For more information, see Burkina Faso and the IMF
Enhanced Structural Adjustment Facility
Policy Framework Paper for 1998-2000
Prepared by the Burkinabè Authorities in Collaboration with the
Staffs of the International Monetary Fund and the World Bank
August 12, 1998
1. The programs supported by the two annual Enhanced Structural Adjustment Facility (ESAF) arrangements put in place since 1996 have been implemented in a broadly satisfactory manner. This policy framework paper (PFP), which analyzes the results of the economic reforms implemented under the two previous programs, presents the macroeconomic and sectoral policy stance that the Burkinabè authorities will take in 1998-2000 in the context of the third annual arrangement under the second ESAF program and identifies Burkina Faso’s financing requirements for this period.
2. The implementation of the financial and structural measures that accompanied the devaluation of the CFA franc in early 1994 led to a significant improvement in the country’s macroeconomic performance. In 1996, real GDP is estimated to have risen by 6.2 percent, its highest rate since 1991. This trend continued in 1997, although at a slightly lower rate of 5.5 percent, owing to unfavorable weather conditions. Consumer price inflation declined to 2.3 percent in 1997 from 6.1 percent in 1996, as a result of prudent financial policies, the good cereals harvest in 1996, stable wages, and low inflation worldwide, notably in the main trading partners.
3. The continued improvement of Burkina Faso’s macroeconomic performance can be attributed mainly to the recovery in the cotton sector and to the fiscal consolidation efforts. A strong fiscal performance in recent years led to a primary surplus of 1.1 percent of GDP in 1997. In addition, the overall fiscal balance (on a commitment basis, excluding foreign-financed investment and restructuring operations) has been positive since 1995. This has made it possible to finance the restructuring operations under way in the public sector and to substantially reduce domestic arrears.
II. Program implementation and economic and financial developments in 1997
4. Even though weather conditions in 1997 led to a decline in cereals production of about 8.4 percent, the economy grew by 5.5 percent, close to initial forecasts. Economic activity was supported by significant growth in cotton production, construction and public works, and services, which reflected the rise in investment. Inflation was moderate, declining, on an annual average, from 6.1 percent in 1996 to 2.3 percent in 1997. The primary surplus (excluding interest, foreign-financed projects, and restructuring expenditure) declined from 1.7 percent of GDP in 1996 to 1.1 percent in 1997, compared with a target of 1.9 percent. This shortfall is explained by the overrun in relation to program of the domestic contribution to investment (approximately CFAF 10 billion).
5. The fiscal recovery has resulted in large measure from significant effort made to improve tax and customs duty collection; tax revenue reached 12 percent of GDP in 1997, in line with the target and up from 11.5 percent in 1996.
6. Prudent spending policies were pursued, especially with respect to the civil service wage bill. Domestic expenditures, excluding foreign-financed investment spending, were reduced from more than 15 percent of GDP in 1993 to 12.8 percent in 1997. Nonpriority outlays were curtailed, while adequate budget appropriations were made for the priority sectors of health and education.
7. Despite the solid performance of exports, Burkina Faso’s external position deteriorated between 1996 and 1997, mainly because of a reduction in official transfers and capital inflows. The volume of exports of cotton and nontraditional products (fruits and vegetables, and industrial and artisanal products) increased by 50 percent and 20 percent, respectively. The external current account deficit, excluding grants, declined from 13.4 percent of GDP in 1996 to 12.6 percent in 1997, a level that was higher than anticipated, owing to the sizable imports of capital and intermediate goods. The money stock is estimated to have grown by some 14 percent in 1997, compared with a forecast of 7 percent. Owing to the pickup of economic activity and the requirements of cotton crop financing, credit to the economy rose by 43.7 percent in 1997, compared with 40 percent in 1996; net foreign assets of the banking system declined in 1997, for the first time since 1994.
8. In the area of structural reforms, the tariffs for services provided by the water company (ONEA) and the postal company (SONAPOST) have been adjusted. Regarding the program to privatize the 20 remaining public enterprises (out of the 41 covered by the first and second phases of privatization), calls for bids were issued for the privatization of 5 companies: SOSUCO (sugar), SOPAL (alcohol), FASO FANI (textiles), SONACOR (rice ginning), and SAVANA (fruit juices); the privatization strategy for INB (printing press) was adopted; and the government is to make an announcement shortly on the privatization of SNTB (transportation), SLM (equipment leasing), and SOCOGIB (construction). The government is determined to complete the liquidation of six companies by end-1998 (see matrix of measures) and to merge CNEA (agricultural equipment) with APICOMA by the same date. As for privatization in the banking system, the government's equity interest in the agricultural credit bank (CNCA) is still being held in trust by the West African Development Bank (BOAD); a new bank, the Société Générale de Banque du Burkina (SGBB), took over the Banque de Financement du Commerce et Industrie (BFCIB) and started operations in early 1998, after obtaining the approval of the banking commission; and the liquidation of the development bank (BND-B) was closed by Regulation 158/98PGO of February 2, 1998.
9. The laws providing the basis for a comprehensive civil service reform were adopted by the National Assembly in April 1998. There are three laws: (1) on the modalities for government intervention and the distribution of responsibility between the government and the other partners in development; (2) on the norms for the creation, organization, and management of the civil service structures; and (3) on the legal regime applicable to civil servants and civil service jobs. These laws formalize the principle of merit-based promotion.
10. In the area of regional integration, the government approved the West African Monetary and Economic Union (WAEMU) directives for the harmonization of budgetary systems, and adopted the draft common external tariff (CET). The directives on the budget laws and on general government accounting regulations were also adopted, while the CET of the WAEMU will enter into effect in phases in 1998-2000. The customs duty rates have been set at 0, 5, 10, and 20 percent for four categories of products, which are currently being defined, and the rate for the statistical tax has been set at 1 percent. The intermediate phases provide for limiting the maximum customs duty rate to 30 percent on July 1, 1998 and 25 percent on January 1, 1999. In line with these intermediate phases, the government has decided to establish the maximum fiscal duty and maximum customs duty at 25 percent in July 1998, to maintain the statistical tax rate at 4 percent, and to eliminate the special intervention tax. Thus, the maximum duty on foreign trade has been cut from 37 percent to 29 percent. As of January 1, 1999, the WAEMU product classification for taxable purpose will enter into effect, with applicable customs duty rates of 0, 5, 10, and 25 percent.
III. Strategy and objectives for 1998-2000
11. To raise the income levels of the population and foster the development of human resources and productive potential, the government has formulated a medium- and long-term strategy within the framework of the letter of policy on sustainable human development. The major objectives from the present to 2005 may be summarized as follows: (1) increase per capita GDP by at least 3 percent a year; (2) double the literacy rate from 20 percent to 40 percent; and (3) raise life expectancy by about 10 years to 57 years. The macroeconomic objectives for the period 1998-2000 are to (1) maintain a real GDP growth rate of about 5.5 percent on average between 1998 and 2000; (2) limit inflation to 2.5 percent per annum; and (3) reduce the external current account deficit, excluding grants, to 9 percent of GDP by 2000.
12. Agriculture and the rest of the primary sector will most likely continue to be the main source of growth in Burkina Faso, as well as the main revenue-generating and job-creating activity, accounting for about 30 percent of GDP. Maintaining the economy’s competitiveness will facilitate development of the growth potential of such exports as cotton and livestock products and promote the production of nontraditional exports crops, such as fruits and vegetables. The mining sector is also expected to expand, given the recent renewed interest in gold exploration and extraction. Current estimates indicate that gold output could increase at least fivefold in the next decade, up from the current level of 1.5 metric tons a year.
13. The government intends to continue to pursue its macroeconomic and reform strategy, the main elements of which are the following: (1) maintaining macroeconomic stability and consolidating the recent competitiveness gains; (2) improving the efficiency of the public sector by further strengthening tax and customs administration and budgetary procedures, and by stepping up the reform of the civil service and public enterprises; (3) reforming the judicial system to ensure appropriate protection and incentives for private investors; (4) further reducing the state’s role in agriculture and mining; and (5) improving human resources development. This strategy requires moderation of population growth, implementation of policies directed at promoting job creation and income growth, and at providing women with a greater role in the development process, and greater access to social services, especially education, health, safe drinking water, and sanitation services. It also requires a better management of natural resources through enhanced security of land ownership and training of the general public in environmental protection techniques.
14. The targeted rate of economic growth will be sustainable only if it is supported by an increase in saving and investment. For this reason, the government’s fiscal policy will seek to increase public saving; such an increase, combined with the expected inflow of external assistance, will permit the financing of an adequate level of investment, which, in turn, needs to be effectively allocated; the overall investment ratio is expected to remain at about 25 percent of GDP during the 1998-2000 period. At the same time, private sector saving and investment will be fostered by a more favorable business climate.
IV. Macroeconomic policy and structural reforms
A. Government Finance and the Civil Service
15. The government will maintain a cautious expenditure policy stance, including on the civil service wage bill. Owing to the introduction of the CET, which is expected to cause a revenue shortfall of about 1.7 percent of GDP in 2000, fiscal revenues could decline from 13 percent of GDP in 1997 to 12 percent in 2000. As a result, with current expenditure declining from 10.5 percent of GDP in 1998 to 10 percent in 2000, and the domestic contribution to investment maintained at 2.7 percent of GDP, the primary surplus is expected to decline in 1999-2000. However, the effect on the financing requirements will be partially offset by higher privatization receipts, lower restructuring expenditure, and the completion of the domestic arrears reduction operation. Revenue will also be supported by higher excise taxes on hydrocarbons, more rigorous control of exemptions, and a greater effort to tax the informal sector. On the expenditure side, it will be necessary to better define priorities, in order to ensure adequate allocations to the social sectors and for poverty reduction.
16. Public investment expenditure, which increased substantially in the 1995-97 period (from 9.3 percent of GDP to 12.5 percent), will stabilize at about 12 percent of GDP in the period 1999-2000. The component financed from domestic budgetary resources, which had also increased significantly, is projected to remain stable at about 2.7 percent of GDP during the period.
17. The government is committed to implementing a policy to modernize and reform the civil service; the key measures for the period 1998-2000 are set out in the attached matrix of measures. Specifically, the government will focus its effort during the period on five main objectives, which can be summarized as follows: (1) improving the operational management of government personnel; (2) improving the quality of services provided by civil servants; (3) implementing the comprehensive civil service reform; (4) promoting good governance; and (5) strengthening the social peace. The strategy defined to meet these objectives will be based on (1) the implementation of measures to ensure management in real time of the administrative decisions affecting the careers and administrative status of civil servants and to permit ongoing access to reliable information on government personnel; (2) implementation of a series of specific measures to increase the productivity of the civil service by, inter alia, introducing a merit-based promotion system and having greater recourse to contractual staff; (3) introduction of procedures and mechanisms necessary to effectively apply the legislation relating to the comprehensive civil service reform; (4) promotion of a set of rules, mechanisms, and methods for effective and transparent management of public affairs, offering genuine opportunities for citizens’ participation and control; and (5) improvement of the system of social protection for civil servants, seeking ways and means to accelerate the financial compensation of reinstated personnel and the establishment of a productive social dialogue among the government, labor, and management.
18. The savings resulting from these policies will not, however, be sufficient to offset the higher expenditure needed by certain priority sectors, which will require larger budgetary allocations. Therefore, the government expenditure review will be seen as an ongoing process, conducted with the assistance of Burkina Faso’s aid partners, aimed at enhancing the government’s ability to control and rationalize its expenditure. These reviews will, in particular, facilitate the annual consultations with donors and lenders on the volume and composition of the public investment program.
B. Monetary Policy and Restructuring of the Banking Sector
19. The regional central bank (BCEAO) will continue to pursue a prudent credit policy, with the aim of strengthening the external reserves of the union and protecting the exchange rate peg. To that end, the central bank will rely on a flexible interest rate policy and appropriate money market operations to control bank liquidity.
20. The progress made in 1997 in channeling banking resources to the private sector and in improving financial intermediation will be pursued. The banking system will also continue to be strengthened, with the strict application of the banking law and the recommendations of the banking commission, and by the strengthening of regulations for debt collection and for proceedings against collateral. In connection with this point, the government will audit the operations and portfolio of the public loan recovery agency (BRCB), while continuing to develop its debt collection capacity. The mobilization of savings will focus on the implementation of a regional securities exchange in Abidjan and on the development of cooperative savings and loan institutions, with a view to establishing a link between the structured banking sector and decentralized financial institutions. To this end, a specialized unit has been established in the Finance Ministry to monitor and supervise decentralized finance institutions. In the area of insurance, Burkina Faso’s advisory committee on insurance, created in 1997, will see to the implementation of the Interafrican Conference on Insurance Markets (CIMA) code and of the recommendations and decisions of the Regional Insurance Control Commission. With the entry into force of the CIMA code and the role assigned to the Regional Insurance Control Commission, the function and organization of the national insurance directorate will change and its resources adjusted accordingly.
C. External Sector
21. The government will pursue a strategy aimed at developing and diversifying the country’s export potential, and it will complete the liberalization of the export and import sectors. This strategy should lead to the sustained growth of exports which are projected to rise by an average of 19 percent annually in value in 1998-2000 and by 13 percent in volume, owing mainly to the continued increase in cotton production. The external current account deficit, excluding grants, is projected to decline to 9 percent of GDP by 2000; this decline, together with the reduction in external debt under the Initiative for Heavily Indebted Poor Countries (HIPC Initiative), should reduce the debt burden to a sustainable level.
D. Public Investment Program (PIP)
22. To increase the effectiveness of public investment, the government will continue to place particular emphasis on improving project implementation. To this end, it will ensure that: (1) sectoral strategies are finalized; (2) a medium-term expenditure framework is prepared; (3) program budgets are gradually generalized; (4) the new public procurement regulations are implemented, especially at the local level; (5) measures are introduced to increase the accountability of project managers; (6) the programming of annual project execution, counterpart funds’ expenditure, and recurrent expenditure is improved; (7) the financial and accounting system for public investment projects is strengthened; and (8) the monitoring of the physical and financial implementation of the PIP continues to improve. The three-year investment program will be consistent with the macroeconomic framework prepared for 1998-2000. For this purpose, the government will each year carry out a review of the annual tranche of the PIP with the support of the World Bank, giving priority to the social sectors, and emphasizing the rehabilitation and maintenance of existing infrastructure and the strengthening of services supporting the private sector.
E. Public Enterprises
23. The government will continue the public enterprise reform program, which includes: (1) rehabilitating public utility companies by periodically adjusting tariff rates to reflect the cost of producing these goods and services; (2) completely liquidating public enterprises for which buyers have not been found (see list in matrix of measures); and (3) putting up for sale a series of enterprises already slated for privatization (see matrix of measures). In addition, the government has decided to privatize the Société des Hôtels de la Gare (SHG). The government will prepare a comprehensive inventory of its equity holdings and a strategic analysis of its portfolio, with a view to adopting a strategy by end-April 1999. In this context, the telecommunications sector will be opened up to competition; to that end, the government will adopt a sectoral strategy by end-1998, and submit a draft law to the National Assembly that sets out the legal and regulatory framework for telecommunications. The government envisages the licensing of cellular telephone services in 1999, and at the same time implementing a strategy for the partial privatization of ONATEL.
F. Development of the Private Sector and Legal Framework
24. The government is aware that the private sector must play a central role in economic growth, and it will accordingly continue its policy directed at promoting the Burkinabè private sector. In particular, it plans to implement the recommendations on the restructuring of supporting institutions and on the preparation of a plan of action for the Chamber of Commerce (CCIA-B) that resulted from the consultations with private economic agents (see matrix of measures). Furthermore, actions will be stepped up to inform the public of the reforms undertaken to promote the private sector. Finally, the government intends to involve private economic agents more closely in the management of projects aimed at assisting that sector. To improve the environment for private sector activities, the Burkinabè government will strengthen the judicial system by (1) continuing to recruit judges and legal assistants; (2) providing initial and ongoing training for judges, various categories of court officials, and legal assistants; and (3) establishing commercial courts.
V. Sectoral reforms and policies
A. Population and Human Resources Development
25. Controlling population growth in order to bring it into line with the development of the country’s resources remains a major concern of the government. A reproductive health program will be developed and implemented, and the population policy will emphasize expanding the coverage of health services, strengthening the role of family planning in health centers, and implementing a literacy program for women in rural areas. Within this framework, measures will be taken to increase the use of contraceptives and to involve local communities to a greater extent in their distribution. Emphasis will also be placed on an information, education, and communication (IEC) campaign on population issues, particularly in rural areas. To this end, institutions responsible for family policy and family planning programs will be strengthened. In the context of the Population and AIDS Control project (PPLS), 400 new family planning service centers are planned, at a rate of 100 a year.
STDs and AIDS
26. Despite efforts to combat acquired immune deficiency syndrome (AIDS), this disease continues to spread. The government will therefore step up its efforts to combat this pandemic disease as well as sexually transmitted diseases (STDs). The general objective is to reduce the HIV-positive rate in high-risk groups by strengthening, with the support of the National Anti-AIDS Committee (CNLS), the capacity of the health districts to take action. Multisector AIDS control programs for each district will be implemented before end-1998. Provincial anti-AIDS committees will be created. Epidemiological monitoring and the safety of blood transfusions will be improved. Promotion of preventive measures will be stepped up. Increased attention will be given to ensuring adequate medical treatment for people affected by the disease. In addition, Burkina Faso will join subregional anti-AIDS projects. The "Youth, Town, Jobs" project of the Ministry of Infrastructure, Housing, and Urban Development will be fully implemented. Finally, a strategy based on information, education and communication, training for health personnel, and research/action will be developed.
Strengthening the role of women in development
27. Within the framework of the national strategies to strengthen the role of women in development, the government’s commitment to ensuring gender equality has led to the creation of a ministry responsible for the promotion of women. In addition, measures and actions have been taken in favor of women and girls in three following program areas. First, antipoverty measures, that is, measures increasing access of rural women to agricultural extension services and to credit adapted to their needs and expectations, will be taken. To this end the Support Fund for Gainful Activities for Women (FAARF) and other supporting organizations will expand their activities in all provinces; it will emphasize training women and women’s groups in organization, management, education, health, and nutrition. Second, female human resources will be developed through education and training, and improvement of women’s health. To this end, the plan of action for promoting the education of girls will be stepped up so as to reduce educational disparities between girls and boys; programs and projects adapted to specific problems in each region in the schooling of girls will be prepared in cooperation with the various partners. Finally, the fundamental rights of women and girls will be protected. For this purpose, the project to disseminate the individual and family rights code, which is aimed at informing women of the resources available to protect their interests and those of their children, will be further developed; in addition, the effort to combat violence against women, particularly the campaign against female circumcision, will be intensified.
28. Health remains a key priority sector. The government will continue to implement its health development strategy based on the following: (1) implementation of the Bamako initiative, which emphasizes prevention; (2) the preparation of a national health development plan; (3) establishment of a system to share the financing of health care between the government and local communities; (4) decentralization of health care facilities and introduction of health districts, so as to guarantee the participation of the general public and the accountability of local governments; (5) promotion and strengthening of the private sector, with a view to establishing health centers and pharmacies; and (6) promotion of information, education, and communication on health. The implementation of these strategic principles will help achieve the following objectives (see matrix of measures): (1) reduce the general and infant mortality rates to 14.1 per thousand and 70 per thousand by 2000 by emphasizing health care for mothers and children and providing training in family planning; (2) increase the vaccination rate for the major diseases (including diphtheria, tetanus, measles, and meningitis) by strengthening the expanded vaccination program; (3) reduce the prevalence of parasitic diseases; (4) reduce malnutrition, particularly among children under 5 years of age, by caloric and micronutrient supplements; (5) reduce the maximum area covered by health and social promotion centers to 5 kilometers, and (6) provide health centers with adequate financial and human resources and essential generic drugs. The efforts will be stepped up to render fully operational the health districts, so as to improve health care infrastructure and quality of services. Thus, the number of operational districts will be increased from 22 at the beginning of 1998 to 35 in 1999. In this framework, the collection and dissemination of health statistics will be improved, inter alia, to permit a better appreciation of the intensity of use in each health district.
29. A more rational policy for revitalizing the health centers will be implemented. The state will set minimum standards for personnel in each health center. In application of the redeployment plan, a staff workload study (to be carried out on a sample of 33 districts) is under way, that follows up on preliminary studies already conducted, to provide basic objectives for the general redeployment of health sector staff in 1998. The management capacities of health centers and staff will be improved. A policy for developing human resources will be defined, that includes a decentralization of recruitment through a system of regionalization of positions. The government will continue to call on its external partners to facilitate the construction and equipment of health centers, and to support the development of human resources. To promote resource mobilization, an adequate policy for financing the health sector will be adopted.
30. The government will continue its policy of promoting generic drugs to improve the availability and accessibility of drugs for all segments of the population. Furthermore, the campaign to alert the general public and health care personnel to the importance of using essential generic drugs will be continued. A health equipment and infrastructure maintenance system will be established and implemented. The role of the private sector will be redefined so that it can contribute effectively to improving health coverage.
Social and family action
31. The following main areas of intervention define the strategy for social and family policy during 1998-2000: (1) protection and social promotion of children; (2) protection and promotion of the family; (3) protection and promotion of vulnerable groups; (4) organization of emergency response in the case of natural disasters; and (5) organization of national solidarity. In the protection and promotion of children, priority will be given to ensuring their well-being and development. For this purpose, the second national action plan for the survival, protection, and development of children in Burkina Faso, which has been adopted, will be implemented. The objective concerning preschooling for children up to 6 years of age is to raise the participation rate from 1.44 percent in 1997 to 1.76 percent in 2000. In the area of legal protection and socioeconomic promotion of the family, the national education and family life policy (EVF) and the national action plan for the social protection of the family will be implemented. The awareness campaign against female genital mutilation and all forms of discrimination will be stepped up. In addition, the dissemination of the individual and family rights codes and documents of international law will be continued and intensified. The protection and promotion of vulnerable groups will be provided through actions aimed at creating conditions favoring their social and economic integration. To that end, a national policy in favor of the disabled and elderly will be developed and adopted. The open-air educational activities (AEMO) strategy will be extended to the cities of Koudougou, Bobo–Dioulasso, and Koupéla. In the area of emergency intervention, a national emergency intervention and rehabilitation plan will be implemented. Furthermore, to ensure a better harmonization and coordination of initiatives in social and family policy, an orientation law on medium- and long-term policy strategy will be submitted to parliament.
32. To improve the educational level, Burkina Faso will have to develop basic education in a systematic manner. The current basic education (primary education and literacy training) policy is defined in the ten-year plan. The main objectives are to (1) increase access to relevant, high-quality basic education; (2) improve the capacity to manage and guide the education system; and (3) develop nonformal education. Moreover, current efforts to improve the management of educational facilities and to reduce unit costs will be pursued. In view of the low primary and postprimary enrollment rates, particularly for girls, the education sector will continue to receive additional resources. Underutilized teaching staff will be redeployed to rural and remote areas. Educational innovations that take account of community needs and conditions (double-shift teaching, multigrade classes, satellite schools, and nonformal basic education centers) will continue to be implemented. However, the ongoing evaluation of these systems—designed to identify the various problems that have arisen in their application—will be completed, so as to better orient their development, especially from a qualitative standpoint.
33. The objective for the gross school enrollment rate is to increase it from approximately 40 percent in 1996-97 to 48 percent in 2000, and to increase the rate for girls from 30.5 percent in 1996 to 40 percent in 2000. The enrollment rate in provinces with the lowest rates should reach 24 percent by 2000. In view of the limited resources at its disposal, the government will continue to call on its financial and technical assistance partners, and on the contribution of local governments, associations, and nongovernmental organizations. The private sector will also be encouraged to participate in the efforts to develop basic education. To this end, a study to define the strategy for the development of private schools will be conducted in 1999.
34. Improvement of the quality and relevance of instruction is one of the priorities of the ten-year development program for basic education. For this purpose, emphasis will be placed on the quality of the training and supervision of teachers, a review of curricula to adapt them to the needs of students and their social environment, and improvement in the teaching/learning environment. Action will be taken to strengthen the human and institutional capacities of the three national primary teacher training schools (ENEPs) in Loumbila, Bobo-Dioulasso and Fado; a fourth school will be built in 1998-99 in Ouahigouya. The system for producing, distributing, and ensuring the quality of school textbooks will be improved with the implementation of a monitoring and control mechanism. New school textbooks will be adapted to renovated programs. Schools implementing the educational reforms (double-shift teaching and multigrade classes), and girls in regions where the proportion of girls attending school is low, will continue to receive free textbooks. Educational manuals and guides will also be provided for private teachers. As part of the new ten-year development program for basic (presently 1,200 per year) education, there are plans to increase the pace of construction and outfitting classrooms and satellite schools (presently 100 per year). This will make it possible to increase new students in the first year of primary education from 154,000 in 1997 to 269,000 in 2000. Likewise, the government will see to improving the nutritional health of schoolchildren. The first stage of this program, currently under way as a pilot project in two provinces, will be extended to five other provinces in 1998.
35. The government recognizes the need to link post-primary education and research with the needs of the market and with national development priorities. Accordingly, the implementation of the education development plan, prepared in May 1995, will be continued. In addition, implementation of the Post-Primary Education project supported by the World Bank will be pursued; this project will help increase the availability of education and improve the relevance of what is taught. In the area of higher education, emphasis will be placed on improving internal performance (improving students’ learning condition, and teachers’ training) and external performance (professionalizing training and diversifying areas of training by adapting them to labor market needs). Given the shortage of public resources, the government will redouble its efforts to increase private sector involvement in postprimary education, particularly in semiurban areas.
Employment, labor and social security
36. The employment and social protection of workers constitutes a priority for the government. Its policy in this area is aimed at improving the institutional and regulatory frameworks favoring sustained growth of employment in all sectors. It also aims at increasing training and development opportunities for workers, and improving the qualifications of job seekers. To achieve these objectives, the government is relying on (1) the preparation of a regulatory framework for the employment and training promotion strategy; (2) the introduction of more flexibility in the job market; and (3) measures to increase the transparency of the labor market. In the area of vocational training, the government’s efforts will be aimed at: (1) developing a rational system of vocational training, including adequate standards; (2) improving existing vocational training structures; (3) creating new vocational training centers adapted to the needs of the economy; (4) introducing a mechanism for financing vocational training and apprenticeships; and (5) establishing job promotion instruments and structures. As for protecting workers and social security, the overall objective is to improving living and working conditions by (1) introducing an institutional and regulatory framework; (2) reviewing the social security code; and (3) providing adequate information and training.
B. Agriculture, Livestock, and Natural Resource Management
37. In Burkina Faso, the primary sector is the key sector of the national economy, employing more than 80 percent of the labor force and accounting for about 30 percent of the gross domestic product (GDP). Consequently, sustainable economic development depends largely on strong growth in the agricultural sector. Accordingly, the government developed, and subsequently adopted in January 1998 a strategic orientation document (DOS), that describes the main objectives and the lines of an operational strategy for sustained growth in the agriculture and livestock sectors up to the year 2010: (1) promoting the development of markets in rural areas; (2) modernizing farms and livestock operations; (3) increasing professionalization in the agricultural and livestock sectors; (4) ensuring the sustainable management of food and nutritional resources; (5) increasing food and nutritional security; (6) improving the economic status of rural women; and (7) refocusing the role of the government and promoting private initiative in rural development. This strategic plan will be followed by plans of action and agricultural investment programs that are consistent with the thrust of the DOS. The government intends to involve all economic agents, public and private institutions concerned with the development of this sector and external partners in the execution of this plan. It is understood that the regional dimension of the WAEMU will be taken into account in these deliberations.
38. To ensure that these actions are effectively implemented, the detailed plan for restructuring agricultural services that was prepared in 1996 is being implemented. The objective is to improve the effectiveness and impact of the support provided by the government to farming populations to promote the adoption of improved technologies. The plans for restructuring the head and regional offices of the Ministries of Agriculture and of Animal Resources, prepared in the context of the sector adjustment reforms have been adopted by the Council of Ministers. These plans confirm the decision of the government to withdraw from all production, input marketing and supply, and lending activities. The regulations concerning this reorganization and the modalities for its implementation have also been adopted, and new structures are being put in place accordingly. To ensure the consistency and integration of support/advisory services provided to farmers, a joint memorandum on the organization of agricultural and livestock extension services has been signed by the Ministries of Agriculture and Animal Resources. Plans already prepared, especially on the creation of professional organizations, rural financing, and the promotion of the rice sector, will soon be brought to the implementation stage. Particular emphasis will be placed on a food security, and soil fertility strategy. In addition, action plans will be developed for the promotion of traditional grains, oil seeds, fruits, and vegetables, and action plans to provide support agriculture will be formulated. The cotton sector will be further strengthened.
39. Following the liberalization of rice marketing (1996) and sugar marketing (March 1998), the government will take the steps needed to deepen and expand the institutional reforms undertaken in the context of the sector adjustment reforms. To this end, its policy will be based on (1) its continued divestiture from production, marketing of farm products, and distribution of inputs and credit; (2) liberalization of marketing and prices for animal products; (3) elimination of tariff and nontariff barriers for agricultural products; and (4) streamlining and strengthening of the public agricultural investment program.
40. In the cotton sector, the government intends to pursue the following objectives: (1) increase production and productivity and improve the performance of the cotton marketing and ginning company (SOFITEX) and the competitiveness of the sector; and (2) raise the farmers’ share of sector revenues. In this regard, an interprofessional agreement has been developed that provides, in particular, for the creation of a sectoral management committee responsible for managing the price policy and monitoring the activities provided in the interprofessional agreement. This committee consists of representatives of SOFITEX, the government, and farmers. The interprofessional agreement also provides rules and mechanisms for setting more remunerative prices for producers, regularizing the purchase price for cottonseed, and distributing profits. In addition, the board of directors of SOFITEX will implement a mechanism to monitor the implementation of the action plan to improve the company’s performance. The implementation of all these measures requires the legal recognition of the associations of cotton producers. This process began in February 1998, and, since then, more than 3,000 associations have been recognized. In May 1998, the government also decided to open up the capital of SOFITEX to producers and to facilitate the setting up of private operators in new cotton zones.
41. Finally, the government intends to continue to implement the following projects and programs: the pilot private irrigation project, the second phase of the Community-based Rural Development Program (PNGT), the National Agricultural Services Development Program (PNDSA), which follows the Project for Strengthening Support Services for Producers (PRSAP), and the Food and Nutritional Security Project (PSAN).
42. In Burkina Faso, animal products constitute the second most important source of foreign exchange. This situation has led the government to pay particular attention to this sector by creating a Ministry of Animal Resources and, in November 1997, adopting a memorandum for the orientation of the plan of action for the livestock policy of Burkina Faso. In this memorandum, the government set the following objectives: (1) to develop an operational action plan and investment program for the livestock sector in Burkina Faso; (2) to prepare a program for the development of 54 grazing zones and peri-urban livestock zones; (3) to develop a grazing strategy and laws to protect cattle trails; (4) to introduce a national plan for the development of animals with short lifespan (poultry, hogs, sheep, and goats); (5) to introduce a national cattle feeding plan; and (6) to establish a plan for developing dairy farming around the large urban centers of Ouagadougou and Bobo-Dioulasso and in the grazing zones, supplemented by a national genetic improvement plan requiring the creation of artificial insemination centers and dairy product processing plants; and (7) to rehabilitate the Ouagadougou slaughterhouse and bring it up to standard, and to construct a modern slaughterhouse in Bobo-Dioulasso.
43. Moreover, with a view to making better use of the available resources, the livestock–growing area will be divided into three zones: (1) the northern zone, specializing in raising young animals for the market; (2) the central zone, specializing in raising and fattening livestock; and (3) the southern zone, specializing in implementing intensive livestock practices and combining livestock and farming. Given the role of the poultry, pork, and mutton subsectors in increasing the incomes of rural households, the government will take measures to improve animal nutrition and health, with a view to genuinely promoting these subsectors. However, the process of divestment of government interests in the supply and distribution of inputs will continue, as will the privatization of the veterinary profession.
44. With a view to achieving a socioecological and socioeconomic balance that can contribute to food self-sufficiency and better living conditions for the population, the government intends to focus its environmental policy on the following four main areas: (1) antidesertification efforts; (2) management of forest resources; (3) landscape improvements; and (4) efforts to combat pollution and noxious agents. The antidesertification effort will essentially involve implementation of the national action plan for the environment (PANE). The management of forest resources will involve the implementation of the forestry code adopted by parliament in 1997. The effort to combat pollution and noxious agents will involve information, education, and communication (IEC) campaigns on the risks to the environment and the need to improve it. Landscape improvements are aimed at improving the living conditions and the population environment through the planting of trees and plants in urban and rural areas. The National Council for the Management of the Environment (CONAGES), which is the institutional framework for environmental management, will play an important role in environmental policy.
45. To ensure more effective protection and management of forest resources, the government will emphasize: (1) the promotion and revitalization of village wildlife management associations, taking into account traditional organizational arrangements; (2) the promotion of such sectors as ranching and small-scale herding of wild animals and the reintroduction of local species; (3) increased protection of wildlife resources; and (4) the promotion of safari tourism and sports hunting, especially by licensing hunting zones. In the fisheries subsector, the government intends to streamline the development of fisheries resources by maximizing their potential and making efforts to improve productivity and increase the fish supply, so as to correct the current deficit. Furthermore, in the second phase of the PNGT, the government will emphasize the strategic transfer to rural populations of the skills and means they need to assume responsibility for the management and development of natural resources.
46. The water sector is of considerable concern to the government and has been so for more than two decades. The government has consequently established the objective of satisfying water needs on a sustainable basis in terms of quantity and quality by ensuring that water ecosystems are respected in an environment that is not very conducive to the renewal and mobilization of water resources. Thus, in the policy document on water strategy, the government focuses on the following three areas: the drinking water supply, irrigation, and other uses of water in sectors of the economy in which the water supply is a determining factor for economic development.
D. Transportation and Tourism
47. The fact that Burkina Faso is landlocked requires that specific attention be given to the transportation sector. Accordingly, the government has prepared a strategic document for the transportation sector, following consultations held in 1997. It sets the following objectives: (1) to create a reliable, structured transportation network that can support the development of interregional trade, making it possible to funnel agricultural surpluses from surplus zones to deficit zones and facilitating the supply of industrial products of all kinds; (2) to open up Burkina Faso to the outside by developing means of transport; (3) to organize the transport activity, and to structure and organize the management of road transport; (4) to maintain the freight generated by Burkina Faso’s foreign trade and ensure smooth traffic flows; (5) to promote private sector involvement in transportation; (6) to develop the potential for tourism; (7) to promote tourism in Burkina Faso; and (8) to open up and develop services at tourism sites. To achieve these objectives, a plan of action covering 1998-2000 has been developed. Also, concerning the airline (Air Burkina), the government will adopt a privatization strategy by end-December 1998 and will sell the company during 1999. The reform of the management of airport activities will be finalized during 1999.
48. The exceptionally high cost of energy in Burkina Faso remains a major impediment to industrialization. Accordingly, the government will give priority to investments in the energy sector that will make it possible to meet demand in an optimal fashion. To this end, a draft law opening up electricity production to the private sector has been prepared and will be submitted to parliament in 1998. In addition, an organizational study will be conducted of the Société Nationale d’Electricité du Burkina (SONABEL), and a national electrification plan will be developed. The interconnection with Côte d’Ivoire is under way and will be completed by 2000. As regards traditional sources of energy, the government will continue its policy to encourage a more rational use of firewood and to promote the substitution of other sources of energy. These policies will be consistent with the framework defined in the international conventions adopted in Rio de Janeiro. Furthermore, the government will pursue its policy of adjusting the selling price for hydrocarbons every two months to reflect actual costs. Finally, the government will rationalize of the allocation of the roles of the different economic agents in the hydrocarbon sector, ensuring that the importing company SONABHY implements the energy policy determined by the government.
49. The government is aware of the need to develop the mining sector to maximize its contribution to economic growth. To this end, it has prepared and adopted a new mining law that is consistent with international best practices. Also, beginning in 1998, the government began to pursue its mining policy by: (1) adopting and implementing decrees for the mining law, mining taxes, and environmental protection; (2) enhancing the efficiency of sectoral institutions and administrative procedures; (3) improving the availability and quality of data on the mining sector; (4) coordinating the various environmental measures relating to the sector; and (5) training public and private sector agents to better manage activities in the sector. The government will also promote small-scale mining. Moreover, regarding the restructuring and strengthening of institutions working in the sector, the office of mining and geology (BUMIGEB) and the precious metal marketing agency (CBMP) have been transformed into state enterprises and their tasks redefined accordingly. Geological services, such as drilling and laboratory services, have been assigned to private companies. The government will adjust exploration concession fees, taking into account the evolution of international mineral prices, in particular of gold. Moreover, with the support of its development partners, the government will establish social, health, and educational facilities in artisanal gold mining villages. To protect the environment, the government will ensure that new mining activities are preceded by an environmental impact assessment. To this end, environmental management and protection services will be stepped up.
VI. Social impact of adjustment and poverty alleviation
50. As part of its poverty alleviation effort, the government conducted a study of the "poverty profile" in 1996, based on the results of its Priority Survey. This study shows that almost half of the population (44.5 percent) lives below the absolute poverty line. In addition, special studies on education, health, employment, and gender in relation to poverty were conducted in 1997. Moreover, a survey on the perceptions of poverty in urban areas and the Second Priority Survey are under way. These surveys will serve to develop a national antipoverty strategy that will enable the government to target its actions toward the most vulnerable groups as effectively as possible.
51. The preliminary findings of the poverty profile study are enabling the government to focus its actions on the following areas: (1) maintaining a stable and sustainable macroeconomic framework; (2) ensuring access to basic social services and human resources protection; (3) promoting income-generating activities, job creation, and food security; (4) improving the management of the public sector; (5) establishing an environment favorable to the private sector and enhancing access to financial resources; and (6) achieving further progress in the area of regional integration.
VII. Regional integration
52. The government attaches high priority to regional economic integration with its neighboring countries in West Africa. Accordingly, in January 1994 the government ratified the WAEMU Treaty which transformed the WAMU into a true economic union. The WAEMU is already operational, and its institutions have been set up. The aims of the WAEMU include (1) the free movement of people, goods, and capital; (2) the creation of a customs union among the eight member states; (3) the convergence of macroeconomic policies; (4) the harmonization of sectoral policies; (5) the harmonization of government finance statistics; and (6) the harmonization of indirect taxes. For the three-year period 1998-2000, the measures include (1) the preparation of a regional investment code (2) effective harmonization of government finance statistics; (3) implementation of the common accounting system (SYSCOA); (4) implementation of the CET; and (5) multilateral surveillance with application of penalties. Finally, Burkina Faso is actively moving to integrate its transport system through the joint operation, with Côte d’Ivoire, of a private railroad company, as well as exploring the potential for subregional operation of air transport services with several neighboring countries.
VIII. Improvement of the statistical base and strengthening of economic management capacity
53. To ensure that its economic reform program can be monitored more effectively and directed efficiently, the government will accelerate the implementation of its national statistical strategy. In this context, the law on statistical secrecy and the obligation to respond to requests for information was passed. The national statistical program and specifications for the various components of the national statistical system will be formulated and adopted in 1998-99.
54. As part of the statistical harmonization efforts in the WAEMU, the harmonized consumer price index has been available since January 1998. To improve and update its statistical base, the government will, inter alia (see matrix of measures), (1) establish the national accounts for 1994-96; (2) expand the scope of the harmonized consumer price index; (3) conduct a national budget/consumption survey; (4) implement the common minimum statistics program (PROSMIC); and (5) revise the industrial production index.
55. The successful implementation of the measures included in the program of reform and poverty alleviation, in particular the enhancement of the operational capacity of the public administration, will require effective management of the macroeconomic framework, as well as improved monitoring, analysis, and decision-making mechanisms. Accordingly, the government will seek to enhance the national economic management capacity in the context of the capacity-building program. This program will be the object of a broadly based seminar organized to establish the national priorities for capacity building. In view of the considerable resources required, the government wishes to continue receiving technical and financial assistance from the international community. In order to optimize the effectiveness of such assistance, the government will make every effort to coordinate the actions of donors and lenders so as to ensure that their actions reflect the priorities set forth in the program.
IX. External financing requirements
56. The strengthening of the adjustment strategy and the reform policies adopted under the program aim at promoting sustained economic growth in a context of financial stability and at restoring normal financial relations with partner countries. In this framework, the government, having eliminated all its nonreschedulable external arrears in 1995, has set the objective of achieving a viable external position in the medium term. The targeted improvement in government finances and in private sector competitiveness can be expected to result in a reduction in the external current account deficit (excluding official transfers) from 12.6 percent of GDP in 1997 to 9 percent in 2000. This reduction would come mainly from an improvement in the trade balance. Remittances from Burkinabè workers abroad should remain unchanged as a percentage of GDP during the period.
57. In view of its external debt-amortization obligations (CFAF 23 billion per year on average) and the projected accumulation of net foreign assets (excluding use of Fund resources), Burkina Faso’s external financing requirements will average CFAF 222 billion a year in 1998-2000. These requirements will be covered in part by official transfers (CFAF 120 billion a year on average) and project-related lending (CFAF 55 billion a year). Given expected private capital flows during the period, the financing gap (CFAF 42 billion a year on average) will be covered by the contribution of the IMF (CFAF 11 billion a year), adjustment credits from the World Bank, and exceptional assistance from bilateral partners and the European Union, including debt relief.
58. For 1998, Burkina Faso’s external financing requirement (estimated at CFAF 214 billion) is expected to be covered in large measure by commitments from external partners, including official transfers (CFAF 115 billion), project lending (CFAF 50 billion), and adjustment aid from the World Bank (CFAF 11.8 billion). In addition, IMF gross disbursements will amount to CFAF 11 billion. Private capital flows are projected at CFAF 10 billion. The financing gap of CFAF 18.3 billion will be covered by assistance from bilateral and multilateral donors and lenders (CFAF 15.5 billion), including the European Union, and from debt relief (CFAF 2.8 billion expected).
59. The policy on external debt will remain a prudent one. Accordingly, the government will neither contract nor guarantee new loans unless such loans are on concessional terms (except normal import credits of less than one year and loans related to rescheduling). To this end, the government has established the National Public Debt Committee (CNDP), which will rule on all requests for financing. Moreover, the government will continue to take all necessary steps to prevent the accumulation of new arrears.
60. Despite prudent management of its external debt, Burkina Faso's external debt service obligations will be difficult to sustain in the medium and long term. Balance of payments projections over the medium term indicate that the ratio of the net present value of Burkina Faso’s stock of debt to its exports of goods and nonfactor services will remain substantially above the 200 percent threshold for a number of years. Consequently, Burkina Faso has requested that it be considered eligible for exceptional debt reduction under the HIPC Initiative. Its request has been accepted, and the completion point has been set for April 2000. The government will ensure that its obligations in this regard are fully met.