IMF Executive Board Concludes 2012 Discussion on Common Policies of Member Countries of the West African Economic and Monetary Union

Public Information Notice (PIN) No. 12/29
March 22, 2012

Public Information Notices (PINs) form part of the IMF's efforts to promote transparency of the IMF's views and analysis of economic developments and policies. With the consent of the country (or countries) concerned, PINs are issued after Executive Board discussions of Article IV consultations with member countries, of its surveillance of developments at the regional level, of post-program monitoring, and of ex post assessments of member countries with longer-term program engagements. PINs are also issued after Executive Board discussions of general policy matters, unless otherwise decided by the Executive Board in a particular case. The staff report (use the free Adobe Acrobat Reader to view this pdf file) for the annual Discussion on Common Policies of Member Countries of the WAEMU is also available.

On March 14, 2012, the Executive Board of the International Monetary Fund (IMF) concluded the annual Discussion1 on Common Policies of Member Countries of the West African Economic and Monetary Union (WAEMU).2


2011 was a challenging year for the WAEMU. Côte d’Ivoire experienced a political crisis and armed conflict for a few months after the presidential election held in November 2010. This crisis was the culmination of a decade of political instability in the country, which had a major impact on its development. The crisis ended in April 2011 when President Ouattara (the election winner) took control of the country, but it had a severe economic impact. Subsequently, the new government embarked on an ambitious investment-led recovery. The early part of 2011 was also marked by rising food and fuel prices, which have a major economic and social impact on WAEMU countries. The second half of 2011 was marked by a drought affecting severely cereal production in the Sahel countries, but also by the incipient global slowdown.

Regional growth in 2011 (0.9 percent) was affected by the Ivorian crisis and the drought in the Sahel countries. Côte d’Ivoire’s economic activity contracted sharply in early 2011 as a result of the crisis, which led to an estimated annual GDP decline of 5.8 percent despite the subsequent recovery. The drought had a large impact on cereal production in Burkina Faso, Mali, Niger, and Senegal with estimated declines ranging from 15 to 27 percent. As a result, growth in these countries was significantly affected. The shortfall in the production of these traditional food crops also exposes millions of persons in the region to food insecurity.

Fuel and food prices had a significant impact on regional inflation. The surge in international fuel and food prices pushed inflation upward to a peak in the spring of 2011. The subsequent easing of these prices was accompanied by a quick drop in year-on-year inflation, which was below 3 percent at year-end. On average, annual consumer price inflation is estimated at 3.6 percent in 2011.

The area-wide overall fiscal deficit (excluding grants) widened in 2011. It is estimated to have increased from 5.5 percent of GDP in 2010 to 7.9 percent of GDP, mainly on account of the impact of the crisis in Côte d’Ivoire. Other factors include higher subsidies to the electricity sector in Senegal, the use of privatization revenue for investment projects in Mali, and lower tax revenue in Benin. Average public debt is estimated to have remained at about 42 percent of GDP in 2011.

The region’s current account deficit rose to about 6 percent of GDP in 2011. This increase (from about 5 percent of GDP in 2010) partly reflects less favorable terms of trade, lower worker remittances, and larger imports related to reconstruction in Côte d’Ivoire, to mining in Burkina Faso and Niger, and to higher food and fuel prices. However, thanks to strong capital inflows, the Union’s foreign exchange reserves increased and amounted to about six months’ imports (excluding intra-WAEMU trade) at end-2011.

Progress in the area of convergence was mixed. Whereas all the countries met the inflation criterion in 2010, only a minority of them still did so in 2011, because of the increase in international food and fuel prices. Most of the countries did not meet the key criterion on the fiscal deficit in 2011. On the other hand, progress was made with respect to the indebtedness criterion, as a result of the debt relief granted to Togo and Guinea-Bissau in the context of the HIPC Initiative and MDRI.

Executive Board Assessment

Executive Directors commended the regional authorities’ sound macroeconomic management, which helped contain inflation and maintain financial stability across the region in 2011 despite the political crisis in Côte d’Ivoire in the early part of the year, a sharp increase in international food and fuel prices, and severe drought in the Sahel countries. They noted, however, that progress in complying with convergence criteria has been mixed, and downside risks remain in light of the crisis in Europe and the ongoing drought in the Sahel. Macroeconomic policies will need to respond appropriately if these risks materialize. Over the medium term, it will be critical to improve the macroeconomic policy framework, address underlying structural weaknesses, enhance the stability of the union drawing on the euro area’s experience, and strengthen regional surveillance.

Directors underscored the need to reduce the area-wide fiscal deficit over the medium term to maintain fiscal sustainability, with due attention to the region’s pressing infrastructure needs. They welcomed the ongoing review of the convergence criterion on debt, and suggested that a broader approach to fiscal sustainability could be considered. They urged prompt implementation by member countries of the directives on public financial management, containment of wages and salaries, broad-based tax reforms, and replacement of petroleum price subsidies with well-targeted social safety nets tailored to the region’s circumstances.

Directors considered the monetary stance to be broadly appropriate. However, they highlighted the need to strengthen the liquidity management and forecasting framework and expedite planned inter-bank market reforms. They agreed that foreign exchange reserves are adequate and that the area-wide real exchange rate appears to be broadly aligned with economic fundamentals in the region.

Directors were encouraged that stress tests point to a resilient regional financial sector. Nevertheless, prudential regulation and supervision need to be further strengthened and brought into line with international best practices, and a more formal crisis management framework should be introduced. The FSAP recommendations should continue to be vigorously implemented. Directors also called for stepped-up efforts to develop the financial sector to help ease domestic financing constraints and support growth.

Directors urged the authorities to accelerate regional integration. This would require reinvigorating regional policies, ensuring their full implementation, and increasing policy coordination by member countries. Reform priorities include removal of barriers to intra-regional trade and factor mobility, improvement of the business environment to enhance non-price competitiveness, and development of regional infrastructures.

Directors welcomed the authorities’ initiatives to further improve transparency and information availability, and urged continued progress in this area. They recommended the regular compilation and timely publication of financial soundness indicators.

The views expressed by Executive Directors today will form part of the Article IV consultation discussions on individual members of the WAEMU that take place until the next Board discussion of WAEMU common policies.

Table 1. WAEMU: Selected Economic and Financial Indicators, 2008—2016


2008 2009 2010 2011 2012 2013 2014 2015



      Est. Proj. Proj. Proj. Proj.


  (Annual percentage change)

National income and prices


GDP at constant prices

4.2 2.9 4.6 0.8 7.0 5.6 5.8 5.7


excluding Côte d'Ivoire

4.9 2.6 5.5 3.2 6.5 5.5 5.8 5.8


GDP per capita at constant prices

1.4 0.2 1.8 -1.9 4.1 2.8 3.0 2.9


excluding Côte d'Ivoire

2.2 0.0 2.8 0.5 3.7 2.8 3.0 3.1


Broad money to GDP

-3.5 9.5 8.9 6.6

Consumer prices (average)

7.4 0.4 1.4 3.8 3.6 2.5 2.5 2.4


Terms of trade

12.0 4.0 -4.5 1.3 2.8 1.8 -0.1 0.9


Nominal effective exchange rates

3.4 0.9 -4.3 1.7

Real effective exchange rates

5.8 0.2 -6.4 0.9

  (Percent of GDP)

National accounts


Gross domestic savings

12.8 15.5 13.5 13.5 13.5 13.8 14.6 15.3


Gross domestic investment

19.8 18.6 19.1 19.3 20.9 21.6 21.7 22.2


Of which: public investment

5.9 7.1 6.6 7.0 8.2 8.5 8.6 8.6


Resource gap

-7.0 -3.1 -5.5 -5.7 -7.5 -7.8 -7.1 -6.9


  (Annual changes in percent of beginning-of-period broad money)

Money and credit 1


Net foreign assets

0.3 5.8 3.1 5.5

Net domestic assets

12.4 10.8 14.6 8.9

Broad money

9.0 14.7 15.7 12.7

  (Percent of GDP, unless otherwise indicated)

Government financial operations


Government total revenue, excl. grants

17.6 17.4 18.0 16.5 18.3 18.7 19.0 19.2


Government expenditure

22.4 23.9 23.5 24.4 25.3 25.4 25.3 25.2


Overall fiscal balance, excl. grants

-4.8 -6.5 -5.5 -7.9 -7.0 -6.6 -6.3 -6.0


Official grants

2.9 3.0 2.3 3.1 3.0 3.1 3.1 3.1


Overall fiscal balance, incl. grants

-1.9 -3.5 -3.2 -4.8 -3.9 -3.5 -3.1 -2.8


Basic fiscal balance, incl. grants & HIPC

-1.8 -1.3 -0.8 -2.5 -1.9 -1.3 -0.9 -0.7


External sector


Exports of goods and services 2

22.1 26.6 27.7 29.0 29.0 28.4 27.7 27.1


Imports of goods and services 2

35.8 32.0 34.8 36.8 37.9 37.1 35.8 34.9


Current account, excl. grants3

-8.7 -5.7 -6.8 -7.7 -9.2 -9.2 -8.5 -8.3


Current account, incl. grants3

-7.1 -3.6 -4.9 -5.7 -7.4 -7.7 -7.1 -6.9


External public debt

33.8 35.6 32.3 32.2 32.6 32.8 33.3 33.0


Broad money

29.5 32.3 35.2 37.5

Memorandum items:


Nominal GDP (in billions of CFA francs)

31,205 32,551 34,660 35,977 39,800 42,988 46,490 50,162


Nominal GDP per capita (in US dollars)

750 722 713 757 754 791 828 865


CFA franc per US dollars, average

448 472 495 471

Euro per US dollars, average

0.68 0.72 0.76 0.72

Foreign exchange cover ratio 4

96.8 98.9 99.9 97.2

Reserves in months of imports


(excl. intra-WAEMU imports)

5.7 6.2 6.3 6.2 6.0 6.1 6.1 6.0



Sources: IMF, African Department database; World Economic Outlook; IMF staff estimates.

1The estimates for 2011 refer to annual change at end-Oct, with the beginning-of-period referring to end-Oct 2010.

2Excluding intra-regional trade as estimated by BCEAO up to 2013.

3Data up to 2010 are corrected for intra-regional trade discrepancies by BCEAO.

4Gross official reserves divided by short term domestic liabilities (IMF definition). For 2011, the estimate refers to end-Oct.

1 Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of these bilateral Article IV consultation discussions, staff hold separate annual discussions with the regional institutions responsible for common policies in four currency unions—the Euro Area, the Eastern Caribbean Currency Union, the Central African Economic and Monetary Union, and the West African Economic and Monetary Union. For each of the currency unions, a staff team visits the regional institutions responsible for common policies in the currency union, collects economic and financial information, and discusses with officials the currency union’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. Both staff’s discussions with the regional institutions and the Board discussion of the annual staff report will be considered an integral part of the Article IV consultation with each member. At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here:

2 WAEMU’s members are Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo.


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