Back Matter

Jean-Pierre Briffaut; George Iden; Peter C. Hayward; Tonny Lybek; Hassanali Mehran; Piero Ugolini; Stephen M Swaray

Previous Chapter

Back Matter

Author:

Jean-Pierre Briffaut

Jean-Pierre Briffaut https://isni.org/isni/0000000404811396 International Monetary Fund

Search for other papers by Jean-Pierre Briffaut in
Current site
Google Scholar

Mr. George Iden

Mr. George Iden
Search for other papers by Mr. George Iden in
Current site
Google Scholar

Mr. Peter C. Hayward

Mr. Peter C. Hayward
Search for other papers by Mr. Peter C. Hayward in
Current site
Google Scholar

Mr. Tonny Lybek

Mr. Tonny Lybek
Search for other papers by Mr. Tonny Lybek in
Current site
Google Scholar

Mr. Hassanali Mehran

Mr. Hassanali Mehran
Search for other papers by Mr. Hassanali Mehran in
Current site
Google Scholar

Mr. Piero Ugolini

Mr. Piero Ugolini
Search for other papers by Mr. Piero Ugolini in
Current site
Google Scholar

, and

Mr. Stephen M Swaray

Mr. Stephen M Swaray
Search for other papers by Mr. Stephen M Swaray in
Current site
Google Scholar

Language:: English

Keywords:: OP; central bank; government; market; payment; monetary policy

Download PDF (7.9 MB)

Abstract

This study takes stock of progress made so far in the financial sectors of sub-saharan African countries. It recommends further reforms and specific measures in the areas of supervision, development of monetary operations and financial markets, external sector liberalization, central bank autonomy and accountability, payments system, and central bank accounting and auditing.

Appendix I Statistical Tables

Table A1.

Indicators of De Jure Central Bank Autonomy and Accountability in Selected Sub-Saharan

Note: See accompanying notes for definitions of the weights that are associated with the various indicators.

^{^*}Law is under review.

^¹Provisions in legislation on labor contracts not inconsistent with the central bank law may provide some guarantees against arbitrary dismissal.

^²Dismissals for breach of qualifications and misconduct are explicit, but it is not made explicit that these are the only reasons for dismissal.

^³The West African Monetary Union and the BCEAO were established in November 1973, but were supplemented by the WAEMU treaty, which was ratified in August 1994. Benin, Burkina Faso, Côte d'lvoire, Mali, Niger, Senegal, and Togo are members.

^⁴The council of ministers can overrule the board, while the board can overrule the national committees, which may have some authority over direct monetary instruments. These committees include government representatives. However, while there are sound provisions for sharing information between the governments and the central bank, it is not explicitly stated that the council of ministers shall publish its decisions and forward them to the legislature, and neither is it stated—as, for instance, in the statutes of the European Central Bank—that the board shall not take instructions from national governments.

^⁵Should external liquid assets be exhausted, the BCEAO shall require that external liquid assets held by the states of the WAMU be surrendered for the benefit of the BCEAO in return for currency issued by it (Article 20 of the Treaty Establishing the West African Monetary Union).

^⁶The council of ministers, with a representative from each country, appoints the governor, while the government of each country appoints executive directors, thus ensuring a balanced view.

^⁷The national monetary committees, with representatives from the respective ministries of finance, may influence the board. WAMU's council of ministers ultimately determines the monetary and credit policy.

^⁸The Central African Monetary Area and the BEAC were established in November 1972 and consist of Cameroon, the Central African Republic, Chad, the Republic of Congo, Equatorial Guinea, and Gabon. The CAEMC was established in March 1994, but the customs union has not yet been ratified. The national monetary committees, with representatives from the respective ministries of finance, have some authority, but can be overruled by the board, which appears to have more authority than the board of the BCEAO, where this authority is split with the council of ministers.

^⁹A three-fourths majority vote is needed t o dismiss the governor (Article 43).

^¹⁰When international reserves have declined and the situation persists, the governor may decline to issue further foreign exchange permits (Article 50.3).

^¹¹Only duly audited annual profit and loss statements shall be published (Article 14); there is no explicit requirement to publish a more frequent summary balance sheet.

^¹²The permanent secretary to the treasury participates in the board meetings, but without the right to vote (Article II.c). However, the president may waive disqualification requirements; that is, the president can allow government representatives to become members of the board (Article I4.c.ii).

^¹³The president can appoint executive directors exempted from qualification requirements and later dismiss them (Article 14).

^¹⁴Advances to the government are limited to 5 percent of the budgeted revenue of the current fiscal year. The central bank may apparently underwrite government securities in the primary market (Article 46).

^¹⁵Banking supervision is handled by an agency separate from the central bank.

^¹⁶In exceptional cases, the 15 percent ceiling may be increased by legislation to 20 percent for a maximum period of six months (Article 28).

^¹⁷The central bank law only requires account statements to be published every three months.

^¹⁸The governor-general defines misconduct (Article 6.12).

^¹⁹Terms are apparently staggered.

^²⁰Dismissals only for “a just cause” (Article 45).

^²¹Implicit in Article 51 that board members cannot at the same time work for or represent the government.

^²²It is ambiguous if the limit for overdrafts (Article 18) includes or excludes loans for the government (Article 19).

^²³Advances and the central bank's holding of government securities shall not exceed 25 percent of the average annual revenue of the three fiscal years immediately preceding (Article 47).

^²⁴Advances and the central bank's holding of government securities, including government securities used as collateral, shall not exceed II percent of the annual average of ordinary revenue recorded the preceding three fiscal years (Article 58).

^²⁵Higher interest rates, explicitly stipulated in the law, the more the government uses its overdraft facility (Article 54).

^²⁶If the minister of finance is of the opinion that the central bank does not comply with the act, he or she may ask the board to remedy the situation within a specified time. If the board fails to comply, the minister of finance may apply to the supreme court (Article 37).

^²⁷No explicit provision for dismissal; however, the fact that the shareholders elect half the board provides some guarantee against arbitrary dismissals.

^²⁸The clearly defined objective of price stability, entrenched in the constitution, implicitly limits direct credit to the government.

^²⁹No explicit requirement for the government to ensure the solvency of the central bank, but international reserves are traded for the profit and loss of the government (Articles 25–28).

^³⁰The minister of finance may recommend that the prime minister instruct the central bank, provided the government accepts the responsibility, but such directives are not explicitly required to be published (Article 54).

^³¹Directors of the board are not explicitly prevented from being government representatives.

^³²Advances and the central bank's holding of government securities, including government securities used as collateral, shall not exceed 20 percent of the annual average of ordinary revenue recorded in the preceding three fiscal years (Article 47.2).

^³³However, such instructions are not to be laid before the legislature (Article 10).

^³⁴The board may determine that the interest rate shall be different from the market rate (Article 34).

^³⁵The central bank shall implement and give effect to government policies the minister of finance may convey to the governor, but it is not explicit that such instructions shall be published or subject to discussions by the legislature.

^³⁶The central bank shall not advance funds to the government, except in special circumstances (Article 49). Such advances, purchases of government securities in the primary market, or any other form for extension of credit to the government shall not exceed 15 percent of ordinary revenue of the previous financial year (Article 50).

^³⁷Although the current law is not explicit on publication of policy statements, the central bank currently publishes policy statements twice a year.

Notes:

This index is based on components from the index on central bank independence by Grilli, Masciandaro, and Tabellini (1991) and Cukierman (1992) and from the index on accountability by Briault, Haldane, and King (1996). For an overview of legal indexes for central bank autonomy, see, for example, Eijffinger and de Haan (1996). Practice may have developed differently from the formal legislation. For instance, the central bank may primarily use indirect monetary instruments, or it may publish monetary policy statements twice a year, although it is not obligated to do so under the current law. In some countries, unofficial translations of the central bank law have been used.

This legal index gives only a rough indication of the extent to which the existing central bank law formally supports central bank autonomy and accountability, but does not describe the central bank's de facto autonomy. The relevant indicators are subjectively weighted to achieve a maximum weight of 21. The weighting (¼, ½ ¾ or 1) is subject to discussion, and so are the elements included in the index and their interpretation. The definitions of the weights associated with the various indicators are as follows:

Objectives

Economic policy

Financial system

Policy

Monetary policy

Foreign exchange

Coordination

Conflict resolution

Political autonomy

Term of governor

Appointment of governor

Dismissal of governor

Government representation on board

Term of board members, excluding ex officio members

Appointment of board members

Dismissal of board members

Economic autonomy

Limits

Interest rates

Securitization

Quasi-fiscal activities

Monetary instruments

Solvency

Accountability

Publication of statements

Audit

Table A1.

Indicators of De Jure Central Bank Autonomy and Accountability in Selected Sub-Saharan

Country/Year of Most Recent Amendment of Central Bank Law														Economic Autonomy
			Policy	Political Autonomy	Political Autonomy	Credit to Government
	colspan="2">Objective	Monetary	Foreign exchange	Coordination	Resolution	Governor	Board	Limit	Interest rate	Securitization	Quasifiscal	Instruments	Solvency	Accountability
	Economic	Monetary	Foreign exchange	Coordination	Resolution	Financial	Term	Limit	Interest rate	Securitization	Quasifiscal	Instruments	Solvency	Appointer	Dismissal	Gov. rep.	Term	Appointer	Dismissal	Publication	Auditing	Index (Total = 21)
Angola, 1991*	1	¾	1M	¼M	½	—	—	—	—¹	1	¾	1	—²	½	—	½	¾	¾	1	¾	¾	Index (Total = 21)	11¼
BECAO, I973³	1	¾	¼M⁴	1M⁵	½⁴	¼⁴	1	1⁶	—	½⁷	—	1⁶	—	¼	1	—	—	⅝	¾	½	¾	11⅛
BEAC, I985⁸	1	¾	½M⁸	1M	½⁸	½⁸	¾	1⁶	¼⁹	½⁷	—	1⁶	—	¼	¾	—	—	¾	¼	½	1	11¼
Botswana, 1996	¾	¾	1F	¼M	½	1	¼	—	1	½	—	—	1	¾	½	—	¾	¾	¾	¾	1	12¼
Ethiopia, 1994	¾	¾	1F	¼M¹⁰	¼	¼	—	—	—	—	—	—	—	½	1	—	1	⅝	⅔	¼	¾¹¹	8 $\frac{1}{24}$
Ghana, 1992	¼	¾	1F	¼M	½	½	¾	¼	½²	½	—	—	½²	¼	½	—	—	¾	⅔	¾	¾	9 $\frac{5}{12}$
Kenya, 1997	1	¾	1F	1F	1	1	½	—	1	1¹²	¾	—	½¹³	¾	1	1	1	⅞	1	1	1	17⅛
Lesotho, 1984*	¼	¾	1F	¼M	½	¼	¼	1	1	—	—	—	1	½¹⁴	¾	¼	1	¾	1	¾	¾	12
Madagascar, 1994	1	1¹⁵	1F	1F	¾	½	½	¼	¾	1	½	1	1	½¹⁶	¼	—	1	¾	1	¾	1¹⁷	15½
Malawi, 1989	¼	¾	1M	¼M	¼	—	¾	—	—	—	—	—	—	¼	¾	¼	—	¾	1	¾	1	8¼
Mauritius, 1974*	¾	¾	¾F	¼M	½	—	¼	—	½¹⁸	1	¼¹⁹	¼	½¹⁸	¼	¾	—	—	¾	½	¾	1	9¾
Mozambique, 1992	1	¾	1F	1F	¾	½	¾	—	—²⁰	1²¹	¾	—	—²⁰	¼²²	—	—²²	¼	⅝	⅔	¼	½	10 $\frac{1}{24}$
Namibia, 1990*	¼	¾	1M	1M	½	¾	¾	1	¾	—	—	1	¾	¼²³	1	—²³	1	⅞	⅔	½	1	13 $\frac{19}{24}$
Rwanda, 1981*	¾	¾	1M	¼M	½	—	—	1	—	—	¼	1	—	¼²⁴	½²⁵	—²⁴	½	⅝	⅔	¾	1	10 $\frac{1}{24}$
South Africa, 1996	1	¾	1F	1F	1	1²⁶	¾	1	—¹¹	1	—	1	½²⁷	¼²⁸	¾	—	1	⅞	¾²⁹	¾	1	15⅜
Swaziland, 1986	¼	¾	1M	¼M	¾	¾³⁰	¼	1	—¹¹	—³¹	—	—	—¹¹	¼³²	¾	—³²	—	¾	⅔	¾	1	9⅙
Tanzania, 1995	1	¾	1F	1F	1	¾³³	¾	—	—¹¹	¼	—	—	¼	½	½	—	1	⅞	⅝	1	1	12¼
Uganda, 1993	½	¾	¾F	¾F	¾	1	¾	1	—¹¹	—³¹	¾	—	—¹¹	¾	¾³⁴	—	—	¾	⅔	¾	1¹⁷	11⅔
Zambia, 1996	¾	¾	1F	¾M	½	—³⁵	¼	1	—	—³¹	—	—	—	½³⁶	¼	—³⁶	1	⅝	1	1	1	10⅜
Zimbabwe, 1984*	—	—	1F	1F	—	—³⁵	¾	½	¾	1	—	½	¾	¼	—	¼	—	⅝	1	—³⁷	1	9½