Event

International forces managed to curb al-Qaeda militants in northern Mali, who had hijacked an initial Tuareg independency rebellion following the chaos of a military coup in Bamako. Jihadist guerrilla-style attacks still threaten to endure, while past clashes between the army and Tuareg rebels over the northern town of Kidal raised concerns over the central government’s future ability to control the vast northern desert area. On 18 June, the government and an association of Tuareg rebel groups signed a ceasefire agreement that should clear the way for disarmament and enable the organisation of nationwide elections on 28 July. The agreement is the first step in a long and difficult process towards reconciliation and peace between the different communities and ethnicities. Tackling the long-standing grievances of people in the northern Azawad region, without taunting southern communities by doing disproportionate concessions, will be an essential balance to be found. Even though the ceasefire agreement will facilitate voting in Tuareg-occupied Kidal, logistical hitches and registration problems could still derail the timeframe of the elections.

Impact on country risk

Since the March 2012 military coup, bilateral and multilateral donor support has been suspended. The holding of free and representative elections will not only be critical to peace and democratic establishment, but it will furthermore release € 3.25 billion worth of aid money, pledged by the European Union after the donor conference in Brussels last month. High reconstruction and humanitarian needs are expected to create budgetary and external financing gaps. The re-engagement with the IMF since early 2013 and the pledged donor support are crucial in order to meet urgent balance-of-payment needs and execute highly needed government priority spending, while avoiding the creation of new payment arrears. In the near term, Mali will depend on the rebound of aid-related financial inflows to offset its projected current account deficit, making a smooth conduct of the 28 July elections decisive for the country’s liquidity and solvency position.

Analyst: Louise Van Cauwenbergh, l.vancauwenbergh@credendogroup.com