Title Page


Lessons in Managing Growth, Inclusiveness, and Volatility


Alexei P. Kireyev


© 2016 International Monetary Fund

Cover design: Joseph Procopio with IMF Multimedia Services Division.

Cataloging-in-Publication Data

Joint Bank-Fund Library

Names: Kireyev, Alexei. | International Monetary Fund.

Title: Building integrated economies in West Africa : lessons in managing growth, inclusiveness, and volatility / Alexei P. Kireyev, editor.

Description: Washington, DC : International Monetary Fund, 2016.

Identifiers: ISBN 978-1-51351-183-2

Subjects: LCSH: Union économique et monétaire ouest africaine. | Monetary unions—Africa, West. | Monetary policy—Africa, West.

Classification: LCC HG3986.5.B84 2016

Disclaimer: The views expressed in this book are those of the authors and do not necessarily represent the views of the International Monetary Fund, its Executive Board, or management.

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Internet: www.elibrary.imf.org



  • Foreword

  • Acknowledgments

  • Contributors

  • Abbreviations

  • Introduction: Lessons from the WAEMU: Findings and Recommendations

    • Alexei Kireyev


  • 1 | Institutional Arrangements and Regional Integration

    • Alexei Kireyev

  • 2 | Macroeconomic Setting and Current Challenges

    • Monique Newiak and Christian Josz

  • 3 | Macroeconomic Policy Coordination

    • Alexei Kireyev


  • 4 | Quest for Higher Growth

    • Douglas Shapiro and Aleksandra Zdzienicka

  • 5 | Shocks to Growth

    • Aleksandra Zdzienicka and Christina Kolerus

  • 6 | Structural Transformation and Diversification

    • John Hooley and Monique Newiak

  • 7 | Growth Inclusiveness and Equality

    • Alexei Kireyev, Stefan Klos, Christina Kolerus, and Monique Newiak

  • 8 | Financing Growth

    • Mame Astou Diouf and François Boutin-Dufresne


  • 9 | Fiscal Rules and Institutions

    • Olivier Basdevant and Aleksandra Zdzienicka

  • 10 | Fiscal Discipline: Rules and Markets

    • Ermal Hitaj

  • 11 | Public Investment and Fiscal Rules

    • Sébastien Dessus, Jose L. Diaz-Sanchez, and Aristomene Varoudakis

  • 12 | Fiscal Space and Investment Scaling Up

    • Christine Dieterich, Karim Barhoumi, Qiang Cui, Sergio Sola, and Alexander Raabe

  • 13 | Tax Coordination and Tax Competition

    • Mario Mansour and Grégoire Rota-Graziosi

  • 14 | Regional Sovereign Debt Market

    • WAMU Securities Agency


  • 15 | Monetary Policy in a Currency Union

    • Alexei Kireyev

  • 16 | Country Effects of a Single Monetary Policy

    • Alexei Kireyev

  • 17 | Liquidity Injections and Risks

    • John Hooley

  • 18 | Monetary Policy and Inflation

    • Central Bank of West African States (BCEAO)


  • 19 | Financial System Structure

    • Patrick Imam and Christina Kolerus

  • 20 | Financial Development: Level, Depth, and Access

    • Calixte Ahokpossi, Patrick Imam, Kareem Ismail, Sudipto Karmakar, Christina Kolerus, and Mesmin Koulet-Vickot

  • 21 | Financial Inclusion

    • Monique Newiak and Rachid Awad

  • 22 | Financial Sector Stability

    • Patrick Imam and Christina Kolerus

  • 23 | Mobile Banking

    • Rachid Awad and Monique Newiak


  • 24 | Regional Trade Network

    • Alexei Kireyev

  • 25 | Macroeconomic Implications of Tariff Changes

    • William Gbohoui, Karim Barhoumi, Qiang Cui, and Monique Newiak

  • 26 | Foreign Investment in Government Debt

    • Patrick Imam

  • 27 | Integration and Poverty Reduction

    • Samuel Guerineau

  • Index


West African countries have made great strides in building monetary unity in the region. Its institutional core, the West African Economic and Monetary Union (WAEMU), has been central to the region’s successful adoption of a common currency, establishment of a common market, and the formation of institutions tasked with coordinating economic policies. And the eight individual WAEMU member countries—Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, Togo—are to be commended for their dedicated efforts in preserving macroeconomic stability, low inflation, fiscal integrity, debt sustainability, and a fixed exchange rate.

At the same time, WAEMU policymakers face major challenges: achieving high and inclusive growth, reducing poverty, managing commodity price volatility, and addressing domestic and external shocks. They have to balance pressing development needs against the imperative to maintain economic stability and contain government deficits. Regional growth remains uneven, and making decisive progress in reducing poverty does not come easily. Currently, international competitiveness of local products is not sufficient, regional trade is low, and the private sector needs more vibrancy to bolster growth and job creation.

This book takes stock of key developments in the WAEMU in recent years and sketches the agenda for reforms that could foster further growth, inclusiveness, and integration. Drawing on a wide range of work that captures the depth and breadth of the IMF’s analysis of the region, it covers such key issues as growth and inclusiveness, fiscal policy and coordination, single monetary policy, financial sector development and regional capital markets, along with trade and competitiveness. Furthermore, given the considerable interest in monetary unions in general, this book’s authors aim to outline the costs and benefits for policymakers in other countries contemplating joining an existing currency union or establishing a new one.

The IMF is committed to being a partner to help WAEMU countries manage the challenges, and we have stepped up efforts to support them through continued policy dialogue, increased capacity building, more analytical work, and additional financing.

This book is one facet of that continued commitment. It draws on international experience and contributions from regional policymakers, IMF and World Bank staff, and academics. The findings and policy discussions collected within focus on both the WAEMU as a whole as well as the individual circumstances of its member countries.

We hope this book will serve as a resource for policymakers in the region and for those more generally interested in monetary unions and low-income countries.

Christine Lagarde

Managing Director


This book provides a comprehensive analysis of the key macroeconomic and financial sector issues in the West African Economic and Monetary Union (WAEMU). It combines coverage of the various analytical topics with a discussion of the institutional setup of the economic and monetary union, and provides background information on the institutional and economic setting. An understanding of all of these areas is important for the formulation and successful implementation of sound policies.

This book completes the series of books on regional integrations in developing countries published recently by the IMF. Included among them are The CFA Franc Zone: Common Currency, Uncommon Challenges (C. Tsangarides and A-M. Gulde, editors, 2008); Oil Wealth in Central Africa: Policies for Inclusive Growth (B. Akitoby and S. Coorey, editors, IMF, 2012); The Eastern Caribbean Economic and Currency Union: Macroeconomic and Financial Systems (A. Schipke, A. Cebotari, and N. Thacker, editors, IMF, 2013); and The Quest for Regional Integration in the East African Community (P. Drummond, S. Kal Wajid, and O. Williams, editors, 2014).

The authors would like to express special thanks to Antoinette Sayeh, Roger Nord, and Ali Mansoor for guidance and encouragement. This book would not have been possible without the support of many economists and research assistants, cutting across a large number of IMF departments and the experts of the BCEAO, the WAEMU Commission, and the WAEMU Securities Agency. The authors would also like to express their appreciation for the useful comments and suggestions received from the authorities in the region during annual regional consultations with WAEMU institutions. The authors are also indebted to Bruno Cabrillac (Bank of France) and colleagues from the World Bank for their comments.

Yanmin Ye and Jessica Witten have provided research assistance and formatted the many figures and tables in record time. The authors would also like to thank Linda Kean and Patricia Loo for useful input. Most important, the authors would like to thank Lorraine Coffey for an outstanding job in copy editing the manuscript and Joseph V. Procopio of the IMF Communications Department, who managed the book’s editorial production from beginning to end.


Calixte Ahokpossi is an economist in the Strategy, Policy, and Review Department of the International Monetary Fund. He holds a Ph.D. in Economics from Boston University. His research interest includes fiscal and monetary policy, financial sector development, industrial organization, and international macroeconomics.

Karim Barhoumi is an economist in the African Department at the IMF. He holds a Ph.D. in applied econometrics from Marseille University in France. Prior to joining IMF, he worked as an economist at the French central bank and at the IMF Center of Economics and Finance in Kuwait. He has published in several international journals in the area of applied macroeconomics and short forecasting (Economic Modeling, Oxford Bulletin of Economic and Statistics, Journal of Policy Modeling).

Olivier Basdevant is a senior economist at the IMF. He holds a Ph.D. in economics from the Sorbonne University in Paris. Prior to joining the IMF he advised ministries of finance (Russia, Lithuania), as well as central banks (Estonia, New Zealand), on enhancing their economic forecasting tools. His publications have focused on economic modeling and forecasting, fiscal rules, strategies for fiscal adjustment, inflation targeting, and inclusive growth.

François Boutin-Dufresne is a strategist in economics and global markets. Prior to joining Pavilion Global Markets, he worked at the IMF, the Caisse de Dépôt et Placement du Québec, and the Government of Canada. In addition to his professional duties, François was also part-time professor at the University of Ottawa and the Université de Montréal. Over the past years, he has published several articles on global economics and finance for various audiences, including a book with the chief economist of the World Bank, Trajectories of the World Economy. In his career, he worked on a broad set of issues ranging from development economics and finance to global financial markets to developing and emerging markets both in the public and private sector.

Qiang Cui is an economist at the IMF. He has worked on economic research and policy in Africa, Asia, Europe, and the Carribean region. Previously, he also worked on economic policy and regional infrastructure issues at the World Bank and on public policy and private sector consulting in China and in the United States. He has published on macroeconomic and fiscal policy issues in Comparative Economic Studies, European Investment Bank Staff Papers, World Development, and several IMF and World Bank publications. He holds degrees of B.Sc. from East China Normal University and of MPA/ID from Harvard University.

Sébastien Dessus is a program leader at the World Bank, in charge of macroeconomic, governance, and poverty programs for Sahelian countries. He previously served as lead economist for Ghana, Sierra Leone, Liberia, and Guinea, as senior economist for Lebanon and West Bank and Gaza, and for the office of the World Bank Chief Economist. Prior to joining the World Bank, he served as a senior economist at the OECD Development Center. Sébastien Dessus holds a Ph.D. in economics from Paris 1 Panthéon-Sorbonne University, and has published extensively in academic journals and books on issues related to growth, trade, environment, poverty, political economy, and general equilibrium modeling.

Jose L. Diaz-Sanchez is an economist at the Office of the World Bank Chief Economist. He has also held assignments at the World Bank’s Independent Evaluation Group, the International Monetary Fund, and the Central Bank of Peru. He obtained his Ph.D. in economics from Paris 1 Panthéon-Sorbonne University (Paris School of Economics). Dr. Diaz-Sanchez has researched and published on macroeconomics topics such as housing macrolinkages, public finance, internal and external imbalances, and international finance.

Christine Dieterich is Deputy Division Chief in the IMF’s African Department and mission chief for Benin. Prior to joining the IMF, she worked in the German Ministry of Finance on international relations. Her main area of expertise is fiscal policy, in particular, tax policy and international macroeconomics.

Mame Astou Diouf is an economist in the Surveillance Policy Division of the IMF’s Strategy, Policy, and Review Department. She has worked extensively on the design of Fund surveillance policies. Prior to joining the IMF, she worked at the World Bank and in the telecommunications sector in Senegal. Dr. Diouf has a Ph.D. in economics from the Université de Montréal (Canada) and a master’s degree from Toulouse School of Economics (France) in econometrics, economics and statistics, and finance.

William Gbohoui is completing a Ph.D. in macroeconomics and public economics at the University of Montreal (Canada), where he also taught macroeconomics and econometrics. His research interests lie on quantitative macroeconomic theory, empirical macroeconomics, fiscal policy, and international trade. His ongoing research develops dynamic stochastic general equilibrium models to assess the implications of public policies. He also holds an M.Sc. in statistics and economics from ENSEA (Abidjan) and a B.Sc. in statistics from ENEAM (University d’Abomey-Calavi, Benin). Previously, he was a program officer at the Ministry of Labor in Benin. He also worked for the International Monetary Fund and the African Development Bank.

Samuel Guérineau is an associate professor, Université d’Auvergne (UDA) since 2003, researcher at the Centre d’Etudes et de Recherches sur le Développement International (CERDI), thesis supervisor since 2010, and director of studies of the School of Economics-UDA since 2012. He has been a consultant for the World Bank, UNDP, AFD, French treasury, French Ministry of Foreign Affairs, and BCEAO. His research is focused on macroeconomic policies in developing economies, mainly financial development, monetary, fiscal and exchange rate policies, and economic integration. His work has been published in French and English-speaking peer-reviewed journals. He has been an editor of a book dedicated to economic integration in the WAEMU and CEMAC.

Ermal Hitaj is an economist in the African Department at the IMF. He holds a Ph.D. in Economics from the University of Maryland–College Park. He previously worked as an economist at the Central Bank of Albania. Ermal’s work has focused on fiscal rules, remittances, public finance, and the political economy of development.

John Hooley is an economist in the African Department at the IMF. Prior to joining the Fund he was a senior economist at the Bank of England where he had held a number of roles across monetary policy, financial stability, and emerging markets. His publications to date have focused on cross-border capital flows and international shock transmission. John holds degrees in economics from the London School of Economics and Cambridge University.

Patrick Imam is a senior economist at the IMF. Since joining the Fund, he has worked on IMF programs and surveillance cases in the Middle East and Central Asia Department, the African Department, the IMF Institute, and more recently in the Monetary and Capital Markets Department. His publications have focused on issues related to financial stability, macropruden-tial policies, and financial sector development. Prior to joining the Fund, he worked as an Investment Banker at Credit Suisse First Boston in London. He has a Ph.D. in economics from Cambridge University.

Kareem Ismail is an economist at the Strategy, Policy, and Review Department of the International Monetary Fund. He holds a Ph.D. in economics from Johns Hopkins University. His research interest is mainly on fiscal, external, and financial implications from commodity price fluctuations on natural resource intensive economies.

Christian Josz is the Iraq Deputy Division Chief at the IMF. He has led missions to Chad, Mali, and the WAEMU and was senior economist on Senegal and Madagascar, assignments which gave him in-depth exposure to financial programming in the context of the use of IMF financial resources. Prior to joining the Fund, he was advisor at the Cabinet of the Minister of Economy of Belgium, financial analyst in a multinational company, and senior economist at the Belgian central bank with postings at the Belgian delegation to the OECD and the Office of the Belgian Executive Director at the IMF. He holds a master’s degree in business and engineering from the Université Libre de Bruxelles and a Master’s in Business Administration from the University of Toronto.

Sudipto Karmakar is an economist in the Financial Intermediation Division of the Economic Research Department at Banco de Portugal since 2013. He holds a B.Sc. in economics from Presidency College, Kolkata, an M.Sc. in economics from the University of Calcutta, and a Ph.D. in economics from Boston University. He conducts theoretical and empirical research on issues related to macroprudential regulation and real-financial sector linkages.

Alexei Kireyev is a senior economist at the IMF and former IMF representative to the WTO. He has led advance IMF missions to member countries, provided advice on macroeconomic policies to countries with IMF-supported programs, and reviewed IMF policy advice, financing, and technical assistance. Before his IMF career, he was an economic advisor to the president, economist at the World Bank, and professor of international economics at universities in Russia and the United States. His degrees include a master’s degree in economics from George Washington University and a Ph.D. (Doctor of Sciences) in economics from Moscow State Institute of International Relations. Dr. Kireyev has researched and published extensively on international economics and trade, applied macroeconomics, principles of economics, and the economic problems of low-income countries. His most recent publications include a two-volume book on International Microeconomics and International Macroeconomics.

Stefan Klos is a research analyst in the African Department of the IMF, concentrating mainly on Article IV research and program work for Mali, Guinea-Bissau, and WAEMU. Prior to his time at the fund, Stefan received a bachelor’s degree in mathematics and economics from Northeastern University in Boston. Topics of interest include governance, inequality, and their effects on economic performance.

Christina Kolerus is an economist at the Strategy, Policy, and Review Department at the IMF. Holding a Ph.D. from Mannheim University, she has worked in the Fiscal Affairs Department and African Department, in particular on WAEMU countries. Prior to joining the Fund, she was a consultant and visiting scholar at the OECD and ECB. Her published research includes areas such as fiscal policy, labor markets, and political economy.

Mesmin Koulet-Vickot is a senior economist at the International Monetary Fund (IMF). He graduated in economics from the University of Clermont-Ferrand (CERDI, France). Prior to joining the IMF, he worked at the Central Bank (BEAC) in the Research Department and as assistant to the deputy governor. His research interest includes monetary policy, financial sector development, and international macroeconomics.

Mario Mansour is Deputy Chief, Tax Policy Division, in the Fiscal Affairs Department of the IMF. Prior to joining the Fund in 2004, he worked at a Canadian consultancy as a lead economist on tax reform projects in the Middle East and the Eastern Caribbean regions (2000–03), and at the Canadian Department of Finance as a tax policy analyst (1992–2000). He has advised on tax policy issues in over 25 countries. His research work includes evaluation of investment tax incentives, modeling effective tax rates on capital income, microsimulation of revenue and distributional impacts of tax reform, estimation and analysis of tax expenditures, and more recently tax policy issues in Africa and the Middle East regions.

Monique Newiak is an economist in the African Department of the International Monetary Fund. She participated in several country and regional missions in Western Africa, including during the WAEMU 2015 regional consultation but also Article IV and IMF-program missions, including to Ghana, Senegal, The Gambia, and Guinea-Bissau. Before joining the African Department, she worked in the External Sector Unit of the IMF’s Strategy, Policy, and Review Department. Monique Newiak holds a Ph.D. from Ludwig-Maximilans-University in Munich, and master’s degrees in business administration and economics. Her research has focused on development economics, international economics, and the economics of gender.

Yasin Onder is an economist in the Research Department at the Central Bank of Turkey. He holds a Ph.D. in economics from the University of Georgetown. Yasin’s research has focused on sovereign default, bailouts, and financial stability.

Alexander Raabe is a research analyst at the IMF. He particiapted in a program negotiation mission to Ghana covering the real sector and contributed to publications in the area of fiscal and investment policy as well as financial integration. Prior to joining the IMF, he obtained a master’s degree in international economics from Johns Hopkins University’s School of Advanced International Studies and a bachelor’s degree in economics and corporate management from a leading business school in Germany. Mr. Raabe also worked at UNDP Malaysia, UNCTAD, and in the European and German foreign service in Thailand, Malaysia, and Mexico.

Grégoire Rota-Graziosi is full professor, Université d’Auvergne (UdA), researcher at the Centre d’Etudes et de Recherches sur le Développement International (CERDI), and senior fellow at the Fondation pour les Etudes et Recherches sur le Développement International (FERDI). He is also scientific editor of the Revue d’Economie du Développement. From 2010 to 2015 he was a senior economist in tax policy, Fiscal Affairs Department, at the IMF. He has led multiple technical assistance missions in French-speaking countries and particularly in WAEMU member countries. These missions reviewed countries’ general tax systems (direct and indirect taxation) and tax regimes of the natural resource sector. He published in several academic journals (American Economic Review, Journal of Public Economics, and Revue d’Economie du Développement) on tax competition, decentralization, and political economy.

Douglas Shapiro is a former research analyst at the International Monetary Fund. During his three years at the IMF he worked on the Guinea-Bissau, Gambia, Mali, Senegal, Niger, and WAEMU country teams. He dreams of a world where everyone has economic opportunity.

Sergio Sola is an economist in the Middle East and Central Asia Department of the IMF. He holds a Ph.D. in international economics from the Graduate Institute of International Studies in Geneva. His research focus is on fiscal and monetary policy, financial markets, and applied macroeconometrics.

Aristomene Varoudakis is an economic adviser at the Office of the World Bank Chief Economist. He has previously served as a lead economist and country manager at the World Bank’s Europe and Central Asia and Middle East and North Africa Departments and as an adviser at the World Bank’s Independent Evaluation Group. Prior to joining the World Bank, he served as a senior economist in the OECD Economics Department and the OECD Development Center. He is professor of economics, on leave from the University of Strasbourg, France, where he taught at the Institut d’Etudes Politiques and the Department of Economics. His research interests include macroeconomics and growth, development economics, public finance, international finance, and exchange rates. His work has been published in academic journals and collected volumes. He is the author or coauthor of four books.

Aleksandra Zdzienicka is an economist in the Strategy, Policy, and Review Department of the IMF. She holds a Ph.D. in international economics and finance from the University of Lyon and an M.Sc. in engineering studies from the Silesian University of Technology. Aleksandra previously worked as an economist at Centre d’Etudes Prospectives et d’Information Internationales in Paris and a consultant at the Economic Department of the Organization for Economic Co-operation and Development. She has published in international journals in the area of macroeconomics, international finance, and macroeconomics.



anti-money laundering/countering the financing of terrorism


automated teller machine


Banque Centrale des Etats de l’Afrique de l’Ouest (Central Bank of West African States)


Banque Ouest Africaine de Développement (West African Development Bank)


Bourse Régionale des Valeurs Mobiliéres (Regional Stock Exchange)


Communauté Économique et Monétaire de l’Afrique Centrale (Central African Economic and Monetary Community)


Common External Tariff


Communauté Financière Africaine (African Financial Community)


Corporate income tax


Common Market for Eastern and Southern Africa


Consumer price index


Conseil Régional de l’Epargne Publique et des Marchés Financiers (Regional Council of Public Savings and Financial Markets)


Central Deposit and Settlement Organization


East African Community


European Central Bank


Eastern Caribbean Currency Union


Error correction model


Economic Partnership Agreement


European Union


Foreign direct investment


General Agreement on Tariffs and Trade


Global Competitiveness Report


Gross domestic product


Generalized System of Preferences


Human Development Index


Heavily Indebted Poor Countries


Harmonized System


Investment code


International Country Risk Guide


International Financial Statistics


Harmonized Consumer Price Index


International Monetary Fund


Information Notice System


Low-income countries


Multilateral Debt Relief Initiative


Microfinance institution


Most favored nation


Mean log deviation


Monetary Policy Committee


Multilateral tax treaty


Nominal effective exchange rate


Nonperforming loan


Organization for Economic Cooperation and Development


Permanent establishment


Purchasing power parity


Poverty reduction strategy paper


Real effective exchange rate


Regional Economic Plan


rest of the world


Southern African Development Community


Small and medium-sized enterprise


Sub-Saharan Africa


Total factor productivity


Unit labor cost


United Nations Commodity Trade Statistics database


Vector autoregression


Value-added tax


West African Economic and Monetary Union


West African Monetary Union


World Customs Organization


World Economic Forum


World Economic Outlook


World Governance Indicators


World Trade Organization

Lessons in Managing Growth, Inclusiveness, and Volatility