This Selected Issues paper on Senegal revisits the challenges of emergence by tapping on the experience of other countries across the world that became emerging economies in the past two decades. It then looks at the preconditions needed for growth acceleration in Senegal. The paper also discusses options for strengthening Senegal’s fiscal framework to support Plan Sénégal Emergent (PSE) implementation while keeping risks of debt distress low. It provides an assessment of Senegal’s external stability and explores how to improve the structure of the Senegalese economy to make it more competitive with more diversified exports. The paper describes the electricity problem as a major impediment to growth acceleration. Improved revenue performance and expenditure composition are critical for creating the fiscal space to support the PSE. There is an opportunity cost for development spending, as the economy still faces bottlenecks from high electricity costs and insufficient electricity production. The share of the population living below the poverty line and its exposure to shock remains unacceptably high.
We compile a historical dataset covering nearly 40 years of booms and busts in the commodity terms of trade of over 150 countries. We discuss the characteristics of these events and their effects on macroeconomic performance and, in particular, compare the most recent commodity-price cycle with its historical precedents.
International Monetary Fund. External Relations Dept.
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This 2004 Article IV Consultation highlights that real GDP growth of Mauritius is expected to rebound to about 4½ percent in 2003/04. This largely reflects the recovery of tourism and sugar production, and continued strong construction and transportation activity. The current account is projected to remain in surplus with the recovery of the tourism sector offsetting a widening in the trade deficit. The capital and financial account is projected to register a small deficit of 0.8 percent of GDP in 2003/04 compared with a surplus in 2002/03.
Mr. James Y. Yao, Mr. Gamal Z El-Masry, Padamja Khandelwal, and Mr. Emilio Sacerdoti
Mauritius has achieved remarkable success since its independence in 1968. It has one of the highest per capita GDPs in Africa, the economy has diversified from complete dependence on the sugar crop, into textiles, then tourism, and recently information and communication services. This paper examines the factors that have contributed to this impressive growth, including macroeconomic stability, a solid institutional framework, political stability, an efficient administration, a favorable regulatory framework, and a well-developed financial system, and outlines the challenges that remain to ensure continued sustainable growth in Mauritius.
Preference erosion has become an obstacle to multilateral trade liberalization, as beneficiaries of trade preferences have an incentive to resist reductions in mostfavored- nation (MFN) tariffs. This study identifies middle-income developing countries that are vulnerable to export revenue loss from preference erosion. It concludes that the problem is heavily concentrated in a sub-set of preference beneficiaries-primarily small island economies dependent on sugar, banana, and-to a lesser extent-textile exports. Accordingly, measures to help mitigate the impact of preference erosion can be closely targeted at the countries at risk.
Mr. Arvind Subramanian, Aaditya Mattoo, and Mr. Devesh Roy
This paper describes the United States recently enacted Africa Growth and Opportunity Act (AGOA) and assesses its quantitative impact on African exports. The AGOA expands the scope of preferential access of Africa's exports to the United States in key areas such as clothing. However, its medium term benefits estimated at about US$100-$140 million, an 8 11 percent addition to current non-oil exports would have been nearly five times greater (US$540 million) if no restrictive conditions had been imposed on the terms of market access. The most important of these conditions are the rules of origin with which African exporters of clothing must comply to benefit from duty-free access.
This Selected Issues paper and Statistical Appendix analyzes the labor market of Mauritius. It highlights that the high level of youth unemployment in Mauritius points to deficiencies in education and training. There are also significant rigidities in the functioning of the labor market that aggravate the problem. In particular, the Mauritian labor market is highly regulated and the relevant institutions operate according to a legalistic approach in which economic criteria play a relatively minor role.