Senegal
Senegalese macro-economy on track

afrol News, 10 April - The Senegalese economy posted real GDP growth of 5.6 percent in 2001, the government reports. The slowdown in the global economy following the events of 11 September had only had a negligible impact on the Senegalese economy in 2001.

Timing had been positive for Senegal, because by 11 September, production in most key export sectors (groundnuts, fishing, and phosphates) had been largely achieved. Even tourism, the sector potentially more vulnerable to the events, was only marginally affected, according to a report by the Senegalese Minister Delegate in charge of the Budget and Housing, Cheikh Hadjibou Soumaré. Also the fall in world petroleum prices had eased the external current account deficit. 

The basic fiscal balance at end-December 2001 amounted to a deficit of Franc CFA 25.9 billion (40 million euro) or 0.8 percent of GDP, and the overall deficit stood at CFAF 130.3 billion (200 million euros) or 3.9 percent of GDP.

- The government's economic policy in 2002 is aimed at maintaining a real economic growth rate of about 5 percent and keeping inflation in check, Soumaré states. "Real GDP growth will be supported by sustained activity in the secondary sector as a result of investments in energy and mining, as well as by continued buoyancy in the tertiary sector." 

The program of the Senegalese government aimed to consolidate economic growth by speeding up structural reforms, redirecting government expenditure to priority sectors, and increasing public savings following the public enterprise deficits observed in 2001, according to Soumaré. Senegal is undergoing wide-ranged structural reforms to meet demands by international finance institutions. Formerly an economy dominated by state interventions and subsidies, privatisation and private sector promotion are the new key elements of Senegalese policies.

While the long-term negative trends of Senegal's macro-economy have been turned and substantial GDP growth is registered, reforms have also been painful. Especially the policy of liberalising the groundnut sector has been difficult. The dissolution of Sonagraines, a state-owned company organising most of the collection and transportation of groundnuts, was to ensure that the prices of these services would be determined freely by the market, but merely resulted in the collapse of groundnut collection and transport.

The privatisation of the power utility Senelec was to be achieved by the increase of electricity tariffs last year, so as to make the utility solvent and an interesting buy. While private consumers pay even more for electricity, Senelec still had financial problems and privatisation is hard to achieve. Power tariffs were again increased by an average of 10 percent on 1 March this year. Government subsidies for petroleum products, except for butane gas, were suspended in June 2001.

While macroeconomic reform has been slow and somewhat painful, results are however materialising. The negative side effects of structural reforms are in some ways counterweighted by poverty reduction programmes promoted by the government and mostly financed by the IMF and the World Bank.

According to Soumaré, the Senegalese government has a strong desire to reduce poverty. The main actions planned for 2002 in this context relate, in particular, to an increase in the education budget, which was expected to grow from 31.6 percent of budgetary expenditure (including foreign-financed investment spending) in 2001 to 32.0 percent in 2002. This was paralleled by an increase in the health budget to 9.2 percent of budgetary expenditure. To strengthen decentralisation, the government was to provide additional appropriations to local governments in the amount of CFAF 2.5 billion (3.8 million euro). 

Sources: Based on IMF and afrol archives

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