11 December 2013, Bamako — The International Monetary Fund has asked Mali to reduce its fossil fuel subsidies during negotiations on financial assistance to the West African state. But Malians fear such a move could result in costlier electricity and rising poverty.
“They already increased the price of electricity in March, and people didn’t protest because we were under a state of emergency. If we have to support another increase, people won’t accept that,” said Amadou Coulibaly, a high-school teacher in Bamako. Prices rose by 3 to 5 percent for individual consumers in March, and by 7 percent for public authorities and businesses.
Mali needs financial support for its economic recovery following a conflict sparked by a rebel insurgency that ended earlier this year after military intervention by France.
The Malian government has requested access to the rapid credit facility of the International Monetary Fund (IMF). In return, the IMF wants Mali to cut its fossil fuel subsidies, shifting the economy onto a more sustainable path, the fund’s mission chief for Mali, Christian Josz, told journalists in Bamako in October.
Prior to the current negotiations – which are due to continue until the end of this year – the IMF helped Mali with a similar loan in the wake of the 2012 military coup triggered by an uprising in the north by Tuareg rebels. In January 2013, the IMF approved lending of $18.4 million to support macroeconomic stability and growth, as France’s air force halted an advance south by Islamist groups that had hijacked the insurgency.
When electricity prices rose two months later, people didn’t know it was related to the IMF loan, Coulibaly said. “I understand that the price rise is necessary for the survival of EDM (the state power company), but my fear is that electricity is becoming unaffordable for most of us,” he said.
POWER FIRM STRUGGLING
The Malian government commission that regulates electricity and water said the tariff rises were aimed at alleviating the government’s fossil fuel bill. It channels about $80 million into fossil fuel subsidies each year.
“In past years, the price of fossil fuels constantly increased on the international market while the electricity price (in Mali) didn’t change since 2009,” Moctar Toure, head of the commission, said in October.