Senegal: Recent Economic Developments
Author:
International Monetary Fund
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Publication Date:
20 Aug 2000
eISBN:
9781451833850
Language:
English
Keywords:
ISCR; CR; Senegal; CFA franc; service sector; enterprise; import authorization; import tariff; import protection; restrictiveness index; WAEMU imports; Tariffs; Imports; Exports; Trade policy; Trade barriers
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Public consumption has declined from 12 percent of GDP in 1996 to 10.8 percent in 1999 owing to fiscal consolidation: wage increases are moderate, and other current expenditures have grown slowly. Conversely, private consumption has increased from 75.2 percent of GDP in 1996 to 76.9 percent in 1998, and is estimated to have reached 76.6 percent in 1999. Public investment has increased from 6.4 percent of GDP in 1996 to 7.2 percent of GDP in 1998 and is estimated to have reached 8.2 percent of GDP in 1999, whereas private investment has experienced a downward slide.

Abstract

Public consumption has declined from 12 percent of GDP in 1996 to 10.8 percent in 1999 owing to fiscal consolidation: wage increases are moderate, and other current expenditures have grown slowly. Conversely, private consumption has increased from 75.2 percent of GDP in 1996 to 76.9 percent in 1998, and is estimated to have reached 76.6 percent in 1999. Public investment has increased from 6.4 percent of GDP in 1996 to 7.2 percent of GDP in 1998 and is estimated to have reached 8.2 percent of GDP in 1999, whereas private investment has experienced a downward slide.

V. Recent Developments in Trade Policy36

A. Introduction

76. In the 1970s and 1980s, Senegal maintained a complex and comprehensive system of tariff exemptions and price and import controls aimed at limiting foreign competition and ensuring the availability on the domestic market of goods considered essential. Special agreements were granted to selected private and state-owned enterprises reflecting the “dirigiste” nature of economic policymaking. In the second half of the 1980s and in the early 1990s, a substantially overvalued exchange rate, lagging international competitiveness, and the fear of a significant decline in industrial output, as well as a shortfall in tariff revenues, proved to be a strong disincentive to the authorities for dismantling this protectionist system.

77. With the price competitiveness of exports improving markedly after the devaluation of the CFA franc in January 1994, a window of opportunity for Senegal to embark on comprehensive price liberalization and trade reform opened. Senegal’s trade-weighted real effective exchange rate declined by about 30 percent following the devaluation.37 Subsequently, price controls were progressively lifted, and the number of items requiring import authorization was reduced. This latter practice was discontinued altogether by end- 1995. However, it was only in the context of the regional initiative to establish a customs union among the member countries of the West African Economic and Monetary Union (WAEMU) in 1997 that trade reform gained a more prominent place on Senegal’s policy agenda.

78. This note summarizes the developments in Senegal’s trade policy since 1997, which were primarily driven by the implementation of the WAEMU common external tariff (TEC) and the elimination of intra-area customs duties for eligible products. It first describes the predominant patterns of trade and the role of trade policy in the Senegalese economy.38 It then outlines the trade reform agenda since 1997 and its likely potential for reducing the level of import protection, including the scope for the introduction of compensatory protectionist measures. This is followed by a brief assessment of the economic adjustment pressures on Senegal from the WAEMU-inspired trade reform.

B. Trade Patterns and Trade Policy

79. Senegal’s trade patterns have largely developed from historical ties, particularly those with France, but they also reflect endowments of climate and certain natural resources, as well as the development of port facilities for trade. Its main goods export revenues are derived from exporting fish, phosphates, and groundnut products. These three principal export products account for more than half of total exports. About 11 percent of total exports are reexported goods, as Senegal’s exports serve several neighboring countries (especially Cote d’lvoire, Mali, and Mauritania). The significant decline in Europe’s share of Senegal’s exports (including reexports) since 1995 has been accompanied by a corresponding increase in the share of Senegalese goods exported to other African countries and to Asia. Also, Asia has now surpassed Europe in importance as an export destination. This shift in trade orientation reflects the decline in world prices for Senegal’s export commodities shipped to industrial countries, as well as the growth of intra-WAEMU shipments of petroleum products (mostly to Mali) and the increased demand for industrial products from Senegal in the WAEMU region and in Asia.39 The bulk of Senegal’s imports (over 80 percent) are capital and intermediate goods, food products, and crude and refined petroleum. The origin of imports to Senegal has remained relatively stable over the past several years, with European, and especially French, suppliers playing a dominant role.40

80. The concentration on a small range of commodities exported to industrialized countries, particularly in Asia and Europe, indicates a strong link to the demand conditions in these countries. These trade patterns are distinct from intraregional exports to WAEMU and Mauritania, which comprise a variety of processed goods. However, trade among WAEMU members remains limited relative to overall trade transactions to and from the region, which are dominated by Cote d’lvoire and Senegal. At present, therefore, the internal market for the kinds of tradable goods on which the countries of WAEMU have specialized remains narrow. In addition, poor infrastructure and communications links, as well as divergent legal frameworks that lack transparency, have also hampered intraregional trade.

81. In formulating trade policy, Senegal has traditionally attached considerable importance to the fact that the trade regime has a large bearing on the composition of domestic production. Past experience with import protection as a means of fostering domestic industries continues to strongly influence the authorities’ policy stance on trade. Prior to the WAEMU tariff reforms, Senegal relied primarily on import tariffs as a policy instrument to influence trade flows and the allocation of resources within its economy. While there were no trade restrictions on the export side, imports were subject to a complex tariff system aimed at fostering imports of certain categories of goods deemed necessary or desirable by the authorities. While barriers on imports that could potentially crowd out local production were maintained, these customs regulations differentiated between consumption, industrial inputs, and investment imports.41 The level of import protection accorded to the domestic industry with this system was substantial (see below).

82. The scope for economic distortions created by Senegal’s trade regulations, centering on the import side and on tariffs, nevertheless appeared to be mitigated by the limited extent of other forms of trade protection. Quantitative trade barriers were limited, and there were no restrictions on payments for current transactions.42 In addition, the tariff regime defined a large number of tariff exemptions that reduced the number of products actually covered by import tariffs, thus lowering the overall effective level of protection. At the same time, however, these exemptions were highly distortionary and increased the scope for administrative discretion, discriminatory treatment, and rent-seeking behavior (Box 4). Furthermore, business activities falling under the legislation on Free Export Companies (i.e., by export-processing enterprises) were fully tariff exempt.43

Tariff Exemption in Senegal

According to the Senegalese customs administration, imports amounting to a total value of about CFAF 227 billion were tariff exempt in 1998. This implied a loss in customs revenue of approximately CFAF 60 billion (2.2 percent of GDP or 8.3 percent of goods imports). Senegal waives customs duties for various types of imports for economic, diplomatic, humanitarian, and military reasons. Imported goods falling into the following broad categories are generally exempt from the tariff regime:

  • Exemptions based on the investment code and other legal statutes. These are given to individual companies and organizations in conformity with the respective legal provisions (i.e., the investment, petroleum, and mining codes, the statute on Free Export Companies, and the convention on the establishment of a major domestic enterprise). Five large, partially or fully state-owned industrial enterprises were the principal beneficiaries of such exemptions in 1998. The value of exempted investment-related imports was 59.4 percent of total exempted imports, thus representing the bulk of forgone tariff revenues.

  • Conditional exemptions. These are accorded by the authorities on the basis of contracts or international treaties and are subject to specified conditions. They include, in particular, diplomatic privileges and contracts involving governments and nongovernmental development agencies. Exemptions under this heading are also given to the French armed forces stationed in Senegal, the Senegalese army, and the hospital of Dakar. In 1998, 30.4 percent of exempted imports were due to conditional exemptions.

  • Special exemptions. These apply to various kinds of foreign aid to government ministries, such as imports of medicine, and medical equipment, as well as books and other educational material. Donations to the Red Cross and other welfare organizations are tariff exempt. Aid destined for nongovernmental and other organizations also fall into this category of exemptions.

Source: Senegalese authorities.

C. Trade Reform since 1997

83. In 1997, Senegal agreed to make major adjustments to its trade policies in the context of the WAEMU initiative to establish a common external tariff among member countries and gradually remove intraregional barriers to trade. It also committed itself to eliminating its codes de précisions44 in the process of implementing WAEMU’s common temporary import surcharges (see below). After some delay in reaching a decision within the WAEMU Council of Ministers, the TEC entered into force effective July 1, 1998. On that date, the import categories applicable to all WAEMU countries were harmonized and reduced from seven to four. Lower import duties and a higher permanent preferential tariff exemption (PPT) on authorized industrial products of WAEMU origin45 were phased in over the subsequent 18– month period. Since January 2000, the statutory tariffs rates of the four tariff categories have been set at 0, 5, 10, and 20 percent and the PPT at 100 percent, i.e., a zero tariff rate is applied to most WAEMU-internal trade.46 Furthermore, the authorities have taken steps to reduce administrative costs and limit the scope for discretionary treatment when effecting trade transactions, for example, by promoting the services of Trade Point Senegal (Box 5).

Facilitating Customs Procedures Through Trade Point

Trade Point Senegal is part of the Global Trade Point Network, an initiative launched by the United Nations in 1992 to foster the integration of small and medium-sized enterprises in developing countries into the world trading system. It offers trade facilitation services to Senegalese businesses based on up-to-date computer technology that significantly reduces information and transaction costs. For a small fee, enterprises can open an electronic account that gives them access to the global database of Trade Point. Trade Point Senegal is a public foundation, primarily financed by the Senegalese government.

In addition to its “matchmaking” activities, Trade Point has launched a system to facilitate the administrative processes required for trade to and from Senegal. This system, called ORBUS 2000, is ultimately envisaged to link all actors involved in trade transactions, including banks, via the internet. In principle, all ministries that require trade documentation should be linked to Trade Point, which should allow for a workflow entirely in electronic form (instead of necessitating sometimes multiple visits to the various ministries). Companies will be able to address themselves exclusively to Trade Point to complete the necessary formalities for trade transactions. It is envisaged that the format of the official documentation required by the ministries involved will eventually be harmonized. Among the considerable challenges facing Trade Point is the need to gain acceptance for ORBUS within the administration. In particular, the support by the tax and customs administrations and the compatibility between the Trade Point network and their computer systems will be crucial for the success of ORBUS.

84. In order to alleviate the negative impact—likely to be temporary—on local production from lowering the level of tariff protection, three WAEMU-wide supplementary safeguard mechanisms were introduced to replace former surtaxes on certain (mainly primary commodities) imports. These protectionist mechanisms are the following:

  • Temporary surtaxes (taxe dégressive de protection). This instrument aims at giving temporary protection to industries that put forward a request to a national trade commission. The WAEMU Commission decides on these requests on the basis of the loss in effective protection suffered by the applicants from the introduction of the TEC. The instrument consists of a surtax of 10 percent or 20 percent, declining linearly over four years, with the rates reduced in a first step to 7.5 percent or 15 percent, as applicable, at the beginning of 2000.

  • Compensatory import levies (taxe conjoncturelle à I’importation). This tax seeks to protect domestic industries from external shocks stemming from fluctuations in world prices of certain primary commodities. An administrative trigger price, which is periodically reevaluated, serves as the base for calculating the import levy in case of large downward movements in commodity prices.

  • Administratively set customs valuations (valeurs de référence). This safeguard measure allows certain import product categories to be valued administratively, rather than according to actual transaction values, for customs purposes. As this represents an exception to the general World Trade Orgnization (WTO) agreements, WAEMU members have requested a temporary exception to the WTO’ s customs valuation rules.

85. The changes in Senegal’s tariff regulations reflecting the new WAEMU tariff regime for both extra- and intraregional trade are presented in Tables 7 and 8. This comparison of the regulatory status quo in Senegal at end-1997 and at the beginning of 2000 shows that the tariff structure has become more transparent and less dispersed and protectionist than before. An important step has been the full abolition of the codes de precisions as a trade policy instrument by end-1999. However, the system remains complex and does not entirely do away with discretionary elements, such as special surcharges and tariff exemptions. The liberalization effect will crucially depend on how extensively the protectionist safeguard measures introduced in parallel will be used. The reduction of trade protection, as measured by the lowering of average tariff rates (Table 9), therefore does not fully account for remaining nontariff barriers. A change in overall trade restrictiveness can also be assessed using the IMF’ trade restrictiveness index (Box 6).

Table 4.

Senegal: Exports by Commodities, 1992-99

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Sources: Senegalese authorities, Fund staff estimates.

Change in total volume in constant prices (Paasche index).

Table 5.

Senegal: Imports by Commodities f.o.b., 1992-99

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Sources: Senegalese authorities; and Fund staff estimates.

Change in total volume in constant prices (Paasche index).

Table 6.

Senegal: Direction of Foreign Trade, 1992-99

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Sources: Senegalese authorities; and Fund staff estimates.
Table 7.

Senegal: Import Tariff Structure, 1997 and 2000

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Source: Senegalese authorities.

Levied on consumption goods imports from non-WAEMU countries. Exemptions from this tax include gift to the government, imports in the context of donor assistance, petroleum products, etc.

Table 8.

Senegal: Comparison of Trade Regulations, 1997 and 2000

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Source: Senegalese authorities.
Table 9.

Senegal: Measures of Import Protection, 1997 and 2000

(In percent)

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Sources: Senegalese authorities: and Fund staff calculations.

Based on the Broad Economic Classification (BEC) of the United Nations and the Harmonized System of Product Nomenclature (HS 1996 version) prepared by the World Customs Organization (Brussels).

Excluding the customs stamp of 5 percent. See SM/98/256, Table 28.

Excluding the statistical tax of 1 percent. Based on the number of tariff positions of the WAEMU common externel tariff adopted by the WAEMU Council of Mini and implemented in January 2000. See SM/99/316, Table 18.

86. One of the main features of the WAEMU trade reform is the introduction of common safeguards for key sectors, as described above, alongside the reduction and harmonization of statutory tariff protection. This approach may lead members to push for more extensive protection under the safeguard instruments, thereby undermining the progress achieved in agreeing on a more open trade policy stance. This could occur if members seek to expand the list of products to be accorded special common (protectionist) treatment. A WAEMU member may request modifications of the TEC regulations, which, if approved by the WAEMU Commission or the WAEMU Council of Ministers, will apply to all members. Alternatively, a member country could maintain or introduce nontariff barriers unilaterally The de facto level of import protection may thus remain stable or even increase.

Senegal’s Trade Regime and the IMF’s Trade Restrictiveness Index

As a tool for measuring the overall restrictiveness of a trade regime, the IMF developed an index of trade restrictiveness. This index combines the main elements of trade protectionism, namely the unweighted average level of statutory tariffs and the coverage of nontariff barriers (NTBs) in relation to trade and production. These elements are synthesized to allow for a classification on a 10-point scale with 1 denoting the most open and 10 the most restrictive trade regime. As of 1998, Senegal was classified as having a rather restrictive trade regime. Its overall index number (8) mirrored both notable tariff protection and a number of NTBs, such as, for example, licensing requirements. A preliminary assessment of the trade reforms in the context of WAEMU integration, which took effect at the beginning of 2000, suggests an improvement in Senegal’s restrictiveness rating of about three points on the scale since 1998. This assessment takes account of the lowering of statutory tariff rates to a simple unweighted average of about 12 percent.

Sources: Sharer (1998); and Fund staff estimates

87. The relative economic and political weight of members within WAEMU plays an important part in such considerations of a politico-economic nature.47 As a dominant country in the region, Senegal has been persistent in defending its domestic interests in negotiations with its WAEMU partners. In fact, the consensual agreement among WAEMU participants on tariff classifications and safeguards (for example the agreed lists of exemptions under the safeguard mechanisms) primarily reflects the interests of Cote d’lvoire and Senegal, the two largest countries within WAEMU.

D. Adjustment Pressures from Trade Liberalization

88. The objectives of exploiting comparative advantages, deepening economic linkages, and improving the prospects for growth for the region as a whole have been the main rationales for the agreement among WAEMU members to move ahead with the regional agenda for trade reform since mid-1998. As part of broader structural reforms, it was deemed essential, on balance, to improve the regulatory framework for trade, even though the related fiscal pressures and structural adjustment costs appeared significant. Judging from current trade patterns and developments, however, economic integration among WAEMU countries has yet to result in a significant strengthening of intraregional trade, investment flows, and obvious gains from trade creation.

89. By way of a qualitative assessment of the impact of WAEMU trade reform on Senegal, it has to be recognized that the removal of import restrictions is both welfare enhancing and reducing. In fact, an adjustment of domestic production structures in response to changed relative prices is necessary if potential welfare gains are to be reaped over time. This points to the fact that the costs of adjustment may be felt earlier than the benefits. The economic implications of the WAEMU-inspired trade reform for the domestic economy can be compared to the effects following a revaluation of the nominal exchange rate. However, the relative price change that the trade reform involves is not comprehensive, and the demand and supply effects will only affect some sectors and product categories.48

90. The liberalization of imports, while likely to be economically beneficial in the longer term, does entail exposing the domestic economy to stronger competition from abroad – a development that will speed up the necessary restructuring of hitherto-protected industries. This consequence will not be accepted easily in the domestic political setting. A judgment on the balance of costs and benefits for Senegal will be determined by two types of considerations. First, WAEMU trade reforms will further open the domestic market to imports, which will foster competition in prices and quality in those sectors that have been shielded from foreign competitors. Producer rents that have formerly accrued to sheltered sectors will shrink while consumers are likely to profit from lower prices, particularly for food products. However, cheaper imports for capital and intermediate goods will lower production costs and improve the cost competitiveness of all producers, whether supplying the home market or selling abroad. Second, the lowering of import tariffs among WAEMU members will also open foreign markets. It presents an opportunity for Senegalese exporters to extend their reach into other countries within the customs union. In this respect, Senegal’s geographic location is nevertheless less advantageous than that of Côte d’Ivoire as it directly borders only on two other WAEMU members (Mali and Guinea-Bissau). To the extent that there is untapped market potential, particularly for processed goods, Senegalese firms could increase production destined for intra-area exports.

91. All in all, implementing the WAEMU initiative on the TEC will entail a significant loss of import protection for Senegal, which will be reflected in the magnitude and the relative importance of the welfare effects discussed above. However, further analysis would be required to quantify these effects, and no attempt in this regard is made here. As concerns the budgetary impact of the import tariff reductions, the fiscal revenue losses for Senegal are significant. Fund staff estimates, based on a detailed analysis of import categories, indicate that the expected fiscal cost from the full implementation of the TEC will be about 1 percent of GDP49 Several sources of additional income are being made available to cover this gap – first and foremost domestic tax revenues. Senegal will harmonize the value-added tax at the rate of 18 percent as of July 1, 2000. Also, the regional tax (Prélèvem ent Communautaire de Solidarité) may be used among WAEMU members to compensate countries for lost revenue related to intraregional tariff reform.50 In addition, the World Bank and the European Union (EU) have pledged conditional financial support for Senegal in order to cushion the implementation of the TEC.51 Increased efforts at domestic revenue mobilization and external financial support will thus mitigate the immediate fiscal impact of the tariff reductions.

APPENDIX

Table 10.

Senegal: GDP by Economic Sector at Constant 1987 Prices, 1992-99

(In billions of CFA francs)

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Source: Senegalese authorities.
Table 11.

Senegal: GDP by Economic Sector at Constant 1987 Prices, 1992-99

(Annual percentage changes)

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Source: Senegalese authorities.
Table 12.

Senegal: Supply and Use of Resources at Current Prices, 1992–99

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Source: Senegalese authorities.
Table 13.

Senegal: Level of Rainfall on the Groundnut Basin, 1960/61–1999/2000

(In millimeters)

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Source: Senegalese authorities.

The level of rainfall refers to the period May-October of the first year shown

Table 14.

Senegal: Production and Disposition of Groundnuts (Unshelled), 1991/92–1998/99 1/

(In thousands of metric tons)

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Source: Senegalese authorities.

Crop year (November-October)

Including handpicked select.

Including sales in the parallel market.

Table 15.

Senegal: Cereals Balance, 1991/92–1998/99 1/

(In thousands of metric tons, unless otherwise indicated)

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Source: Senegalese authorities.

Crop year (November-October); data may not add up because of rounding.

Table 16.

Senegal: Estimates of Production, Area Under Cultivation, and Yields of Principal Crops, 1991/92–1998/99 1/

(Production in thousands of metric tons; area in thousands of hectares; yield in metric tons per hectare)

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Source: Senegalese authorities.

Crop year (November-October).

Table 17.

Senegal: Producer Prices of Main Agricultural Products, 1991/92–1998/99 1/

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Sources: Senegalese authorities; and staff estimates.

Crop year (November - October). By December 1999, the producer prices for all agricultural products had been liberalized, except those for oil groundnuts, cotton, and paddy; the price of paddy was liberalized in June 1994. The producer prices for oil groundnuts and cotton are determined by a committee representing the farmers, the marketing agencies, and the government, taking into account

Table 18.

Senegal: Fish Catch by Domestic and Foreign Vessels, 1992–98

(In thousands of metric tons)

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Source: Direction de l’Océanographie et des Pêches Maritimes.

Domestic catch only for 1993-96.

Table 19.

Senegal: Foreign Fish Catch by Vessel Nationality, 1992–98

(In thousands of metric tons)

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Source: Direction de l’Océanographie et des Pêches Maritimes.
Table 20.

Senegal: Evolution of Livestock, 1992–98

(In thousands of heads)

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Source: Ministry of Rural Development.
Table 21.

Senegal: Indices of Industrial Production, 1992–98

(1976 = 100)

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Source: Senegalese authorities.
Table 22.

Senegal: Production of Principal Mineral and Industrial Products, 1992–98

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Source: Senegalese authorities.
Table 23.

Senegal: Production, Sales, and Prices of Lime Phosphates, 1992–98

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Sources: Conipagnie Sénégalaise des Phosphates de Taiba (CSPT); and Société Sénégalaise des Phosphates de Thiés (SSPT)

Includes lime, clinker, and attapulgite.

Table 24.

Senegal: Imports of Crude and Refined Petroleum Products by the Société Africaine de Raffinage (SAR), 1992–99

(Volume in tons; value in millions of CFA francs)

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Source: Société Africaine de Raffinage (SAR).
Table 25.

Senegal: Exports of Refined Petroleum Products by the Société Africaine de Raffinage (SAR), 1992–99

(Volume in tons; value in millions of CFA francs)

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Source: Société Africaine de Raffinage (SAR).
Table 26.

Senegal: Retail Prices of Liquid Petroleum Products, June 1985–November 1999

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Source: Senegalese authorities.

Prices to large consumers.

Table 27.

Senegal: Trends in the Tourism Sector, 1992–98 1/

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Source: Ministry of Tourism.

Figures may differ from thoser in the services and transfers accounts because of differents methods used for recording data

Table 28.

Senegal: Public Investment, 1993–98

(In billions of CFA francs, unless otherwise indicated)

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Source: Direction de la coopération écontimique el financiére.
Table 29.

Senegal: Index of Consumer Prices for 1991-99

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Source: Senegalese authorities.

From 1998 onward, the harmonized West African Economic and Monetary Union index is u rebased as 1996 = 100

Annual change for annual data; change over four quarters for quarterly data.

Table 30.

Senegal: Price Control System

(As of July 1999)

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Source: Senegalese authorities
Table 31.

Senegal: Nominal and Real Minimum Wages, July 1981-September 1999

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Sources: Senegalese authorities; and staff estimates.

Calculated using the consumer price index for the average Senegalese family.

Table 32.

Senegal: Government Financial Operations, 1993-991

(In billions of CFA francs)

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Sources: Senegalese authorities; and staff estimates.

Foreign financial assistance for externally financed capital outlays of the central government.

The external debt-service figures include all debt directly contracted by the government and the part of the government-guaranteed debt serviced by the government.

Consisting of outlays for materials, supplies, maintenance, subsidies, other current transfers, and unclassified expenditure.

Deficits are added to expenditure, while surpluses are deducted. The treasury’s special accounts exclude net repayments in the Debt Amortization Fund and National Energy Fund, and investment expenditures relating to the Fifth and Sixth Plans, which are shown separately.

Includes debt rescheduling from the London and Paris Clubs and other official bilateral creditors, and commercial bank rescheduling.

Includes errors and omissions and privatization receipts.

Table 33.

Senegal: Fiscal Performance, 1993-99

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Source: Senegalese authorities; and staff estimates.

Includes the treasury’s special and correspondent accounts, and outlays for the banking system reform and voluntary departure programs.

Table 34.

Senegal: Outstanding Payments Arrears of the Central Government, 1993-99

(In billions of CFA francs; end of period)

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Source: Senegalese authorities.
Table 35.

Senegal: Budgetary Revenue, 1993-99

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Source: Senegalese authorities.

Includes the customs duty, the fiscal duty, the stamp duty, and surtaxes. Surtaxes generate no more than CFAF 1 billion a year.

Excluding petroleum products.

Table 36.

Senegal: Structure of the External Tariff, 1994-98

(In percent of import value)

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Sources: Senegalese authorities; West African Economic and Monetary Union (WAEMU); and staff estimates.

Based on the Broad Economic Classification (BEC) of the United Nations and the Harmonized System of Productive Nomenclature (HS 1996 version) prepared by the World Customs Organization (Brussels)

Excluding the custom stamp duty of 5 percent.

On the basis of the tariff reform implemented in April 1998.

Based on the categorization of products adopted by the West African Economic and Monetary Union (WAEMU) Council of Ministers in July 1998 and the tariff structure (excluding the statistical tax) adopted in November 1997 for implementation in January 2000.

Table 37.

Senegal: Current Budgetary Expenditure, 1993-99

(In billions of CFA francs)

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Source: Senegalese authorities.

Including scheduled interest on government debt serviced by the Caisse Autonome d’Amonissement (CAA) through a treasury special account.

Table 38.

Senegal: Government Wage Bill and Number of Civil Servants, 1993-99

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Source: Senegalese authorities.

Excluding technical assistants and employees in process of retirement. In 1999, number are those of September.

Table 39.

Senegal: Minimum and Maximum Salaries for Selected Civil Servants, 1993-99

(CFA francs per month)

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Source: Senegalese authorities.

Salary levels have remained unchanged since April 1994

Table 40.

Senegal: Social Expenditures, 1993-99

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Sources: Senegalese authorities; and staff estimates.
Table 41.

Senegal: Monetary Survey, 1994 -991

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Source: Central Bank of West African States (BCEAO).

Excluding the balance sheets of the liquidated banks, and using the data from the new commercial banks’ accounts forms, which resulted in a revision of (he classification of foreign and domestic assets, as well as the classification of government and nongovernment deposits.

Includes revaluation account.

Table 42.

Senegal: Summary Accounts of the Central Bank, 1994-99 1

(In billions of CFA francs)

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Source: BCEAO.

Excluding the balance sheets of the liquidated banks, and using the data from the new commercial banks’ accounts forms, which resulted in a revision of the classification of foreign and domestic assets, as well as the classification of government and nongovernment deposits.

Table 43.

Senegal: Summary Accounts of the Commercial Banks, 1994-99 1/

(In billions of CFA francs)

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Source: BCEAO.

Excluding the balance sheets of the liquidated banks, and using the data from the new commercial banks’ accounts forms, which resulted in a revision of the classification of foreign and domestic assets, as well as the classification of government and nongovernment deposits.

Caisse Nationale de Crédit Agricole du Sénégal (CNCAS).

Banque Sénégalo - Tunisienne (BST)

Table 44.

Senegal: Banking System Claims on Central Government, 1994-99. 1

(In billions of CFA francs)

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Source: Central Bank of West African States (BCEAO).

Exeluding the balance sheets of the liquidated banks, and using the data from the new commercial banks’accounts forms, which resulted in a revision of the classification of foreign and domestic assets, as well as the classification of government and nongovernment deposits.

Caisse nationale de Crédit agricole du Sénégal (CNCAS).

Banque Sénégalo - Tunisienne (BST).

Table 45.

Senegal: Factors Affecting the Money Supply, 1994-99 1

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Source: Table 41.

Excluding the balance sheets of the liquidated banks, and using the data from the new commercial banks’ accounts forms, which has allowed a revision of the classification of foreign and domestic assets, as well as the classification of government and nongovernment deposits.

Not including securities held by local nonbank investors and by investors from other West African Economic and Monetary Union (WAEMU) countries for 1994 and 1995.

Table 46.

Senegal: Indicators of Financial Savings, 1994-99 1

(In percent of GDP, unless otherwise indicated)

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Sources: Senegalese authorities; IMF, International Financial Statistics; and staff estimates.

Excluding the balance sheets of the liquidated banks, and using the data from the new commercial banks’ accounts forms, which has allowed a revision of the classification of foreign and domestic assets, as well as the classification of government and nongovernment deposits.

Cross-border nonbank deposits of private Senegalese residents, as reported in International Financial Statistics.

Table 47.

Senegal: Net Foreign Assets of the Central Bank of West African States (BCEAO), 1994-99 1

(In billions of CFA francs)

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Source: BCEAO.

Excluding the balance sheets of the liquidated banks, and using the data from the new commercial banks’ account forms, which has allowed a revision of the classification of foreign and domestic assets, as well as the classification of government and nongovernment deposits.

Table 48.

Senegal: Statutory Ceilings on Central Bank Advances to the Government and Actual Advances, 1994-99

(In billions of CFA francs, unless otherwise indicated; end of period)

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Source: Central Bank of West African States (BCEAO).
Table 49.

Senegal: Distribution of Credit to the Economy, 1994-99 1

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Source: Central Bank of West African States (BCEAO).

Based on information provided by the Centrale des Risques. Data in this table differ from those in Table 41 because of differences in definition and coverage.

Table 50.

Senegal: Commercial Banks and Financial Institutions

(As of June 1999)

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Source: Central Bank of West African States (BCEAO) from data furnished by commercial banks.

Includes the Senegalese government, other Senegalese public institutions, and the BCEAO.

Table 51.

Senegal: Net Income of the Banking System, 1992-96 1

(In billions of CFA francs)

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Source: Banking Commission of the West African Monetary Union.

May not sum due to rounding. Data are for fiscal years (Oct.-Sep.) before 1995, and calendar years from 1996. The data for 1995 are for the 15 months Oct. 1994-Dec. 1995. Data are not available for 1997 and 1998.

Table 52.

Senegal: Observance of the Prudential Ratios by Banking System, 1993-98

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Source: Central Bank of West African States (BCEAO).

There were eight commercial banks between 1992 and 1995. A ninth, Banque Islamique du Sénégal (BIS), resumed operation in October 1996 and a Ecobank, was set up in February 1999.

The overall liquidity ratio is defined as the ratio of the commercial banks’ total short-term assets to total short-term liabilities.

The overall adjusted liquidity ratio is defined as the mean of all the individual commercial banks’ liquidity ratios.

Data on this ratio are not available for all banks owing to the ongoing classification of risks by the banking commission.

NBFI = nonbank financial institutions.

Table 53.

Senegal: Interest Rate Indicators, 1991-99

(In percent per year)

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Sources: Senegalese authorities; IMF, International Financial Statistics; and staff estimates.

Minimum rate on accounts above CFAF 2,000,000 for more than one year through 1992; thereafter, rate applied to deposits on money market.

Central Bank of West African States = BCEAO. Until 1992, overnight advances to deposit money banks; thereafter, auction of weekly advances.

Day-to-day loans against commercial paper.

Table 54.

Senegal: Discount Rates Applied by the Central Bank, 1975-99 1

(In percent per year)

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Source: Central Bank of West African States (BCEAO).

Rates applied to short-term credit of one year or less and to medium-term credit of up to ten years. The BCEAO will also rediscount long-term credit that, at the time of rediscounting, has no more than 15 years to maturity.

Rates applied also to advances against government and private paper, to rediscount of customs duty bills, and to prise en pension (a rediscount operation with a promise to transfer the credit title back to the original lender).

Rates applied to crop credit, credit to the government and local authorities, small national enterprises with total credit outstanding not exceeding CFAF 30 million, and nationals for the construction of the borrower’s first primary residence (maximum CFAF 15 million, with maturities shorter than ten years). Also applied to overdrafts by the treasury.

Rates applied to all credits.

Table 55.

Senegal: Supply and Demand in Overnight Money Market, 1989-99

(Monthly averages in billions of CFA francs)

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Source: Central Bank of West African States (BCEAO).

From October 1993, averages are from the weekly West African Economic and Monetary Union (WAEMU) market.

Beginning in August 1996, the two-way auctions of the money market were replaced by a system of withdrawing liquidity through the auction of central bank bills and injecting liquidity from the BCEAO.

Table 56.

Senegal: Interest Rates Applied in the Money Market, 1994-99 1

(In percent per year)

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Source: Central Bank of West African States (BCEAO).

In October 1993, the money market was transformed into an auction of weekly advances. Figures shown are monthly averages. Rates paid on auctions of central bank bills, introduced in August 1996, are not included.

Table 57.

Senegal: Deposit Rates Applied by Commercial Banks, 1989-99 1

(In percent per year)

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Source: Central Bank of West African Stales (BCEAO).

Fixed rates, unless marked with an asterisk (*). in which case minimum rate.

Includes deposits of the treasuiy, post office, savings bank, and others govemement agencies, public and mixed enterprises, and special provate sector deposits resulting from legal requirements, such as reserves of insurance companies.

Deposit rates no longer fixed by the BCEAO.

Average monthly money market rate (TMM) published by the BCEAO minus 2 percent.

Applicable lo savings deposits of less than CFAF 5 million.

Table 58.

Senegal: Maximum Lending Rates Applied by Commercial Banks, 1989-99

(In percent per year)

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Source: Central Bank of West African States (BCEAO).

Until early September 1998, maximum lending rates were based on the Central Bank of West African States’ (BCEAO) discount rate Since September 5, 1998, maximum lending ratess throughout the West African Economic and Monetary Union (WAEMU) have been fixed by WAEMU’s Council of Ministers.

Of any member state of the West African Monetary Union (WAMU).

With maturity of more than 2 years and less than 15 years.

Table 59.

Senegal: Balance of Payments, 1992-99

(In billions of CFA francs, unless otherwise indicated)

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Sources: Senegalese authorities; and staff estimates.

Includes Paris Club deferral (1995-97), and debt cancellation (1997). Beginning in 1998, debt service is net of debt relief obtained from the Paris Club stock-of-debt operation of June 1998.

Table 60.

Senegal: Balance of Payments, 1992-99

(In millions of SDRs, unless otherwise indicated)

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Sources: Senegalese authorities; and staff estimates.

Includes Paris Club deferral (1995-97), and debt cancellation (1997). Beginning in 1998, debt service is net of debt relief obtained from the Paris Club stock-of-debt operation of June 1998.

Table 61.

Senegal: Export and Import Price, Volume, and Terms of Trade Indices, 1992-99 1

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Sources: Senegalese authorities; and staff estimates.

Using the Paasche method.

Table 62.

Senegal: Merchandise Exports, 1992-99

(Values in billions of CFA francs; volumes in thousands of metric tons; prices in CFA francs per kilogram)

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Sources: Senegalese authorities; and staff estimates.

Includes exports of unprocessed groundnuts valued at CFAF 6.0 billion.

Phosphoric acid and other chemicals exported by Industries Chimiques du Sénégal.

Table 63.

Senegal: Merchandise Imports, 1992-99

(Values in billions of CFA francs; volumes in thousands of metric tons; prices in CFA francs per kilogram)

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Sources: Senegalese authorities; and staff estimates.
Table 64.

Senegal: Direction of Foreign Trade 1992-99

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Source: Senegalese authorities.
Table 65.

Senegal: Services and Transfers Accounts, 1992-99

(In billions of CFA francs)

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Sources: Senegalese authorities; and staff estimates.
Table 66.

Senegal: External Public Debt Outstanding, 1992-99 1

(In billions of CFA francs; end of period)

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Sources: Senegalese authorities

Provided by the authorities before the debt sustainability analysis.

Includes arrears outstanding at the end of the year.

EDF/EIB = European Development Fund/European Investment Bank; AfDB/AfDF = African Development Bank/Fund; and OPEC/IDB/BADEA = Organization of Petroleum Exporting Countries/Islamic Development Bank/Arab Bank for Economic Development in Africa.

Excludes rescheduled debt; OECD = Organization for Economic Cooperation and Development.

From 1994 onward, includes Depot Koweitien.

Not including arrears on commercial debt, which was the object of a debt-buyback operation in December 1996.

Short-term foreign liabilities of the central bank, related to the operations account.

Table 67.

Senegal: External Public Debt Ratios, 1992-99

(End of period)

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Source: Table 66.

Excludes rescheduled debt.

Short-term foreign liabilities of the central bank, related to the operations account.

Table 68.

Senegal: Public Sector Loan Disbursements, 1992-99

(In billions of CFA francs)

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Sources: Senegalese authorities; and staff estimates.

Excluding budgetary loans.

AfDB/AfDF African Development Bank/Fund and EDF/EIB European Development Fund/European Investment Bank.

Table 69.

Senegal: Structure and Terms of External Public Debt Commitments, 1992-99 1

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Source: Senegalese authorities.

Medium- and long-term government and government-guaranteed debts, excluding IMF credits and rescheduled debt.

Weighted average of new disbursements.

Table 70.

Senegal: External Public Debt Service, 1992-99 1

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Sources: Senegalese authorities; and staff estimates.

Provided by the authorities before the debt suslainabilty analysis. Medium- and long-term govemment and government-guaranteed debts, excluding debt-service obligations of the multilateral companies. Air Afrique, and Agence pour la Sécurité de la Navigation Aérienne.

After debt cancellation obtained through 1995. Beginning in 1998, debt service is net of debt relief obtained from the Paris Club stock-of-debt operation of June 1998.

Table 71.

Senegal: Exchange Rates, 1992-99

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Source: IMF, International Financial Statistics.
Table 72.

Senegal: Nominal and Real Effective Exchange Rate Indices, 1991-991

(1990 = 100)

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Source: IMF, Information Notice System.

Period averages, based on the following average trade weights (in percent): France (30.20), United States (10.45), Germany (8.17), Japan (7.81), Italy (7.48), Netherlands (5.04), Belgium (4.87), United Kingdom (4.82), Spain (4.13) and other countries (17.03).

Senegal: Summary of Tax System as of December 1999 1/

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Source: Data provided by the Senegalese auttiorities.

Except trade (axes reflecting the adoption of the TEC as of January 1, 2000.

Entirely earmarked for use by the local authorises.

Of which taxes on alcoholic beverages are earmarked for use by the CAA.

Half of the proceeds are earmarked for use by the local authorities.

References

  • Clément, Jean A.P., and others, 1996, Aftermath of the CFA Franc Devaluation, IMF Occasional Paper No. 138 (Washington: International Monetary Fund).

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  • Ebrill, Liam, Janet Stotsky, and Reint Gropp, 1999, Revenue Implications of Trade Liberalization, IMF Occasional Paper No. 180 (Washington: International Monetary Fund).

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  • Hernandéz-Catá, Ernesto, and others, 1998, The West African Economic and Monetary Union: Recent Developments and Policy Issues, IMF Occasional Paper No. 170 (Washington: International Monetary Fund).

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  • Iqbal, Zubair and Mohsin Khan, eds., 1998, Trade Reform and Regional Integration in Africa (Washington: International Monetary Fund).

  • Ng, Francis and L. Alan Winters, 1998, “Tariff Reform in Senegal: A Simple Numerical Analysis” (unpublished; Washington: World Bank).

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  • République du Sénégal, 1997, “Impacte du Tarif Extérieur Cornmun sur l’Industrie Sénégalaise”, Comité National UEMOA, October.

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  • Sharer, Robert, and others, 1998, Trade Liberalization in IMF-Supported Programs, World Economic and Financial Surveys (Washington: International Monetary Fund).

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  • Sharer, Robert, 1999, “Trade: An Engine for Growth for Africa”, Finance and Development, December 1999, pp. 26-29 (Washington: International Monetary Fund).

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  • Shiells, Clinton, 1995, “Regional Trade Blocks: Trade Creating or Diverting?” Finance and Development, March 1995, pp. 30-32 (Washington: World Bank and International Monetary Fund).

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  • World Bank, 1997, “Senegal: The Challenge of International Integration” (Washington: World Bank).

  • World Bank, 1999, “The World Trading System: The Road Ahead” in, World Development Report 1999/2000 Chapter 2 (Washington: World Bank).

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Websites

http://www.worldbank.org/afr/sn.htm (World Bank Senegal page)

http://www.ifc.org/abn/cic/senegal/english/senegal.htm (IFC Country Information Center)

http://www.dakarcom.com/CCG/ccg_ExecSumm.htm (Country Commercial Guide, U.S. Embassy, Dakar)

http://www.mbendi.co.za/cysncy.htm (MBendi Senegal country profile)

http://www.gksoft.com/govt/en/sn.html (Governments on the WWW: Senegal)

http://www.icdt.org/tradeguides/tgsn.htm (Trade Information Network for Islamic Countries)

36

Prepared by Rene Weber (PDR).

37

For a comprehensive assessment of the impact of the CFA franc devaluation, see Clement and others (1996).

38

The chapter focuses on trade reform within the regional context. It does not cover the consequences for Senegal of changes in the international trading system resulting from the conclusion of the Uruguay Round of trade negotiations and the initiation of further global trade talks. Furthermore, policy changes in trading-partner countries, such as the status of trade preferences for exports to the European Union (EU), are also not addressed.

39

An important factor in the large increase in the export share to Asia in 1996 (see Table 3) was the rise in exports of phosphoric acid produced by the Industrie Chimique Sénégalaise (ICS) to India.

40

See data on trade developments in Tables 1-3. The relative importance of trade in the economy (as measured by the ratios of import and export values to GDP) has not increased after 1994, reflecting the country’s still limited integration into the world economy. A study by the World Bank (1997) on the challenge of international integration for Senegal concluded that Senegal remained poorly integrated in the world economy and had significant scope for reducing trade protection.

41

Before the WAEMU tariff reform, extensive use was made of codes de précisions, consisting of two figures added to the customs nomenclature. This end-use tariff-setting mechanism determined import duty rebates according to the destination of imported goods (negative surtax). The customs code initially included 3,124 précisions tarifaires.

42

Senegal accepted Article VIII of the IMF’s Articles of Agreement in 1996. While banknotes circulate freely, currency transactions by other means to and from the WAEMU area can be effected only through the Central Bank of West African States (BCEAO), the postal administration, or a designated bank. For payments of business imports from countries outside WAEMU exceeding the value of CFAF 5 million, a designated bank has to act as an intermediary.

43

The 1995 (law no. 95/34) and 1996 (decree no. 96-869) legislation on Free Export Companies replaced the long-standing system of free trade zones and points francs (single- factory zones). While tariff exempt, firms are subject to a 15 percent profit tax and are, in principle, allowed to sell no more than 20 percent of production on the domestic market.

44

An end-use tariff discounting mechanism.

45

Preferential treatment is accorded to imports of eligible industrial products, i.e., those with a minimum regional value added of 40 percent of total value added or a local content of at least 60 percent. Agricultural products and handicrafts have been exempt from customs duties since July 1996.

46

While WAEMU regulations simplified Senegal’s imports tariff regime by combining customs and fiscal duties, it initially maintained a separate customs statistics duty of 5 percent (exempting imports related to development projects, military assistance, and export processing zone enterprises, as well as imports by diplomatic missions and international organizations). It was replaced by a statistical tax of 1 percent on all imports beginning in 2000.

47

On the political economy of regional trade arrangements, see Shiells (1995) and Iqbal and Khan (1998).

48

In a stylized way, the change in relative prices of tradables owing to a lowering of import protection triggers a redirection of domestic demand away from local production to foreign sources, as well as a (presumably lagged) supply-side response (volume effect). The negative impact on supply will be mitigated by lower costs for imported capital and intermediate goods (price effect), to the extent that these types of goods were not already exempted from tariffs. For a broad-based discussion on role of trade liberalization in the African context and the theoretical linkages between trade reform, macroeconomic policies, and growth, see Iqbal and Khan (1998).

49

A previous estimate of the impact of WAEMU tariff reform by the World Bank, on the basis of 1996 data, put the fiscal impact in the range of 2 percent of GDP (see Ng and Winters, 1998). For a general presentation of the fiscal impact of trade reform, see Ebrill, Stotsky, and Gropp (1999).

50

The special window designated for intracommunity support for revenue shortfalls caused by the implementation of intraregional tariff reform will be phased out, ending in 2004.

51

Such financial support from the EU is available in the context of the Programme d’Appui Régional à l’Intégration UEMOA (PARI).

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Cover IMF Staff Country Reports
Senegal: Recent Economic Developments
Author:
International Monetary Fund
Volume/Issue:
Volume 2000: Issue 091
Publisher:
International Monetary Fund
ISBN:
9781451833850
ISSN:
1934-7685
Pages:
126
DOI:
https://doi.org/10.5089/9781451833850.002