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Mali is a poor, predominantly desert country with a high dependency on gold and cotton exports. The agricultural sector accounts for 40% of GDP, and the economy is therefore highly vulnerable to shocks. A second military coup in less than 10 years also underlines the deep fragile political foundations. The move has come after months of protests calling for the resignation of President Ibrahim Boubacar Keita. Rising political uncertainty will pose additional risk to a country that has been facing difficulties in combating terrorist groups in the north and central regions.

Up to now, the economy has continued to perform reasonably well, with economic growth of about 5% in recent years, as the bulk of activity is located outside troubled areas (gold, cotton). But the combination of political troubles and the Covid-19 pandemic shock made hard to avoid a recession in 2020. Looking ahead, downside risks remain significant, depending on the length of the political transition.    

However, the country’s membership in the CFA Franc zone does not appear to be compromised by the military coup. This provides a solid buffer against balance of payment shocks as the French treasury guarantees the full convertibility of the CFA Franc against the euro at a fixed rate.Reforms of the CFA Franc are ongoing but the fundamentals of the currency arrangement remain and the project of an enlarged monetary union with other West African countries is a long-term possibility. Furthermore, comfortable FX reserves pooled at the regional central bank, the BCEAO, continue to support the stability of the peg.