For more information, see Senegal and the IMF

Senegal—Enhanced Structural Adjustment Facility
Policy Framework Paper, 1998–2000

Tables 1-3


Table 1. Senegal: Summary and Timetable of Macroeconomic
and Structural Adjustment Measures, 1998-2000



Policy Area Objectives and Targets Strategies and Measures Timetable Technical Assistance

A. Fiscal policies

Maintain fiscal stability and increase public savings.

Consolidate revenue mobilization and expenditure rationalization efforts.

Achieve fiscal savings of around 6.5 percent of GDP in 2000.


1998-2000



1998-2000

1. Revenue Continue reform of the tax system to expand the tax base and improve its yield. Introduce an external tariff consistent with WAEMU's common external tariff policy objectives.
1998-2000

IMF and World Bank
Introduce a four-tier tarifff structure, exclusive of a customs stamp (0, 5, 10 and 25 percent) April 1998
Adopt a common WAEMU classification for imported products, with four rates. July 1998
Define the terms of application of the surtaxes, in accordance with the decisions taken within the WAEMU. July 1998
Reform petroleum taxation (see section F below) April 1998
Align the rates of the VAT collected at the border to the rates set out in the Tax Code. April 1998
Strengthen the monitoring of large taxpayers. 1998
Complete computerization of the VAT administration. 1998
Expand the use of the single taxpayer identification number system 1998
Closely monitor conditional tax exempt arrangements (bonded warehouses, temporary admissions, export processing enterprises, industrial free zones). 1998-2000
Prepare a study on the possible adoption of a single VAT rate. July 1998
Eliminate the exemptions to customs duties and VAT collected by Customs. 1998-99
Prepare measures to simplify the taxation of small enterprises and better tax the informal sector. 1998-99
Continue implementation of the import inspection program (PVI). 1998-99
Connect the valuation database of the Société générale de surveillance (SGS) and the GAINDE system; improve the efficiency of the GAINDE system. 1998
Revise the investment incentive systems together with WAEMU member countries and adopt a regional investment code. 1998-2000
Eliminate the exceptional fiscal arrangements granted certain enterprises in the modern sector. 1998-99
2. Current expenditure Pursue a policy of controlling current expenditure by improving its structure. Limit the number of civil servants to 67,000, excluding volunteers and contractual teachers.

Implement the new merit-based salary adjustment system.

1998-2000




July 1998

Assess medium-term budgetary needs of the Ministries of National Education, Health, and Justice based on the objectives assigned to them. 1998
Complete the institutional and actuarial study of the National Pension Fund (FNR). By end-1998 ILO
Implement the institutional reform of the FNR. 1999-2000 ILO
Increase the share of expenditure allocated to the priority social sectors. 1998-2000
Prepare a report on the outline of the government's new budget programming approach and action plan to improve preparation of the investment budget. End July 1998
Strictly limit transfers and subsidies to public enterprises to the amounts specified in the budget; no longer grant subsidies to state-owned or semipublic companies. 1998-2000
Avoid any accumulation of extrabudgetary arrears by stepping up control of expenditure commitment at the level of the single authorizing unit (Ministry of Economy, Finance and Planning). 1998-2000
Conduct annual public expenditure review. 1998-2000 World Bank
3. Capital expenditure Prioritize public investments; improve the effectiveness of government capital expenditure. Implement the recommendations of the public expenditure review conducted in 1997 with the assistance of the World Bank.

Increase the share of priority projects, especially those devoted to infrastructure, human resource development, and poverty alleviation.

January 1999






1998-2000

Strengthen the evaluation, programming, and monitoring of investment. 1998-2000
Closely monitor quarterly performance indicators for the execution of the public investment program. 1998-2000
Submit the three-year rolling public investment program (PTIP) (1999-2001) to the World Bank for review. September 1998 World Bank
Adopt the 1999-2001 PTIP. Dec. 1998
Ensure that recurrent project costs are taken into account. 1998-2000
4. Civil service reform Strengthen the personnel management and control system through greater control of staffing levels. Update, computerize and standardize the three files (payroll, civil service, technical ministries) and make them consistent with the staffing plans of the various ministries.

Distribute procedures manuals.

1998







1998
World Bank
Improve effectiveness of public services. Conduct a users' survey on the quality of public services. April 1998 World Bank
and UNDP
Organize a national debate on the quality of public services. July 1998
Complete the transfer of responsibilities in the context of decentralization. 1998-2000
Have the new government procurement code adopted. July 1998
Prepare the national plan for good governance (PNBG) in regard to local and central governments. 1998-99 World Bank
and UNDP
5. Urban development and support for communes.




Facilitate Senegal's growing urbanization and encourage the participation of local governments in the financing of infrastructure and basic social services. Conduct audits of communes to define a priority investment program.

Conduct organizational and financial audits to define municipal adjustment programs.

Ensure that the Municipal Development Agency is operational.

1998-2002



1998-2002




1998-2002
World Bank
Promote the reform of local taxation. 1998-2002
B. Public debt Reduce debt service to a sustainable level. Limit new concessional loans to those entailing a grant element of at least 35 percent. 1998-2000
Make all government and government-guaranteed borrowing subject to prior authorization by the Ministry of Economy, Finance and Planning. 1998-2000
Increase the staff of the unit responsible for managing the external debt. 1998
Set up a system for monitoring domestic public debt. June 1998
Clear any existing external payments arrears and avoid accumulation of new arrears 1998-2000
C. Public enterprises Reduce the size of the public enterprise sector and enhance its efficiency. Complete execution of the public enterprise restructuring program by 2000 with a view to reducing the government's holdings to less than 25 percent, with the exception of a few enterprises (asset holding companies, training and promotion companies, and strategic enterprises such as SONATEL and SENELEC).
Complete the privatization of SSPT, SPHU-TERANGA and SONADIS. By end-March 1998
Complete the privatization of DAKAR MARINE. By end-July 1998
Privatize SOTRAC, SICAP, the Méridien-Président hotel and 4 small enterprises (SODIDA, MSAD, HAMO and SONEPI). By end-December 1998
Privatize SENELEC: launching of bids. August 1998
Adopt a new strategy for the privatization of SONACOS (see G below). July 1998
Strengthen the unit in charge of managing the government portfolio. 1998-99 World Bank
Annually update the statement of government portfolio holdings. 1998-2000
Present a report on the economic and financial results in 1996 of the 37 enterprises in which the government has a majority holding. End-July 1998
D. Monetary and credit policy and financial market development Design a credit policy consistent with the targets for regional growth, inflation, and external assets. Implement a prudent monetary policy, essentially using indirect instruments.

Develop the secondary markets in treasury bills and central bank paper.

1998-2000



1998-2000
Limit access of government to bank financing. Continuous
Enhance the soundness of the banking system and improve financial. intermediation. Submit a law to the National Assembly amending the system for determining usury rates.

Continue implementation of programs to strengthen the payments system.

December 1998




1998-2000
Continue to strictly enforce the prudential ratios established by the regional banking commission. 1998-2000
Implement the recommendations of bank audits in progress. 1998-2000
Promote medium-term financing and access to technical assistance for small and medium-sized companies. 1998-2000 IFC
Analyze the conclusions of the rural credit studies conducted in 1997 with a view to their implementation. 1998
Strengthen the unit at the Ministry of Economy, Finance and Planning responsible for supervisory mutual savings and loan associations. 1998
Improve functioning of commercial courts and procedures to liquidate collateral for bank loans. 1998
Promote private equity and develop the securities markets. Encourage the development and diversification of institutions and instruments for financing investments (especially leasing and venture capital). December 1998
Implement the texts regulating the regional financial market and the Securities. Commission (Conseil Régional). 1998
Begin offering shares in partially privatized enterprises via the regional stock exchange. 1998
E. Regulatory and judicial framework for economic activities Promote private sector activity and reduce distortions. Continue liberalization of domestic and foreign trade and of the pricing system.

Promote respect of the rules of competition.

1998-2000



1998-2000

Improve the legal environment and the performance of the judicial system. Undertake an assessment of the results of measures taken in the context of PASCO.

Implement the uniform OHADA instruments.

December 1998




As of 1998
World Bank

Have the National Assembly adopt new measures regarding arbitration, enterprises in difficulty and paralegals. Next session of the National Assembly
Train magistrates in commercial law. 1998-2000
Increase budgetary appropriations allocated to the administration of justice. 1998-2000
Reduce restrictions on international financial transactions. Study options for the gradual liberalization of capital flows.

Develop a plan to improve institutional support and streamline administrative processes for exporters.

December 1998

1998




World Bank

F. Energy policy Eliminate all energy sector monopolies or rigid oligopolies (trade in fuelwood, petroleum products, and electric power generation and distribution) Liberalize the import, transportation, and distribution of petroleum products (including third-party access to import, storage, and transport facilities).

Abolish the US$2.3 SAR supplement per barrel and replace the special agreement for the SAR by a temporary, declining surtax on imports of refined products.

April 1998





April 1998

World Bank




1998-2002

Adopt a tariff structure which entails a 20 percentage-point differential between white products and crude oil and 5 points on black products. April 1998
Adjust this structure downward in line with the WAEMU tariff convergence program and reduce the differential to 15 percentage points for white products. January 1, 2000
Eliminate the implicit subsidies on black products sold for electricity generation over three years (1998-2001); on butane over four years (1998-2002). 1998-2002
Replace the variable stabilization levy with a specific tax on white products. April 1998
Adopt a new price structure for petroleum products with automatic adjustment (quarterly, then monthly) of domestic sale prices. April 1998
Continue execution of privatization plan for SENELEC. 1998-Q1 1999
Adoption of the law restructuring and regulating electricity sector, entailing private sector participation. April 1998
Transfer of legal ownership of Senegal's electricity transport and distribution infrastructure from the State to SENELEC. April 1998
Launching of bids for privatization of SENELEC August 1998
Transfer of SENELEC's holdings and management oversight to strategic partner. End Q4 1998
Sale of shares to SENELEC workers and other private sector operators; reduction of state ownership to no more than 41 percent. Before April 1999
Liberalize charcoal and woodfuel prices. End-1999
Implement the provisions of the new forestry Code. 1998-2000
G. Agricultural and fisheries policy Ensure food security by means of diversified and competitive local production.

Finalization of an operational strategy document
Provide support and advice to farmers
-strengthen agricultural research and extension services;
-enhance the role of producer organizations in the development of the agricultural sector;
-implement a viable rural credit system.
June 1998



1998

1998-2000


1998-99
Support the development of private investment in agriculture. Revise the land tenure legal context to ensure greater security of private investment in agriculture. 1998
Modernize techniques, tools and means of action of the agricultural sector; restore soil fertility; restructure the fertilizer subsector; improve access to quality seed varieties. 1998-2000
Finalize a priority investment program for the agricultural sector based on the agricultural development policy letter (LPDA) and the recommendations of the strategic orientation paper. December 1998
Water Conduct an assessment of water needs. March 1998
Consolidate the operations of the Program for the Development of the Left Bank of the Senegal River (PDRG). Q3 1998
Implement water-saving programs in irrigated areas. 1998-2000
Establish the Higher Council on Water and the Water Technical Committee. 1998
Groundnut sector. Privatize SONACOS:
-define a strategy;
-select a reference partner.

June 1998
Dec. 1998
Cotton sector. Maintain the free determination of the sale price of fiber to local textile mills. 1998-2000
Implement the plan to rehabilitate/ privatize SODEFITEX. Q4 1998
Horticulture. Streamline administrative procedures for exports. 1998 World Bank
Introduce a system of standardization of fruit and vegetable quality. 1998
Livestock Pursue privatization of SODESP and veterinary medicine. 1998-99
Pursue the development of animal production. 1998-2000
Promote exports from the leather and skins subsector. 1998-2000
Fisheries. Finalize the fisheries development master plan. June 1998
Ensure that the new fishing code, for the conservation and rational use of fish resources, is adopted. December 1998
Complete the privatization of fishing equipment. 1998-2000
H. Other sectoral policies Transportation. Develop transnational transportation infrastructure to open Senegal up from its land-locked position within the WAEMU (roads, railroads, ports, airports). 1998-2000
Improve the competitiveness of the Port of Dakar (keep personnel costs below 30 percent of operating costs and billing periods to a maximum of three months). 1998-2000 World Bank
Privatization of the management of Senegal's airports:
-launching of studies;
-adoption of legislative framework;
-implementation.


April 1998
June 1999
January 2000
Restructure Air-Senegal:
- Develop a business plan for Air Senegal;
-Privatize the company.

Sept. 1998

Dec. 1999

World Bank
Restructure the Dakar-Bamako international rail line:
-Adopt a legal and regulatory framework for the private operation of the Dakar Bamako international rail line;
-Create a joint Senegalese-Malian private management company for the Dakar Bamako international rail line (SETI);
-Start up SETI.


Oct. 1998



Dec. 1998



April 1999
Design a program for improved management of rural roads and government funding 1998
Reform the legal and operational framework of urban transportation for its complete liberalization. 1998-2000
Mining sector. Adopt the revised Mining Code. December 1998
Update and modernize the geological and cartographic database. 1998
I. Human resources development
1. Health Ensure better access to quality health care. Improve the management and viability of the public health system. Reduce the fertility rate. Increase the share of current government expenditure on health care by at least 0.5 percent per year to reach the WHO standard of 9 percent by 2002.

Sign the decree reorganizing the Ministry of Health and Social Action.

1998-2002







March 1998
World Bank
Implement a recruitment plan for the Ministry of Health and Social Action with a target of recruiting 250 staff per year (all categories combined). 1998-2000
Reduce the number of inhabitants per health center from about 158,000 in 1997 to 150,000 by 2000. 1998-2000
Reduce the number of inhabitants per health post from around 11,000 in 1997 to 10,000 in 2000 1998-2000
Reduce deaths in childbirth by 25 percent, from 510 per 100,000 births in 1997 to 380 per 100,000 births in 2002. 1998-2002
Begin research into the conditions for a sustainable solid financial footing for hospitals. March 1998
Change the status of the Pharmacie Nationale d'Approvisionnement (PNA), with a view to providing more management autonomy. June 1998
Increase immunization coverage from 60 percent in 1997 to 80 percent by 2002. 1998-2002
Reduce the fertility index from 5.9 in 1997 to 5.3 in 2000. 1998-2000
Promote the distribution and use of generic drugs. 1998-2000
Encourage the rehabilitation of laboratories and the establishment of drug manufacturing facilities by the private sector. 1998-2000
Reform the statutory and regulatory framework of mutual health insurance organizations. 1998-2000
Rehabilitate private sector health insurance companies. 1998-2000
2. Population policy Control population growth (increase the contraception prevalence rate from 9 percent in 1997 to 16 percent in 2002). Continue to implement the program of priority actions related to population.

Step up support to local governments in the area of population control.

Conclude the action program aimed at lowering the fertility rate.

1998-2000



1998-2000



1998
3. Education Improve the availability, effectiveness and quality of education by:

-Increasing the gross primary enrollment ratio from 59.7 percent in 1997 to 70 percent by 2000;

Promote continued improvement in the quality of primary education and increase enrollment rates in rural areas, especially among girls.

Gradually increase the share of current expenditure devoted to primary education.

1998-2000






1998-2000
World Bank
- Increasing the enrollment rate for girls from 53 percent in 1997 to 60 percent by 2000;
Build and equip about 1,500 primary classrooms annually and complete the ongoing classroom rehabilitation program.

Annually recruit 1,500 primary school teachers.

1998-2000





1998-2000
- Reducing repetition rates in grades 5 and 6 from 14 percent and 28 percent, respectively, in 1997 to 10 percent and 18 percent by 2000. Implement new regulations for primary school teacher training, recruitment, salaries, and career plans conducive to primary education for all.

Rationalize higher education based on the conclusions of the PAES by gradually reducing its share in the education budget to 20.3 percent by 2000.

1998-2000






1998-2000
Involve students and businesses in financing the costs of vocational training. 1998-2000
Eliminate adult illiteracy. Increase the number of beneficiaries of literacy programs by 20,000 a year (75 percent women) between 1997 and 2000. 1998-2000
4. Role of women Enhance the integration of women into political, economic, and social life Implement a national action plan for women and start implementation.

Reduce the rate of female illiteracy by developing functional literacy.

1998-2000



1998-2000
World Bank
5. Reduction of poverty Improve the living conditions of the poorest social groups. Intensify the coordinated measures to help the most-disadvantaged social groups in accordance with the national poverty alleviation program adopted in December 1997. 1998-2000 World Bank
Increase the income of the poorest segments of the population by:
-developing strategies for promoting micro- and small-scale enterprises (MPE);
-supporting the creation and development of MPEs;
-strengthening the regulatory and financial environment of MPEs.


1998


1998-99

1999
Improve living conditions by:
-devising development plans for poor urban neighborhoods and rural communes;
-implementing these plans;
-developing the intervention and management capacities of urban and rural grass-roots organizations, and departments, regions and municipalities.

1998


1998-99
1998-99
Implement the local nutrition program. 1998-2000
Accelerate and expand labor-intensive projects, especially in the infrastructure sector. 1998-2000
J. Environment Maintain environmental resources and environmental quality with a view to sustaining long-term economic growth. Have the government adopt the national environmental action plan (PNAE) and prepare an environmental management program to implement its recommendations.

Improve environmental protection by establishing a framework for environmental impact studies.

Early 1998







1998
Conduct environmental impact studies for all large investment projects. 1998-2000
Strengthen local-level capacity to manage the environment and natural resources through the establishment of a national environment foundation and through environmental education. 1998-99
Monitor the status of environmental resources through the establishment of an environmental information system. 1998-99
Rehabilitate destroyed habitats, such as the Bay of Hann, and preserve Senegal's biodiversity. Formulate and implement a coastal resources management program.

Establish a system to facilitate solid waste management by local governments.

1998-99



1998-2000
K. Statistical issues Improve the formulation and analysis of economic policy. Increase the resources set aside for the compilation of statistics, especially with regard to national accounts, foreign trade, and social indicators; continue to implement recommendations made in conjunction with past technical assistance; regularly publish available data. 1998-2000

 

 
Table 2. Senegal: Selected Economic and Financial Indicators, 1994-2000
        1997
Projections
  1994 1995 1996 Prel. 1998 1999 2000
 
(Annual percent change, unless otherwise indicated)
National income and prices
  GDP at constant prices 2. 9 4. 8 5. 7 5. 2 5. 3 6. 5 6. 0
    Of which: non agriculture GDP 1. 5 5. 7 5. 1 7. 0 6. 6 5. 7 6. 0
  Consumer prices
    Annual average 32. 1 8. 5 2. 8 1. 8 2. 4 2. 0 2. 0
    End of period 37. 5 5. 5 2. 4 1. 9 . . . . . . . . .
External sector
  Exports, f. o. b. (in CFAF) 119. 1 8. 7 4. 2 7. 1 7. 1 6. 1 6. 1
  Imports, f. o. b. (in CFAF) 84. 0 6. 4 7. 5 7. 1 5. 9 7. 2 7. 1
  Export volume 9. 1 7. 3 2. 1 1. 7 7. 3 5. 2 5. 1
  Import volume -4. 4 5. 0 4. 2 2. 9 9. 0 5. 7 5. 7
  Terms of trade (deterioration -) 4. 4 0. 0 -1. 1 1. 0 2. 9 -0. 3 -0. 2
  Nominal effective exchange rate -45. 1 4. 9 -2. 1 -3. 5 . . . . . . . . .
  Real effective exchange rate -35. 1 8. 5 -2. 4 -3. 7 . . . . . . . . .
Government financial operations
  Revenue 17. 8 21. 5 7. 7 9. 6 3. 4 12. 0 9. 1
  Total expenditure and net lending 32. 8 4. 7 0. 8 5. 4 6. 9 5. 3 6. 7
 
(Changes in percent of beginning-of-year broad money, unless otherwise indicated)
Money and credit
  Net domestic assets -8. 4 -2. 0 5. 0 -14. 3 11. 2 . . . . . .
    Domestic credit -19. 2 1. 2 9. 4 -16. 1 11. 2 . . . . . .
    Credit to the government (net) -14. 9 -0. 6 -2. 8 -26. 4 6. 0 . . . . . .
    Credit to the economy -4. 3 1. 8 12. 3 10. 3 5. 2 . . . . . .
  Broad money (M2) 42. 1 9. 2 9. 2 2. 0 11. 0 . . . . . .
  Velocity
    (annual average)
5.3 4. 8 4. 8 4. 9 5.0 . . . . . .
  Interest rates (end of
    period; in percent)
    Discount rate 10. 0 7. 5 6. 5 6. 0 . . . . . . . . .
    Money market rate 5. 5 6. 0 5. 0 3. 8 . . . . . . . . .
 
(In percent of GDP)
Overall fiscal surplus
    or deficit (-)
  Commitment basis,
    excluding grants
-6. 1 -3. 5 -2. 2 -1. 5 -2. 0 -1. 0 -0. 6
  Commitment basis,
    including grants
-1. 9 -0. 2 -0. 2 0. 1 -1. 0 -0. 1 0. 0
Gross domestic investment 16. 2 16. 9 17. 4 18. 7 19. 2 19. 9 20. 7
Gross domestic savings 9. 6 11. 3 11. 9 13. 2 13. 8 14. 7 15. 4
Gross national savings (including
    official transfers)
16. 3 16. 4 16. 1 17. 1 16. 9 17. 9 18. 6
External current
     account deficit (-)
  Excluding offical transfers -9. 3 -9. 2 -7. 7 -7. 5 -7. 3 -6. 8 -6. 7
  Including official transfers 0. 1 -1. 1 -1. 3 -1. 6 -2. 3 -2. 0 -2. 1
Domestic public debt 18. 0 14. 0 12. 6 10. 8 8. 8 7. 4 6. 3
External public debt 80. 9 76. 6 77. 3 75. 2 71. 0 65. 5 60. 5
 
(In percent of exports of goods and nonfactor services, unless otherwise indicated)
External public debt service 21. 9 20. 1 18. 6 19. 6 18. 7 15. 9 16. 1
  In percent of government revenue 34. 2 42. 4 38. 3 39. 2 38. 4 30. 9 30. 8
GDP at current market prices
    (in billions of CFA francs)
2,022. 3 2,242. 9 2,459. 2 2,651. 0 2,860. 5 3,121. 5 3,386. 6

Sources: Senegalese authorities; and staff estimates and projections.

 

 
Table 3. Senegal: External Financing Needs and Resources, 1996-2000
(In millions U. S. dollars)
 
    1997
Est.
1998 1999 2000   1998-2000
1996
Program
 
Needs 596. 3 661. 1 529. 0 600. 6 627. 5 1757. 2
  Current account deficit, excl. gross
    official transfers and interest payments
249. 9 236. 6 243. 9 259. 9 289. 1 792. 9
  Interest payments 120. 9 106. 5 106. 9 100. 3 96. 4 303. 7
  Amortization (excluding IMF) 136. 0 127. 1 127. 1 134. 7 167. 0 428. 7
  IMF repurchases and repayments 44. 5 63. 1 60. 1 32. 4 23. 3 115. 8
  Change in external arrears (increase -) 0. 0 -4. 6 4. 5 0. 0 0. 0 4. 5
  Change in net foreign assets (increase +)1 45. 0 132. 4 -13. 5 73. 3 51. 8 111. 6
             
Resources: 596. 3 661. 1 529. 0 600. 6 627. 5 1757. 2
  Gross official transfers 307. 7 271. 6 239. 3 255. 9 261. 9 757. 0
  Long-term loans2 202. 3 202. 4 120. 3 126. 8 136. 0 383. 0
  Private capital (net)3 -5. 2 110. 3 54. 0 81. 0 109. 3 244. 3
  Secured debt relief 57. 0 27. 6 0. 0 0. 0 0. 0 0. 0
  Use of Fund resources 34. 5 49. 1 48. 3 48. 4 48. 7 145. 4
  Financing gap 0. 0 0. 0 67. 1 88. 6 71. 7 227. 4
Memorandum item:
  Exchange rate (CFAF per US$) 511. 6 582. 0 594. 5 591. 6 588. 3  

Sources: Senegalese authorities; and staff estimates and projections
1Excluding the change in the net position vis-à-vis the Fund
2Including both existing and expected new commitments
3Including errors and omissions

Tables 4-5

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