Mali defaults on $31 million bond payments
Mali has defaulted on more than US$31 million of bond payments, its finance ministry and the West African debt management agency said on Wednesday, as sanctions imposed over elections delayed by the country’s military junta took effect.
The defaults add to mounting troubles for Mali, which has experienced two coups since August 2020 and has struggled for years to stem an Islamist insurgency that has drawn in foreign powers including former colonial ruler France.
Mali failed to repay 15.6 billion CFA francs (US$26.6 million) in relation to a treasury bond that matured on 31 January, the debt agency of West Africa’s monetary union zone said in a note to investors.
“It is notable that this payment incident occurs in a context where the state of Mali is subject to sanctions,” the note from UMOA-Titres said.
Mali’s finance ministry earlier said that the country had failed to meet a debt payment of 2.7 billion CFA francs (US$4.7 million) on treasury bond coupons, blaming the ECOWAS sanctions and those imposed by the BCEAO central bank that administers the CFA franc.
The ministry said the deadline to meet the coupon payments on two sets of bonds had passed on 28 January with it unable to comply with its obligations because of measures that have largely cut it off from regional financial markets.
“Because of these restrictions and despite having sufficient reserves in its treasury, the central bank did not proceed to meet the bond repayment scheduled for 28 January,” the ministry said, adding that Mali would pay its debts as soon as the restrictions are lifted.
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SANCTIONS BITE
The 15-member ECOWAS economic bloc and the UEMOA regional monetary union both imposed sanctions on Mali on 9 January after the military junta that first seized power in a 2020 coup decided to delay a national election.
ECOWAS has frozen Malian state assets in its member states’ commercial banks and suspended non-essential financial transactions with Mali.
The UEMOA, which has eight member countries including Mali, also imposed sanctions, instructing all financial institutions under its umbrella to suspend Mali with immediate effect.
The junta took power in August 2020, then staged a second coup last May against a transitional government that had been put in place. It said it would organise elections in February this year, only to delay them and propose staying in power until 2025.
The delay infuriated allies including France, which has led an international military mission to fight the Islamist insurgency in Mali. Stung by criticism from Paris that the junta was “out of control”, it expelled the French ambassador on Monday (31 January).
The junta appeared to receive a surge of domestic support after the sanctions were announced. Tens of thousands of people took to the streets for government-organised demonstrations that denounced ECOWAS and France.
Some analysts, however, warned that the bounce could prove temporary as the impact of the sanctions ripples through the economy.
William Linder, head of risk consultants 14 North, said the sanctions were already starting to hurt, with price rises for a range of items such as salt, cooking oil, bananas and potatoes. Many of these would normally be imported from Ivory Coast or Senegal.
