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For more information, see Senegal and the IMF
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Policy Framework Paper, 1998–2000
I. Introduction 1. Following the devaluation of the CFA franc in January 1994, the government of Senegal undertook a series of programs of adjustment and economic reform aimed at restoring the conditions for strong, sustainable economic growth and ensuring domestic and external financial viability. These programs were based on the strict management of domestic demand to bring inflation and the government deficit quickly under control, and on the implementation of wide-ranging structural reforms aimed at liberalizing the economy, reducing the size of the public sector, and fostering private sector development. The programs also involved the implementation of ambitious plans to improve the provision of education and health services and, more generally, to raise the living standards of the most disadvantaged social groups. In this effort to thoroughly restructure its economy, Senegal received substantial assistance from the international community, particularly the International Monetary Fund, the World Bank, the European Union, and several bilateral partners. The implementation of the reform program was coupled with a deepening of the democratic process, decentralization, and the transfer of responsibilities to local governments. It also provided an opportunity to strengthen the dialogue and consensus-seeking among all political and social partners in Senegal and took into account the prospects for regional integration opened up with the signing of the treaty creating the West African Economic and Monetary Union (WAEMU) in January 1994. 2. Despite a decline in agricultural production in 1997 owing to poor weather conditions, the execution of the adjustment and reform programs implemented in 1994-97 was broadly satisfactory, and contributed to an improvement in economic and financial conditions. Real GDP growth reached 2.9 percent in 1994 and averaged more than 5 percent in the years 1995-97. The implementation of sound fiscal and monetary policies has helped bring inflation under control, lowering it to less than 2 percent by 1997. The fiscal and external current account deficits have been reduced to manageable levels.
3. In 1998-2000, the government of Senegal will take the necessary steps to
achieve
strong, sustainable, more diversified, and better distributed growth. It will complete the basic
structural reforms initiated since January 1994, deepen the various sectoral reforms under
way,
and undertake new reforms in the areas of good governance, poverty reduction, the
development of human resources, and the protection of the environment. Senegal seeks the
support of the donor community for the implementation of this new and ambitious program
of
accelerated growth and sustainable development.
4. As a result of the rigorous implementation of the four annual programs adopted since early 1994, Senegal's economic and financial position has shown considerable improvement and significant progress has been made, particularly in liberalizing the economy and restructuring the public sector. The macroeconomic objectives adopted for 1994-97 have been achieved. Consequently, after a long period of stagnation, real GDP growth averaged slightly more than 5 percent in the years 1995-97. This recovery was made possible primarily by the growth of services, construction, and industrial and mining output. The agricultural sector contributed only modestly to growth, owing to poor weather conditions in the last two crop years and other more structural obstacles that impeded the development of agriculture. Inflation was reduced to 1.8 percent in 1997 after having risen to some 32.1 percent on a year-to-year basis following the devaluation in 1994. The overall fiscal deficit (on a commitment basis and excluding grants) was reduced from 6.1 percent of GDP in 1994 to 1.5 percent in 1997. The external current account deficit (excluding official transfers) narrowed from 9.3 percent of GDP in 1994 to 7.6 percent in 1997, slightly above the initial projections because of a decline in groundnut exports. Finally, the resumption of external assistance and the pursuit of a prudent monetary policy contributed to a substantial improvement in Senegal's official foreign assets, which rose to the equivalent of 73 percent of base money (including government deposits) at end-1997, compared to barely 1 percent at end-1993. 5. Senegal's efforts at fiscal consolidation have been successful. The overall budget deficit (on a commitment basis and excluding grants) has been reduced as a result of the combined effect of an increase in revenue and the limit placed on the growth of expenditure. Fiscal revenue increased an average rate of 13 percent per annum between 1994 and 1997, rising from 14.9 percent of GDP in 1994 to 16.3 percent in 1997. Over the same period, total expenditure and net lending increased by only 3.6 percent, on average, mainly as a result of the growth of capital expenditure financed with domestic budgetary resources. Current expenditures have been stabilized as a result of the gradual reduction of interest charges on public debt, albeit offset by the moderate growth of the wage bill. The share of social spending (education, health, and the promotion of women, children, and the family) in total current expenditure (excluding interest) has steadily expanded, increasing from 33 percent of GDP in 1994 to 42 percent in 1997. All domestic and external payments arrears were eliminated between 1994 and 1995 and all domestic and external debt service obligations have been honored on a timely basis, with only one exception in December 1997. 6. Monetary policy has been conducted prudently at the regional level by the BCEAO, based on the indirect liquidity regulation mechanisms established in 1989. The growth of the money stock was 9.2 percent both in 1995 and 1996, and 2 percent in 1997. Net bank credit to the government, which had been decreasing since 1994, was reduced by 41 percent in 1997 owing to the marked improvement in the government's financial position, while credit to the economy increased approximately by 15 1/2 percent on annual average during 1995-97 following a slight decline in 1994. The net domestic assets of the central bank were kept within the established limits throughout the period, while official foreign assets improved substantially. As a result of the reduction in inflation, the BCEAO discount rate was gradually lowered to 6 percent in September 1997 from 14.5 percent in January 1994. At end-1997, bank prime rates varied between 8 percent and 9.5 percent, compared to a range of 11 percent to 12.5 percent in April 1994. 7. Major structural reforms were undertaken in 1994-97 in order to reduce government intervention in the economy and to create an environment conducive to the development of private sector investment. The government liberalized nearly all prices, as well as domestic and foreign trade and international shipping; dismantled nearly all monopolies, including the rice monopoly; eased the regulatory framework governing economic activity, particularly the labor code; and streamlined the tax system. Most of the planned measures were implemented. The liberalization of prices affected a large number of products with authorized or administered prices. The prices of a few products are still determined administratively (charcoal, hydrocarbons, water, electricity, telephone services, hospital and clinic charges, and the fees of licensed physicians); and prior authorization is required for changes to prices of butane gas, pharmaceutical products, and informal sector urban transport rates. The reforms undertaken also concerned the promotion of competition through the cancellation of most special agreements or the restructuring of those remaining through the gradual elimination of specific tax benefits. A competition commission was set up on June 12, 1997. An unfair trade practices committee was created, as well as a national consumer council. Consumer associations are being formed and are contributing to the dissemination of economic information and the organization of consumers. 8. In the parapublic sector, the 1994-97 program called for the restructuring of 22 of the 54 nonfinancial enterprises and commercial public establishments in the government's portfolio at end-1993. At end-December 1997, restructuring of 7 enterprises was completed: the Caisse de Péréquation et de Stabilisation des Prix (CPSP–1996), the Société Industrielle d'Assainissement du Sénégal (SIAS–1996), the Société Hotelière Saly (SH-SALY–1996), the Société Nationale des Eaux du Sénégal (SONES–1996), the Agence Sénégalaise pour l'Assurance du Commerce Extérieur (ASACE–1997), the Société Nationale des Télécommunications (SONATEL–1997), and the Société des Textiles de Kaolack (SOTEXKA–1997). Three others will be restructured by end-March 1998: the Société Sénégalaise des Phosphates de Thiès (SSPT), the Société de l'Hôtel de l'Union Teranga (SPHU-TERANGA) and the Société Nouvelle pour l'Approvisionnement et la Distribution du Sénégal (SONADIS), and an eleventh (DAKAR-MARINE) by end-July 1998. These restructuring arrangements reduced the government portfolio by 25 percent and generated CFAF 93 billion (3.5 percent of GDP) in 1997, largely from the sale of 61 percent of the capital of SONATEL. Efforts to privatize 11 other enterprises are under way; they will however not be completed before end-1998. 9. Sectoral reforms have also been undertaken in the field of energy, transportation, and agriculture, as well as in the areas of business law and the judicial system. However, these reforms have yet to produce the expected results and, in certain cases such as the energy sector, have been significantly delayed specifically as a result of the difficulties encountered in achieving the necessary social consensus.
10. The government believes that the positive macroeconomic results now
obtained and the
structural and sectoral progress made so far are as yet insufficient to place the Senegalese
economy on the road to strong growth and significantly reduce unemployment and poverty.
The Senegalese economy is still fragile and structural impediments hamper its development.
First, fiscal consolidation is hampered by the weakness of the country's overall fiscal effort
(16 percent of GDP), a revenue structure that relies excessively on import taxes, the
inadequacy of health care expenditure, and the inefficiency of education expenditure. Second,
the restructuring of the parapublic sector and the envisaged reform of the civil service will
require significant efforts in the years to come to further reduce the size of the government,
refocus its functions, and create a more professional and more efficient civil service. Third,
despite the improvement in external competitiveness, the development of the economy is still
hindered by the high cost of the primary technical inputs (electricity, water, transportation),
the
lack of basic infrastructure, a high level of protectionism, and a persistently swollen
bureaucracy. Fourth, although development of the private sector has progressed substantially,
it still falls far short of expectations; foreign investment is very modest; and the country still
depends quite heavily on official development assistance, which seems to be on the decline.
Finally, despite the recovery of growth since 1994, most social indicators are extremely
unsatisfactory and poverty is still widespread, both in rural areas and in the cities.
11. A new enhanced structural adjustment program for 1998-2000 focuses on the elimination of the structural obstacles to strong growth and reduced unemployment and poverty. The strategy adopted aims to ensure economic growth of 6 percent and an increase in per-capita income of more than 3 percent on average over the period; to keep inflation below 3 percent in order to maintain an inflation differential favorable to the competitiveness of Senegalese goods; and to contain the external current account deficit (excluding official transfers) to less than 7 percent. The gains in competitiveness to be made from the adopted reforms should allow for a sustained expansion of exports faster than the growth of imports, thus contributing to improvement in the external position. To attain these objectives, the government is determined to keep the overall budget deficit (excluding grants) at less than 2 percent of GDP throughout the period and to implement a major reform of the external trade regime. Achievement of the program objectives will depend very much on the pace of implementation of the near-term measures envisaged for consolidating government finances, reducing excessive technical input costs, and expanding the scope of private sector activities. In light of the fixed parity of the CFA franc, regional monetary policy will continue to be designed to strengthen the zone's foreign assets position and limit bank credit to government. In the medium and long term, improvement in the efficiency of government intervention, in the extent and quality of the basic infrastructure (transportation in particular), and in the development of human and natural resources will contribute to the formation of a well developed stock of efficient physical and human capital. 12. The success of the program in respect of growth and poverty reduction will require a substantial increase in domestic investment and savings. The investment rate is expected to increase from 18.7 percent of GDP in 1997 to 20.7 percent in 2000, a gain of nearly two points, largely attributable to increased private sector investment. At the same time, the savings rate is expected to increase from 13.2 percent of GDP in 1997 to 15.4 percent in 2000. As a result of improvements in the position of government finances, public savings will remain positive, averaging the equivalent of 6.2 percent of GDP annually. A considerable improvement in private savings is expected, given a business-friendly environment and the enhanced confidence of economic agents and investors in the outlook for the economy. Steps will be taken to encourage the diversification of instruments of financial intermediation so as to mobilize savings and to ensure adequate allocation of credit both to modern sector enterprises and to small enterprises operating in various sectors of the economy such as agriculture, livestock farming, fishing, handicrafts, and transportation. The mobilization of small savings will be encouraged by expanding the network of mutual savings and loan associations in urban and rural areas.
13. The medium-term strategy will be based essentially on fiscal consolidation;
completion
of reforms in the energy and parapublic sectors; promotion of private sector development;
and
the efficient management of central and local governments. In addition, improvements in the
management of public investment will be coupled with a shift in the focus of such investment
in favor of social sectors such as education and health. Poverty reduction, the promotion of
the
role of women, and better management of natural resources will round out the actions to be
taken to accelerate growth and sustainable development. 14. Further consolidation of government finances will continue to be the cornerstone of the government's fiscal and tax policy during 1998-2000. This will reinforce sustainable, medium-term financial viability, support the country's shrinking dependence on external financial assistance, and promote the enhanced competitiveness of the Senegalese economy. During the same period, the pursuit of a prudent monetary and credit policy will continue within the framework of the objectives defined by the Council of Ministers of the West African Monetary Union. 15. Against the backdrop of a significant reduction in average import taxation arising from the adoption of the common external tariff (CET) of the WAEMU, the government's financial policy for 1998-2000 will aim to further consolidate public finances while meeting the country's growing social demands, as well as the financial requirements of the investment in basic infrastructure which is essential for enhancing the competitiveness of the economy. The objective of the program is to limit the overall budget deficit (excluding grants) to less than 2 percent of GDP, on average, during 1998-2000, a level consistent with the amount of grants and concessional loans projected under the program, and the use of privatization earnings to finance high-priority public investment. The 1998 deficit will be half a percentage point of GDP larger than the 1997 deficit, owing to net revenue losses resulting from the reduction of external tariffs. The ratio of fiscal revenue to GDP is expected to decline by approximately three-quarters of a percentage point in 1998 to 15.6 percent. It is subsequently expected to rise to the equivalent of 16 percent of GDP in 1999 and 2000, reflecting projected increases in domestic tax revenues. The government's objective is to reduce public expenditure as a percentage of GDP from 17.8 percent in 1997 to 16.8 percent in 2000, while expanding the share of current and capital outlays devoted the social sectors in total public expenditure. 16. As of the second quarter of 1998, the government will undertake a major streamlining of the fiscal system, ahead of the adoption by January 1, 2000, of the CET. The reform of the tax system will consist of a significant reduction in the average rate of import taxation and the establishment of the broadest possible tax system under the law "droit commun" that seeks to eliminate existing exemptions. The relative reduction of customs taxes is expected to be offset by a broadening of the domestic tax base and improvement in administrative efficiency. 17. Senegal will therefore introduce, in April 1998, a four-tier external tariff structure (0, 5, 10 and 25), plus a 5 percent customs stamp, while maintaining on a temporary basis existing surcharges that apply to a few selected import products. Pending agreement on product classification among the WAEMU member countries, Senegal will resort to more appropriate customs procedures and a provisional classification that effectively abolishes the multi-layer tariff structure known as the "Code de précisions", except with regard to its application to a limited number of products used in industrial processing during the period until the implementation of the common external classification by the WAEMU countries in January 1999 at the latest. Based on the measures adopted, the average taxation rate on non-exempted imports (inclusive of surcharges but excluding petroleum product taxes) will be lowered from 20 percent in 1997 to 15 percent in 1998 and 1999, and to 12 percent in 2000. The phasing-in of the CET will be accompanied by (i) the adoption of a customs taxation system "régime de droit commun" that eliminates exemptions; (ii) the regional harmonization of customs regulations; and (iii) the coordination of domestic indirect taxes, particularly the VAT. As of January 1, 2000, the maximum tariff rate of the CET will be reduced to 20 percent. 18. With a view to partially offsetting the short-term loss of revenue resulting from the tariff reform, steps will also be taken to increase domestic tax revenue. The VAT computerization program, to be completed in 1998, will allow a closer monitoring of VAT tax returns and collection efforts. Economic agents in the informal sector will benefit from the accounting and tax training provided by authorized management centers. This will, in turn, help the government to better monitor informal sector activities for taxation purposes. The use of the single taxpayer registration system by the tax and customs departments and the systematic review of income tax returns should also strengthen monitoring of taxpayers' obligations. To facilitate the transition from the informal to the modern sector, the tax and customs administrations plan to require that merchants make tax payments above a certain amount by check. The authorities will examine the possibility of further reducing the scope of exemptions and of products subject to the reduced VAT rate; they will also prepare, by end-July 1998, a report on the possible unification of the VAT rates. Furthermore, the government will make renewed efforts to eliminate smuggling, with special emphasis being given to continued execution of the import inspection program (PVI). However, implementation of the PVI will be adapted to the need for the further simplification of customs clearance procedures and to the broader objective of improving the quality of services offered by the customs administration. The necessary arrangements will be made to give customs offices access to the import valuation database. 19. The government is acutely aware of the need to improve the quality of Senegal's budget programming and management. Public expenditure policy is hampered by two major obstacles. The first is the lack of efficiency indicators for the resources used, so that consistency between economic policy objectives and budget allocations cannot be ensured. The second is the rigid separation of the current budget from the capital budget. In order to ensure more effective government action, budgetary allocations will increasingly be made with a view to achieving certain specifically defined sectoral objectives, in the context of a budgeting-by-objective strategy. Thus, beginning with the 1999 budget law, the main recommendations of the public expenditure review underway in the fields of education, health, and justice will be implemented, which will allow for a more efficient allocation of budgetary resources in those three sectors. The main changes envisaged will be the establishment of a medium-term expenditure framework which integrates both current and capital expenditure by sector (including expenditure financed by foreign donors), the recognition of a strict budget constraint by sector, and the definition of appropriate monitoring indicators for each sector. If the experiment is conclusive, it will be extended to other ministerial departments. 20. The government is committed to consolidating the gains achieved in the management of current expenditure and, in particular, reducing the relative share of the wage bill. Recruitment will be determined on the basis of personnel departures from the civil service, and on sectoral priorities, with education and health having the very highest priorities. The new merit-based promotion system will become operational in 1998, with the definition of a performance rating scale for each employee, based on appropriate performance indicators. 21. The 1998 capital budget included in the 1998-2000 program calls for an 18 percent increase in capital expenditure. The proportion of expenditure financed by domestic resources will increase significantly with the growth of public savings and nonrecurrent privatization receipts. Nearly a fifth of total capital expenditure will be devoted to social infrastructure projects. The public expenditure review has exposed a number of weaknesses in the programming and management of capital expenditure. It has, in particular, revealed deficiencies in project analysis and monitoring, the evaluation of recurrent expenditure, coordination with and between donors, and the consistency of investment appropriations with the government's overall medium-term financial framework. To correct these weaknesses, the government will begin preparing a thorough reform of work methods and budget procedures in 1998. The purpose of this reform will be to prepare a comprehensive, multiyear budget which reconciles, in a transparent manner, the objectives sought and the resources used to achieve them. In particular, the reform will include the establishment of sectoral expenditure programs (such as recently prepared for the health sector and currently being developed for the education sector) and the consolidation of all public capital expenditure, whether executed by the central government or covered by external financing. An initial report on the guidelines of this new approach to budget programming, and an action plan to improve preparation of the capital budget, will be drafted by end-July 1998. 22. A series of actions aimed at strengthening planning capacities and the implementation of the technical ministries' development projects and programs will be undertaken in the context of a good governance program. In particular, efforts will be pursued to improve project monitoring and the technical expertise of the Ministry of Economy, Finance, and Planning in the areas of project evaluation, selection, and coordination. Pending the establishment of ministerial research and planning units, the 1997 experiment, which consisted of using local consultants to monitor and evaluate public projects and programs, will be continued and expanded. The three-year public investment programming system will be improved through the gradual adoption of a programming approach that provides an overall view of the policies to be implemented in a given sector. In this context, coordination between the government, donors and lenders will be intensified with a view to improving the information system and the monitoring of projects in progress. 23. Between end-1996 and end-1997, the gross stock of domestic public debt was reduced from 13 percent of GDP to 10.7 percent as a result of the partial payment of extrabudgetary payments arrears in December 1997, the restructuring of the bank debt of the former National Office for Development Cooperation and Assistance (ONCAD), and the payment of current debt obligations. The exceptional clearance of the balance of extrabudgetary arrears and the payment of current obligations should reduce the stock of domestic debt to less than 9 percent of GDP in 1998. The government's financial obligations arising from cross debts were settled in 1996 and 1997, in keeping with the established timetables. Agreements were concluded regarding the significant net balances owed to the government; these agreements are being complied with. The government's claims on a number of public enterprises experiencing serious financial difficulties would be canceled. Near-term measures aimed at financial rehabilitation of the government employees' National Pension Fund (FNR) have been adopted, in particular in the form of increases in 1996 of individual contributions and the discharge of certain government obligations. Actions designed to ensure the medium- and long-term viability of the FNR are being prepared with technical assistance from the International Labor Office (ILO); the reform measures under consideration include transforming the Fund into an autonomous institution, streamlining benefits, and maximizing the profitability of the Fund's financial investments. 2. Monetary and credit policies
24. The monetary authorities will continue to conduct a prudent monetary and
credit policy
at the regional level, in keeping with the union's growth, inflation, and balance of payments
objectives. It is therefore projected that Senegal's money stock will grow an annual average
rate of 9 percent in 1998-2000, in line with the growth of nominal GDP. Net credit to the
government will increase in 1998 owing to the programmed use of part of the substantial
government deposits accumulated in 1997. The government will then seek to reduce its
indebtedness to the monetary institutions. Credit to the economy is projected to increase by
an
annual average of just over 8 percent for the years 1998-2000. Senegal's contribution to the
net foreign assets of the BCEAO will also continue to grow. 26. The government will assiduously support the actions of the WAMU Banking Commission to ensure compliance with the prudential rules and strengthen the financial structure of credit institutions. The ongoing measures designed to improve the legal and judicial systems should also contribute to the rehabilitation of the banking environment and introduction of healthy competition in deposit-taking and in credit-distribution activities. 27. In order to support economic growth, the government will work with its WAMU partners to promote private sector investment. The amendment of legislative provisions on usury rates and the expected clarification of their fiscal regime should promote the growth of financial leasing institutions. The opening in 1998 of the regional securities exchange will facilitate diversification of financial products promoting development of savings and long-term financing of enterprises. Finally, the government will exercise appropriate prudential surveillance of the country's rapidly expanding mutual savings and loan associations to ensure continued sound performance of these institutions.
28. To facilitate the design and monitoring of policies, the government is
taking all required
steps, to improve the quality and coverage of economic and social data. To that end, in
coordination with the BCEAO, an action plan is being implemented to improve balance of
payments and monetary statistics. The authorities will address weaknesses in the areas of
national accounts and social data, if necessary with technical assistance. They will also
accelerate the pace of dissemination of the data, including on foreign trade. 1. Reform of the energy sector 30. The energy sector development policy letter signed in February 1997 sets out the broad outlines for restructuring and reforming the electricity, petroleum products, and domestic fuels subsectors. The government's objective is to finalize the major actions for restructuring of the sector by end-1999 under the sectoral adjustment program negotiated with the World Bank and in the context of implementation of the project for sustainable and participatory management of traditional energy. 31. Regarding electricity, the process to privatize the Société Nationale d'Electricité–SENELEC (including the requisite liberalization of the electricity generation, transmission, and distribution activities) was initiated with the passage by the National Assembly of Law 98-01 of January 22, 1998 on opening up the company's capital to the private sector. The strategic operator will be selected during the second half of 1998 and the new company will be operational as of the first quarter of 1999. The State will not keep more than 41% of SENELEC's capital. The regulatory and legislative framework for the electricity subsector, which opens up electricity production and distribution activities to the private sector, will be adopted by the government before April 15, 1998. As part of this new electricity law, a regulatory agency will be set up by end of March 1999. In addition to reducing the cost of electricity, the purpose of the reform is to speed up country-wide electrification, in particular in the rural areas. 32. Regarding the petroleum sector, the government has decided to create the conditions for liberalization of the importation, distribution, and transportation of hydrocarbons. The conclusions of the current study on the modalities for liberalizing subsector activities will serve as a basis for the introduction, in April 1998, of a new legal and regulatory framework. Petroleum taxation will be revised to better reflect the sector's new operating environment and will come under the umbrella of WAEMU customs and tax harmonization measures. It will also take account of economic competitiveness and government financing requirements. The reform envisages a simplified taxation mechanism and greater tax neutrality. Proposed actions include: (i) the introduction of a specific tax on white products (regular and super gasoline, and gas-oil) replacing the variable stabilization levy; (ii) the automatic adjustment (quarterly in 1998 and monthly beginning in 1999) of domestic prices on the basis of international prices; (iii) liberalization of third-party access to existing import, storage, and transport facilities; (iv) elimination of the US$2.3/barrel supplement paid to the SAR and its replacement by an ordinary law protective duty based on a differential not exceeding 20 percentage points (and 15 percent in 2000) between white products and crude oil, and 5 percent for the black products, to ensure protection of refining activities; (v) introduction of a four year declining surtax on white products to offset the abolition of the SAR monopoly agreement and SAR's implementation of an investment program intended to reconvert and adapt its production unit. 33. Abolition of the oil stabilization mechanism is intended to allow the fluctuations in international petroleum prices to affect pump prices, as well as to gradually reduce the subsidy on butane gas and fuel oil. The subsidy on gas, which has risen to an unsustainable level, will be eliminated gradually over a four year period and will be nil not later than January 1, 2002. The subsidy on fuel oil and diesel oil for power generation will also be eliminated gradually, over a three year period, and will be nil not later than January 1, 2001. In all, the objective is to help lower consumer prices while guaranteeing an adequate level of revenue to the government from the sector. 34. Regarding the domestic fuel subsector, the sector liberalization policy should allow liberalization of market prices for charcoal and fuelwood not later than end-1999 to reflect the costs of renewing forestry resources. It is hoped that the transfer of responsibilities for managing natural resources to the local authorities will result in a more sustainable supply of charcoal and fuelwood, in accordance with the objectives of the law on regionalization and the new Forestry Code adopted by the National Assembly in December 1997. 2. Restructuring the public and parapublic sectors 35. The government intends to withdraw from all commercial activities by end-2000, through privatizing financial and nonfinancial public enterprises, wholly or in part, or by reducing its share of the capital to 25 percent at most. In the case of certain public services, such as water distribution, urban transport, railways, ports and airports, it will seek to entrust the management to the private sector, while creating a asset holdings public company. Government participation in rural training, low-cost housing, and minerals-prospecting companies will be limited to 51 percent. The government will maintain a participation of between one-third and 41 percent in two strategic enterprises (SONATEL and SENELEC). The administrative unit responsible for managing this program will be strengthened. Before end July-1998, this unit will prepare a report on economic and financial results in 1996 of the 37 enterprises in which the Government has a equity share of more than one third. 36. An investment bank has been chosen to propose before end-July 1998 a strategy for the sale of the Méridien-Président hotel. The studies that will lead to the creation of a private operating company for public transport in Dakar—to replace the Société des Transports du Cap-Vert (SOTRAC)—are well under way; the request for bids is expected to be launched in June 1998 and a strategic partner chosen by September 1998. The privatization strategy of the Société Immobilière du Cap-Vert (SICAP) should allow its privatization by the end of the year. Given the complex nature of the Société Nationale de Commercialisation des Oléagineux (SONACOS) privatization process and the lack of success with previous attempts, the government has chosen an investment bank to propose a new privatization strategy that could allow for the choice of a buyer by end-1998. As for the SENELEC, it is now planned to issue a request for bids in August 1998, after completion of the technical and financial audits, and to proceed to the choice of strategic partner by end-December 1998; the latter would take up duties in the first quarter of 1999, after the terms of the contract have been negotiated. The establishment of a private company (with minority share holding by the governments of Senegal and Mali) to operate the Dakar-Bamako rail link is expected by December 1998. A bank acting in the capacity of financial advisor will be chosen to select the strategic operator of the international line. Four small enterprises (the Société des Habitations Modernes–HAMO, the Manufactures Sénégalaises des Arts Décoratifs–MSAD, the Société du Domaine Industriel de Dakar–SODIDA, and the Société Nationale d'Etudes et de Promotion Industrielle–SONEPI) will be privatized by end-December 1998. The list of enterprises to be privatized in 1999-2000 will be finalized at the time of the midterm review of the first annual arrangement under the ESAF. The 1998 privatization program and the program envisaged for 1999 and 2000 should reduce the government share in public and semipublic enterprises from 71 percent on average at end-1997 to 43 percent in 2000. Several of these enterprises will be simply asset holding public companies after the management has been turned over to a private partner. These will include SONES (water distribution, Dakar-Marine (shipyard), and Dakar-Bamako (railways). 3. Reform of the legal framework and of the judicial system 37. A set of measures have been, or are being, adopted at the national and international level to improve business law and the functioning of the judiciary. The Arbitration Center created in Dakar's Chamber of Commerce, Industry, and Agriculture will be operational following adoption of the law on internal arbitration by the National Assembly in the second half of 1998. In the particular case of enterprises in difficulty, draft laws governing the professions associated with judicial control (trustees, receivers, court-appointed conservators) have been prepared at the national level to ensure adherence to the regulations governing competence and business ethics. These drafts will be submitted to the National Assembly during the second half of 1998. The business law training program for magistrates and paralegals will continue. Establishment of the commercial clerk's office is part of a more comprehensive reform of the Dakar regional court. 38. In the context of the Organization for the Harmonization of Business Law in Africa (OHADA), the uniform laws on general commercial law, company law, and economic interest groupings and on the organization of guarantees have been in effect since January 1998 in all the signatory states, including Senegal. The laws supplementing or modifying the provisions of these uniform laws, as well as those repealing the contrary provisions applicable at the national level, were the subject of three draft decrees and four draft laws which will be submitted to the National Assembly very shortly to prevent any inconsistencies between the various relevant legal provisions and the provisions of the OHADA Treaty. Other uniform laws are being prepared in the areas of procedures for recovery and execution, of collective procedures, and of accounting law. A department specializing in business law is being established at the Dakar regional court principally to monitor OHADA uniform laws. 39. The government intends to follow up on the initiatives to improve the business regulatory framework and strengthen the capacities of the private sector, which were begun in 1994. In collaboration with the World Bank, the government will evaluate the economic impact of trade liberalization. The government is preparing a new project to be financed by the World Bank to promote private investment and exports. The study on competitiveness prepared by the World Bank -- Senegal: The Challenge of International Integration -- will be one of the documents used to prepare this project. A workshop to discuss this study will take place in Senegal before end-June 1998.
5. Tariff reform in the WAEMU context 41. To support and strengthen the modernization policy and lay the groundwork for better management of public affairs, the government must rethink its processes, organization, and operations in relation to its role of private sector strategist and promoter. To initiate the necessary reform in this area, a national dialogue on public service and the new governance will be organized, following the example of higher education and the private sector. Surveys of users and government officials will be launched beginning in April 1998 to prepare for the start, in mid-June 1998, of a dialogue that should lead to an action plan to improve the organization and operations of the civil service. The reforms to be instituted aim at creating the conditions for a civil service that is managed rigorously and whose mechanisms for transparency, responsibility, control, merit, and sanction are clearly defined. 42. Having gone through the decentralization phase in 1996, Senegal now has 10 regions, 48 communes, and 320 rural communities henceforward endowed with new powers to design, program, and implement actions in the area of economic, educational, social, and cultural development. As decentralization deepens, the managerial and planning capabilities of the locally elected representatives will be developed. Therefore, special attention will be paid to the management of local finances and local investment programs. The government will institute regional development agencies (ARD) with responsibility for promoting local and regional development. At the same time, implementation of the national land use and development plan (PNAT) will make it possible to guarantee more balanced land use in Senegal and greater equity in government investment. The strategy to be used in this connection will be based on a global plan and ten regional land-use blueprints. 43. The transport sector constitutes an essential service. The fundamental objective of the ongoing reform of this sector is to increase the efficiency of the transport system in order to make a significant contribution to improving the competitiveness of the economy and its regional integration. Building on the momentum created by the sectoral adjustment program for transport (PAST), the government will implement the sectoral transport program (PST II) in 1999 with the support of the World Bank. This program will assist the productive sector in consolidating and strengthening its competitiveness. Among other objectives, the PST II aims to consolidate the institutional, organizational, and financial gains of the PAST, to open up new possibilities in underdeveloped areas (rural roads, coastal navigation, river transport), supporting subregional integration, and to promote greater private sector participation, in particular in the financing of investment and the management of transport infrastructure. 44. The actions and measures contained in the transport sector policy letter (LPST) to be signed by August 1998 will be implemented in each transport subsector. Priority in the area of road infrastructure will be given to maintenance and repair, which will receive 75 percent of the resources allocated to the subsector. Investment in excess of an amount to be decided with the World Bank and described in detail in the LPST will have to meet a minimum economic return threshold of 12 percent. A reform of the highways fund will be undertaken before December 1998 to ensure greater transparency and more efficient use of its resources, to introduce a new management system, and to make it possible to estimate fund resource allocation. 45. Regarding rail transport, a company to develop the Dakar-Bamako international rail line is to be created by December 1998 and the new company's activities could begin in April 1999. To this end, the government will adopt an appropriate legal and regulatory framework by October 1998. Once the international railway line has been fully privatized, restructuring of the Société Nationale de Chemins de Fer du Sénégal (SNCS) will be undertaken by September 1999 to redefine its activities and bring them into line with its new missions. A business plan will be drafted by April 1999 which will include investment requirements for track repair. 46. In the area of maritime transport, the port of Dakar will have to be made more competitive and the secondary ports reintegrated into a local development support system. In the case of the Port Autonome de Dakar (PAD), particular emphasis will be placed on conserving past gains in personnel management. The goal will be to reduce the excessive burden of the wage bill on the production cost structure. In this respect, the number of permanent PAD staff will be reduced to a maximum of 460 in 1999 and 425 in 2000. The corresponding personnel cost will be reduced to 27 percent in 1999 and 25 percent in 2000 of total operating costs (including depreciation). 47. Actions with regard to air transport are aimed at ensuring safety, increasing the national supply of air transport, and promoting the international traffic platform at Dakar airport. In particular, Air Senegal should be fully privatized by December 1999. Prior to the privatization of the company and to ensure a more streamlined process than in the past, a business plan will be prepared and discussed with the World Bank by September 1998; it will focus on reducing staffing, covering the liabilities incurred by the loss of two aircraft, and making the enterprise attractive to potential buyers. SONATRA-Air Senegal has been recapitalized and its debt to the ASECNA has been restructured (two of the conditions for successful privatization). In addition, the government intends to privatize Senegal's airports and to reorganize the civil aviation sector. To this end, preparatory studies will be launched in April 1998 to be concluded by October 1998. The government will then be able to take the relevant decisions in January 1999 and present the legislative texts before June 1999. This privatization and restructuring of the sector could be implemented by January 2000. 48. In the urban transport sector, the government set up an executive council for Dakar urban transport (CETUD) in 1997. The technical studies prior to SOTRAC privatization are under way. The technical, financial, and accounting audit of this company will be completed by March 1998 and the request for bids to privatize it is scheduled for June 1998. A study is under way to determine the financing mechanisms for renewing the transport fleet. 8. Sectoral reforms in agriculture, livestock, fishing, mining, and tourism 49. The government accords a high priority to agriculture, the main source of employment and income for more than 60 percent of the population. Achievement of sustained growth of the agricultural sector depends on the sector's ability to improve its productivity and competitiveness. Liberalization and restructuring of the various branches of the agricultural sector continue along the lines of the agricultural sectoral adjustment program (PASA), implemented between 1995 and 1997. 50. The strategy for the agricultural sector must be based on a broad national consensus. This strategy will provide the operational framework for the preparation, by end-December 1998, of the medium-term agricultural sector investment program (PISA) and will be described in detail in an operational strategy document that the government intends to finalize by July 1998. This document on the agricultural sector stresses: (i) institutional reforms aimed at strengthening the capacities of the local governments and rural organizations in the context of the decentralization policy; (ii) implementation of basic rural infrastructures; (iii) in-depth restructuring of the Ministry of Agriculture and the regional rural development companies (SRDR); and (iv) the introduction of agricultural services—research and extension—that are flexible and efficient, managed and financed with the effective participation of the beneficiaries. In addition, to promote both private investment and the conservation of natural resources, a land tenure reform project is under discussion with local governments. Improved financial intermediation services in rural areas will make it possible to encourage saving with a view to financing private investment. 51. Special emphasis will be placed on removing two major constraints on the long-term development of the agricultural sector: (i) the implementation of a sustainable mechanism for restoring soil fertility, particularly in the groundnut basin; and (ii) harnessing of the country's water resources, both above- and below-ground. A study on the use of the waters of the Senegal River will be available in March 1998. This, and the land tenure system study, will consolidate the left-bank development program (PDRG) options. 52. In the livestock sector, the government's strategy is to ensure the sustainable growth of the sector's productivity through greater participation of socioprofessional and private sector organizations. It is aimed at increasing public and private investment in the production of short-lived animal species, the relocation of slaughter infrastructure, and the introduction of specific credits for the different segments of the livestock sector. The safety of extensive production systems will be assured by means of livestock development and management programs. Fodder supplies for cattle and the establishment of an animal health program will be included in programs receiving government support and private sector participation. 53. A draft master plan for developing sea fishing was prepared in 1997. It includes measures for fishing research, resource management, development of small-scale fisheries and new marine production (including aquaculture), in addition to sector financing. Discussion of the draft master plan will take place during the first quarter of 1998. The new code that is being prepared aims to ensure the sustainable development of fishing resources. In particular, it provides for the creation of a national advisory council on sea fishing to promote investment and sector regulation. It will be submitted to the National Assembly in the second half of 1998. The privatization of refrigerated warehouses, currently run under a management lease, will take effect by the end of the first half of 1998. 54. In the mining sector, the government is aware that the risks inherent in prospecting activities are very high. Consequently, its actions will be limited to promoting the sedimentary basin and implementing a regulatory framework to encourage increased private investment. A new and more attractive mining code will be submitted to the National Assembly in 1998. The government is actively continuing to update the geological and mining map. A new petroleum code was adopted by the National Assembly in December 1997. It offers potential investors attractive conditions for the development of exploration and production activities.
55. The strategic development plan for the tourism sector prepared by the
government in 1995 envisaged that the number of international tourist arrivals would
quadruple by 2010. Therefore, private investment should be encouraged by developing basic
infrastructure,
promoting Senegal as a destination, and training tourism sector personnel. In addition, the
government will encourage the liberalization of air transport to reduce transport costs.
56. The government will strengthen its programs to develop human and natural
resources.
These programs cover education, health, poverty alleviation, the expansion of the role of
women, and the conservation of the environment. 57. The government's objectives in the education sector are to increase elementary school enrollment from 65 percent in 1998 to 75 percent in 2000, to promote enrollment of girls, and to improve the quality of education at all levels. Senegal's gross enrollment ratio was 59.8 percent in 1996/97, as against an average of approximately 70 percent in sub-Saharan Africa. To close this gap, the government intends to pursue the reforms in the sector and prepare a 10-year medium-term program. To tackle the constraints faced by the education sector as a result of demographic pressure, the government devoted 34 percent of its 1997 budget allocations to education. 58. The reforms undertaken to maintain and increase the enrollment ratio focus mainly on containing unit costs and rationalizing resource allocation among different types of education. Unit costs will be contained in particular by adopting locally adapted prototype classes and introducing contractual status for elementary school teachers. In this context, the volunteer experiment will be continued, and all volunteers who have served continuously for four years will automatically be given contractual status. In higher education, the reforms undertaken in connection with the higher education support program (PAES) will be continued. 59. To achieve the target universal enrollment by 2008, the authorities will, by March 1999, finalize a 10-year plan for 1998-2008. The purpose of this plan will be the development of an educational system based on (i) universal enrollment in primary school and gradual improvement in the quality of primary education; (ii) the control of flows at the secondary and higher education levels to reflect financing capacities, quality objectives, and the contribution from the private sector; (iii) giving priority, at the secondary level, to teacher quality and suitability, chiefly by promoting scientific education and the gradual introduction of technology; (iv) restructuring of technical and professional education to reflect the actual situation and signals from the job market; (v) improved management of the education system in the context of decentralization; and (vi) more efficient allocation of public resources and mobilization of additional resources from the private sector.
60. The policy on literacy, basic education, and promotion of national
languages aims to
eradicate illiteracy in the long term, by reducing the illiteracy rate by five percentage points
per
year. This policy will allow a reduction in the illiteracy rate from 62% in 1997 to less than
50%
in 2000. The focus will be on literacy for women and on reducing disparities between rural
and
urban areas. The various programs in progress with assistance from nongovernmental
organizations (NGOs), grass-roots organizations, and women's groups should make it
possible to reach these goals by achieving literacy for 125,000 persons per year. 61. The new health policy and social action orientations have led to the identification of a number of constraints, the formulation of strategic orientations, and the outlining of reforms envisaged in the health sector. They will be implemented through the national health development plan (PNDS) for the period 1998-2007, the strategic priorities of which are reflected in a five-year integrated health development program (PDIS) for the period 1998-2002 adopted in May 1997. The goals of the PDIS are: (i) to improve financial viability and management of the public health system, (ii) to ensure that vulnerable groups have access to quality care (in particular, the number of persons per health center and health post should decrease from 158,000 and 11,000, respectively, in 1997 to 150,000 and 10,000 in 2000; and (iii) to help lower fertility rates and reduce the high population growth rate by improving reproductive health services and management (the fertility rate should decrease from 5.9 in 1997 to 5.3 in 2000). The financial viability of the health system would be achieved through better targeting of public subsidies, improving the management of mandatory health insurance schemes, and promoting community based health insurance systems. By 1999, the statute of the mutual health insurance system would be submitted by the government to the National Assembly for passage into law. 62. Public resources allocated to the health sector are currently insufficient at the present time to ensure minimum coverage of health care requirements. The government has therefore undertaken to increase the health sector's share in the overall government recurrent budget by 0.5 points per year, with the aim of reaching the norm of 9 percent, recommended by the World Health Organization (WHO), by 2002. The distribution of budget allocations will promote expenditure on supervision, maintenance, and operations, which will increase by approximately 10 percent per annum, as compared with 4.0 percent for personnel expenditure. 63. The government has adopted the law on reform of the hospital subsector, which gives greater autonomy to hospitals and other health institutions. These will be required to elaborate a comprehensive development plan (Projet d'établissement) which will include a management plan and a financial plan which will provide for sustainable financial equilibrium and autonomous management. Before end-1999, at least three development plans will be adopted by the Ministry of Health. In connection with this reform, the status of the Pharmacie Nationale d'Approvisionnement (PNA) will be changed by June 30, 1998 to that of an autonomous Public Health Establishment (Etablissement Public de Santé - EPS). 64. The health sector reform program also emphasizes the reorganization of the Ministry of Health and Social Action and the implementation of a plan covering personnel training, recruitment, and management. To that end, a decree organizing the Ministry of Health and Social Action should be signed by end-March 1998 and a plan to recruit 250 staff per year (all categories combined) will be implemented beginning in 1998. 65. The government's strategy concerning poverty alleviation is based on fostering strong, sustainable growth through the implementation of a national program to support persons who would otherwise be excluded from the benefits of growth. A national poverty alleviation program (PNLP) was adopted by the inter-ministerial council in December 1997. The implementation of the PNLP will be reflected in an investment program estimated at approximately CFAF 60 billion in its initial phase. This estimate was based on local development plans (PLD) and communal investment plans (PIC). This investment program, covering the period 1998-2002, will be submitted to a donors' round table meeting in 1998. 66. In its design and implementation, the PNLP is based on a participatory approach. It focuses on cross-sector activities that supplement sectoral investment programs and which are designed: (i) to implement productive activities to generate revenue and create jobs in the context of a development program for micro- and small-scale enterprises supported with the implementation of more suitable financial instruments; (ii) to improve access to basic social services; (iii) to improve monitoring of household living conditions; (iv) to implement a system to support vulnerable groups; and (v) to promote poor women economically, to strengthen their organizational and entrepreneurial capacities. 67. Activities are identified based on geographic targeting supplemented with a participatory approach to enable the various persons involved to agree on priorities. The local governments will play a central role in program execution. When required, they will receive support from NGOs and grass-roots organizations in carrying out activities at the local level. Program activities will give the beneficiary units of government an opportunity to strengthen their technical capacities and to become actively involved in the design and execution of activities and in sharing the costs of such activities. 4. Expanding the role of women 68. The policy to expand the role of women has five areas of particular focus, reflecting the priorities in the national action plan for women adopted in November 1996, drawing from the African action platform prepared for the 1995 Beijing conference. These are: (i) to strengthen organizational and entrepreneurial capacities; (ii) to develop education and literacy; (iii) to improve women's health, especially reproductive health; (iv) to strengthen the role of women in public affairs; and (v) to implement an effective institutional system for the monitoring and technical and financial execution of the action program. The government will ensure that these priorities are reflected in all sectoral policies. Special emphasis will be placed on developing education for girls and literacy for women. The enrollment ratio for girls 7-12 years of age will be increased from 52.9 percent in 1997 to 60 percent in 2000. 5. Protection of the environment 69. The government intends to implement a sustainable development strategy, by giving the people greater responsibility in preparing, implementing, and monitoring environmental management programs. With the adoption of the national environmental action plan (PNAE) by March 1998, a number of actions will be taken; in particular, the large-scale implementation of options to reduce greenhouse gases in the energy, agriculture, forestry and waste management sectors. Protection of coastal and wetland areas from climate changes will also be strengthened. 70. For the period 1998-2000, the government plans, under the PNAE, to control solid and liquid waste management, to fight a number of dangerous pollution sources, including accidental pollution by hydrocarbons, and to implement an environmental education and communication policy in both the formal and informal education settings. In rural areas, particular emphasis will be placed on protecting ecosystems by relieving pressure on forestry resources through the participation of the people in environmental management. Actions will be taken under the program for sustainable and participatory management of traditional and substitute energy sources, prepared with the World Bank, the government of the Netherlands, and the Global Environment Facility (GEF). The development of a price incentive policy to promote the use of substitute fuel and equipment to replace wood energy will be encouraged, while the public capacity for orientation, programming, monitoring, assessment, and communication will be strengthened. These priority actions will supplement the short-term measures on revamping the institutional framework, establishing a national foundation for the environment, implementing a reference framework for environmental impact studies, and developing an information system on the environment.
71. The adjustment strategy adopted by Senegal aims to improve the country's economic competitiveness, ensure its financial viability, and, in general, facilitate Senegal's integration into the world economy and reduce its dependence on external assistance. Considering the country's existing production potential, efforts to improve infrastructure (including the supply of electricity and transportation networks), and the world market outlook, Senegal should be able to achieve a substantial increase in its traditional exports in the short term. In particular, as the result of sizable investment financed with private capital, production and exports of chemicals can be expected to nearly double in the next five years. In the medium term, the rigorous application of the structural reforms described above, beginning with tariff liberalization, is expected to facilitate the emergence of new activities and robust expansion of nontraditional exports. Despite a surge in imports of capital goods, the expected increase in exports should make it possible to maintain the balance of payments current account deficit, excluding official transfers, at about 7.5 percent of GDP in 1998, and to reduce it to an average of 6.8 percent of GDP during the subsequent two years. Private capital inflows, hitherto limited, should finance an increasing share of these deficits. 72. External financing requirements for 1998-2000 amount to US$1.7 billion, of which US$529 million will be needed in 1998. These requirements will be largely financed through external contributions from bilateral and multilateral donors to Senegal's development projects. Two thirds of the aid is expected to consist of unrequited transfers and one third of concessional long-term loans. Agreements have already been reached on a substantial portion of identified project financing requirements; discussions are on going on another portion, and potential donors are expected to make definitive pledges during the forthcoming Consultative Group meeting. There remains nevertheless a residual financing gap estimated at US$373 million, which would be covered by the use of Fund resources under the ESAF, an energy sector adjustment loan from the World Bank, budget support from the European Union, a stock-of-debt operation from Paris Club creditors—there is an agreement on the principle of examining such an operation—and at least comparable treatment from other bilateral creditors. 73. Senegal's total outstanding external public debt amounted to US$3.3 billion at end-December 1997, or 75 percent of GDP. Debt owed to multilateral creditors represented approximately 67 percent of the total outstanding, including about 9 percent owed to the International Monetary Fund and about 36 percent owed to the World Bank. Debt owed to bilateral creditors accounted for 33 percent of the total outstanding, with more than two thirds owed to Paris Club creditors. Short-term obligations to the central bank represented approximately 1 percent of the total outstanding. Projected debt service, before any restructuring operations, is estimated at US$299 million in 1998, including US$107 million in interest. 74. A loan-by-loan external debt sustainability analysis was conducted jointly by the Senegalese authorities and IMF and World Bank staff. Subject to some verifications, these detailed calculations indicate that, at end-1997, before any debt relief, the present value of external debt amounted to 148 percent of exports of goods and nonfactor services. They also confirm the results of the preliminary debt sustainability analysis conducted in 1996, which has revealed a downward trend in this indicator and in the ratio of debt service to exports in the long term. Thus, in 2000, before debt rescheduling, the net present value of external debt and debt service are estimated at 128 percent and 17 percent of exports of goods and services. These ratios can be expected to decline to 117 percent and 14 percent, taking into account the projected impact of a reduction in outstanding debt to Paris Club creditors and comparable treatment of debt service to other bilateral creditors. This analysis therefore leads to the assessment that both external debt ratios considered in the initiative for heavily indebted poor countries (HIPC Initiative) are below the critical thresholds used as eligibility criteria for this initiative. Senegal's external debt is, therefore, sustainable under the terms of the HIPC Initiative. The fiscal burden remains high, however, with debt service to revenues projected to be 38 percent in 1998. This makes it more difficult to increase expenditures, including for the priority sectors of education and health, which are necessary for strong and sustainable growth. To help fill the fiscal and external financing gaps which remain under the program for 1998-2000, and to improve its debt outlook, Senegal intends to request from Paris Club creditors a stock-of-debt operation on Naples terms and will seek comparable treatment from its other bilateral creditors.
75. To further improve its external debt service profile, Senegal will continue
to seek grants
and loans on concessional terms. Accordingly, the government will neither contract nor
guarantee any new nonconcessional external loans (that is, loans not entailing a grant
component of at least 35 percent). Similarly, the government will neither contract nor
guarantee
any external loans with maturities of less than one year, with the exception of regular import
financing. It will continue to subject any loan contracted or guaranteed by the government to
prior approval from the Ministry of Economy, Finance, and Planning, and will increase the
staff responsible for external debt management. The government will clear any existing
arrears
and avoid the accumulation of any new external payments arrears.
1Nominal GDP for the period 1994-97 was revised downward by an annual average of 6 percent to reflect the final results of in-depth economic surveys. As a result, the ratios of economic variables calculated as percentages of GDP are different from those included in the policy framework, 1996-99, dated November 7, 1996. However, the changes in these ratios from year to year do not differ significantly from the earlier versions.
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