The Gambia: Selected Issues

This Selected Issues paper examines economic developments in The Gambia during 1994–98. Although real output growth slowed significantly in the early 1990s and turned negative in 1994/95, both 1997 and 1998 were characterized by an upswing in real economic activity. The 1994/95 output decline of 3.4 percent was primarily owing to a significant downturn in tourist activity. The recovery in the tourist sector and the more favorable weather conditions led to real GDP growth of 4.9 percent in 1997 and an estimated real growth rate of 4.7 percent in 1998.


This Selected Issues paper examines economic developments in The Gambia during 1994–98. Although real output growth slowed significantly in the early 1990s and turned negative in 1994/95, both 1997 and 1998 were characterized by an upswing in real economic activity. The 1994/95 output decline of 3.4 percent was primarily owing to a significant downturn in tourist activity. The recovery in the tourist sector and the more favorable weather conditions led to real GDP growth of 4.9 percent in 1997 and an estimated real growth rate of 4.7 percent in 1998.

I. Overview of Recent Economic Developments1

A. Background

1. The Gambia is a small open economy, located on the west coast of Africa; it extends inland for 320 kilometers along both banks of the river Gambia, at widths varying from 24 to 48 kilometers. The only land borders of the country are with Senegal. With a population of 1.2 million (1997) and population growth of 3.6 percent per year (average, 1980-96, including migration), the country’s population density, estimated at 109 inhabitants per square kilometer, is one of the highest in the world.

2. In the decade following independence in 1965, The Gambia maintained broadly stable macroeconomic conditions and exhibited modest economic growth. In the subsequent years, however, economic performance deteriorated significantly as a result of adverse terms of trade shocks and significant domestic borrowing to finance the budget deficit. The increased reliance on government intervention in allocating credit and promoting economic development, primarily in the agricultural sector, and the lack of competition in the economy created an unsustainable economic environment. In 1985, the authorities embarked on an ambitious Economic Reform Program (ERP), succeeded in 1990 by the Program for Sustained Development (PSD). The military coup of July 1994 interrupted nearly three decades of multiparty democracy and adversely affected the economic reforms that had been implemented. In the aftermath of the coup, negative travel advisories by key tourist countries resulted in a significant drop in tourism receipts, which led to a further deterioration of economic performance. In addition, reinforcement of border and transit controls by Senegal, started in 1993, resulted in a sharp decline in reexport trade until 1995/96.

3. The presidential elections of September 1996 and the parliamentary elections held in January 1997 marked the end of the transition period from military to civilian government and helped to establish the conditions for resuming donor support and economic reforms. In 1998, the IMF approved a three-year arrangement with The Gambia under the Enhanced Structural Adjustment Facility (ESAF).

B. Real Sector Performance

Developments in output, savings, and investment

4. While real output growth slowed significantly in the early 1990s and turned negative in 1994/95, both 1997 and 1998 were characterized by an upswing in real economic activity (Tables 14-16). The 1994/95 output decline of 3.4 percent was primarily due to a significant downturn in tourist activity, attributable to the 1994 coup which resulted in negative travel advisories by key tourist countries and thus a drop in tourism receipts of some 60 percent. The recovery in the tourist sector and the more favorable weather conditions led to real GDP growth of 4.9 percent in 1997 and an estimated real growth rate of 4.7 percent in 1998.

5. The production and export of groundnuts has long been the main sector of the Gambian economy. Owing to climatic and institutional problems, however, groundnut production declined steadily from a high of 129,000 metric tons in 1989/90 to a low of 45,800 metric tons in 1996/97; meanwhile, planted areas were reduced from 100,000 hectares in 1989/90 to 68,100 hectares in 1996/97 (Table 18). The privatization of the Gambia Oilseeds Processing and Marketing Company (GOPMAC), the successor of the Gambia Produce Marketing Board (GPMB), in 1993, did not lead to the expected rehabilitation of the groundnut sector, or to the introduction of more competition in the procurement, processing, and export of groundnuts. Producer prices remained stagnant, with no increase in 1998 over the preceding year (Table 19). The downward trend in groundnut production was somewhat reversed in the last two years; in 1997 and 1998, groundnut production increased by some 70 percent and 7 percent, respectively, mainly due to more favorable weather conditions. In 1998, the authorities closed the Groundnut Cooperative Union (GCU), reached an agreement on the settlement of its nonperforming loans to the Standard Chartered Bank of The Gambia (see Chapter IV), and are in the process of liquidating it.

6. Production of the other major crops has increased significantly since 1994/95, with a slight decline in 1996/97, primarily on account of weather conditions. The output of millet increased by more than 30 percent from 1994/95 to 1997, but declined in 1998. Maize production, which had been declining until 1997, grew by almost 45 percent in 1998, while rice output increased by 9 percent in 1998 after a 30 percent increase in 1997. After a significant increase in 1995-96, fisheries production declined by 48 percent in 1998, due to structural problems in the sector, including insufficient shipping and storage capacity at the port of Banjul, and the migration of industrial fishing activities to Senegal.

7. The performance of the services sector has been strongly influenced by reexport trade and tourism, although their high import content has limited the scope for improving employment and income levels in The Gambia. After a significant drop in the number of tourists and travel receipts in the aftermath of the July 1994 military coup, earnings from tourism started to recover in 1995/96, but the record level of 1993/94 was surpassed only in 1997. Because the number of tourist arrivals in 1998 increased by 14½ percent over the previous year (Table 20), output in the services sector increased by about 6 percent in real terms. The Gambia’s small industrial sector grew by 5.3 percent, largely due to an increase of 8 percent in the construction sector and of almost 10 percent in energy production (Table 21).

8. The Gambian authorities do not compile national accounts by expenditure category, and staff estimates are derived using data from the external and fiscal accounts (Table 17). These estimates indicate that gross national savings have increased in every year since 1995/96; in 1998, gross national savings are estimated to have increased to 14½ percent of GDP from a low of 10 percent in 1995/96, on account of both higher government and private savings. Total domestic investment reached a peak of almost 23½ percent of GDP in 1995/96 and a level of 19.3 percent in 1996/97 on account of D 180 million and D 150 million foreign-financed extrabudgetary spending, respectively. On the other hand, the increase in domestic investment from about 17 percent of GDP in 1997 to 18.4 percent in 1998 was driven by a substantial increase in private investment (including the public enterprise sector), which more than offset a 2½ percentage point decline in government investment.

Developments in prices, employment, and wages

9. Price movements in The Gambia, as measured by the consumer price index (CPI), are closely related to price developments in the reexport sector because the food commodities, such as rice, sugar, and flour, that are predominant in reexport trade also have a dominant weight in the domestic consumption basket.2 Inflation, as measured by the CPI, has been in the single digits throughout the 1990s and under 3 percent since 1996 (Table 22). In 1998, the average annual inflation rate fell to 1.1 percent from 2.8 percent in 1997 on account of tight monetary policy. Because of seasonal factors, mainly related to higher food prices, inflation increased in midyear; during the last quarter of 1998, however, the higher inflation rate was primarily due to a lower basis at end-1997.

10. Public sector nominal wage scales have not been changed since 1996/97 (Table 23). However, because of the built-in seniority wage drift of about 2-3 percent per annum, real wages have marginally increased since 1997 on account of the low inflation. On the other hand, nominal minimum private sector wages for laborers did not increase in 1997 and went up only modestly in 1998 (Table 24), thus slightly declining in real terms. The increase in the public sector wage bill of 5 percent in 1998 over 1997 was due to both the increase in public sector employment (primarily teachers and nurses) and the wage drift.

11. Employment data for The Gambia are incomplete. On the basis of information collected in the 1982/83 census and the 1992/93 household survey, changes in employment on a sectoral basis reflected changes in the composition of output. In the years between the 1982/83 census and the 1992/93 household survey, agricultural employment declined from 77 percent to 64 percent. At the same time, the share of employment in trading and other services sectors increased from 8 percent to 18 percent. Given the increased importance of the services sector and the substantial increase in tourist activity, this development is likely to have continued in 1998. The actual public sector employment (including health and education sectors) grew from 12,125 at end-1997 to 12,666 at end-1998, or by 4½ percent even though the number of budgeted positions increased only by 1.1 percent (Table 25).

C. Fiscal Policy


12. After the military coup, an overly expansionary fiscal stance resulted in unsustainable fiscal deficits (excluding grants), which rose from 2¼ percent of GDP in 1993/94 to about 12 percent in 1995/96 (Tables 26 and 27). The deterioration in the fiscal position was due to a drop in government revenue that resulted from lower reexport trade, fewer tourist arrivals, and the granting of duty exemptions. To finance the deficits, the government resorted to domestic borrowing from the banking sector and the public enterprises through the issuance of treasury bills. As a result, domestic debt increased from 12½ percent of GDP in mid-1993 to 22½ percent at end-1997, while domestic interest payments rose from 9½ percent of total government revenue in 1992/93 to 1914 percent in 1997. In 1998, the authorities succeeded in reducing the overall deficit (excluding grants) to 4½ percent of GDP and increasing the basic primary balance to 5.7 percent from 4.9 percent in 1997. However, because of a significant shortfall in external financing equivalent to about 6 percent of domestic revenue, the government increased its recourse to domestic financing. Domestic debt outstanding in 1998 increased to about 26 percent of GDP and domestic interest payments rose further to 21.7 percent of total government revenue. In addition, in view of the large negative errors and omissions (more than 3½ percent of domestic revenue in 1998), certain expenditures may not have been properly accounted for, and an estimated D 12 million of arrears on payments due to the public enterprises accumulated.

Domestic revenue

13. In 1998, domestic revenue declined to 18.8 percent of GDP from 19.3 percent in 1997 on account of lower domestic sales tax and nontax revenue. Direct tax revenue increased by one-tenth of 1 percentage point to 4.2 percent of GDP, driven by increases in both personal and corporate tax revenues (Table 27). Capital gains tax revenue declined by 13 percent from a high of D 10 million in 1997; collections in 1997 were mainly due to three large one time sales. Indirect tax collection declined to 12.8 percent of GDP from 13.2 percent in 1997 due to lower-than-expected collection from tax on international trade. With reexports registering a significant increase in 1998 (see below), the underperformance was mainly due to the lack of tangible progress in strengthening the customs and excise unit and, to a lesser degree, to the implementation of the first stage of the tariff reform (see Chapter III). Despite the surge in oil imports of 26 percent in 1998, the collection of the associated duty and sales tax decreased by 1½ percent compared with 1997, mainly on account of duty exemptions and insufficient collection efforts. The higher fixed domestic pump prices made local distributors less competitive than those across the border, prompting the government to lower pump prices effective January 8, 1999 by reducing the duty, flumara3, and sales tax on oil imports.4 Effective August 17, 1998, the domestic sales tax of 10 percent was extended to professionals.5 However, collections of the tax thus far have been negligible as the Department of State for Finance and Economic Affairs (DoSFEA) has not fully implemented collection due to complaints by certain groups of professionals.

14. Non-tax revenue in 1998 was two-tenths of one percent of GDP lower than in 1997, despite the 68 percent increase in the payments of interest and dividends by public enterprises. The decline was mainly attributable to lower government services and charges and a much smaller profits transfer from the Central Bank of The Gambia (CBG) to the budget. The smaller CBG profits transfer (smaller by D 13.4 million, or more than 1½ percent of domestic revenue) was due to the one time cost of minting new coins and the increased interest cost of issuing CBG bills for liquidity management purposes.

Domestic expenditure

15. Current expenditure, which increased from some 17½ percent of GDP in 1995/96 to 19.1 percent of GDP in 1997, declined to 18.1 percent in 1998, mainly on account of significantly lower government purchases of goods and services (Table 26). Nevertheless, the increase in the size of the civil service by 4½ percent over 1997 resulted in an increase in the wage bill of about D 6 million. Despite lower nominal interest rates in the last quarter of 1998, higher domestic borrowing led to a significant rise in domestic interest payments from about 19½ percent of domestic revenue in 1997 to 21¾ percent in 1998.

16. Capital expenditure in The Gambia declined from 7 percent of GDP in 1997 (excluding extrabudgetary spending) to 5.8 percent in 1998 because of significantly lower external loan disbursements (the equivalent of 6.2 percent of domestic revenue). In addition, principal loan repayments by public enterprises increased by almost 50 percent (see below).

Developments in the public enterprise sector

17. In the late 1980s, The Gambia made significant progress in divesting 22 public enterprises. The remaining parastatals became subject to performance contracts overseen by the National Investment Board (NIB). After the liquidation of the NIB in 1994, the DoSFEA took charge of the financial management of the remaining enterprises. Enforcing hard budget constraints on these entities was a priority for the authorities, but staffing restrictions and political intervention with their management remained pressing problems. At the beginning of 1998, the government and the ten remaining public enterprises (Table 31) agreed to an offsetting arrangement in the context of memoranda of understanding (MOU) for the mutual financial obligations that had been incurred as of end-July 1997.6 The stock of arrears was converted into loans of the public enterprises, and a schedule for principal and interest repayments was also agreed upon. Despite the MOUs, however, at end-1998, a number of public enterprises, most notably the telecommunications company (GAMTEL) and the water and electricity company (NAWEC), had accumulated significant arrears on their principal and interest due, while the government had also accumulated significant obligations to the public sector. It is estimated that about D 12 million of the amount owed by the government is significantly past due and represents arrears.

18. In the context of the Fund-supported ESAF program, the authorities have been working on a divestiture strategy for the public enterprise sector. However, lack of clarity on the role that the government and the private sector will play in the development of the economy has delayed the adoption of such a strategy. At end-1998, the ten public enterprises employed more than 3,150 people, or about 25 percent of total public sector employment.

D. Developments in the Monetary Sector


19. Achieving and maintaining price stability has been the key objective of monetary policy under the CBG Act in 1992. However, the interruption of the structural adjustment programs by the military coup in 1994 made achievement of this goal more difficult; as a result, average annual inflation as measured by the consumer price index increased to almost 7 percent in 1995 after falling to 1.7 percent in 1994. Since 1990, the CBG has used mainly indirect instruments of monetary policy, most notably through the auction and discounting of treasury bills (since 1986), and, increasingly, CBG bills (since 1990) (Chapter IV). Important steps were taken after 1992 and, especially, in 1998, to improve the institutional environment for conducting monetary policy. Chapter IV discusses the reform efforts to improve the soundness of the banking system, increase the efficiency of financial markets, and enhance financial sector competition. Despite the expansionary fiscal stance in recent years, the tight monetary policy resulted in a low inflation rate and high real interest rates. However, broad money grew by an average 11 percent between 1994/95 and 1996/97, with the increase being twice as large in 1996/97 than in the earlier two years. In 1996/97, the net domestic assets of the banking system doubled after a decline of almost 50 percent in 1995/96.

Monetary developments in 1997-98

20. Monetary policy during 1997-98 was aimed at keeping inflation low while providing sufficient credit to the private sector to keep pace with the rebound in economic activity after the 1994 military coup. The growth in broad money of 10 percent in 1998, down from

22 percent in 1997, was primarily due to an increase in the net foreign assets of the banking system of almost 18 percent (Tables 32-34). However, while the foreign liabilities of the CBG declined significantly resulting in an increase in its net foreign assets, the net foreign assets of the commercial banks decreased, leading to a scarcity of foreign exchange in the interbank market in the latter part of 1998. At the same time, the growth rate of net domestic assets decreased from 68 percent in 1997 to -6 percent in 1998. Deposit liabilities of the commercial banks grew by 16 percent, slightly higher than the 15½ percent increase in 1997. As the fiscal deficit relied more on nonbank financing in 1998, net claims on the government declined by D 20 million (almost 2 percent of beginning-of-period broad money), and growth of credit to the private sector slowed to 15 percent from 27 percent in 1997.

21. The falling inflation rate in 1997-98 was achieved against an increased build-up of domestic debt, as the CBG continued to sell sizable amounts of treasury and CBG bills for budget deficit financing and liquidity management purposes. As a result, the treasury bill rate remained unchanged at 16 percent from October 1995 until October 1998 (Table 35). In view of the tightened fiscal policy in the first nine months of 1998, the treasury bill rate gradually declined to 14 percent by December 1998, but remained very high in real terms. The spread between lending and deposit rates also remained high at some 8 percent over the period (Table 36) on account of the lack of flexibility in setting of the rates and the remaining structural issues in The Gambian economy (Chapter IV).

22. In the mid-1980s, the government began a process of financial sector liberalization (Chapter IV). Key elements of the reform process were the strengthening of the role and authority of the CBG and the rehabilitation of the banking system, mainly through the restructuring of the main commercial bank in that period, the Gambia Commercial and Development Bank (GCDB). The Central Bank of The Gambia Act (1992) improved the CBG’s ability to formulate and implement independent monetary policy, while the Financial Institutions Act (1992) made the CBG the sole regulator and licensor of financial institutions in The Gambia, in accordance with the Basle core principles. As a result of the reforms, the financial system in The Gambia has improved but still remains fragile, given the relatively early stage of development of the economy. The banking system is highly concentrated, as one large bank, with more than half the market share, dominates the market.

E. External Sector


23. Imports for domestic use increased by 14½ percent in 1998, with oil imports, which constitute about 10 percent of such imports, growing by more than 26 percent (Table 41). The revival in the groundnut sector led to a 177 percent increase in the exports of groundnut products, while fish and cotton exports declined. Reexports grew by almost 20 percent. The current account deficit worsened by one-half of 1 percentage point to 11 percent of GDP in 1998, mainly because of higher imports and related transportation outlays. There were substantial private capital inflows, mainly suppliers’ credits. The overall balance of payments improved from SDR 4.7 million in 1997 to SDR 6.2 million in 1998. Gross official reserves increased to SDR 75.4 million (5.2 months of import cover), and external debt service obligations were met as scheduled.

Reexport trade

24. Reexport and transit activities in The Gambia developed in the early 1920s, when the favorable geographical situation of the port of Banjul made it easy for traders to supply the neighboring countries with foodstuffs, textiles, and footwear. By the end of the Second World War, the large resident expatriate houses, which supplied goods to wholesalers in the neighboring countries, were well established in The Gambia.

25. The reexport trade is the largest foreign exchange earner for The Gambian economy. In 1998, reexports represented 27 percent of GDP, slightly down from 28 percent in 1994/95. Growth of the reexport sector was especially buoyant in the 1980s and 1990s, when The Gambia floated its domestic currency, started opening its foreign exchange and domestic goods markets, and further liberalized its foreign trade regime. The real appreciation of the CFA franc up to 1994 also contributed to the relatively lower cost of importing goods through the port of Banjul, as compared to the other locations in the subregion.

26. Following the reinforcement of border and transit trade controls by Senegal in 1993, the reexport trade shrank by 32 percent from 1992/93 to 1995/96. The Gambia’s competitive advantage resulting from the overvaluation of the CFA franc and from policy-induced distortions in the neighboring countries was reduced following the devaluation of the CFA franc in January 1994 and the subsequent acceleration of reforms in the CFA zone countries. The military coup in 1994, which led to the suspension or cancellation of assistance by most traditional donors, also worsened the situation. The harmonization of the tariff systems of the CFA zone countries7 has forced The Gambia to introduce significant tariff reforms in order to maintain its external competitiveness (Chapter II). As of July 1, 1998, the maximum duty rate was reduced from 90 percent to 25 percent (except for alcohol, tobacco, and vehicles) and the number of import duties from 30 to 18. The resulting revenue loss was estimated at about D 5½ million (one-tenth of 1 percent of GDP). As of January 1, 1999, the authorities further reduced the top duty rate for all goods to 20 percent and introduced excise taxes (revenue taxes) and environmental taxes for vehicles, alcohol, tobacco, soap, wheel-barrows, nails, and confectionary sugar (see Summary of Tax System) to limit revenue losses.


27. Tourism is The Gambia’s second most important source of foreign exchange earnings. As a result of the implementation of the structural reform programs in the late 1980s, the tourism sector expanded considerably, with the number of tourists in 1993/94 increasing by 37 percent relative to 1991/92. However, because of the travel advisories issued in the aftermath of the July 1994 military coup, tourist arrivals declined by about 52 percent during the 1994/95 season, resulting in a drop in travel income of two-thirds. Since 1995/96, the sector has been recovering steadily, and in 1998 tourist arrivals increased by 14.6 percent over the previous year. However, because of the slim profit margin of the tourism sector, travel income increased by only 7 percent.

28. Due to competitive pressures, The Gambia’s tourist industry operates under a tight profit margin. Typically, European charter tour operators package tours for the major hotels in the Gambia. The CBG estimates that local hotel accommodation accounts for only one-third of the retail price of such a tour. The remaining two-thirds reflect the cost of air transportation, operating costs, and profit margins of the tour operators. In addition, most of the inputs used in the tourist industry are imported; hotels are also heavy consumers of electricity, which contributes significantly to the local operating costs. Therefore, The Gambia depends largely on low labor costs and possible economies of scale derived from large numbers of charter tourist arrivals. In the last several years, The Gambia has been able to diversify its markets by attracting a significant number of tourists from countries other than the United Kingdom, most notably Germany.

Developments in external debt

29. A detailed debt sustainability analysis for The Gambia was undertaken in 1998 (EBS/98/102) and an update, based on aggregate data, indicates that at end-1998, the net present value of the debt stock and debt service amounted to 105 percent and 9¾ percent of exports of goods and nonfactor services, respectively. By 2001, these ratios would decline to 90 percent for the net present value of debt and 8.2 percent for the debt service. On this basis, the country’s external debt is sustainable under the parameters used in the context of the Heavily Indebted Poor Countries (HIPC) initiative. In 1998, total external debt increased slightly to SDR 315 million from SDR 309 million in 1997 (Table 46). About 80 percent of The Gambia’s debt is owed to multilateral donors and less than 2 percent is to private creditors. In 1998, the external debt service ratio decreased by more than 3 percentage points to 10.2 percent of total exports and travel income. All external debt service payments were met in a timely fashion.

Exchange rate developments

30. The Gambia has operated a liberal exchange rate system since the introduction of an interbank foreign exchange market in the context of the floating of the dalasi in 1986. In January 1993, the authorities accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Fund’s Articles of Agreement. There are no exchange controls or restrictions on current or capital transactions. For the commercial banks registered in The Gambia, the CBG sets a limit on the amount of foreign exchange they can hold (Chapter IV). In addition, banks are not allowed to hold foreign currency deposits.

31. Despite the negative shocks from the Asian financial crisis and the political instability in Guinea-Bissau, the exchange rate has remained relatively stable (Table 47). In 1998, the nominal exchange rate of the dalasi vis-à-vis the U.S. dollar depreciated by 5 percent and the nominal exchange rate vis-à-vis the SDR depreciated by 3 percent. The nominal and real effective exchange rates have been relatively stable since the depreciation of the CFA franc in 1994, except for a sharp decline in October 1998, caused primarily by the appreciation of the Japanese yen vis-à-vis the U.S. dollar.

32. Several factors help explain the relative stability of the dalasi. First, the turbulence in the world financial markets has not had a significant impact on The Gambia, as reexport trade, which provides a significant fraction of The Gambia’s foreign exchange earnings, has been growing rapidly. In addition, reexport traders have been able to minimize the negative impact of the political instability in Guinea-Bisau by redirecting their activities through other neighboring countries. Second, because the main foreign exchange earners (reexport trade and tourism) are also heavy users of foreign exchange, the dalasi has not come under pressure from the rapid increase in the volume of trade or the number of tourist arrivals. Third, the major interbank market participants are also the major holders of treasury securities. They have an interest in foreign exchange stability because it underpins price stability, which, in turn affects the real return on treasury securities in the banks’ portfolios. In the face of a potential scarcity of foreign exchange, banks prefer not to bid the rate up in the interbank market, but to either borrow from their foreign owners or partners, or ration the amount of foreign exchange offered to their customers.


Prepared by Ivailo Izvorski with Christian H. Beddies.


The weight of foodstuffs in the domestic consumption basket is 58 percent, while that of clothing, textiles, and footwear is 1714 percent. Among the other major components, fuel and light account for 5.4 percent, and housing for 5.1 percent.


The difference between the (fixed) pump price and the (fluctuating) import price, inclusive of the dealer’s margin, duty, and sales tax.


The pump price of petrol (gasoline) was reduced from D 8.5 to D 7.75 per liter. The price of gas oil was lowered from D 6.5 to D 5.5 per liter, and that of kerosene from D 3.27 to D 2.3 per liter. The duty and sales tax on kerosene were abolished.


Includes lawyers, builders, accountants, engineers, architects, video hire, laundry and dry cleaners, recording studios, surveyors, hairdressers, and newspaper advertisements.


The public enterprises owed the government about D 97 million, while the government owed the public enterprises D 72 million.


As of January 1, 1999, the West African Economic and Monetary Union (WAEMU) countries impose a maximum tariff of 25 percent on final consumption goods, a maximum of 10 percent on intermediate goods, and a maximum of 5 percent on raw materials and intermediaries. The maximum tariff on final consumption goods would further be reduced to 20 percent from January 1, 2000. For more details, see The West African Economic and Monetary Union: Recent Developments and Policy Issues, Ernesto Hernández-Catá and others, Occasional Paper No. 170 (Washington: International Monetary Fund, Washington DC).