa with an area of over 1,240,192 square kilometres (478,841 sq mi).
The country shares a border with Algeria to the North then Niger to the East, with Mauritania to the North West.
Mali also shares a border with both Burkina Faso and Ivory Coast to the South and Guinea with Senegal to the West.
The country’s Capital, Bamako is the largest city in the country. With a population of 24,478,595, Mali is governed by a military junta headed by Assimi Goita who is the interim President after a successful coup he led in April 2021.
ROUNDCHECK Findings
The junta-led West African nation’s economy has been rocked by two coups in 2020-2021 and consequent regional sanctions which have contributed significantly to the continued high debt profile of the country.
On the 20th of October, Mali Economy and Finance Minister, Alousseni Sanou, in a news report by Reuters, acknowledged the increasing challenges the country is facing as debt repayment efforts begin.
The report disclosed that Mali will pay off 200 billion CFA francs ($332 million) of its internal debt starting from the following week until the end of the year in a bid to ease its debt burden.
In the report, IMF analysis warned that the direction and pace of debt accumulation are worrisome and that Mali’s domestic debt had risen from a low base of 8.1% of gross domestic product in 2015 to 22.1% as of 2021.
In another report, Mali’s economy minister revealed that the country expected to pay off $1.015 billion in domestic debt as part of its 2024 budget plan to ease the debt burden
However, the repayment of the $322 million of internal debt does not make the country debt-free as there are still other pending debts and financial obligations the country needs to fulfil.
According to official data, Mali’s domestic debt stood at CFA2,965.9 billion(about $5 billion) in 2023, making up over 55% of the country’s total public debt.
On the 18th of October, Moussa Diallo, Mali’s Minister of Industry and Commerce, during a session broadcasted by ORTM (Office de Radiodiffusion-Télévision du Mali), emphasised the broader impact of reducing the debt.
According to him, “By paying CFA 200 billion of the domestic debt, we are looking to restore the cash flow of businesses, help them meet their obligations to banks, and support domestic consumption. Overall, this initiative should help kick-start the economy.”
Mali’s Debt Profile
In 2022, Mali’s public debt was 51.7% of its GDP, and its external debt was $3,923,341,002. In the decade leading up to 2022, Mali’s public debt averaged 38.3% of its GDP. The World Bank and IMF projected that the public debt will increase to 47% of GDP in 2023, and then gradually decline to 43.2% of GDP in 2030.
According to Statista, the national debt in Mali was projected to continuously increase between 2024 and 2029 by 4.4 billion U.S. dollars (+36.64 per cent).
According to the International Monetary Fund, the general government gross debt consists of all liabilities that require payment or payments of interest and/or principal by the debtor to the creditor at a date or dates in the future.
The main external creditors were the IMF, World Bank, African Development Fund, West African Development Bank, Islamic Development Bank, and the governments of France, China, India, and Abu Dhabi.
IMF noted that Mali’s outstanding purchases and loans (SDR) were $344.68 million as of September 30, 2024, with Mali’s contingent liabilities estimated to be 14.3% of GDP at the end of 2024.
Mali’s debt service reached a historical record of $292 million in 2021. In 2022, Mali’s budget deficit widened to 5.3% of its GDP.
The International Monetary Fund (IMF) has warned that Mali’s debt accumulation is worrisome. However, Statista forecasts that Mali’s debt-to-GDP ratio will decrease to 54.41% by 2029.
Can a country be debt-free?
ROUNDCHECK findings showed that a country can be debt free but it is difficult to achieve. With the Heavily Indebted Poor Countries (HIPC) Initiative launched in 1996 by the International Monetary Fund (IMF) and World Bank, it can only help countries avoid unmanageable debt.
Also, in 2005, the Multilateral Debt Relief Initiative was added to help countries reach the United Nations’ Sustainable Development Goals. Countries that complete the HIPC Initiative process can receive 100% relief on eligible debts.
Findings revealed that these achievements paved the way for Somalia to conclude the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative in December 2023.
As a result, the country received $4.5 billion in debt relief from the World Bank’s International Development Association (IDA), the International Monetary Fund (IMF), the African Development Fund, other multilateral creditors as well as bilateral and commercial creditors, mostly members of the Paris Club.
This achievement reduced Somalia’s external debt from 64% of GDP in 2018 to less than 6% of GDP by the end of 2023, allowing the country to re-enter the global financial system following two decades of isolation.
Conclusion
Our findings revealed that Mali is not a debt-free country yet.
