Economy of Senegal

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In January 1994, Senegal undertook a bold and ambitious economic reform program with the support of the international donor community. This reform began with a 50% devaluation of Senegal's currency, the CFA franc, which was linked at a fixed rate to the French franc. Government price controls and subsidies have been steadily dismantled as another economic reform. Even if the end result is an increase on the GDP, the social consequences of this devaluation was really hard on the population, because most of the essentials goods were imported. It means that over night, the price of goods like milk, rice, fertilizer and machinery doubled. In return, the country suffered a large exode and the most educated persons and those who could afford it fled the country. After seeing its economy contract by 2.1% in 1993, Senegal made an important turnaround, thanks to the reform program, with a growth in GDP averaging over 5% annually during 1995-2004. Annual inflation had been pushed down to the low single digits. As a member of the West African Economic and Monetary Union (WAEMU), Senegal is working toward greater regional integration with a unified external tariff and a more stable monetary policy. Senegal still relies heavily upon outside donor assistance, however. Under the IMF's Highly Indebted Poor Countries debt relief program, Senegal will benefit from eradication of two-thirds of its bilateral, multilateral, and private sector debt, in exchange of the completion of a privatization programs proposed by the gouvernment and aproved by the IMF

Contents 1 Macro-economic trend 2 See also 3 References 4 External links

[edit] Macro-economic trend

This is a chart of trend of gross domestic product of Senegal at market prices estimated by the International Monetary Fund with figures in millions of CFA Francs.

Year	Gross Domestic Product	US Dollar Exchange	Inflation Index (2000=100)
1980	652,221	211.27 CFA Francs	37
1985	1,197,462	449.32 CFA Francs	66
1990	1,603,679	272.27 CFA Francs	66
1995	2,309,091	499.15 CFA Francs	93
2000	3,192,019	709.96 CFA Francs	100
2005	4,387,230	526.55 CFA Francs	107

- in greater depth==

The former capital of French West Africa, Senegal is a semi-arid country located on the westernmost point of Africa. Predominantly rural and with limited natural resources, the country earns foreign exchange from fish, phosphates, peanuts, tourism, and services. Its economy is highly vulnerable to variations in rainfall and changes in world commodity prices. Senegal depends heavily on foreign assistance, which in 2000 represented about 32% of overall government spending--including both current expenditures and capital investments--or CFA 270.8 billion (U.S.$ 361.0 million).

Current GDP per capita of Senegal shrank by 1.30% in the Sixties. But it registered a peak growth of 158% in the Seventies. In the turbulent Eighties, it still expanded 43%. However this proved unsustainable and it consequently shrank by 40% in the Nineties.

Since the January 1994 CFA franc devaluation, the International Monetary Fund (IMF), the World Bank, and other multilateral and creditors have been supporting the Government of Senegal’s structural and sectoral adjustment programs. The broad objectives of the program have been to facilitate growth and development by reducing the role of government in the economy, improving public sector management, enhancing incentives for the private sector, and reducing poverty.

With an external debt of $ 2,495 million, and with its economic reform program on track, Senegal qualified for the multilateral debt relief initiative for Heavily Indebted Poor Countries (HIPC). Progress on structural reforms is on track, but the pace of reforms remains slow, as delays occur in implementing a number of measures on the privatization program, good governance issues, and the promotion of private sector activity. However, macroeconomic indicators show that Senegal turned in a respectable performance in meeting IMF targets in 2000: annual GDP growth increased to 5.7%, compared to 5.1% in 1999. Inflation was reported to be 0.7% compared to 0.8% in 1999, and the current account deficit (excluding transfers) was held at less than 6% of GDP.

The fishing sector has replaced the groundnut sector as Senegal's export leader. Its export earnings reached $239 million in 2000. The industrial fishing operations struggle with high costs, and Senegalese tuna is rapidly losing the French market to more efficient Asian competitors.

Phosphate production, the second major foreign exchange earner, has been steady at about $95 million. Exports of peanut products reached $79 million in 2000 and represented 11% of total export earnings. Receipts from tourism, the fourth major foreign exchange earner, have picked up since the January 1994 devaluation. In 2000, some 500,000 tourists visited Senegal, earning the country $120 million.

Senegal’s new Agency for the Promotion of Investment (APIX) plays a pivotal role in the government’s foreign investment program. Its objective is to increase the investment rate from its current level of 20.6% to 30%. Currently, there are no restrictions on the transfer or repatriation of capital and income earned, or investment financed with convertible foreign exchange. Direct U.S. investment in Senegal remains about $38 million, mainly in petroleum marketing, pharmaceuticals manufacturing, chemicals, and banking. Economic assistance, about $350 million a year, comes largely from France, the IMF, the World Bank, and the United States. Canada, Italy, Japan, and Germany also provide assistance.

Senegal has well-developed though costly port facilities, a major international airport serving 23 international airlines, and direct and expanding telecommunications links with major world centers.

Senegalese Country Commercial Guide: The Senegalese http://en.wikipedia.org/wiki/Country_commercial_guides can be found here:

• Senegalese Country Commercial Guides

Currency: 1 Communaute Financiere Africaine franc (CFAF) = 100 centimes

Exchange rates: In 2006, 1 € = 655.82 XOF (West-African CFA), or 1 XOF = 0.001525 €

• € to XOF
• XOF to €

Fiscal year: calendar year

[edit] See also

• Senegal
• Economy of Africa
• CFA_franc

[edit] References

• This article contains material from the CIA World Factbook which, as a US government publication, is in the public domain. [1]

[edit] External links

• Wages of Senegalese workers