I. Introduction
1. With the support of the International Monetary Fund and the World Bank, Burkina Faso has, since 1991, been implementing a wide-ranging program of structural reform and economic adjustment aimed at stabilizing the macroeconomic and financial framework. The government intends to pursue and strengthen these reforms as part of a third program under the Enhanced Structural Adjustment Facility (ESAF); in this connection, this policy framework paper (PFP) reviews the results achieved, sets the objectives, describes the strategy, and identifies the financing requirements for the period 2000-02.
2. Since 1994, the macroeconomic results of the reforms already undertaken have been encouraging. In the real sector, the financial and structural measures that accompanied the 1994 devaluation of the CFA franc helped to strengthen the foundations for economic expansion. Accordingly, real GDP recorded growth averaging 5 percent over the period 1996-98. Moreover, in 1998, despite some decline in cotton production from the record level of 1997, the rate of growth is estimated at 6.2 percent on account of a substantial increase in cereal production, which was helped by better rainfall conditions than in 1997, higher public investment, and an expansion in services. Inflationary trends were favorable during the period, despite the emergence of pressures affecting the prices of agricultural products in 1998, mainly due to the shortage of cereal resulting from the poor 1997 harvest: annual average inflation was 4.5 percent during 1996-98, compared with 24 percent in 1994.
3. Public finance policy remained prudent, particularly in respect of the wage bill. In 1998, the current primary surplus amounted to 3.6 percent of GDP (compared with a programmed 3.5 percent of GDP); this made it possible to finance additional expenditure out of own resources (organization of the Organization of African Unity (OAU) Summit and the African football cup, CAN). Budgetary revenue grew by 9.9 percent, attaining 13.1 percent of GDP in 1998.
4. Regarding the external sector, despite favorable export performance in 1998, Burkina Faso's external position deteriorated, primarily on account of a rapid rise in imports; the contribution of Burkina Faso to the reserves of the union was negative.
5. In the area of structural reform, laws were adopted in 1998 to liberalize certain segments of the energy and telecommunications sectors. Four more enterprises have been privatized: SOSUCO (sugar), SOPAL (alcohol), SNTB (transport), and INB (printing). The privatization of FASO FANI (textile) and SAVANA (juices) is under negotiation with prospective buyers. Privatization operations in respect of AIR BURKINA (air transport), CNEA (agricultural equipment), SHG (hotels), and ONATEL (telecommunications) are under way. The government intends to finalize the liquidation, or complete the sale of assets, of seven other companies: SOFIVAR (groundnuts), SONACOR (rice ginning), SONACAB (tiles), SINAC (shoes), SONACIB (cinema), SOBEMA (enamel), and COMIKI (mining). Regarding banking system privatization, the government's participation in the capital of CNCA, the agricultural credit bank, has been reduced to 25 percent. Since 1997, adjustments have been applied to the prices charged for services rendered by ONEA (water distribution) and SONAPOST (post office).
6. The laws on comprehensive civil service reform were passed by the National Assembly in April 1998, and the repositioning of civil servants within the new salary scales took place in January 1999. In the context of regional integration, the government has ratified the directives on budget systems harmonization and adopted the draft Common External Tariff (CET). The directives pertaining to budget laws and general government accounting regulations were approved, and the implementation of the West African Economic and Monetary Union (WAEMU) CET will be phased in over the 1999-2000 period.
II. Strategies and Objectives for 2000-02
7. With the aim of increasing per capita income and accelerating the development of human resources and productive potential, the government has formulated a medium- and long-term strategy in the context of the Letter on Sustainable Human Development Policy. The primary objectives between now and 2005 can be summarized as follows: (i) a minimum annual increase of 3 percent in per capita GDP; (ii) a doubling of the literacy rate of the entire population from 20 percent to 40 percent; and (iii) a gain of some 10 years in life expectancy, bringing it to 57 years. The macroeconomic objectives for the period 2000-02 consist in (i) achieving a minimum average rate of real GDP growth of at least 7 percent between 2000 and 2002; (ii) limiting inflation to below 3 percent annually, and; (iii) reducing the external current account deficit, excluding grants, to 10.8 percent of GDP in 2002 (8.5 percent, including grants). The achievement of a GDP growth rate of 7 percent, which is higher than those previously recorded, will require the implementation of measures to enhance competition and promote private sector development, described in detail below.
8. Agriculture and other primary sector activities will continue to be the main source of growth for Burkina Faso. Indeed, these will continue to be the dominant revenue- and job-creating activities, and their contribution to GDP will amount to almost 40 percent. Improvement in competitiveness will make it possible to accelerate the growth in exports of such commodities as cotton and livestock products, as well as nontraditional production and exports, such as fruits and vegetables. The mining sector also will be able to expand as a result of the recent upsurge in interest elicited by gold prospecting and mining. Current forecasts indicate that gold production could quintuple, at the least, over the next decade, in relation to its current annual level of 1.5 metric tons.
9. The government intends to pursue its reform strategy, which is based on the following: (i) maintaining macroeconomic stability and strengthen economic competitiveness; (ii) improving public sector efficiency while increasing government productivity through improved civil service operations management, quality of service, and decentralization; (iii) reforming the legal system, in order to provide appropriate protection and incentives to private investors; (iv) redefining the role of government and further reducing the government's role in the agricultural and mining sectors; and (v) enhancing human resources development to facilitate, inter alia, the promotion of the private sector. This requires controlled demographic growth, implementation of policies to promote employment and income growth, and efforts to enable women to play a larger role in the development process; furthermore, it calls for broader access to the social services, especially education, drinking water, and public health services. The medium-term strategy also entails improved management of natural resources, greater safeguards for land tenure rights, and increased public awareness of the need to protect the environment.
10. The projected economic growth will not be sustainable unless it is supported by substantial savings efforts and more efficient investment. Therefore the government's financial policy will aim at ensuring optimal allocation of national savings and external resources by implementing an active policy to diversify financing instruments and facilities. This should open up avenues to alternative sources of financing, particularly through the issuance of negotiable debt instruments, thus making it possible to finance more effective investment. For the period 1999-2002, the gross investment ratio is expected to remain stable at around 27 percent of GDP, and the share of private investment is expected to increase. The increase in domestic saving, which is targeted to rise from 10 percent of GDP in 1999 to 13.5 percent of GDP in 2002, is expected to lead to a smaller external current account deficit.
III. Macroeconomic Policies and Structural Reforms
A. Public Finance and the Civil Service
11. Taking into account the introduction of the CET, which could reduce receipts by more than 1 percent of GDP by 2000, government revenue as a percentage of GDP is projected to decline from 13.1 percent in 1998 to 12.2 percent in 2000 (13.7 percent including taxes paid by the Treasury on foreign-financed public investment). This ratio is expected to reach 14.2 percent of GDP by 2002. Therefore, the government will pursue in the coming years a prudent expenditure policy, including with regard to civil service salaries, in the wake of the 1999 increases that followed the repositioning of civil servants within the new salary scales. Current expenditure is programmed to remain stable at around 10.5 percent of GDP. Similarly, the domestic contribution to investment will remain stable at about 4 percent annually. As a result of these trends, the primary surplus is expected to increase slightly in the 2000-02 period. The absence of domestic arrears and limits on restructuring expenses will limit the financing requirements. Revenue estimates take into account an increase in excise taxes, which is expected to partly offset shortfalls in customs revenue, tighter controls on exemptions and intensified efforts to tax the informal sector. On the expenditure side, the government will have to define priorities more clearly, in order to ensure adequate allocations for the social sectors.
12. Public investment expenditure, which had increased substantially in the 1995-98 period (from 9.3 percent of GDP in 1995 to 13.8 percent in 1998) could stabilize at about 13 percent of GDP in the 2000-02 period; the component financed from domestic budgetary resources, which had also increased substantially, is expected to hold steady at approximately 2.5 percent of GDP during that period (4 percent including taxes paid through treasury checks).
13. The government has undertaken a policy of civil service modernization and reform; the key actions envisaged for the 2000-02 period are shown in the matrix of measures attached to this policy framework paper. During this period, the government will focus on pursuing four major objectives: (i) improving operational management of civil servants; (ii) improving quality of the services provided by civil servants; (iii) implementing the comprehensive reform of the civil service; and (iv) intensifying the decentralization process. The strategy for achieving these objectives will be based on (i) adopting measures allowing for real-time management of administrative decisions affecting the career and administrative status of civil servants and ensuring that accurate records on the status of government personnel are available at all times; (ii) implementing a package of specific measures designed to make the civil service a factor of productivity and excellence, inter alia, by introducing a merit promotion system and by making more frequent use of contractual staff; (iii) instituting the mechanisms and instruments needed to ensure effective implementation of the laws on the comprehensive reform of the civil service; (iv) promoting a body of regulations, mechanisms, and methods allowing for efficient and transparent management of government business and providing meaningful opportunities for citizen participation and control; and (v) enhancing the social safety net for government employees, identifying ways and means to speed up the process of providing financial compensation for reinstated employees, and establishing fruitful social dialogue between the government and its social partners.
14. The savings that will result from these policies will not, however, be sufficient to cover the increase in spending in priority sectors, which will therefore require enhanced budgetary efforts. Furthermore, the process of public expenditure review and the implementation of the medium-term expenditure framework (MTEF) are designed to take place on a sustained basis; they will be conducted with the support of the government's partners, in order to increase the government's capacity to control and rationalize spending. In particular, these tools will facilitate consultations with donors and lenders regarding the volume and composition of the public investment program.
B. Regional Monetary Policy and Banking Sector Restructuring
15. With regard to monetary policy and according to the regional objectives for the balance of payments, the Central Bank of West African States (BCEAO) will continue to manage the banking system liquidity on the basis of a prudent policy, in order to help contain inflationary pressures and consolidate the external position of the WAEMU.
16. The progress recorded in 1998 concerning bank financing for the private sector and the development of financial intermediation will be pursued further. Banking system reorganization will continue by strictly enforcing the banking law and Banking Commission recommendations and by reinforcing regulatory mechanisms for claims recovery and execution of guarantees. Regarding the latter, the government will complete auditing the operations and portfolio of Burkina Faso's claims recovery office (BRCB), while continuing to develop its recovery capabilities. Efforts to mobilize savings will be based on the development of the regional stock exchange and further widening of the network of credit unions, with the aim of establishing a link between the structured banking sector and the informal productive sector. To this end, a specialized unit has been set up within the financial administration to monitor and control the microcredit institutions. The government will endeavor to provide alternative sources of financing, such as government borrowing, and to enable private sector operators to benefit from the opportunities offered by certain regional financing instruments (such as the African Solidarity Fund [Fonds de Solidarité Africain (FAGACE)] and the West African Development Bank (BOAD) GARI. Fund. Regarding the insurance sector, the government will ensure implementation of the Code of the Inter-African Insurance Market [Conférence Inter-Africaine des Marchés des Assurances (CIMA)] and of the recommendations and decisions of the Regional Commission for Insurance Control [Commission Régionale de Contrôle des Assurances].
C. External Sector
17. The government will strengthen the measures aimed at developing and diversifying export potential. Special emphasis will be placed on the fruits and vegetables sector. This will make it possible to increase exports, which over the period 2000-02 are expected to record average annual increases of 9 percent in value terms and of 8 percent in volume terms, mainly on account of a sustained expansion of cotton production. The current external deficit, excluding grants, is projected to be reduced to 10.8 percent of GDP by 2002 (8.5 percent including grants); the reduction of the external debt under the Initiative for Heavily Indebted Poor Countries (HIPC Initiative) will make it possible to reduce the debt service-exports ratio to a sustainable level.
D. The Public Investment Program (PIP)
18. In order to increase the effectiveness of public investment and achieve more balanced growth, the government intends to introduce a unified budget system in the context of the World Bank support for budgetary reform. This system, which will consist in incorporating all operations financed by development partners in the government budget, requires an equitable partnership, mutual trust, increased assumption of responsibility, accountability, and followup and control on the basis of performance indicators, as well as greater resource predictability. To this end, the government will (i) implement sound macroeconomic and sectoral policies; (ii) orient the budget toward development goals; (iii) strengthen budgetary procedures and management capabilities; (iv) ensure closer coordination with donors and lenders, and (v) disseminate budgetary data. Moreover, it will also have to undertake a study of the content of the PIP, with the aim of achieving consistency with the program budget of each ministry.
E. Public Enterprises
19. The government will pursue the public enterprise reform program by (i) strengthening public utility companies through periodic price adjustments to reflect the real costs of producing these goods and services; (ii) finalizing the liquidation of three public enterprises for which buyers have not been found (see list in the matrix of measures); and (iii) putting up for sale the remainder of the enterprises identified since the beginning of the process (see matrix of measures). Furthermore, the government will assess the results of privatization operations; these will serve as input for defining the strategy concerning the government's remaining portfolio of public enterprises before end-1999. By 1999, the government will lay the groundwork for successfully opening the telecommunications sector to competition and for conducting the partial privatization of ONATEL before June 2000.
F. Promotion of the Private Sector and of the Legal Framework
20. Conscious that the private sector must play a pivotal role in economic growth, the government will continue its policy of promoting the private sector by creating a favorable environment for its development, including strengthening the judicial system. To this end, the government will initiate negotiations with its development partners regarding the introduction of a new program to replace the World Bank-supported Private Sector Support Program (PASP), which will end in December 1999. Furthermore, the information campaign about the reforms undertaken to promote the private sector will be strengthened with the establishment of the Maison de l'entrepreneur and of a trade center. Lastly, the government intends to give the widest possible role for the Standing Committee on Government/Private Sector Consultation [Commission Permanente de Concertation Etat/Secteur Privé]. With regard to the legal framework and in order to provide adequate safeguards for private sector action, the government will strengthen the judicial system by (i) continuing to recruit magistrates and auxiliary officers of the judiciary; (ii) implementing the recommendations of the recent justice forum; (iii) establishing commercial courts; and (iv) designing and implementing a training program for magistrates and officers of the judiciary.
IV. Sectoral Policies and Reforms
A. Population and Human Resources Development
Population
21. Burkina Faso's population policy is aimed, inter alia, at improving the living standards of its people by controlling demographic growth. This will be pursued by (i) encouraging reproductive health by preparing and implementing a reproductive health program; (ii) formulating a policy of more balanced regional distribution of the population in the context of a comprehensive policy of regional and urban development and rational management of natural resources; (iii) encouraging the development of human resources to increase people's capabilities and skills; and (iv) increasing national capacities for designing and implementing population and development programs and policies as part of a national capacity-building action plan. Meanwhile, the government will pursue its efforts in the following areas: (i) strengthening the role of family planning in health facilities, particularly through the project on population and combating AIDS (PPLS), which provides for 100 new family planning centers annually and the implementation of a literacy program for women in rural environments; (ii) increasing the rate of use of contraceptives by enhancing the role of local communities in their distribution; and (iii) intensifying IEC (information, education, and communication) activities with regard to population, particularly in rural areas. To this end, institutions responsible for family policy and family planning programs will be reinforced.
STDs and AIDS
22. Despite the efforts to combat it, AIDS (acquired immunodeficiency syndrome) is still widespread. Accordingly, the government will intensify its struggle against the AIDS epidemic and against sexually transmitted diseases (STDs). The key objective is to reduce human immunodeficiency virus (HIV) prevalence in at-risk groups. Accordingly, the government's strategy will focus on preventing the spread of infection by means of: (i) increased support for community-based associations engaged in combating AIDS; (ii) informing and educating people with regard to condom use; and (iii) conducting epidemiological surveillance and promoting transfusion safety. In addition, actions with respect to the care of sick people and those infected with HIV will be strengthened, as will socioeconomic support for the sick. Furthermore, the national committee for combating AIDS [Comité National de Lutte contre le Sida (CNLS)] will continue to support the health districts to reinforce their action capability; multisectoral plans for combating AIDS at the district level will be drawn up and implemented gradually. A national multisectoral plan will also be prepared by end-1999 and implemented beginning in 2000. In addition, Burkina Faso will join in subregional projects to combat AIDS. Lastly, the IEC-based strategy, training of health personnel and research/action, will be developed.
Strengthening the role of women in the development process
23. Mindful of the importance of the role of women in the development process, the government has decided to promote gender equality. This commitment is reflected in the creation of the Ministry for the Advancement of Women in June 1997 with the objective of improving the social and economic status of women. As a result, actions favoring women and girls will be better coordinated, and will focus on the following programs: (i) efforts to address poverty among women in rural environments; (ii) the development of women's human resources through education and training, and improvement of women's health; and (iii) protection of women's and girls' basic rights. Such efforts involve increasing women's access to land, to agricultural extension services, and to credit appropriate to their needs and expectations. In this connection, the support fund for remunerative activities of women [Fonds d'Appui aux Activités Remunératrices des Femmes (FAARF)], the support fund for activities generating income for women farmers [Fonds d'Appui aux Activités Génératrices de Revenus des Agricultrices (FAAGRA)], and other support entities will pursue their training activities for women and groups of women in organization, management, education, health, and nutrition in all the provinces. Therefore, implementation of the action plan to promote the education of girls will be accelerated to reduce the educational disparities between girls and boys. Particular attention will be given to those provinces with low rates of girls' school enrollment; in addition, programs and projects tailored to specific regional problems related to girls' school enrollment will be designed in consultation with the various partners. This requires promoting women's basic rights and combating the various acts of violence committed against women. In this connection, action will be taken to pursue the project to disseminate the Individuals and Family Code, which aims, inter alia, at acquainting women with the resources available for protecting their interests and those of their children. Furthermore, efforts to combat the practice of excision will also be pursued by familiarizing the various societal groups with the consequences of this practice for women. Achieving these objectives will require that human, institutional, and ministerial management capabilities be strengthened, in particular the National Commission for the Elimination of Discrimination Against Women [Commission Nationale de Lutte contre les discriminations faites aux femmes (CONADIS)] and the National Committee for the Advancement of Women [Commission Nationale pour la Promotion de la Femme (CNPF)].
Health
24. The health sector remains a key priority. The general objective for health is to improve the availability of quality care and the general public's access to it. Thus, to achieve this objective, the government will push ahead with its health development strategy, which is centered on the following: (i) implementation of the Bamako Initiative (IB), which stresses prevention; (ii) preparation of a national health development plan; (iii) introduction of sustainable alternatives for financing health care by developing a third-party payment system (mutual insurance companies, health insurance, etc.); (iv) decentralization of the health system and full effectiveness of health districts to improve access to quality care and use of health services, and to ensure grassroots participation by, and accountability for, local communities; (v) promotion and strengthening of the private sector so that it can contribute more effectively to improving health coverage; (vi) promotion of health-related information, education, and communication (IEC); (vii) promotion of the health of vulnerable groups; and (viii) the fight against endemic diseases/epidemics. Implementation of these strategies should facilitate efforts to achieve the following objectives by 2002: (i) reducing the overall mortality rate to 14.1 per 1,000 and the infant mortality rate to 70 per 1,000, particularly by strengthening health care for mothers and babies and by training health personnel in family planning; (ii) reducing the maternal mortality rate from 566 to 300 per 100,000 live births, increasing the rate of vaccination coverage against illnesses targeted in the Expanded Vaccination Program (EVP) (BCG, diphtheria, tetanus, whooping cough, measles, yellow fever, etc.) by reinforcing the program; (iii) reducing the spread of parasite-borne illnesses; (iv) reducing malnutrition, particularly among children under 5 years, by means of high-calorie and micronutrient supplements; and (v) ensuring that the existing health centers are functioning effectively by supplying them with financial resources, essential and generic medicines, and sufficient staff. Regarding the latter, global redeployment of health personnel will be carried out on the basis of the results of the workload study, pending the formulation of a comprehensive human resources development policy. Moreover, existing efforts to allocate appropriations for health districts will be strengthened through the execution of the review of public expenditure in the health sector to ensure greater efficiency in budgetary spending. In this context, the collection and dissemination of health statistics will be improved to allow for, inter alia, a better evaluation of the attendance rate at health centers.
25. Capacities for managing health and personnel facilities will be strengthened. A policy will be designed to develop human resources, including decentralized recruitment and a regional personnel allocation system. The government will continue to call on the external partners to support the ministry' s new policy aimed at making the existing health groups operational. Furthermore, the Ministry of Health will benefit from the resources provided under the HIPC Initiative. To facilitate resource mobilization, an adequate financing policy for the health sector will be adopted and implemented. A system to maintain health infrastructure and equipment will also be designed and implemented.
Social action and family protection
26. Strategic approaches in the area of social action and family protection during the period 2000-02 are focused on addressing the following major objectives: (i) efforts to protect children and to enhance their status in society; (ii) the protection and promotion of families; (iii) the protection and promotion of underprivileged groups; (iv) the organization of emergency disaster relief; and (v) action to boost the national solidarity movement. The key objective in regard to the protection and enhancement of the status of children is to help provide a better life and growth opportunities for children by giving priority to children's rights to survival, protection, and development. The chosen strategy will focus on the following areas during the period 2000-02: (i) safeguarding endangered children; (ii) providing preschool education, and promoting an increase in the preschool enrollment ratio from 1.44 percent in 1997 to 2.4 percent in 2001; (iii) strengthening social services for school children; (iv) monitoring and implementing the convention on the rights of children (CDE); and (v) assessing the national action plan for the survival, protection, and development of children in Burkina Faso. As regards the legal protection and socioeconomic promotion of families, implementation of the national policy on family life education (EVF) and the national action plan for the protection of families will continue. Efforts will also be pursued to increase the access of women to loans from the FAARF and other financial institutions in the 45 provinces. The education campaign against sexual mutilation and discrimination of all types will be intensified. In addition, the dissemination of the Individuals and Family Code will be pursued and strengthened. With respect to the protection and promotion of underprivileged groups, the policies are designed to create an environment that can foster these groups' social rehabilitation and their reintegration into society and the economy. In this connection, a national policy in favor of handicapped persons and the aged will be adopted and implemented. The strategy for educational activities in an open environment (AEMO) will be strengthened. In the area of emergency assistance, the aim will be to promote a culture of disaster prevention and to strengthen disaster-management mechanisms in Burkina Faso. The national plan already adopted for emergency assistance and restructuring will be implemented. Moreover, in order to improve the harmonization and coordination of efforts in the area of social action and family protection, a law will be drafted to provide guidelines on the pursuit of medium- and long-term policies and action strategy. Lastly, as regards strengthening the national solidarity movement, the strategies developed are intended to ensure the mobilization and management of the various resources generated as a result of national and international solidarity efforts.
Education
27. Despite the efforts made by the government and its development partners in regard to education, enrollment ratios in Burkina Faso remain low. The enrollment ratio at the primary school level was 40.9 percent in 1997 and at the secondary level only 11.67 percent in 1998. In addition to a high illiteracy rate, these factors are major obstacles to production in agriculture, industry, and services with high value added. Aware of the situation, the government plans to implement a vigorous school expansion policy that would make it possible to attain an enrollment ratio of at least 50 percent in 2002. To this end, government policy is aimed at reducing the costs of basic education, facilitating geographical and financial access to it, and improving its quality. The implementation of this policy will be based on a stronger, more accountable partnership among the various participants in the sector (state, local governments, private operators, nongovernmental organization (NGO), parents, and the development partners). To reduce costs, the government will institute measures aimed at facilitating financial access to construction materials, equipment, and school supplies, and at limiting waste. In addition, it will accelerate the implementation of the strategy for teacher recruitment and funding by local governments. To improve the quality of education, steps will be taken (in addition to those already under way) to limit class sizes. Achieving this goal will necessitate a wide-ranging program of teacher recruitment and training and the improvement of curriculum content. This ambitious program will generate financial requirements three times larger than the budget currently allocated to the Ministry of Basic Education and Literacy (MEBA). To meet these expenditures, the government will have to make even greater efforts; it will have to increase the share of the budget earmarked for the MEBA, quite apart from the resources that are envisaged in the context of the HIPC Initiative. The success of this program will be dependent on the strengthening of the human, institutional, and management capacities of the MEBA. In particular, the MEBA will have to design and implement new working methods and procedures adapted to the goal of accelerated improvement of the enrollment ratio and to use the supplementary budgetary allocations necessary for such improvement.
28. The government recognizes the need to ensure that postprimary education and research more closely reflect labor market needs, as well as the socioeconomic development requirements of the country. As a result, the emphasis at the secondary education level will be placed on (i) increasing and diversifying quantity and quality in the education provided; (ii) improving the quality of school administration and management; (iii) training personnel; (iv) strengthening technical and vocational education; (v) promoting education for girls; and (vi) reforming curricula. With respect to higher education, the aim will be to improve performance, both internally (improvements in the learning conditions of students and teacher training) and externally (enhancement of vocational training and diversification of training streams in response to labor market needs). In addition, the postprimary education development plan prepared in May 1995 will be pursued. Implementation of the postprimary education project negotiated with the World Bank will also continue. In light of the scarcity of public resources, the government will ensure that private sector participation in postprimary education is increased further, in particular in semiurban areas.
Employment, work, and social security
29. The employment and the welfare of workers are priority goals for the government; the policy in this area is aimed at improving the institutional and regulatory frameworks needed to achieve long-term, sustainable growth of employment in all sectors of activity and help to improve standards of living for workers. Government policy also seeks to increase the training and specialization capacities of workers and to improve the skills of those seeking work and those engaged in job creation. To achieve these objectives, the government is relying on (i) action to improve the institutional and legal frameworks of job promotion and vocational training; (ii) efforts to achieve greater labor market flexibility; and (iii) the introduction of instruments designed to raise the transparency of the labor market. For vocational training, government action is aimed at (i) developing a streamlined vocational training system, including qualification standards, in close cooperation with the private sector; (ii) strengthening existing vocational training institutions; (iii) creating new vocational training centers capable of meeting the needs of the economy; (iv) setting up a mechanism for financing vocational training and apprenticeships; (v) establishing job-creation facilities and tools; and (vi) establishing a system, in close cooperation with the private sector, for the certification of professional knowledge. As regards the protection of workers and social security, the overall objective is to help improve living and working conditions, by (i) creating an appropriate institutional and regulatory framework; (ii) revising the social security code; and (iii) informing, educating, and training workers and employers.
B. Agriculture and Livestock
Agriculture
30. Agriculture is the engine of economic growth in Burkina Faso, employing more than 80 percent of the labor force, accounting for about 40 percent of GDP, and generating, on average, 60 percent of all export proceeds. Accordingly, in 1996 the government initiated an in-depth discussion that led to the adoption, in 1998, of a Strategic Orientation Document (DOS) for the agriculture and livestock sectors. The DOS describes the major objectives, the profile, and the principal aspects of an operational strategy for achieving sustainable growth in the two sectors through the year 2010. The assigned objectives are: (i) to foster market development in rural areas; (ii) to modernize agricultural and livestock farms; (iii) to ensure sustainable management of natural resources; (iv) to increase food security by accelerating the preparation and implementation of a national food security strategy and by implementing the soil fertility management program; (v) to promote the professional development of the various participants and strengthen their role by accelerating the preparation and implementation of the action plan for the emergence of professional agricultural organizations (OPAs) through the creation of an appropriate legal framework and by providing training for OPA members; (vi) to achieve appreciable improvement in the economic status of rural women by promoting their access to education, vocational training, agricultural extension services, means of production, and credit; and (vii) to refocus the role of the state and promote the private sector's role in the agriculture and livestock sectors by continuing to restructure agricultural services and supporting the private sector. More specifically, government departments dealing with agriculture will be responsible for agricultural research, extension and advisory services, agricultural training, the management of natural and land resources, and rural infrastructures. For this purpose, the government intends to keep only 6 percent of the staff at ministry head offices and to assign 12 percent of them to regional directorates and 82 percent to other locations (provinces, departments, etc.). The implementation of these measures attests to the government's commitment to having government departments withdraw from all activities involving the production, marketing, and supply of inputs and credit. All of these actions are discussed in the Operational Strategic Plan (PSO) for agricultural development, and will be implemented through action plans for programs and sectors. Based on these action plans, an agricultural sector public investment program (PISA) will be prepared, with the ultimate aim of achieving a better match between public investment in the sector and sectoral policies and priorities. The discussions are in progress, with the participation of all of the economic transactor, public and private institutions involved in the sector, and the development partners. These strategic discussions incorporate a regional dimension within the WAEMU framework.
31. As regards the cotton sector, the following objectives will be pursued: (i) to accelerate the process of gradual liberalization of the sector by encouraging the start of new companies, with a view to introducing greater competition, which would help to improve the production and income of small farmers; (ii) to enhance the performance of SOFITEX through the conclusion of performance contracts between the company and the state; (iii) to improve regulation of the sector; (iv) to revise the pricing mechanism, taking account of international prices and SOFITEX's efforts to reduce costs; and (v) to increase the share of producers in the sector's revenue. To this end, an interprofessional agreement was signed between SOFITEX and the National Union of Cotton Producers of Burkina (UNPCB) in February 1999. This agreement prescribes a mechanism for establishing and revising cotton purchase prices, sets forth arrangements for the operations of the support fund, creates a sectoral management committee, and allows for the acquisition by producers of up to 30 percent of the capital of SOFITEX. To implement this latter measure, the government already adopted a decree partially opening up the capital of SOFITEX in June 1998 and issued a regulation concerning the procedures for the sale to the Association of Cotton Producers, in March 1999, of a portion of the SOFITEX shares held by the state. This process will be completed by end-1999.
32. Lastly, the government plans to continue the implementation of the following projects and programs, which are helping to achieve the sectoral objectives: the project to develop private irrigation and related activities; the second phase of the national soil management program (PNGT); the national program for the development of agricultural services (PNDSA); and the food security and nutrition project (PSAN).
Livestock
33. Since the change in the parity of the CFA franc to the French franc, the livestock sector has been particularly buoyant, accounting for nearly 12 percent of GDP and about 24 percent of total exports, in value terms. In the interests of building upon these results and streamlining the management of the sector, the government two years ago created a full-fledged ministry responsible for animal resources. In this framework, a memorandum to guide the action plan for livestock development policy in Burkina Faso was adopted in November 1997. The objectives set forth in this memorandum are: (i) to support the development of profitable branches of activity (cattle and meat, leather and skins, milk, and poultry farming); (ii) to contribute to the development and management of rural areas; (iii) to provide food for livestock; (iv) to increase health coverage for animal resources; (v) to enhance the operational effectiveness of support services; (vi) to assist organizations of livestock breeders, with a view to enhancing their professional development; and (vii) to boost the competitiveness of animal production by creating a framework of incentives to attract private sector investment in this activity. To accomplish these goals, the following measures will be implemented (i) preparation of an operational action plan, accompanied by an investment program for the livestock sector in Burkina Faso; (ii) preparation of a program to develop and improve 54 pastoral zones and suburban stockbreeding zones; (iii) drafting of a Pastoral Code and legislation to protect cattle tracks; (iv) establishment of a national plan for the development of short-cycle animals (poultry, pigs, sheep, and goats); (v) establishment of a national cattle feed plan; (vi) introduction of a dairy development plan around the major urban centers of Ouagadougou, Bobo Dioulasso, and pastoral zones; this plan will be accompanied by a national genetic improvement program, requiring the creation of artificial insemination centers and units for the processing of dairy products; and (vii) rehabilitation and upgrading of the Ouagadougou slaughterhouse and construction of a modern slaughterhouse in Bobo Dioulasso. Special emphasis will be placed on the leather and skins sector, with a view to increasing its competitiveness.
C. Environment and Management of Natural Resources
Environment
34. Mindful of the fact that socioecological balances are a key factor in ensuring the sustainable development of agricultural, forest, and pastoral production, the government attaches considerable importance to the environment sector, focusing on the following: (i) control of desertification; (ii) the sustainable and rational management of the forestry resources; and (iii) environmental conservation. As regards the campaign against desertification, the authorities have developed initiatives, with the support of the foreign aid agencies, to tackle this threat, particularly through actions intended to restore the various ecosystems and improve the management of natural resources. All these actions will be clearly defined in the national action plans to control desertification currently being adopted in the context of the revision of the national environmental action plan (PANE). The efforts to achieve sustainable and rational development of the forestry resources will be reflected in the implementation of the Forestry Code passed by the Parliament in 1997. Within the framework of environmental conservation, the government will carry out activities aimed at (i) changing the behavior of the various participants in environmental management; (ii) limiting degradation of the environment; (iii) controlling the impact of human activities on the environment; (iv) improving the living conditions and the quality of life of the people; and (v) conserving the natural resources and biological diversity. The National Council for Environmental Management (CONAGESE), which functions as the institutional framework for environmental management, will play an important role in this policy.
35. The part of the population using only traditional energies (firewood, charcoal, and agricultural waste materials) to meet energy needs is estimated at 90 percent. Consequently, better organization of traditional sources of energy is clearly required, at the same time as appropriate steps are being taken to address the concerns of the population through the promotion of alternative energy sources to meet constantly rising demand. Accordingly, the government has adopted the following objectives: (i) to set a process in motion whereby communities take ownership of reforestation activities, in particular through implementation of the national village forestry program and the second phase of the national soil management program; (ii) to help strengthen institutional and management capacities with respect to brushfire prevention, in accordance with the guidelines determined by the March 1997 forum; (iii) to make more effective use of forestry resources through streamlined management and operations; (iv) to rehabilitate degraded forestry resources; (v) to promote the organization and use of rural areas; and (vi) to meet the demand of rural inhabitants for ligneous fuels. In addition, the government will ensure the promotion of activities such as ranching, private raising of small wild animals, tourism, and sport hunting, in particular through the concession of hunting grounds. With regard to the fishing subsector, the government plans to streamline the use of fishery resources through optimal use of the existing potential as well as through improvements, with a view to increasing fishing productivity and the supply of fish, in light of the recorded shortages.
Water
36. The water resources potential of Burkina Faso is highly dependent on rainfall, which is characterized by sharp fluctuations in any given year, as well as by very unequal distribution among the regions. To address this situation, the government, in its national water policy, has adopted as its main focus that of managing water resources, having due regard for maintaining the equilibrium of the physical environment and aquatic ecosystems. The basic principles underlying this policy are (i) equitable treatment of users; (ii) harmonious development of the regions; (iii) compliance with water use standards; (iv) the establishment of users' accountability for the use of resources and the protection of waterworks; and (v) interregional and international cooperation. Accordingly, in the strategy policy document relating to water, the government has identified the three following areas: the supply of drinking water, hydro-agricultural development, and other uses of water in the other sectors of the national economy where the water supply is crucial for economic development. In addition, the government plans to strengthen institutions in the water sector, with a view to managing resources more efficiently, so as to make the sector economically viable.
D. Economic Infrastructures
Transportation and tourism
37. The development of the transportation sector is one of the priorities of the Burkinabè authorities, in view of the fact that Burkina Faso is a landlocked country. Therefore, following the implementation of the first transportation sector project (PASECT), the government is formulating a new transportation sector strategy, regarding which discussions began in 1998. This strategy, which will be completed by December 1999, would spell out the major government policies in the area of transportation for the short, medium, and long terms. The objectives established in this area are therefore (i) to achieve a reliable, structured transportation network, capable of supporting the development of interregional trade, by enabling the flow of agricultural surpluses away from surplus-producing areas into zones characterized by shortages, and by facilitating the supply to Burkina Faso of various industrial products; (ii) to open up Burkina Faso to the rest of the world through the development of transportation facilities; (iii) to organize the transportation sector and structure and organize the management of road transport; (iv) to adopt policies aimed at reducing transportation costs, so as to make the national economy competitive; (v) to maintain the freight generated by the foreign trade of Burkina Faso and ensure the security and free flow of traffic; (vi) to boost private sector participation in the transportation sector; and (vii) to promote tourism in Burkina Faso. To this end, a coherent policy must be formulated within a more operational regulatory framework, with adequate human resources. The privatization strategy for Air Burkina, for its part, was adopted by the government in 1998, and privatization is progressing as planned, with the call for bids to be launched before end-March 2000. The reform of the management of civil aviation activities and transit assistance will be finalized in the course of 1999.
Telecommunications
38. The high cost of telecommunications services is currently one of the reasons for the low competitiveness of the Burkinabè economy. The government therefore passed Law 051/98/AN of 12/4/98, reforming the telecommunications sector, and Law 058/98/AN of 12/16/98 on the partial privatization of ONATEL. The government will also make every effort to expedite the liberalization of the sector. The following strategic focuses have been defined: (i) the privatization of the existing structures, with a view to facilitating the inflow of new operators and the injection of new resources and technologies into various segments of the market; and (ii) the creation and strengthening of government capacity to regulate the markets for services that are of a public nature.
Energy
39. Because of the scarcity of energy resources in Burkina Faso and the country's landlocked situation, the cost of energy is very high, and this poses a serious obstacle to industrial development. Accordingly, and with the aim of supplying energy to the majority of economic agents at a cost that can enhance the competitiveness of the Burkinabè economy while providing an institutional and financial environment supportive of the activities of the sector, the government plans to focus on the following activities (i) strengthening the national, institutional, and management capacities of the energy sector; (ii) fully liberalizing the sector through the implementation of Law 060/98/AN of December 17, 1998, setting out the overall regulations for the supply of electric power in Burkina Faso, and privatizing the electricity company, SONABEL; (iii) controlling the costs of energy inputs; (iv) improving the energy coverage of the country, particularly in rural areas, through the national electrification plan; (v) promoting other energy sources and, more specifically, renewable sources of energy; and (vi) educating the people with regard to the more efficient use of firewood and encouraging them to use other energy sources as an alternative. In addition, the government will make every effort to complete the interconnections currently being established with neighboring countries (Ghana and Côte d'Ivoire). The government will also streamline the distribution of tasks to the various participants in the oil and gas sector.
Mines
40. The modern mining industry, which is not well developed in Burkina Faso, is primarily oriented toward gold, which, after cotton and livestock products, is the third most important source of foreign exchange for the country. Mindful of the importance of the mining sector's contribution to economic growth, the government has decided since 1996 (mining sector policy statement) to pay special attention to this sector, in light of the renewed interest shown by national and international investors since the change in the parity of the CFA franc. Accordingly, a new mining law was passed in October 1997, providing for more attractive incentives. In March 1999, the government started implementing a project to strengthen mining and environmental management capacities (PRECAGEME); it intends to accelerate the implementation of this project, through the following actions: (i) adoption of the implementation decrees with respect to the mining law, taxation, and environmental protection; (ii) improvement of the efficiency of institutions in the sector and of administrative procedures; (iii) improvement of the availability and quality of mining sector data; (iv) coordination of the various environmental activities relating to the sector; and (v) training of public and private sector personnel to improve the management of activities. In addition, the government plans to engage in the following activities in the sector: (i) conduct series of geophysical surveys from the air and establish a geological map; (ii) construct of a laboratory for geological analysis; and (iii) update the Tambao and Perkoa projects. To protect the environment, the government will ensure that any exploration of deposits is preceded by an environmental impact study.
V. Social Impact of Adjustment and Poverty Alleviation
41. In the context of efforts to alleviate poverty, the government has, since the start of the structural adjustment program, initiated a series of surveys aimed at identifying target households and the extent of poverty. In particular, the priority survey on the profile of poverty showed that in 1996 nearly half the population (i.e., 44.9 percent) was living below the absolute poverty line (CFAF 41,099 per person per year). In addition, specific studies on education, health, employment, and gender with reference to poverty were conducted in 1997. A survey on the perceptions of poverty in urban areas and the priority survey II are also in progress. The government is basing its development strategies (the main focus of which is the elimination of poverty) on these studies.
VI. Regional Integration
42. The government sets great importance on regional economic integration with neighboring West African countries. For this reason, in January 1994 it ratified the treaty of the West African Economic and Monetary Union (WAEMU), thereby helping to turn the WAEMU into an effective economic entity. The WAEMU is already operational, with the establishment of all its institutions. Its purpose is primarily to ensure (i) the freedom of movement of persons, goods, and capital; (ii) the establishment of a customs union among the eight member countries; (iii) macroeconomic policy convergence; (iv) the harmonization of sectoral policies; (v) the harmonization of government finance statistics; and (vi) the harmonization of indirect taxation. For the next three years, actions will focus on (i) the preparation of a Community Investment Code; (ii) the actual harmonization of government finance statistics; (iii) the effective implementation of the harmonized regional accounting system (SYSCOA); (iv) the effective implementation of the CET; and (v) multilateral surveillance, accompanied by sanctions. Lastly, Burkina Faso is actively pursuing efforts to achieve the integration of the transportation system through the joint operation, together with Côte d'Ivoire, of a private railway company and by exploring the possibilities of subregional air transport operations with several neighboring countries.
VII. Improvement of the Statistical Base and National Capacity Building
43. To facilitate better monitoring and the efficient conduct of the program of economic reforms, the government will accelerate the implementation of its national strategy regarding statistical data. To that end, the law on statistical secrecy and disclosure requirements has been passed by Parliament. The national statistical program and the specifications for the various components of the national statistics system will be prepared and adopted by end-1999. Moreover, the restructuring of the National Institute of Statistics and Demography (INSD) will be expedited.
44. Statistical harmonization efforts made at the WAEMU level will be pursued. To improve and update its statistical base, the government is committed, inter alia (see matrix of measures), to (i) introducing new organizational methods for reducing lags in the preparation of the national accounts; (ii) broadening the scope of the harmonized consumer price index; (iii) accelerating the process of carrying out the national budget-consumption survey; (iv) implementing the common minimum statistics program (PROSMIC); and (v) revising the industrial production index.
45. Proper conduct of the actions included in the program of reforms and poverty reduction, especially regarding the increase in the operational capacity of government departments, requires adequate control of the macroeconomic framework and the strengthening of monitoring, analysis, and decision-making systems. For this reason, the government will make every effort to build national economic management capacities within the framework of the capacity-building program. This program will be the focus of a national dialogue, so that national capacity-building priorities can be established. Given the magnitude of the required resources, the government wishes to continue receiving the technical and financial support of the international community. In order to ensure that this assistance is as effective as possible, the government will make every effort to coordinate the actions of donors and lenders, so that these reflect the priorities established in the program.
VIII. External Financing Requirements and Debt Sustainability
46. The strengthened adjustment strategy and the reform policies started in the framework of the program aims at promoting sustainable economic growth in a stable financial environment and at reestablishing normal financial relationships with partner countries. In this context, the government eliminated in 1995 all external arrears on non-reschedulable debt and aims at achieving a viable external position in the medium term. The improvement in public finance and in the private sector competitiveness is expected to yield a reduction of the external current account (excluding grants) from 13.8 percent of GDP in 1998 to 10.8 percent in 2002. This improvement is expected to result from a stronger trade balance; transfers from Burkinabé workers abroad are expected to remain stable relative to GDP over the period.
47. Taking into account an annual average scheduled debt amortization of some CFAF 20 billion a year (before HIPC relief) and the targeted accumulation of net foreign assets, the annual external financing need is projected to average CFAF 240 billion per year over the period 2000-02. This financing need is expected to be met in part through official grants (CFAF 145 billion per year on average) and through project loans (CFAF 80 billion per year on average). Given the private capital flows expected over the period, the residual financing need (CFAF 29 billion per year on average) is expected to be met through IMF disbursements, World Bank adjustment credits, and exceptional assistance from bilateral donors and the European Community.
48. In 2000, the estimated external financing need of CFAF 247 billion is expected to be met mostly through resources already committed by foreign partners. Financing includes foreign grants (CFAF 140 billion) and project loans (CFAF 70 billion). The residual financing gap (CFAF 37 billion) is expected to be filled through bilateral and multilateral assistance.
49. The external debt policy will continue to be prudent. The government will not contract or guarantee on any new external borrowing on nonconcessional terms (expect for normal short-term credits and rescheduling loans). To this end, the government has established the public debt national committee (CNDP), which will examine all new financing requests. Moreover, the government will continue to take all necessary measures to avoid any accumulation of arrears.
50. Despite the prudent debt-management policy, the foreign debt service of Burkina Faso is hardly sustainable over the medium and long term. Indeed, balance of payment projections for the medium term indicate that the ratio of the net present value of Burkina Faso debt to exports of goods and nonfactor services is expected to remain significantly above the 200 percent benchmark for a number of years. For this reason, Burkina Faso requested assistance within the framework of the HIPC Initiative. This request has been accepted, and the completion point has been set for April 2000. Burkina Faso is committed to respecting its obligations set within the HIPC agreement framework.
