Agence UMOA-Titres. See WAEMU Securities Agency

Agricultural sector

• export quality, 69

• growth trends, 68, 69f

• insurance, 291, 292f

• Mali’s, growth inclusiveness and, 90–92

• policies to improve trade competitiveness, 76–77b

• policies to promote inclusive growth, 98–99

• policies to reduce vulnerability to shocks, 3

• poverty reduction through regional integration of, 361, 362–363

• productivity, 76b

• rationale for structural reforms, 28–29, 70

• regional integration, 361–362

• regional policy coordination, 363

• structural reforms to promote growth, 29, 44, 74, 75–77b

• trade patterns, 77b

• trade restrictions, 362

Alcohol taxes, 167, 168, 174

Asymmetric macroeconomic shocks

• current shock-smoothing mechanism, 124f

• definition, 44

• fiscal federalism rationale, 141

• fiscal rule cyclicality and, 114

• frequency, 122

• policy response, 57

• rationale for coordinated fiscal policy response, 44

• regional risk-sharing mechanism, 122, 141–142, 143

• regional stabilization mechanism, 122, 124f

• supply shock convergence, 60, 61f

• synchronization in WAEMU, 135, 136t

ATMs, 287, 288f

Bailouts, 57

Banking sector

• access, 7–8, 98, 256, 287–291, 288f, 289f, 309

• asset concentration, 276f

• barriers to entry, 240

• capital adequacy ratios, 27f, 263f, 265

• capital concentration risk, 303

• Central Bank oversight, 22

• competition in, 273

• contract enforcement, 284–286

• cross-border flows, 260–262

• current commercial bank deposits, 256

• current liquidity positions, 24, 25

• current structural characteristics, 7, 256, 260–262, 261f

• deposit and payment modes, 287–291, 290f

• distribution of excess liquidity, 206

• foreign assets, 205

• foreign ownership, 256

• government securities holdings, 235, 236f, 240

• liquidity-associated risks, 235

• microfinance institutions, 8, 256, 259, 265, 266f, 271

• mobile market, 8–9, 257–258, 302

• nonperforming loans, 263f, 303

• prudential standards compliance, 13

• regional groups, 9, 25, 257, 260, 261f, 301, 304

• regional integration prospects, 364

• reserve requirements, 207–208, 208t, 305–306

• reserves, 205–206, 205f, 206f, 206t, 208f

• resolution framework, 8, 257, 301, 306–308, 307t

• return on assets, 277, 279f

• return on equity, 277, 279f

• soundness, 262–265, 262b, 263f, 264t

• supervision, 2, 7, 8, 22, 28

• WAEMU objectives, 256

• See also Financial sector; Liquidity injections, BCEAO; Prudential standards

Basel II/III standards, 7, 8, 28, 256, 257, 304

BCEAO. See Central Bank of West African States

Benin

• bank reserve requirements, 207

• financial sector depth, 273

• foreign aid flows to, 48

• growth benefits of infrastructure investment, 147

• inflation in, 221

• interest rates, 221, 232

• microfinance institutions in, 265

• public spending, 155

• shock effects in, trade flows and, 336

• tax revenue, 150, 152, 166, 175, 181–182

• total factor productivity, 49

• trade, 322, 324, 326, 328–329, 332, 334, 336, 344–346b

• See also WAEMU

Bond markets

• constraints to regional financing, 110–111

• current efforts to develop, 28, 103–104

• investor guarantees, 302

• ratings, 302

• See also Securities market, WAEMU

Bourse Régionale des Valeurs Mobiliéres, 266–269, 270f, 275, 303

Burkina Faso

• bank reserve requirements, 207

• business cycle synchronization, 59

• foreign aid flows to, 48

• growth, 47

• inflation in, 221, 242

• interest rates, 232

• tax revenue, 152, 175, 181

• total factor productivity, 49

• trade, 165, 322, 324, 326, 328–329, 332, 334, 336, 337, 341, 359

• See also WAEMU

Business climate, 29, 301

• current environment, 52f

• growth and, 51, 53, 67–68, 68f

• right to establishment in WAEMU, 367

Business cycle synchronization, 59, 59t, 271

Cape Verde, 318

Capital income taxation, 164

Capital markets, 52

• regulatory control, 200–201

• in trilemma conditions, 199

Central African Economic and Monetary Community (CEMAC), 12, 358, 363, 364t

Central Bank of West African States (BCEAO), 2, 16

• banking sector supervision, 22

• commercial bank borrowing, 6–7, 24, 27f

• control of capital transactions, 200–201

• correlation of reserve money and net foreign assets, 202

• effectiveness of inflation control policies, 197–198, 211–214, 213t, 241–243

• effectiveness of monetary policy, 196–197, 199, 211, 214

• effectiveness of monetary policy transmission through interest rates, 227–233, 229–231t

• emergency liquidity assistance from, 306

• euro area policy rates and, 201, 202t, 215–218, 216f, 217t

• foreign assets, 196

• future of fiscal-monetary policy coordination, 13, 31

• indicators of monetary policy independence, 201–203

• inflation control policies, 6, 7, 241

• interest rate policy, 204–205, 204b, 219–221

• monetary policy challenges and opportunities, 5–7

• Monetary Policy Committee, 22, 33, 196, 200, 219

• monetary policy framework, 200

• monetary policy objectives, 21, 196

• monetary policy transmission mechanisms, 6, 62, 196–197, 199, 203, 208–210, 209f

• refinancing operations, 24

• in regional securities market, 102–103, 112

• reserves coverage, 24, 200

• reserves policy, 12, 207–208, 208t

• responsibilities and authorities, 1, 12, 18b, 21–22, 33, 37

• role in fiscal-monetary policy coordination with Ministries of Finance, 38–40, 41–42

• structure, 21

• See also Liquidity injections, BCEAO

Central Deposit and Settlement Organization, 102, 103

Child mortality, 78f, 155

China, 59, 60t

Common external tariff, 15, 153, 165, 180, 319

• adoption, 164, 341

• macroeconomic implications, 9–10, 341, 348, 348t, 349f

• objectives, 29

• potential trade outcomes, 341, 344–346, 347f

• rates, 357

• regional trade integration and, 9–10, 358

• revenue implications, 10, 179, 341, 342f, 346–348, 347f

• structure, 29, 164–165, 343, 343t

Communauté Financière Africaine (CAF), 12, 16f, 200, 201

Community solidarity levy, 360–361

Conférence Interafricaine de la Prévoyance Sociale, 302

Conference of Heads of State and Government, 15, 16, 18b, 20

Corporate income taxes, 169–171, 175, 176t, 179, 180–181, 181f, 184

Corruption, 51

Côte d’Ivoire

• bank reserve requirements, 207

• consumption patterns, 24

• credit market, 284–286

• inflation in, 242

• interest rates, 221, 232

• migration patterns, 367

• regional trade, 9

• shock effects in, trade flows and, 336–337, 340

• social stability, 370

• tax revenue, 150, 152, 180

• total factor productivity, 49

• trade, 165, 318, 321, 322, 324, 326, 327, 329, 332–334, 336, 358

• See also WAEMU

Council of Ministers, 16, 17, 18b, 33, 41

Court of Auditors, 17, 18b

Court of Justice, 17, 18b

Credit markets

• access, 256, 283, 296

• current characteristics, 260, 261f

• deposit and payment modes, 287–291, 290f

• depth of WAEMU financial sector, 277, 278f, 284–286

• effectiveness of BCEAO inflation control policies, 197–198, 249–249

• information on borrowers, 283, 284–286, 301

• loans to firms, 291, 293f, 296

• microfinance institutions in, 259

• private sector credit gaps, 291, 294f

• private use of loans, 292f

• regional market characteristics, 266–269

• transmission of monetary policy through, 62, 209–210

Credit-to-GDP ratios, 7–8, 291, 294f

Current account, 318

• financing sources, 26f

• future prospects, 25, 26f

• patterns and trends, 2, 23, 24, 48–49, 50f, 238

Customs duties, 20, 164–166, 361

Debt-to-GDP ratio, 17–19, 23, 127–128, 273–275

Deficit bias, 117, 118f

Demographic trends, 74–80, 78f

• access to financial services, 287, 289f

• mobile banking use, 312f

Dependency ratio, 79b

Deposit insurance, 8, 308

Ebola, 23, 25

Economic Community of Western African States (ECOWAS), 318

• common external tariff, 9–10, 15, 29, 357

• WAEMU trade patterns, 341–342, 342f

Economic Partnership Agreements, 179, 357

Education, 67–68, 291, 292f

• gender inequality outcomes in, 93

• for poverty reduction, 369

• public spending efficiency, 155, 156, 156f, 157t

Employment

• demographic trends and, 74–77, 79f, 80

• gender participation, 92, 93f

• labor market reforms to promote inclusive growth, 98

• sectoral distribution, 75b

Energy infrastructure, 368

Equity markets, 211, 269, 302

Euro area

• cointegration of WAEMU interest rates with, 203, 215–218, 216f, 217t

• fiscal balance criterion, 130

• inflation in WAEMU and, 203, 251

• policy rates, 201, 202t

• WAEMU business cycle synchronization, 59, 60t

European Central Bank, 201, 202t

Excess Deficit Procedure, 131

Exchange rates

• BCEAO resources for defense of, 200

• as constraint to dealing with macroeconomic shocks, 57

• constraints to fiscal and monetary policy, 35

• historical adjustments, 12

• international reserves and, 24

• patterns and trends, 50

• policy challenges and opportunities, 6

• role of monetary policy in fixed rate systems, 196, 199

• transmission of monetary policy through, 210

• WAEMU policy, 1, 12, 318

Excise taxes, 167–169, 168t, 174–175, 174t

Fertility rates, 74–77, 78f, 80

Financial sector

• access, 7–8, 98, 256, 257, 275, 276f, 277, 287–291, 288f, 289f, 293f, 309, 366

• central bank borrowing, 6–7, 24, 27f

• constraints to inclusion, 296

• cost of financing, 52

• crisis prevention, 8, 257, 301, 305, 306–308

• current efforts to deepen, 28

• current level of development, 273–277, 274f, 276f

• current structure, 7, 256, 257, 259–260

• data collection and dissemination needs, 303, 304, 305

• determinants of depth, 277–286

• determinants of financial inclusiveness gaps, 291, 295f

• future challenges and opportunities for WAEMU, 1, 25–28

• growth benefits from development of, 365–366, 366f

• international comparison of development in, 257, 273, 275f, 277, 279–283, 282t

• liquidity provisions, 6

• obstacles to growth and development, 52–53, 301

• poverty reduction through regional integration of, 364–366, 366f

• rationale for deepening, 128

• regional and national coordination, 303

• regional groups, 101

• regional markets, 266–269

• resources for financing growth, 3–4, 45, 101, 111–112

• risk management, 25–28, 269–271

• stability, 271

• strategies to improve access, 257, 296, 297–299f, 302–303, 309

• strategies to promote foreign investment, 10

• strategies to promote inclusive growth, 98

• strategies to promote market discipline, 128–130

• strategies to promote stability and growth, 7–9, 302–303

• structural trends, 256, 259

• transmission of monetary policy through, 210–211, 224, 234

• See also Banking sector; Regulation and supervision, financial sector

Financial Stability Board, 306–308

Financial Stability Committee, 196, 271

Financial Stability Council, 305

Financial Stability Fund, 308, 353

Fiscal balances

• causes of deficits, 237–238

• convergence criteria, 130

• convergence criteria compliance, 117, 118f, 127–128

• cyclical flexibility of fiscal rules for, 140–141

• exclusion of foreign-financed expenditures, 130, 139–140

• fiscal-monetary policy coordination on, 37–38

• future prospects, 4, 13, 25, 26f, 38

• inflation and, 251

• patterns and trends, 2, 23–24, 26f, 39f, 130f, 237–238, 237f

• procyclicality of fiscal policy and, 136–139

• projections, 38

Fiscal consolidation, 240

• future challenges and opportunities, 2, 4, 13

• projections, 38

• rationale, 23

Fiscal councils, 118f, 121–122

Fiscal-monetary policy coordination, 2, 13

• BCEAO independence and, 36–37

• current institutional framework for, 33, 41

• current status, 41

• implementation challenges, 32

• implementation efforts to date, 31, 32

• key areas of, 37–38, 38f

• mutual effects of macroeconomic policies, 36, 36f

• objectives, 33–34, 34f

• rationale, 13, 31

• recommendations for, 41–42

• relations between BCEAO and Ministries of Finance in, 38–40, 40f

• statutory provisions, 32–33, 32b

• strategies for implementation, 31

• types of instruments for, 34–35

Fiscal policy

• achieving market discipline in absence of central fiscal authority, 125

• constraints to, 35

• convergence criteria, 4, 15, 17–19, 117, 119, 127, 129t

• convergence criteria compliance, 19, 19t, 127–128

• countercyclical rules, 114, 120–121

• current institutional structure for, 37–38, 37f, 114

• cyclical effects of fiscal rules, 139–140

• cyclical patterns, 136–139, 137t, 138t

• definition and scope, 114

• design of regional rules, 125

• effectiveness of current regional rules, 117

• federalism, 141, 143

• future challenges and opportunities, 4–5

• as impediment to growth, 120

• monetary policy overlap and interactions, 31–32, 36–37, 36f, 38–40

• objectives, 31, 33–34

• obstacle to addressing shocks, 57

• opportunities for improving fiscal rules and compliance, 119–120

• to reduce impact of macroeconomic shocks, 44, 57

• regional coordination, 40, 57, 114

• regional market discipline and, 114

• regional risk-sharing, 122, 134, 141–142, 143

• regional surveillance, 114

• risk management, 4–5

• role of regional rules, 125

• rule flexibility, 120–121

• significance of, for maintaining stability in WAEMU, 114, 117

• strategies for promoting regional rule compliance, 121–122

• time scale, 35

• tools of, 31, 34

• See also Fiscal-monetary policy coordination; Fiscal rules

Fiscal rules

• budget deficit, 134

• considerations for future revision of, 119–120

• convergence criteria and, 117, 127

• current compliance, 117, 120, 127–128

• current effectiveness, 114, 117

• design, 125

• effects on cyclicality of fiscal policy, 136, 138, 139–140

• flexibility rationale, 120–121, 142

• to mitigate shock risk, 133, 134

• options for allowing cyclical flexibility, 140–141

• procyclicality of public investment and, 114, 134, 142

• public debt ceiling, 130

• quality of fiscal policy and, 134

• rationale, 4, 114, 117, 125, 133–134, 142

• role of fiscal councils in promoting adherence to, 121–122

• strategies for promoting compliance, 120, 121

Fiscal space

• challenges for WAEMU, 147

• opportunities for enlarging, 147

• to promote sustainable growth, 5, 115

• raising tax revenue to enlarge, 148–153

• for scaling up public investment, 147

• tax coordination to create, 115

Foreign aid

• cyclicality, 142

• debt relief, 147

• patterns and trends, 48, 49f

Foreign investment

• bank ownership, 256

• communication issues constraining, 353–354, 355

• current state, 319

• in government debt. See Foreign ownership of government debt

• patterns and trends, 48, 49f

• recommendations for regulation, 8

• strategies to promote, 10, 319

• WAEMU control of capital transactions, 200–201

Foreign ownership of government debt

• benefits to governments, 355

• current, 351

• impediments to, 351, 352–355

• strategies for encouraging, 351, 355–356

France, 12, 200

Gambia, 318

Gender inequality, 67f

• growth and, 45, 93–94, 94f, 95–97f, 99

• labor force participation, 92, 93f

• trends, 92, 93f

Ghana, 242, 257, 273, 277, 318

• government debt market, 351, 352f, 353

Gini coefficient, 85

Goods and services taxes, 148, 149, 152, 154f, 160t, 167

Governance

• constraints to private investment, 53, 301

• current institutional quality, 51, 52f

• depth of financial sector and, 278–279, 281–283

• quality of, growth and, 51, 54

Growth

• benefits of infrastructure investment, 147

• benefits of WAEMU membership, 369

• causes of divergence within Africa, 44, 47

• causes of WAEMU underperformance, 52–54

• constraints to regional financing, 110–111

• demographic factors, 74–80

• determinants of, 47–51, 65–68, 148f

• differences within Africa, 44, 47, 48f, 65

• effects of macroeconomic shocks, 44

• emerging threats, 25

• export diversification to promote, 44, 70–74, 73f

• financial sector development and, 283–284, 365

• financing challenges, 3–4

• fiscal deficit and, 118f, 120

• fiscal policy as impediment to, 120

• future prospects, 25, 26f

• gender inequality and, 45, 93–94, 94f, 95–97f, 99

• income distribution, 83–84, 92

• inflation and, 364

• international comparison of low- and middle-income countries, 135, 135t

• in Mali, 87

• monetary policy objectives, 196

• obstacles to, in WAEMU, 44

• policy recommendations to sustain, 2–4, 30

• possible effects of common external tariff, 341

• poverty reduction and, 83, 84f, 97–98

• public investment and, 135, 135t, 137

• resources for financing, 3–4, 45, 101, 111–112

• sectoral distribution, 68, 69f

• social conflict and, 370

• structural transformation and, 44

• in Sub-Saharan countries, 44, 135

• trade integration and, 359–360

• trends and patterns, 2, 23, 24t, 26f, 30, 44, 47, 48f, 65, 66f, 360

• variation within WAEMU, 135

• volatility, 135

• See also Inclusive growth

Growth incidence curve

• Mali’s, 87–90, 89f

• Senegal’s, 86–87, 88f

Guinea-Bissau, 59, 318, 332, 334

• bank reserve requirements, 207

• financial sector depth, 273

• foreign aid flows to, 48

• interest rates, 221, 232

• shock effects in, trade flows and, 336, 337

• tax revenue, 152, 175, 181

• total factor productivity, 49

• trade, 165, 322, 324, 326, 328, 329, 336, 337, 341–342

• See also WAEMU

Health community policies, 368–369

Health spending, 155–156, 157f, 158t, 291, 292f

Hirsh index, 322

Human capital accumulation, 65–67

Inclusive growth

• current status, 7–8

• definition, 84

• future challenges and opportunities, 8–9

• institutional support for, 98

• in Mali, 87–94, 89f

• measurement, 84–85

• rationale, 3, 94–98

• regional integration and, 357

• in Senegal, 85–87

• strategies for promoting, 45, 81, 98–99

• trends, 81

Income

• financial sector development and, 283–284

• trends, 44, 65

Income distribution

• future challenges and opportunities, 3

• growth and, 45, 83–84, 92

• measurement, 84–85

• patterns in Senegal, 85, 85t

• socio-political outcomes, 92

• trends, 81

• See also Inclusive growth; Poverty reduction

Income tax, 148, 149, 152, 154f, 160t

• corporate, 169–171, 175, 179, 180–181, 181f, 184

• portfolio income, 171, 171t, 173, 175–176

Inflation

• asymmetric transmission of monetary policy within WAEMU, 219, 221

• BCEAO objectives, 241

• BCEAO’s calculation of, 221

• effectiveness of BCEAO policies, 197–198, 241–243

• effectiveness of interest rate policies in controlling, 225–226, 241, 242, 244, 244f, 249

• fiscal deficit and, 251

• fiscal-monetary policy coordination, 13, 39, 40, 41–42

• forecasting, 200

• future policy challenges and opportunities, 2, 6, 7, 25, 26f

• growth and, 364

• imported, 251

• influence of economic variables and policies on, 246–251

• intra-African comparison, 363, 364t

• modeling of monetary policy determinants, 244–246

• modeling of monetary policy transmission, 226–227

• monetary policy objectives, 196, 221

• output gap and, 249–251, 249f

• poverty outcomes, 363–364

• public debt and, 197–198

• terms of trade and, 26f

• transmission of cental bank monetary policies to control, 6

• trends and patterns, 2, 23, 48, 50f, 220f, 221, 243, 243f, 363, 364t

• volatility, 363

• WAEMU and euro area, 203, 251

• WAEMU target levels, 364

Inflation expectations, 210

Infrastructure investment

• financial depth and, 283

• future challenges and opportunities, 2, 13, 23

• growth and, 23, 147

• poverty reduction and, 10, 368

• shortcomings in WAEMU, 135

• for structural reform, 29

• transportation, 362

Insurance market, 274f, 275, 276f, 291, 292f

Interbank market, 199, 203

• current characteristics, 206–207, 211, 227–228, 239f, 259, 260t, 266, 267f

• lending rates, 204–205, 219–221, 266, 267f

• obstacles to further development, 239

• strategies for development of, 302

Interest rates

• asymmetric transmission of monetary policy within WAEMU, 219, 221, 227–233, 229–231t

• cointegration of euro area and WAEMU, 203, 215–218, 216f, 217t

• determinants of, 45, 127, 128t

• effectiveness of BCEAO inflation control policies, 197–198, 211–213, 213t, 241, 242, 244, 244f, 251

• euro area policy rates vs. WAEMU, 201, 202t

• fiscal policy coordination in WAEMU, 4

• government debt market, 351, 352

• liquidity injections to control, 205, 206–207

• modeling of monetary policy transmission, 226–227

• monetary policy, 204–205, 204b

• patterns and trends, 220f, 221, 222f, 223f, 238f, 268f

• policy challenges and opportunities, 6

• rate setting in BCEAO, 219–221

• regional control, 196

• securities market, 106–110

• transmission of monetary policy through, 62, 210, 224–226, 225f, 228t

Intermediation rules, 311

International Finance Corporation, 103, 104, 111

International Financial Reporting Standards, 7

Internet coverage, 283

Investment codes, 164, 176–179, 178t, 184

Kenya, 257, 273, 277, 311

Kola bonds and bills, 103, 104, 111

Legal system, 1–2, 281–283

• contract enforcement, 284–286

• regional integration, 367

Liberia, 318

Life expectancy, 155

Liquidity injections, BCEAO

• associated risks, 197, 207, 235, 238–239

• to control interbank interest rates, 205, 206–207

• crisis management, 306

• as obstacle to development of interbank market, 207

• as percentage of commercial bank reserves, 205–206, 206f, 206t

• rationale, 205, 207

• risk prevention, 197, 235, 239–240

• transmission of monetary policy through, 210–211, 214

• trends, 235–238, 236f

Liquidity requirements, 6, 25

Literacy rates, 92, 93f

Macroeconomic performance

• convergence criteria to promote, 4

• depth of financial sector and, 278, 281

• effects of common external tariff, 348, 348t, 349f

• instability evolution, 360, 361t

• trends and patterns, 2

Macroeconomic policy

• financial sector development and, 284

• to promote foreign investment, 10

• to reduce vulnerability to shocks, 2–3

Macroeconomic shocks

• centralized fiscal smoothing mechanism, 122, 124f

• convergence, 60, 60b, 61f

• current shock-smoothing mechanism, 124f

• diffusion in trade network, 337–339

• effective smoothing mechanisms, 62–64, 62f

• effects on growth, 44, 47–48, 57

• policy response options, 44, 57

• public investment response, 138–139, 139t, 142

• regional fiscal risk-sharing, 122, 133, 134, 141–142, 143

• regional integration to reduce vulnerability to, 369

• significance of, for WAEMU, 57

• WAEMU vulnerabilities to, 58f, 59

• See also Asymmetric macroeconomic shocks

Macroprudential regulation, 304–306

Mali, 332, 334

• agricultural sector, 90–92

• bank reserve requirements, 207

• business cycle synchronization, 59

• consumption patterns, 90, 90t

• foreign direct investment, 48

• growth incidence curve, 87–90, 89f

• growth patterns, 87

• inclusive growth in, 87–94, 89f

• inflation in, 221, 242

• interest rates, 232

• poverty reduction in, 87, 90, 91f

• sectoral distribution of growth, 92

• shock effects in, trade flows and, 336, 337, 340

• tax revenue, 152, 181

• total factor productivity, 49

• trade, 322, 324, 326, 327, 329, 336, 341

• urban–rural differences, 90

• See also WAEMU

Manufacturing sector

• export growth, 51f

• export quality, 69

• growth trends, 68, 69f

• Mali’s, 92

• policies to reduce vulnerability to shocks, 3

• share of GDP, 51f

• structural reforms to promote growth, 44, 70

Microfinance institutions, 8, 256, 259, 265, 266f, 271, 275, 276f

Microprudential regulation, 8, 257, 301, 303–304, 305t

Migration flows, 367

Mining, 164, 170, 177

Mobile banking, 8–9, 257–258, 302

• benefits of, 309

• costs, 311, 313f

• current market, 309, 310f, 315f

• demographic patterns in, 312f

• growth of, 309, 310–311, 310f

• interoperability, 311

• obstacles to, 309, 311

• oversight, 311–314

• strategies for promoting, 309–310, 314

• transaction insurance, 314

Monetary policy

• asymmetric transmission within WAEMU, 219, 221, 227–233, 229–231t

• constraints to, 35, 214

• current institutional structure for, 37–38, 37f

• effective shock-smoothing mechanisms, 62–64, 62f

• effectiveness of inflation control policies, 211– 214, 213t, 241–243

• effectiveness of interest rate channel for transmitting, 224–226

• effectiveness of transmission mechanisms, 196–197, 199

• fiscal policy overlap and interactions, 31–32, 36–37, 36f

• in fixed exchange rate regime, 196, 199

• future challenges and opportunities, 1, 5–7, 214

• institutional framework, 196

• interest rate adjustments, 204–205, 204b

• limitations of WAEMU’s, 196

• macroeconomic framework, 200

• measures of independence, 201–203

• modeling of transmission dynamics, 226–227

• multilateral surveillance, 19–20

• objectives, 21, 31, 34, 196

• poverty reduction through regional integration of, 363–364

• recent patterns and trends, 24

• to reduce impact of macroeconomic shocks, 57

• refinancing rate, 24

• regional integration, 6

• reserve requirements, 207–208, 208t

• response to macroeconomic shocks, 62

• strategies for improving transmission of, 234

• time scale, 35

• tools of, 31, 34–35

• transmission mechanisms, 6, 62, 203, 208–210, 209f, 224, 225f

• transmission through financial markets, 210–211

• in trilemma conditions, 199

• WAEMU administrative structure, 21–22

• See also Fiscal-monetary policy coordination

Monetary Policy Committee, 22, 33, 196, 200, 219

Monetary unions, generally

• in franc zone, 12

• member’s capacity to respond to shocks, 133

• rationale, 133

• role of fiscal rules in, 133–134

Money supply, inflation and, 242, 243, 243f, 249–249

Morocco, 260

Mortality risk, 92, 93f

Mortgage refinancing, 302

Mozambique, 284–286

Multilateral Debt Relief Initiative, 117

Multilateral tax treaty, 171–173, 172t

National Credit Councils, 22, 33

New Partnership for Africa’s Development, 363

Niger, 332, 334, 337

• bank reserve requirements, 207

• financial sector depth, 273

• foreign aid flows to, 48

• foreign direct investment, 48

• inflation in, 221, 242

• interest rates, 221, 232

• tax revenue, 152, 175, 181

• total factor productivity, 49

• trade, 322, 324, 328, 329

• See also WAEMU

Nigeria, 242, 260, 318

• government debt market, 351, 353

Nonperforming loans, 25, 27f, 263f, 303

Oil prices, 25

Organization for the Harmonization of Business Law in Africa, 367

Pan-African banking groups, 9, 25, 260, 261f, 301, 304

Per capita GDP, 47, 48f, 83, 84f

• growth benefits of infrastructure investment, 147

• growth trends, 65, 66f

Petroleum products

• oil prices, 25

• subsidies, 169

• taxes, 169, 177

Political functioning

• deepening of regional integration, 366–367

• effects on growth, 53, 54

• financial depth and, 283

• social conflict, 51, 52f, 53–54, 370

• See also Governance

Poverty gap, 82

Poverty line, 82

Poverty reduction

• agricultural sector integration and, 361–363

• benefits of WAEMU membership, 369–370

• community policies for, 368–369

• deep integration in WAEMU and, 366–370, 371f

• education promotion for, 369

• financial integration and, 364–366, 366f

• future challenges and opportunities, 3

• growth and, 83, 84f, 97–98

• inflation effects, 363–364

• in Mali, 87, 90, 91f

• monetary integration and, 363–364

• regional integration and, 10, 319, 357

• in Senegal, 81–84, 83f, 83t

• strategies to promote, 10, 357

• trade integration and, 358–361, 360f

• trends, 81, 82f

• WAEMU performance to date, 2

Private bonds, 105–106

Private investment

• effects on growth, 52

• financing costs, 52

• loans to firms, 291, 293f, 296

• patterns and trends, 53f

• return on investment, 52–53

• securities market financing, 102

• tax policy, 171, 171t

Productivity

• agricultural sector, 76b

• strategies to reduce vulnerability to shocks, 3

Program for Infrastructure Development, 368

Property rights, 51, 301

Prudential standards

• current compliance, 2, 13, 23, 25, 27f, 256, 259, 263f, 265

• opportunities for improving compliance, 8, 25–28

• reserve requirements, 207–208

• WAEMU objectives, 256

Public debt

• ceilings, 120, 130, 134

• convergence criteria compliance, 117, 118f, 127–128

• current fiscal rules, 134

• deficit bias contributing to, 117, 118f

• fiscal-monetary policy coordination on, 37–38

• future prospects, 25, 26f

• holdings of, 237f, 268f, 269, 273–275

• inflation and, 198

• market characteristics, 352, 354f

• patterns and trends, 23, 39f, 117, 119t, 149f

• projections, 38

• See also Foreign ownership of government debt

Public investment

• convergence criteria, 133

• cyclical patterns, 5, 114, 133, 134, 136–139, 139t, 142

• efficiency, 68f, 115, 147, 154–156

• fiscal deficits and, 23

• fiscal space for, 5, 115, 147

• growth and, 23, 30, 54, 67–68, 135, 135t, 137

• international comparison of low- and middle-income countries, 135, 135t

• opportunities for creating fiscal space for growth, 147

• patterns and trends, 49, 50f

• policies to promote sustainable growth, 5

• recent patterns and trends, 23–24

• response to external shocks, 138–139, 139t, 142

• safeguards, 5

• securities market financing, 102

• strategies for improving efficiency of, 157

Real estate markets, 210, 211

Regional Council for Public Savings and Financial Markets, 16, 102, 103, 201, 271

Regional Economic Program, 368

Regional integration

• in absence of central fiscal authority, 125

• agricultural policy, 363

• banking sector, 260–262

• budget centralization, 141

• business cycle synchronization, 59, 271

• convergence criteria, 4, 15, 17–19

• deep, 366–370, 371f

• distributive effects, 357

• financial, 364–366

• fiscal policy coordination, 40, 114

• fiscal policy to promote, 4–5

• freedom of movement, 20, 21, 367

• future challenges and opportunities for WAEMU, 1

• legal, 367

• lessons from trade network analysis, 340

• monetary policy, 6, 196, 363–364

• poverty reduction and, 10, 319, 357

• securities market, 101–102

• tariff policy, 9–10

• WAEMU objectives, 15–16, 29

• See also Tax coordination; Trade integration

Regional Stock Exchange, 102, 103

Regulation and supervision, financial sector

• barriers to entry, 240

• capital mobility, 200–201, 352–353

• constraints to foreign investment in government debt, 352–353

• crisis management, 306

• of cross-border groups, 304

• current efforts to improve, 25–28

• future challenges and opportunities, 2, 7, 8, 12, 23, 257, 301

• intermediation rules, 311

• macroprudential, 304–306, 305t

• microfinance institutions, 265

• microprudential, 8, 257, 301, 303–304, 305t

• mobile banking, 311–314

• obstacles to mobile banking, 311

• regional banking groups, 301, 304

• regional vs. national, 271, 303

• securities market, 112

• See also Prudential standards; Surveillance

Remittances, 309, 310f, 314f

Return on investment, 52–53, 277, 279f

Risk assessment and management

• banking sector, 262–265, 262b, 264t, 303–304

• challenges to financial sector stability and growth, 301

• countercyclical fiscal rules, 114, 134

• data collection and dissemination to enhance, 304, 305

• financial crisis prevention, 8, 257, 301, 305, 306–308, 366

• financial sector development, 25–28, 259

• fiscal, 4–5, 122, 133, 141–142, 143

• liquidity injections by BCEAO, 197, 207, 235, 238–240

• mobile banking, 314

• recovery and resolution, 306–308, 307t

• in securities market, 111

• strategies for improving, 301, 303–306

• systemic, 269–271

Sanctions regime, 19–20, 121, 128

Savings-investment gap, 24, 26f

Securities market, WAEMU, 259, 268f

• auctions, 190, 302

• borrowing costs, 127

• commercial bank holdings of government securities, 235, 236f, 240

• constraints to regional financing, 110–111

• educational and outreach activities, 192

• encoding of securities, 191

• enhancing capacity to finance regional growth in, 111–112, 187

• future prospects, 187

• government debt issues, 104–105, 105f, 106t, 125–127, 126t, 187–188, 193t, 194t

• growth financing from, 3–4, 45, 101, 102

• institutional framework, 102–103, 102f, 112, 188–189

• interest rate determinants, 106–110, 127, 128t

• investment instruments, 103–104

• investor base, 110, 111, 191, 302

• issuance maturity trends, 192, 192f

• issuance procedures, 103, 190, 191

• lessons from WAEMU experience, 188–189

• long-term issues, 105–106, 107t, 110, 111, 112

• need for standardization of issuances, 188

• obstacles to development of, 115, 187

• operations, 104–106, 105f

• opportunities for future development of, 115–116

• origins and growth of, 101–102, 125–127, 187

• Primary Dealers System, 191

• principal component analysis, 109–110, 109f

• regional activity, 266–269

• regulation, 112

• role of WAEMU Securities Agency, 187, 189–190, 189b

• secondary market, 110–112, 115, 188, 302, 352

• strategies for enhancing function of, 190–192, 302

• systemic risk in, 111

• transmission of monetary policy through, 211

• transparency in, 111, 191

Securitization, 302

Senegal, 59, 332, 334

• agricultural sector policies, 98

• bank reserve requirements, 207

• consumption patterns, 85, 86f

• financial sector depth, 273

• growth benefits of infrastructure investment, 147

• growth incidence curve, 86–87, 88f

• growth trends, 83, 84f

• income distribution patterns, 85–87, 85t

• inflation in, 221, 242

• interest rates, 221, 232

• microfinance institutions in, 265

• ownership of government debt, 351, 352f

• policies to promote inclusive growth, 98

• poverty patterns in, 81–84, 83f, 83t

• regional trade, 9

• shock effects in, trade flows and, 336–337, 340

• tax revenue, 152, 175, 182, 361

• total factor productivity, 49

• trade, 165, 318, 321, 322, 324, 326, 327, 329, 358

• See also WAEMU

Service sector

• growth trends, 50, 68, 69f

• regional integration, 367–368

Sierra Leone, 318

Small and medium-sized enterprises, 29, 283, 302–303

Smuggling, 168

Social conflict, 51, 52f, 53–54, 370

Stock markets, 256, 259–260, 266–269, 270f, 274f, 275

• access for small and medium-sized enterprises, 302–303

• transmission of monetary policy through, 210

Structural reforms

• demographic trends and, 80

• growth and, 44, 50–51, 65, 70–74, 73f

• obstacles to, 65

• rationale, 28–29

• recommendations for policies to promote, 65, 74, 74b

• to reduce vulnerability to shocks, 3

• strategies, 29

• trade competitiveness, 50–51, 318

• WAEMU commitment to, 29

Sub-Saharan Africa

• financial sector development, 273

• growth, 44, 47, 48f, 65, 81

• inflation in, 242, 363, 364t

• tax revenues, 148, 181

Subsidies, petroleum products, 169

Supervision. See Regulation and supervision, financial sector

Surveillance, 2

• compliance with regional tax directives, 184

• current convergence criteria compliance, 127–128

• current regional macroeconomic framework, 127

• data collection, 130–131

• fiscal behavior, 114

• fiscal policy coordination, 4

• fiscal rule compliance, 121

• sanctions procedure, 19–20, 121, 128

• strategies to promote market discipline, 128–131

• WAEMU administration, 19–20

• See also Regulation and supervision, financial sector

Tariffs

• current practice, 341, 342

• current revenue, 342

• Harmonized System classification, 165

• to promote regional integration, 9–10

• regional coordination, 164–166

• tax transition goals, 179

• See also Common external tariff

Tax coordination, 5

• adherence among WAEMU members, 173–179, 184

• capital income taxation, 164

• competition and, 164, 170–171

• corporate income taxes, 169–171, 175, 176t, 184

• current, 115, 163

• customs duties, 20, 164–166, 361

• to encourage foreign investment in government debt, 356

• to enlarge fiscal space, 115

• evolution in WAEMU, 163–164

• excise taxes, 167–169, 174–175, 174t

• future prospects, 179, 184

• harmonization and, 115, 163–164, 184

• implementation challenges, 183–184

• lessons from WAEMU experience with, 5, 115, 163, 183–184

• to mobilize revenue, 179–183

• multilateral tax treaty, 171–173, 172t

• objectives, 163, 164

• portfolio income, 171, 171t, 173, 175–176

• special tax regimes, 176–179, 184

• value-added tax, 166–167, 173–174

Tax policy

• collection efficiency, 154f

• constraints to foreign investment in government debt, 355

• convergence criterion, 148

• credibility of institutional framework, 184

• exemptions for Kola bills and bonds, 104, 111

• government debt market, 302

• harmonization, 5, 115, 163–164

• indirect rates, 148

• opportunities for creating fiscal space for growth, 147

• policymaking structure in WAEMU, 114

• to promote sustainable growth, 5

• raising revenue to enlarge fiscal space, 148–153

• reliance on trade taxes, 115, 147

• revenue collection trends, 148–150, 149f, 150f, 151–153, 153f, 180, 180f, 182f, 183f, 185t

• revenue implications of common external tariff, 341, 342f, 346–348, 347f

• revenue implications of regional integration, 360–361

• revenue potential, 150–151, 159–160t

• transition, 179

• See also Tariffs; Tax coordination

Tax revenue-to-GDP ratio, 19, 23

Tax-to-GDP ratio, 148, 180

Tobacco tax, 167, 168, 174

Togo, 332, 337

• bank reserve requirements, 207

• business cycle synchronization, 59

• financial sector depth, 273

• foreign direct investment, 48

• inflation in, 221, 242

• interest rates, 221, 232

• public spending, 155

• shock effects in, trade flows and, 336–337

• tax revenue, 149, 181

• total factor productivity, 49

• trade, 165, 322, 324, 326, 328–329, 334, 358

• See also WAEMU

Total factor productivity

• obstacles to growth in, 49–50, 65–67, 67f

• patterns and trends, 49, 50f

Trade

• export diversification to promote growth, 44, 70–74, 73f

• export patterns and trends, 58f

• export quality, 69, 70b, 72f

• export trends, 68–69, 70b

• obstacles to growth, 50–51

• tax revenue from, 148, 150f, 152, 153, 154f, 159t

• tax transition goals, 179, 180

• WAEMU vulnerability to macroeconomic shocks, 58f, 59

• See also Trade, intraregional; Trade network, WAEMU

Trade integration

• agricultural, 361–363

• constraints to, 358

• global trade and, 358–359

• growth and, 359–360

• international food price fluctuations and, 362–363

• objectives, 358

• poverty and, 358–361, 360f

• services, 367–368

• tax revenue and, 359, 360–361

Trade, intraregional

• agricultural products, 362

• ban on trade restrictions within WAEMU, 20–21

• common market objectives of WAEMU, 20–21

• community solidarity levy, 360–361

• comparative openness, 50, 51f

• coordination of customs tariffs, 164–166

• current import duties, 342, 342f

• current structure, 9, 50–51, 51f, 318, 321

• econometric analysis, 358

• efficiency, 358

• excise taxes, 167–169, 168t

• export concentration, 358

• growth potential, 9, 318

• informal, 348

• lessons from trade network analysis, 340

• patterns and trends, 9, 50–51, 51f, 165–166, 165f, 318, 321, 322, 326, 341–342, 342f, 358

• potential impact of common external tariff, 319

• price elasticities of import demand, 343–344, 343t, 344t

• revenue from import duties, 342, 342f

• strategies for promoting, 29

• trends, 58f

• WAEMU objectives for promoting competitiveness in, 20, 21

• WAEMU policy goals, 321

• See also Common external tariff; Trade integration; Trade network, WAEMU

Trade network, WAEMU, 318

• clique structure, 329

• cohesion properties, 322–323, 323t

• cohesion properties dynamics, 323–324, 324f

• core-periphery structure, 326–329, 328t

• dependency matrix, 336, 336t

• graphic representation, 321–322, 322f

• hierarchical clustering, 329–332, 330f, 331t, 333t, 334t

• implications for regional integration, 340

• network effects, 335–337, 337t, 339

• overall architecture, 332–335, 335f, 339

• patterns of trade in, 322, 323

• power properties, 324–326, 325t, 327f

• shock diffusion in, 337–340

• signal diffusion, 335–336, 339–340

Transparency, 8, 35, 111, 121–122, 179, 257, 301

Transportation system, 362, 368

Treasury bills, 23, 103, 104, 105f, 108–109, 108f, 110, 125–127, 126t, 187–188, 188f, 211, 268f, 269

Treasury bonds, 103, 104, 108, 187–188, 188f, 268f

Trilemma, 199

Urban–rural differences

• agricultural product trade and prices, 363

• income distribution, 81, 90

Value added tax, 152, 166–167, 173–174, 182

WAEMU Banking Commission, 16, 271, 303, 304, 306–308

WAEMU Commission, 2, 7, 17, 18b, 29, 41, 114, 121, 184, 368

• fiscal-monetary policy coordination and, 32b, 33

• future of fiscal-monetary policy coordination, 13

• surveillance program, 19–20

WAEMU Parliament, 17, 18b

WAEMU Securities Agency, 10, 28, 41, 112, 115, 187, 189–190, 189b, 192, 319, 355

WAEMU Treaty, 15, 16, 17, 32–33, 32b, 128, 163

Wages and salaries-to-tax revenue ratio, 19

Watts index, 85

West African Development Bank, 16, 105, 368

West African Economic and Monetary Union (WAEMU)

• access to financial services, 256, 287–291, 288f, 289f

• accomplishments to date, 12–13, 15

• benefits of membership in, 369–370

• budget, 17

• business cycle synchronization, 59, 59t, 271

• Central Bank. See Central Bank of West African States (BCEAO)

• convergence criteria, 17–19

• convergence criteria compliance, 19, 19t

• cost of electronic payments, 313f

• cross-border flows, 260–262

• financial sector depth, 273–277

• future challenges and opportunities, 1–2, 13, 15

• gender inequality patterns, 92, 93f

• growth variation within, 47, 135

• interest rate patterns, 220f, 221, 222f, 223f, 238f, 268f

• international comparison of growth in low- and middle-income countries, 135, 135t

• macroeconomic instability evolution, 360, 361t

• membership, 1, 12. See also specific country

• objectives, 1, 12, 15–16, 17, 256

• obstacles to growth, 44, 47–54, 57, 65–68, 101

• operating principles, 12

• origins, 12, 15

• private sector credit, 291, 294f, 296

• public spending efficiency, 154–157

• right of free movement in, 20, 21, 367

• securities market. See Securities market, WAEMU

• structure, 12, 16–17, 18b, 37–38, 37f

• tax revenue collection trends, 148–150, 149f, 150f, 151–153, 153f, 179–183, 182f, 185t

• See also Trade, intraregional

West African Monetary Union (WAMU), 12, 16–17