Document of The World Bank FOR OFFICIAL USE ONLY Report No. 8695 PROGRAM PERFORMANCE AUDIT REPORT SENEGAL SECOND AND THIRD STRUCTURAL ADJUSTMENT CREDITS (CREDITS 1656-SE AND 1802-SE) MAY 31, 1990 Operations Evaluation Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CU~ NCY EQUIVALENT Currency Un:it* CFA franr (CFAF) la CFAF US$} A-ýerage End Perýiod' 1981 272- \287 12 328 336 1983- 381 417 1984 437 480 1985 449 378 1986 346 323. 19$7 301 267 1988 29830 1989 319 289 July 1 June 3Q' lC n e F frh te t h CFrecA fac tth at f$F1 FA 0 FOR OFFICIAL USE ONLY 1 THE WORLD BANK -WashwgOon. D.C. 204 33 US A Ote of O4WtWCmnWe& Opatsons 6weuesman May 31, 1990 usIRANDUM TO TuE EXECUTIVE DIRECTOR- AND THE PRESIDENT SUBJECTs Progra! Performance Audit Report on Senegal Second',and Third Structural Adjustment Credits -(Credits 1656-SE and 180-SE) Attached, for information, is a coy of a report entitled "Program Performance Audit Report on Senegal - Second and Third Structurat Adjustment Credits (Credits 1656-SE and 1802-SE)" pkepared by the Operations Evluation Department. Attachment This document has a restricted distribution a d may 6e used by recipients only in the performance of their officialuties, Its contents may not otherwise be disclosed without Wor Bank authorization. FOR OFFICIAL USE ONLY PRGRN EROREE UDT EPR SECOND AND THID STRUCTURAL ADJUS1ENT MREDITS (CREDITS 1656-SE AND 1802-SE) TABLE Oi CONTENTS PREPACE..............................i BASIC DATA SHEET ...*o..o..oo.................o........oo..... iii EVALUATION SIMARY ................................................ vii II. TUE ADJUSTMENT PROGRAM: SALS II AND II .................. 3 III. IMPLEMENTATION .....................0.00 . 0..0000 0000... 4 (a) Socio-Political Resistance ........................... 5 (b) Weak Linka Betveen Ends and Heans ................... 6 IV. OUTCOE AND LESSONS LEARNED ............................. 11 PROGRAM COMPLETION REPORT I. BACKGROUID: GROfTl AND CRISIS ............................ 17 A. Slav Grovth and the Onset of Crieis .................. 17 B. SAL Ii Stabilization and Adjustment .................. 17 C. Economie Performance Under SAL 1 ...................... 18 II. PERPORMANCE AND EXPERIENCE UNDER SAL II ................... 18 A. The Government's Medium-Term Adjustment Program (1985-1992) ......................................... 18 B. The Design of SAL II .................................. 20 C. Implementation of SAL II and Macroeconomic Performance *.................................... 21 III. PERPORMANCE AND EXPERIENCE UNDER SAL III ................. 23 A. The Government's Policy Pramework, 1987-90 ............ 23 B. The Design of SAL III ............................ 23 C. Implementation of SAL III and Macrosconomie Performance *.................0.;,4 .00 .....00.00 24 This dcument has a e~estrctd d ybution and may be used by Woilts ö a*y int eoman of their official duties. Its contents mayno otherws be dis~lse without Worfd Bank authoriato. TABLE öF CONTENTS (cont*d) IV. A9IEVEMENTS OF STRUCTUEAM ADJUSTNT AND THE IMPACT O TRE SALS: WRAT It DIFFERENT AMTER SAL III? ............... 26 A.\ Agriculture ............ .......................... 26 B. Industry and Private Inveent ...................... 27 C, Trade and Ptice Controle ........................... 28 D. Government and Parapublic Sector ...................... 2 3. Rankin8 Sector ....................,........ t3 F. Labor Iarket and Employrt4 0. 'Se Sonesalese Econmy -fter Three SALG .............. 34 V. LESONS LEAR10!»: HOWTO OVERC0HE THE OBSTACLES ...,......\ , 35 A. Design and Sequencing of Reform ....aa.............. 36 8. Time Reeded to Implement Reforms ...................... 36 C. Government's Capacity for,Reform ... ............ 37 D. Lesons for the utu .............. 37 A. genegal: Status of SL II/III Ations as of December 31, 1988 . . ... 9*9.0 4.......\ .0..099.0 9 39 B.(1) Studies, Audits and Act Completed Under SAL II . *..... 7 B.(2 Studiesý Audits and Actions Completed Under SAL II ......5 IMgOGRA PER-ORMACR AUDIT EPORT 8800pD AND TRIRD BTiRUCTURAL ADJUSTMENT CREDITS (CRIEDITS 1656-8 AND 1802-SE) This is the Program Performance Audit Report (PPAR) on the Second and Third $tructural Adjustment Loans (SAL) to Senegal (Credits 1656-SE and 1802-SE, respectively). The principal objective of the loans vas to support the Government's medium-term adjustment program. This program ais at estab- lishing the conditions for self-sustained growth by progressively withdrawing the state from direct involvement in production and promoting private initia- tive and investment, and achieving greater efficiency of public resource management while restoring internal and external financial equilibria. SAL 11 for a total of US$64 million -- a combined IDA and Special African Facility Credit (Credits 1656 for US$20 million and A-010 for US$44 million, respectively) -- was approved in February 1986, and was closed in June 1987. SAL III for a total of US$85 million -- a combined IDA and Special African Facility Credit (Credits 1802 for US$45 million and A-027 for US$40 million, respectively) -- was *pproved in May 1987; in March 1989 it was supplemented by an additional US$5.5 million from the Fifth Dimension; and was closed in June 1989. The credits were fully disbursed. The PPAR vas prepared by the Operations Evaluation Department (OED) and the Progam Completion Report (PCR) vas prepared by the Africa Regional Office. The PPAR is based on the attached PCR, the President's Reports, the loan documents, a study of project files, and discussions with Bank, staff. An ORD mission discussed the effectiveness of the Bank's assistance with Government officials and leaders of the business community. Their kind cooperation and valuable assistance in the preparation of this report is gratefully acknowledged. The PCR provides a good account and assesment of the project experience, and discusses the performance of the Bank and the Government. The PPAR elaborates on particular aspects such as the completeness -- or lack thereof -- of the policy package to achieve the Oeeired objectives. The draft PPAR wes sent to the Borrower; they had no comments on the report. SENEAL SECOND AN TNED STRUCTURAL ADJUSIE T. CREDITS (CREDITS 1656-SE AND 1802-SE) (Amounts in US$ Million) As of Mar. 31, 1990 credit No. OriStawl Digbursed Canelled JMA Oftstanding 1656-SE 20.0 21.8 - - 23.7 A-010-88 44.0 47.5 - - 52.1 1802-8 45.0 47.6 - - 45.2 A-027-SE 40.0 41.2 - - 40.2 1802-1-SE 9k 5.5 5.2 - - 5.4 Credl& 1656 ,gER, Appraisal Bstimate (US$ H) 29.0 64.0 Actual (US$ H) 30.4 69.3 Actual as 2 of Appraisal (2) 1052 108 Date of Final Disbursements November 10, 1986 Credit 1802 IU M9g FY89 Appraisal Estiate (US$ K) 30.0 85.0 85.0"\ Actual (US$ M) 0.0 86.4 88.8 Actual as 2 of Appraisal (2) - 1022 1042 Date of Final Disbursement: August 2, 1988 iA The credits were fully disbursed. Disbursed and outstanding totals differ from the original amounts of the credits in terms of US$ because of changes in the US$1SDR exchange rates. 1k Additional amount made avail ble under the Fifth Dimension. In Not Including the US$.5 million supplement from the Fifth Dimension (Cr. 1802-1) which was fully disbursed for a total of US$5*2 million on June 8, 1989. PROJ=C ATS Credit 1656 Oriinal RevisedfActual Initiating Memorandum n.a. 08109/85 Appraisal n.a. 09115185 Negotiations n.a. 12116/85 Letter of Development Policy n.a. 12/19/85 Board Approval n.ea. 02/04/86 'Credit Agreement n.a. 02/26/86 Effectiveness a.a. 02127/86 Second Tranche Release 10/86 09/86 Credit Closing n.a. 06/30/87 Actual Completion n.a. 12/31/87 Credit 1802 Origna Revised/Actual Initiating Hemorandum n.a. 01/09/87 Appraisal n.a. 02/15/87 Letter of Development Policy U.. 04/16187 Negotiations n.a. 04/22/87 Board Approval n.a. 05/21/87 Credit Agreement n.a. 06/05/87 Effectiveness n.a. 06/29/87 Second Tranche Release ,1187 12/87 Third Tranche Release 03(88 05188 Credit Closing 14 12/31/88 06/30/89 Actual Completion n.ea n.e. STW INPUTS (staff weeks) Credit 1656 ULF 86 PY87 EF88 Total Preappraisal 8.0 59.8 - - 67.8 Appraisal - 28.2 - - 28.2 Negotiations - 19.6 - - 19.6 Supervision - 51.7 27.0 0.1 78.8 Other ...... - ..4 - 1.4 Total 8.0 159.3 28.4 0.1 195.8 Credit 1802 FY86 FY88 UoSgl Peappraisal 0.1 76.0 - 76,1 Appraisal - 28.8 - 28.0 Negotiations - 27.0\ - 27.0 Supervision - 26.4 96.2 122.6 0t1,er,.. 7Thal 0. 158.7 96.2 25. Ext4nded from December 31, 1988, to permit disbursements imdr the Fifth Dimension. MX98ION DATA No. of No. of Staff Date of Credit 1656 MonthlYear Wecka P - W1 Reoort Preparation 04/85 4 4 16 05/85 Appraeial 09185 2 7 14 n.a. Supervialon I n.a. n.a. noa. n.a. n.a. Supervi$on II , .a. n.a. n.a. n.a. n.a. Completion La 10188 3 1 3 06/26189 No. of, No. of Staff Date of Cjedit 1802 äonthlYear' Weke Persona Weeks Reprt Preparation 11/86 n.a. n.a. n.a. n.a. Appralsal 02/87 n.a. n.. n.a. n.a. Supervision 1 06/87 3 2 6 07/09/87 Supervision II 10/87 2 4 8 11/06/87 Cpletion 10/88 3 1 3 Ö6/29/89 OTHER PO,ECT DATA borrover/ecutinug Agency: Republic of Senega Pollov-on Proiects Name : Financial Sector Adjustment Program Credit No.: 2077-8 Amount US$45.0 million board Date& December 18, 1989 a part Of SAL \PT. kpo-pprasiB iggiono, ROGMA 109NNaAMD AMRTRPR 88C0pD AND THIRD STRUCTURAI ADJUSTMENT CREDITS (CREDITS 1656-88 AID 1802-S) VALUATION SUHATRY 1. By the end of the 1970s all macroeconamic indicators in Senegal showed that the economic situation had become untenable. Inappropriate economic policies pursued during the 1970s, including excessive state inter- vention in the economy, coupled with the country's fragile natural resource base, successive druughts and swings in the international terms of trade, 1ad resulted in economic stagnation and large and rising current account and budgetary deficits which reached crisis levels by the end of the decade.- In 1980/81 consumption exceeded domestic production, and the current account deficit in the balance of payments averaged 22% of GDP. Given the depth of the crisis, some stabilization and adjustment was unavoidable, In response, the. GoverameAt adopted an economic rehab4litation program supported by an IMF Extended Fund Facility in August 1980 and by a Bank structural adjustment operation (SAL 1)' in December of that year. Neither program was Implemented to conclusion for a variety of reasons, including the Government's inability to reach some Important performance targets as well as domestic political considerations. Disbursement of the second tranche of SAL I was eventually cancelled in June 1903. A Program Performance Audit Report on SAL I was issued on May 9, 1985. Following elections in mid-1983, the Government resumed its structural adjustment efforts. A Consultative Group was organized In December 1984, where the Government presented a "Medium and Long-Term Economic and Yinancial Adjustment Program" for the period 1985-92. The Bank resumed its "upeort \with SALe II (1985) and III (1987), which are evaluated in this report.,& 2. The overall objectives and thrust of SALs II and III were a con- tinuation of those of SAL Is to achieve stabilization in the short term, and, at the same time, to lay the basic conditions for growth in the longer term. These conditions consisted of an improvement in the incentives' frame- work for production, an increase in the efficiency of public sector activity in the econom*, and a stresgthening and increase in the role of the private sector including progressive withdrawal of the state from direct involvement in production activities. The main features of the policy package of SAL II were (a)- policies for accelerated growth in producti*n and qmployments this included incentive reforms in agric4ture to raise cereals and groundnut output, decontrol of the groundnut sector and a comprehensive industrial policy reform; and (b) Improvements in public sector management, including 11 A more comprehensive evaluation of, the whole of the Bank's assistance program for Seneael can be foun# ta OED, The World Bank and Senetal. 1960-87, Report Nd. 804 , August 31, 1989. reform of public. investment programing and of the parastatal sector and strengthening of public finances. The poUcy package of SAL III was a con- tinuation of SAL II, with, as principal additions, policies to liberalize the regulatory framework for employent and actions to rehabilitate the financial sector. 3. Both SALs included a very large - number of individual measures for implementation by the Government, ranging from simple studies to rather major institutional changes, and touching on a wide range of issues and sectors. Roughly two-thirds of the measures were completed as scheduled. As a result, throughout the SAL II/III period progress in structural adjustment was generally ,Judged to be satisfactory by the Bank and both SALs were disbursed quickly, more or less as scheduled. 4. Much has been achieved. By the end of SAL III, the nature of the Senegalese economy had changed significantly from a system characterized by pervasive government interference to one whch :o much less regulated and is on its way to becoming a decentralized;,private sector economy. Major accom- plishments include: (1) in agriculture, the adoption of a cereals plan with a view to piomoting 'food security and rpducing reliance on mpopted food- stuffs, the abolition of, the monopoly- on 'rice Imports formerly held by the Pricy Equalization and Stabilization Fund, the eliatn.tion 'of most controls on the internal marketing of cereals, liberalization of the grounaut sector and decontrol of fertilizer impotts and phasing out of subsidies (2) with particular regard to the industrial sector, the progressive rationalization of the system of effective protection,,, a phased elimination of quantitative restrictions on imports, revision of the export subsidy scheme, and deregula- tion of the distribution system;, and (3) in the area of the public e,ctor, the preparation of a three-year rolling public investment program, a program of' public disengagement of a number of public enterprises, the beginnings of limiting he size of the civil service qud the initiation of public finance reform (PCR, para. 26-47). 5. The large number of. measures which were sucesfully implemented makes it tempting to conclude that SALs II and III were largely successful in achieving their objectives. However, while the Senegalese economy has been transformed significantlt during the past few yeara, away from excessive state tiervelation, a close review of the adjustment process suggests at least t4o major general problem areas. First, about one-third of the proposed measures were not implemented as scheduled. -This was particularly important in the areas of the parastatal sector, labor regulations and the banking sector, where fundamental structural reforms are crucial to any revitalization of the economy and where the lack of action weakened the effectiveness of those reforms that were implemented. Strong political opposition from pow6rful vested interest groups, such as civ servants and' trade unions, undermined the reform prociss in these areas and little was achieved (PPAR, paras. 3.05-3.07). 6. Second, timely implementation of those measures that were, included k in the program does nt necessarily Pean success. The latter requires an accurate qualitative ant quantitative Jrasp of the links between measures and policy objectives, In several instances, the causal relationships between the measures proposed and the objectives sought as incorporated in the policy packoges were tenuous or Sncomplete. This gave- rise to a continuing tendency to overestimate likely future performance and to underestimate the negative Impact of constraints on development (PPAR, paras. 3.08-3.21). Thus, e.g., in the agricultural sector, the strong reliance on price policies to affect output, without due regard to other constraints, constituted an incceoplete measures in the sense that relying on it is insufficient to attain the objec- tives. Pricing and liberalization measures are necessary prerequisites but not sufficient conditions for growth. The latter will require, in addition, a focus on providing suitable agronomic and technical packages to farmers backed by support institutions and a concerted attack on the climatic impedi- ments to growth through the development of irrigation systems and soil regeneration and conservation programs, even though the difficulties in iden- tifying viable investment options in these areas should not be underesti- mated. Likewise, the restructuring paclage to Improve industrial sector eficiency was also inceqplete. - In this case, the vast majority of SAL measures were implemented, but a multitude of other binding constraints remain to be resolved before a supply response can be expected. 7. The demand management measures implemented during the SAL 111111 period have succeeded in reducing gross domestic expenditure by a substantial margin, although the fiscal deficit remained an area of great concern. On the other hand, it is as yet too early to judge the impact of \the SALs' structural adjustment measurev, as they take time to work themalves out through the system, and, furthermore, some crucial measures were not imple- mented, while in a number of instances 'the set of measures proposed was incomplete. The ove*all growth performance of the economy during 1984-88 was satisfactory, however, althpugh this v*e primarily the result of good weather and a favorable evolution of the terme of trade. 8 While the structure of the economic system changed considerably during the period, the adjustment process is far from finished. Two major lessons can be derived from the SAL 11III experience. First, politically highly sensitive reforms are unlikely to be implemented unless a prior inter"l debate and consensus building on 'the issues has take place. Before proceeding with a SAL program, it is important for the Bank to encourage internal agreement on such issues and to require some up-front assurances of action. Second, in view of the highly restrictive constraints to development of all kinds operating in SOnegal, It is essential to design SAL\ programs with more realistic expectations in mind and better focussed on the most binding constraints. To be effective, the reform program should, given implementation constraints, concentrate on as few measures as possible yet include all of those which are of the highest priority to achieve the objectives. 9. Subsequent to SAL III, the Government has continued its structural adjustment efforts with further support from the Bank. A Financial Sector Adjustment program was approved by the Bank's Board in December 1989, and a fourth SAL is expected to be proposed shortly., It is encouraging to note that the lessons learned from the SAL IIIII 'experience are being incor- porated in the current Bank strategy. pcoIm MD a TH sD TUCTuA ADJ=stuppr aRapas (CREDITS 1656-S AND 1802-SE) 1.01 The performance of the Senegalese economy during the quarter century since Independence in 1960 has been particularly disappointing. In spite of constiaose and generous levels ,of foreign assistance, the long-term average real growth rate of GDP, at around 2.51 per Annum, could not keep up with population growth estimated at close to 3% per annum. The reasons for this poor performance record are many. They include exogenous factors -- a fragile natural resource base, variable and declining rainfall trends, soil degradation, swings in the international terms of trade -- as well as a deficient domestic economic policy environmeut. 1.02 A primary objective of post-Independence economic policies, especially during the 1970s, was to attempt to accelerate development by enlarging the role of the, public sector in the economy, both directly through, among others, a substantial expansion of the public enterprises' sector, and indirectly through regulations on private sector activity. The policies carried with them a strong urban consumption bias, and among the major consequences were a dismally low domestic savings level, excessive consumption growth, poor quality investments and an ever increasing debt service burdip. By the end of the 1970. all macroeconomic Indicators showed that the economic sittation had become untenable. With large and rising current account and budgetary deficits, internal and external disequilibria had reached crisis levels. A cumulative process of worsening economic per- formance was underway. Poor agricultural and export performance resulted in GDP stagnation while both private and government co sumption continued to grow at alarming rates. Between 1977/78 and 1980/81, government consumption grow at alaost 52 per year and private consumption by 3.25 per year compared to a much slower growth of GDP (0.82) and a decline in- investment (-4.3% per year). By 1980181 consumption exceeded domestic production, and the current account deficit in the balance of payments averaged 222 of GDP (Table 1). Given the depth of the crisis, some stabilisation and adjustment was unavoidable. 2 Is SEN SEAL SCTED ECONGIC INDICATOMS, 1980-8 198 R A12 1983 198 198 1986 1 1M8 GDP (billions of 1980 CFA France) 628 624 717 737 705 731 763 796 635 As 2 p Current GDP Consmption 100.5 104.6 99.6 98.0 95.3 98.8 94.0 91.4 90.4 avestment 15.5 16.4 15.4 16.2 1518 13.7 13.7 15.3 15.6 Exports of Goode & FS 28.7 40.3 34.7 37.3 39.Y6 31,3 27.5 25.6 25.1 Imports of Coode & N88 44.7 61.3 49.7 51.5 10.7 8 35.2 32.3 31.1 Balance of Paymentat Current Account Deficit -17.7 -25.9 -17.4 -18.1 -17.7 -17.5 .14,4 -10.2 -9.4 nas Current Veceipts 23.0 19.3 20.1 19.9 20.0 19.5 18.8 19.2 18.2 Current Expenditures 23.5 26.0 24.0 24.1 21.1 20.3 19.0 18.5 17.2 Capital EEpenditatee 5.0 5.9 4.0 4.4 4.1 3.2 2.8 2.8 2.9 Overall Deficit (cash basis) -4.3 -10.1 -10.6 -7.8 -7.5 -5.0 -4.0 -4.1 -4.5 Nemo Itenas Tens of Trade Index 100.0 122.2 10#.7 107.1 422.8 124.2 142.4, 146.8 135.8 ftgnSss World Upk, World Tables; and Senegal Couitry Briefe. 1.03 Recognizing the shortcomings of its policies, the Government, after extensive discussions with the Bank and the 1W, issued an "Economic and Financial Rehabilitation Program" in December '979, followed t14 October 1980 by a "Declaration of tonomic- Policy." These documents paved the way for a stabilization and adjust*nnt program supported by an IM Extended Fund Facility (EFF) in August 1980 and the first Bank structural adjustment opera- tion (SAL 1) approved in December 1980. The overall objectivee of SAL I (which were later carried over to SALs II 'And III) were quite ixear: to achieve stabilization and ,a;oid external payments default in the short thrm, and, at the same time, to lay \the basic conditions for growth in the longer term. These conditions, i summary form, consisted of an improvement in the incentives' framework for production, an increase in the efficiency of public sector activity in the economy, and a strengthening and increase in the role of the private sector. 1.04 SAL I was evaluated by the Operations Evaluation Department (OED), and a Program Performance Audit Report (PPAR) was issued on Nay 9, 1985 (Report No. \5637). Some of the major achievements of the operation were an improvement in the investment program, reform of a number of important parastatals, the provisIon of export incentives to domestic producers, a reduction in distortions of some key commodity pricel, and, maybe mst Impor- tantly, the beginnings of a dialogue, \which is still ongoing, betwen the Gaqernment and the Bank on structural adjustment issues. On the othet hand, the. Government; failed to meet some of the macroeconomic objectives laid down In the SAL I and lif agreements and made little progress on agricultural reform. As a result, the EFF was discontinued and replaced by one-year stand-by errangements, while disbursement of th \Vecond tranche of 'W I was at first postpon d and, eventually, cancelled (June 1983). Some of the important lessons emanating from SAL i, as tiported in the PPAR, were oat a successful outcome hinges on (a) firm political support by the Government and (b) careful preparation of the SAL program on te part of th4 Bank, especially when some of the conditionality is derived ftrom questionable base- 'line data and information. \As will be seen below, these observations apply equally to SAL& II and III. 1.05 Following elections in mid-1983, which had weakened the Government's resolve to take 'difficult corrective measures, and in view of the continuing precarious economic and financial situation (another severe 'rought occurred in 1983/84), the Government resumed its structural adjustment efforts. Some new reform measures were introduced and those implemented under SAL I were continued. ' A Consultative Group was organized in December 1984 where the Government presented a "Medium and Long-Term Economic and Financial 'Adjust- ment Program" for the period 1985-1992, prepared in close consultation with the Bank and the IMF. The Bank resumed its support for Senegal's structural adjustment program with two additional SALs: SAL II, a combined IDA and Special Africa, Facility Credit for a total of $64 million, approved on February 4, 1986\ and SAL III, a combined IDA And Special Africtn Facility Credit for a total of $85 milWitn, approved on May 21, 1987, and supplemented on March 13, 1989, by an additional $5.5 million from 'the fifth dimension. SAL. 11 and III are the focus of the evaluation in the following paragraphs. II. THE ADJUSTMENT PROGRAMs SALS II AND III 2.01 The overall objectives and thrust of SAL. II and III were a con- tinuation of those of SAL I (para. 1.03) with two main themes at the basis of the Government's strategy: (a) progressive withdrawal of the state, from direct involvement in production activities and the promotion of private sector initiatives; and (b) achievement of greater efficiency of pubic resource manageuent through improvements in the quality 'and efficiency of %,public investments and reform of ibe public sector. Both SALs included a \*ry large number of measures for implementation by the Government, ranging from simple studies to rather major intitutional changes, and touching on a wide range -of issues and sectors. While the multitude' of measures was indicative of the comprehensiveness of the SAL programs, it al4 reflected a certain lack of focus as no priority ordering, was established. The measures proposed were, in fact, so numerous that it is' far from e*sy to give an eact count. As listed in the policy matrices in the respective President's Reports, SAL II contained 46 measures versus 77 for SAL III.1 A different counting ib the PCR (Annpx 3), however, lists 39 measures for AL 11 but 147 for SAL III. 2.02 The main features of the policy package of SAL II are described in the PCR, paras. .9-10. In summary form they 1consisted oft (a) policies for accelerated growth "in production and employment; this includd incentive reforms in agriculture to raise cereals and groundnut output, decontrol of the groundnut sector and a comprehensive industrial policy reform; and (b) improvementy in public sector management, including reform of public investment programming and of the parast*tal sector and strengthening of i [L See 084, The World aak and Senexal, 1960-87, Report N . 8041, August 31, 1989. public finances. The policy package of SAL 11, described in the PCR, par"s. 16-17, was essentially a contiration of SAL II, with, as principal additions, policies to liberalize the regulatory framework for employment and actions to rehabilitate the finardiAl sector. 3.01 SAL 11 was disbursed in two trenches. The last disbursement took place within 9 months of the date of credit effectiveness, considerably less than the 15 months estimated at the tame of appraisal. Although a number of the measures were not implemented, these were subsequently incorporated into SAL III, while overall progress in structural adjustment was judged satis- factory. iSAL III was disbursed in three tranches. While there were small delays i releasing the second and third tranches, largsly because of inaction in implementing some of th agricultural components of the program, the final disbursement took place within 14 months of the date of credit effectiveness, compared with an expected 13 months estimated at the time 'of appraisal.2 In this case also, progress in structural adjustment was judged to be satisfactory, although again a number of the proposed measures were not implemented. 3.02 Overall, roughly two-thirds oi the measures incorporated in SAL* 11 and III were completed as scheduled (see PCR, Annex 5). As a result, there has been a significant change in the nature of the Senegalese economy during the past few years, from a system characterized by pervasivi government \ interference to \one which is much less regulated and is on its way to becomipg a decentralized private sector economy. At the same tine, a number of measures were not corpleted and little was achieved in some very crucial areas, especially thosi where the \proposed policy changes encounteied resistance from strongly vested interest groups (paras. 3.05-3.07 below). 3.03 The achievements of SAL* II and III are well doosmented in the PCR, pars. 26 through 47. The most important ones may be summarized as follows: i(1) in agriculture, the adoption of a cereals plan with a view to promoting food security and reducing reliance on imported foodstuffs, the abolition of the monopoly on rice imports formerly held by the Price Equalization and Stabilization Fund, the elimination of most controls on the internal marketing of dyarals, 14beralization of the groundnat sector and decontrol of fertilizer imports and phastng out of subsidies; (2) with particular\ regard to the industrial sector, the progressive rationalization of the system of effective protection, a phased elimination of quantitative restrictions oI imports, revision of the export subsidy scheme, and deregulation of the dis- tribution system; and (3) in the area of the public sector, the preparation of a \three-ypar rolling public investment program, a program of public disen- gagement of a number of public enterprises, the beginnings of limiting the size of the civil service and the initiation of public finance reform. / Thip does not include the additional $5.5 million made available for diabuteement under SAL' III from the Fifth Dimension; this became effectve in May 1989 and was disbursed within o6 4month. - 3.04 The large number of measures which were successfully implemented makes it )tempting to conclude that SALs II and III were, on the whole, largely successful in achieving their objectives. And, as stated above, it is true that the Senegalese economy has been transformed significantly during the past few years, away from excessive state intervention. Given the multi- tude of measures included in the original adjustment program, however, it is, first of 41, easy to lose eight of those that have not been implemented yet, which do amount to about a third of the total. A close review suggests that ' in son* very fund4ental areas 1istle progrss was, in fact, made, either because measures were not IMplemeted or, if they were Implemented, their implementation was not fully pursued, This is particularly important in the areas of parastatals, labor regulations and banking sector reform. Secondly, a large number of measures, even if Implemented, does not necessarily mean success. Ultimate success of the structural adjustment process cannot be gauged by whether measures per so are met but by whether economic performance and the social situation improve (independently of the impact of exogenous factors). For this reason, it is essential to have an accurate qualitative and quantitative understanding of the\ links between measures and policy objectives. As discussed below, the causal relationships between thi measures proposed and thv objectives sought as incorporated In the policy packages were often tenuous or incomplete. This has given rise to a con- tinuing tendency to overestimate likely future performance (particularly with regard to growth) and to underestimate the negative imact of constraints on developagnth. (a) Socio-Political Resistance 3.05 A numNer of actions were initiated to reform and privatize ublic enterprises. It would appear, howeveri that these objectives were pursued. only half-heartedly by the Government. Ohile a framework for reform has been\ set up -- lists of enterprises to be privatized have been prepared, the state has withdrawn from some agencies, performance contracts have been drawn up, the sector's data base has been improved and several studies hav* been completed -- and while the Government has became cpnvinced of the need for reform-and Is-well aware of the necessary steps' it has been hesitant primarily be ause of the short-term tegative employment Impact and the likely strong\ negat 'e reaction from interest groups. , In fact, performance of the sector as a vbole has hardly improved. Thus, e.g., the measures .to reduce direct subsidies did not bring about the hoped-for, -provements, as indirect '\ubsidies were allowed to increase and arrears built up to \keep the eter- pgises afloat. Similarly, performance contracts \were agreed upon between individual enteprises and the Government, but they were frequently not adhered to. At times, proposals for privatization or liquidation or for drawing up performance contracts were subsequently simply decided against. Finally, many of the public enterprises put up for sale 4eros operating at a loss, 4 factor whi4h has clearly contributed to the very minor privatization that ha taken place to date. 3.06 An important constraint to industrial development in Senegal is the imperfect state of the abor market. Traditiona4y, ind6trial labor rela- tions have been characterized by an adversarial relationship between private sector employers, on the one i;r, and labor unions and Government, on the other hand, \perpetuated by various labor market regulations. The labor code has been highly protective of already employed workers. because prior government authorisation for the dismissal of employees was generally required, it was extremely difficult to reduce the workforce and therefore, from the standpoint of employera, risky to hire new employees given uncer- tainties about future demand prospects. In addition, restrictions on the use of temporary workers were very severe. These policies resulted in low labor mobility and underutilisation of labor, and encouraged high levels of real wages. SAL II and especially SAL III addressed these issues. While some limited progress was made under SAL III in relaxing labor regulations, e.g., with the elminatiop of the need to hire Ohrough the Government's labor office, strong opposition to fundamental refo*m has meant that most of the restrictive aspects of labor policips have remained. 3.07 A third area, crucial for the development of the private sector, is reform of the banking system. Senegal's banking crisis, which had been in the making for some time, grew steadily worse during the 1980s. Two major contributory factors stand outs an inordinately large volume of lending to parapublio enterprises with dismal performance rcorde, and weak banking supervision leading to a major erosion .iAn discipline. By the late 1980s about half of the banking system's outstanding loane were non-performing. SAL III in particular contained important measures to address the fundamental problems of thei sector. Here also, however, progress made durIng the SAL period has been slow, primarily because the magnitude of the rteis was not fully appreciated at that time. Banking sector reform is now expected to be continued and pursued more vigorously in conjuntion with a Financial Sector Adjustment Program, supported by a recently approved IDA credit. (b) Weak Links Between Ends and Means 3.08 Timely implementation of SAL actions has not necessarily meant that the desired objective, e.g., economic growth, has been achieved, or even that the f#undations towards obtaining that objective have been laid. The best \ example can probably be found in the case of the industrial sector, where the vast majority of proposed measures have been implemented successfully but where, for a variety of reasons including but not limited to those discussed in parse. 3.05-3.07 above, a basis for sustained growth does not yet exist. A review of t4 e multitude of SAL measures and their links to the desired objectives suggests that in many cases these links could have been improved. The discussion which follows selectively reviews these relationships between means and ends in the four main areas of focus of the OALss agriculture, private and industrial sector efficiency, public investment and finan6et and public sector strengthen and disengagement and private sector engagerut. 3.09 The ovrall objectives of the agricultural sector components of SAL. II and III were to raise and diversify agricultural output, with special emphasis on a policy of import substitution for domestic \ cereals, and to increase productivity. The focus was on fostering private 6ector initiative through improved incentives' ,(especially pricing) policies and a reduction in the role of parastatal ageticies p the sector which had proven to be largely ineffective and a major drain on\the budget. The attention to pricing policy was seen as a means not only to stimulate marketed utput but also to shift income it favor of the rural sector. -7 - 3.10 While the emphasis on the role of prices in stimulating output \was a major and long overdue improvement in policies (little attention vas paid to pricing policy during the 1970a), evidence suggests that the effectiveness of pr.ce policies in the Senegalese context is bound to be limited as long as some other factors affecting the performance of agriculture -- climatic trends, soil degradation, and a weak research and extension effort -- are not being dealt with. Yet, the SAL documents postulated significant growth in aggregate agricultural output primarily on the basis of price effectsa agri- cultural output was projected to grow at approximately 3.5% per year during the following decade, where such growth would largely be generated by cereal output response which would increase at almost 5% per year. 3.11 Several observations may ,be made. First, there is a substantial body of literature which estimates that the supply responsiveness to prices in the Sub-Saharan African context is very limited in the short and medium term. For Senegal, the meager econometric evidence available indicates the predominant influence of rainfall and the very limited impact of prices on both groundnuts and millet output. Moreover, as it turned out, in spite of nominal price increases, real agricultural prices -- or nominal prices corrected for inflation -- were not increased during the strictural adjust- ment period. It must be added that the Bank's recommendations and the measures implemented by the Government 'with respect to agricultural prices never had a very solid analytical basis to begin with. Studies on the effects bf agricultural price policies had been i considered on various occasions, but none had been completed. \ (However, i short study was com- missioned as part of SAL III and completed in February 1988.) In addition to the above, the structural adjustment program for agriculture did not attempt to remedy the long-standing weaknesses of the agricultural research efforts in Senegal. As a result, no progress was made towards the development of clear yield-augmenting technological packages available for dissemination to the farmers. In fact, during the struct%*al adjustment period, some of the key problems to achieving agricultural growth -- technological development, support institutions, credit policy -- were neglected, to some extent on accou at of public expenditure constraints. 3.12 The foregoing suggests that the Bank 's expectations and projections with regard to aggregate agricultural output response to prices appear to have been highly optimistic. To make matters vors*, rainfall in Senegal over the past three decades has shown a strong downward trend and become more irFegular; in additiot, a desertification process appears to, be under way, accelerated by overgrazing, lack of a proper crop rotation paitern, defores- tation and erosion. In other words, weather and the deteriorating natural environment constitute increasingly binding constrai4ts to improved agricul- tural performance. The net conclusion is that the strong reliance on price policies to affect output, without due regard to other constraints, constitutes an incomplete measure, in the sense that relying on it is insuf- ficient to attain the objectives. Pricing and other liberalization measures, though crucial, are only part of the needed action program. They are necessary prerequisites but not sufficient conditions. Agricultural develop- ment in Senegal will require, in addition, a focus on providing suitable i\ agro mic and technical packages to farmers \backed by support institutions and a \concerted attack on the climatic impediments to growth through the - 8 -1 development of irrigation systems and sail regeneration and conservation programs, even though the difficulties in identifying viable investment options in these areas should not be underestimated. 3.13 The restructuring package to improve private and industrial sector efficiency Included, among others, the combination of trade liberalization (elimination of quantitative restrictions and reduction of tariffs) and the phasing out of special conventions between the Government and individual enterprises. This Is the typical recipe of removing price distortions (getting the prices right) and reducing market imperfections. Normally, an exchange rate adjustment would have acompanied the package, but this was not possible in the context of the West African Monetary Union. Implementation of most of the measures that dealt,vith Industrial incentives was very much on schedule. The not effect of trade liberalization measures was to reduce the prices of competitive Imports quite substantially, not only because of the decline in nominal tariffs but also because of the elimination of quotas and special conventions. Thus, domestic producers tended to be hurt by the measures, at least in the short run, by reducing the wedge between home prices and world prices and forcing them to meet foreign competition. Had a devaluation --been possible, it would have alleviated the negative impact of liberalization 9A on short-term output and employment. In fact, domestic producers were faced with the equivalent of a curren#y appreciation. 3.14 Two other factors were expected to affect the industrial sector negatively in the short runs very tight financial policies constraining the supply of credit to domestic fis and the deflationary trend in domestic demand. While these short-term effects could be seen as the transitional costs of adjustment which have to te borne in order to allow the industrial sector to become competitive and enter a new regime of efficient and export- oriented growth, there were, in addition, medium- and long-term factors likely to act' as important obstacles to industrial growth in- Senegal. To begin with, given overall growth prospects, internal, effective demand for consumer goods and other industrial products vas not expected to be very dynamic. Likewises foreign demand prospects for Senegalese Industrial exports were poors except for processed fish products and phosphate, the bulk of industrial exports is directed to,the highly protected and relatively stagnant market of the Economic Community 'of, West African States, while industrial exports are generally not competitive in other markets, especially in view of the fixed exchange rate. In addition, as discussed earlier, the imperfect state of the labor market (pare. 3.06) and the banking sector crisis (para. 3.07) were major impediments to industrial restructuring and development. 3.15 This multitude of constraints throws doubts on the relatively optimistic industrial growth scenario which was presented in the SAL pro-' grames it provides grounds for believing that the limited package of remedial measures which was proposed, though necessary, would be insufficient to achieve the objec4ves. In other words, as in the case of agriculture, the set of measures was Incomplete. While these constraints were well-kno -to the Bank and well-documented in the economic and sector work, it would apear that the Bank had more confidence in\ the favorable Impact of the policy reforms than seemed warranted by the evidence available and underestimated the ext*eme difficulty of relaxing some of those binding constraints. -9*. 3.16 A important aa of SALs 11 and III was a major improvement in the quality of publie investments. Among others, SAL It required stricter tech- nical, economic and financial project analysis criteria, and SAL II estab- lished as measures the completion of a project appraisal guide and the transfer of responsibilities for project identification and preparation to the various technical ministries. Both SALs also sought Improvement in the process of investment programming. Good progress was made in the latter area. The preparation of a rolling three-year Public Investment Program has become a standard feature of government policy-making; these programs have been reviewed regularly by the Bank and, on the whole, have been found satis- factory and Improving. Progress has been much harder to come by in the area of project' analysis. The methodology in use in Senegal was based on the French "mAthode des effets," which uses market prices and attempts to capture the indirect effects of a project through an intersectoral input-output frmework. This method contrasts sharply with the more conventional approach followed by the Bank and most Governments, which relies on shadow prices, and assumes that if the latter reflect appropriately the marginal value of the factors and the border prices of tradables, they also incorporate indirect effects. the "m6thode des effets" is controversial on theoretical as well as on empirical grounds, the latter especially given the notoriously weak data base in Senegal. To the extent that the estimated productivity of investment depends on the project analysis methodology which is employed, the important question left unanswered is whether the composition of the Public Investment Program would be significantly different if the conventional Bank analysis had been applied. 3.17 The completion of a project appraisal guide and the definition of project selection criteria and of operating procedures for a Project Selec- tion Committee were important actions to be taken as part of the SAL III program. The project preparation guidelines, however, were developed. for projects in the directly productive sectors only, leaving the sections on infrastructure and social services for later completion. Project selection criteria were adopted as were the operating procedures for the Project Selection Comittee, which, however, had not yet begun to function before the end of the SAL III period. Furthermore, the technical capacity of the specialized Ministries to prepare projects continued to be weak. The net result is that throughout the SAL 11/111 period, it remained extremely diffi- cult to determine the quality of the great bulk of the projects incorporated into the Public Investment Program. As a consequence, 'the condition regarding review and approval by the Bank of the rolling three-year investment program would appear to have had relatively little bite to it, except that those projects which were clearly unproductive were likely to have been eliminated. 3.18 Of all the structural adjustment issues, public sector strenthenink and disenaaaement and private sector entagement, may be the most difficult to achieve yet it ia a condition sie gua no to the future growth and develop- ment of Senegal. During the 1960. and 1970s, thb public sector had increasingly encroached on private sector activities By the early 1980s, wholly or majority government-owned enterprises represented an estimated 20Z of modern sector GDP, employed an estimated 35,000 workers (about 30% of modern wage employment) and had been absorbing up to 402 of national gross fixed capitva formation, with approximately three-fourths of total investment -10- Into the sector financed with external aid. While the performance of public enterprises had been relatively good, during the mid-1970s, i4 started to deteriorate rapidly after 1977, following the end of the phbephate and groundnut boom. 'By 1981-82 the parastatals had become a critical drain on public finances. The essence of the problem vas that the Government had been burdening itself with a fast rising foreign debt largely ibedded into non- productive activities and projects incapable of generating the future net foreign exchange inflow required to service that debt. 3.19 With the first SAL in 1980 the Bank started to push seriously tor public sector disengagement. The breakdown of SAL I and the consequent loss of leverage, however, meant that almost nothing was achieved on this front udtil 1985. By then, the Goverament adopted a -new policy of parapublic sector reform supported by, SAL. II and III. The primary objectives of the new policy were the withdrawal of the State from enterprise# which the private sector could run better, and the improvement in the efficiency of those public enterprises that would remain uivder Government control. Top on the list of means to achieve these objectives were divestiture programs for selected public enterprises or liquidation of those which proved to be non- viable, and programs to improve the management and performance of the remaining enterprises through, among others, the preparation of performance contracts. 3.20 While sme progress was made on all fronts, a full commitment to go through with the necessary hard decisions still appeared to be lacking, as was discussed earlier in para. 3.05. In addition, an important shortcoming of the privatization program as it had been designed was the lack of any formal association of the private sector with the program. Putting enter- prises up for sale is only half the story: if there are no private takers, it doe not alter the status qup. To succeed, public sector disengagement has to be complemented by private sector engagement -- otherwise, it remains an incomplete -- although necessary -- condition. Even if the disengagement condition is fulfilled by the Government, it remains an icomplete action which by itself pannot change the underlying situation. 3.21 There appear to be enormous obstacles to private sector engagement in Senegal at the present time, many of which have already been referred to earlier. The first ten enterprises put up for sale un4er SAL III were, in combination, operating at a lose, making them unattractive to potential investors. In addition, the deflationary pressures in the short run, resulting from the \ stabilization and adjustment process, compounded by the generally unfavorable prospects for agricultural and industrial supply responses and exports in the medium term, are bound to retard the privati- zation process. Furthermoe, unless the banking system goes through a radical restructuring and rationalizing process and a permanent solution is found for the settlement of government arrears, it is almost impossible to visualize how the private sector take-off could take place. Also, the earlier encroachment of the public on the private sector fostered a class of largely inefficient managers who did not have to face the 4ampetitive pressures of the markett this greatly reduced the scope for providing training and experience to potential entreprensurC in the private sector. Finally, there is a natural reluctance to privatization amongst the bureau- crate who are likely to want to protect their own class interests, having - 11 - already,experienced a fall in their real salaries and a ceiling placed on the number of public servants. While the Bank fully recognized all of these obstacles and uncertainties, it nevertheless continued to be upbeat about the outcome of the privatization process in SALe 11 and III. IV. OUTCOH AND LESSONS LEARNED 4.01 The policies pursued by the Government during the SAL 11/111 period have, on the one hand, contributed significantly to stabilizing the economy. The demand management measures implemented have succeeded in reducing gross domestic expenditure by a substantial margint in particular total consumption, which during the early years of the crisis, in 1980-81, had exceeded GDP, dropped froi 96.71 of GDP in 1983-84 to around 911 by 1987-88 (Table 1). The overall fiscal deficit was reduced from 7.71 of GDP in 1983-84 to 4.3% in 1987-88, while inflationary pressures, as measured by the GDP deflator, declined from about 121 in 1983-84 to 2.51 in 1987-88. Even so, it must be added that the fiscal deficit remained an area of great concerns about a fifth of total government revenue derives from the tax on petroleum products, whose domestic prices have been kept unchanged since the peak in world oil prices in the early 1980s. This policy has been one of the causes of the high domestic cost structure in Senegal which has been a major impediment to a revival of the economy. 4.02 The overall growth performance of the economy during the SAL II/III period has also been satisfactory. GDP grew at an estimated 4.31 per year between 1984 and 1988, compared with a long-tem growth performance of less than 2.5% per year. It is too early, however, to judge the impact of the SALs' structural adjustment measures, as distinct from stabilization, on performance, as they take time to wo4k themselves out through the system and affect the economy. iurtermore, as discussed in previous paragraphs, some crucial measures were not implemented as scheduled, while in a number of instances the set of measures proposed was, in any event, incomplete and therefore could not have had the desired impact. The good growth performance during 1984-88 and the improvement in the current account of the balance of payments (from a deficit equivalent ,to 17.71 of-ODP in l98A to 9.2 a988) were primarily the result of the \Impact of good weather on agricultural output and of a favorable evolution of the terms of trade. On the other hand, growth and investment in the manufacturing industry sector -Cther -than groundnaut oil-processing) have remained depresied. While here also it would be premature to judge the impact of measures, it may be recalled that, although most of the measures proposed under the SALs were, implemented, the package to promote industrial growth was insufficient, while the external trade liberalization measures, in fact, exposed the sector to more intense competition from import. than before. 4.03 The complexity of the SA reform program and the large number of measures involved placed against the Government's limited administrative capacity was clearly one of the reasyne why a number of reform measures were not Implemented as scheduled. nowebr, many structural policy reforms were put in place and, while iA may take some time for their effects to show in terms of macroeconomic indicators #uch as GDP growth or exports, it is -12- undeniable that there has been a major turnaround in the Senegalese economy during these past few years. The process towards the creation of a liberalized and efficient economic regime is well on its way. Among others, the import protection system has been rationalized and quantitative import restrictions and most price controls have been removeds government control and interference in the agricultural sector have been reduced; the quality of public spending is being improved through the adoption of a three-year rolling public investment program; and, the divestiture process of para- statals has been Initiated. 4.04 At the same time, the adjustment process is far from finished. As discussed earlier, the obstacles to a supply response in both the agricul- tural and industrial sectors remain numerous and #evere. Public spending will have to be further rationalized and reduced in line with available resources. And, crucially necessary reforms of the labor market, the banking and the parastatal sectors have only begun to be tackled. There are at least two major lessons which can be derived from the SAL 11111 experience in Senegal. First, given the existence of powerful vested interest groups, such as civil servants and trade unions, which are likely to be hurt by the reform process (at least initially), it is important to encourage the Government to reach internal agreement on difficult policy issues before proceeding with a SAL program. Politically highly sensitive reforms reqitre some up-front assurances of action. When such a period of internal debate and consensus building on major issues is not allowed for -- the agenda of reforms of the labor market, the banking sector and the parastAtals under SALs 11 and III are prime examples -- the Government has been unable to deliver. 4.05 Second, in view of the highly restrictive constraints to development of all kinds operating in Senegal -- ranging from the poor natural resource base and the high domestic cost structure coupled with the fixity of the exchange rate within the monetary union, to the modest intern? as well as external demand prospeats and to the Government's limited capacity to Imple- ment reforms -- it is essential to design SAL programs with more realistic expectations in mind and better focussed on the most binding constraints. As .discussed, the SAL II and III policy measures covered most areas and sectors of the economy but, at the same time, many of the measures were incomplete in the sense that other necessary complements of the policy reforms were sing from the package. While much needs doing across all sectors of the eco , it does not follow that a long list of measures without any clear priority ordering is he answer. To be effective, it is essential for the reform program to concentrate on what, given implementation constraints, may have to be fewer measures, but at the same time on all those measures which are of the highest priority to achieve the desired objectives Often, a more narrow sector adjustment operation may be more desirable. 4.06 It is encouraging to note that following the experience of the SAL 111111 period, the Bank's strategy towards Senegal has evolved and changed in the sense that many of the above identified weaknesses in approach are being addressed. "To illustrate, with regard to Issues where political sensitivities are high, the Sank is encouraging an adequate internal debate on the Issues and Inasisting on up-front action before engaging in further policy-based lending. Thus, e.g.,. several policy reform measures as part of the Financi4l Sector Adjustment Pr6gram to deal with the bank crisis had - 13 - already been Implmmatead by the m of genk goeed pp~al of the program on D40eber Ig, 1989. A efailr appesk t ~pete to be followed ta the caoes of reform of labor narke regulatone end prvatisation of para- stetale, hich are key elemente of a forfehfaig fourth SAL. Vith particular regard to the privatisation ise, the govrnmnt bs aow fohrgmly associated the private setor in the fflIs.sntaten of the progrem. step* are aleo being taken to help the teohnical ministrice develop the tnstitutional capacity to ådentify, prepare and =Moitor projectea the.. effort. are belng supported by the ganh* Development Magmmt Project, approved by the Board on ay 24, 1988. Fially, the complez problem. of agricultural sector development are efpected to be addressed la the near future through a separate gri~ultural Setor Adjuetmant Credit. PROGRAM CMPLETION REPORT SENEGAL SECOND AND THIRD STRUCTUIRAL ADJUSTNENT CRRDITS (CREDITS 1656-SE AND 1802-SE) February 14, 1990 Country Operations Diviston Sahel Department Africa Regio,n I -17 PROGRAM COMPLETION REORT SENEGAL SECOND AND THIRD STRUCTURAL ADJUSTMENT CREDITS (CREDITS 1656-SE AND 1802-SE) I. BACKGROUND: GROWTH hN CRISIS A. Slow Growth and the onset of Crisia 1. At independence in 1960, Senegal inherited a relatively well. developed economy, with adequate productive capacity in both agriculture and Industry and with significant physical and social Infrastructure. Measured on the basis of 0D? per capita, Senegal was at that time considerably better off than both Cote d'Ivoire and Cameroon. Eoeever by 1985, and after 20 years of growth averaging only 2.32 per aanu, Senegal0s GD per capita Vas barely half that of those countries. This failure to gow was due not oly to the country's poor resource base and the vagaries of rainfall that have been responsible for periodic droughts, but also to inappropriate economic policies. This applis in particular to the period 1973-1979 when the Govenment sought to accelerate development by expanding the parapublic sector, asserting control over foreign-owned buaineases and e3tending regulation of the economy. Institutional and management weaknesses, poorly conceived development projects, economic policies that favored in turn the consumption patterns of the urban elites, public sector employment and elitist educational policies, trade union pressures and other factors combined to bring about a serious deterioration in Senegals economic situation. After 1975 and until 1979, agriculture went into a period of decline, industry began to stagnate, only services (including Governat) grew at all. Despite declining output per capita, private consumption levels were maintained and government consumption accelerated. Rising Inflation led to an increase in the real effective exchange rate and eroded the competitive position of the Senegal economy. The cUrrent account deficit increased rapidly and Senegal began to become increasingly dependent on foreign financing for investments. However, at the height of the crisis in 1980 with the resource gap increasing to 161 of GDP in the wake of the 1979 oil price hike, foreign aid inflows were insufficient to finance the deficit and the Government began to build Up substantial domestic and external arrears. 8. SAL I : Stabiligation and Adiustment 2. Recognizing the critical economic situation and the shortcomings of its development policies, the Government began to enlist the help of donors and the international financial institutions to seek to reverse the treaud. In November 1979, the Government adopted a Mediue-Tea Rehabilitation Plan (PEP) for the period to 1984, which was designed to stabilize the economy, increase productive investment, raise public savings, liberalize trade, reduce the Government* role In the economy and streamline the parapublic sector. The P1EW was supported by te IMF's Ixtended Fund Facility (EFF) approved in August 1980 and by the BankIs Structural Adjusteat Loan (SAL 1) which consisted of an IDA credit of US$29 million ang a Bank loan of US$30 million and which was approved in December 1980. The program of structural reform supported by SAL I had four major components that is, parapublic sector reform, agricultural policy refoza, improved production incentives and improved investment policies. C. Economic Perfo fance Under SAL I 3. T experience of SAL I is described fully in the Program Performance Audit Report (No. 5637) which was issued in May 1985. Under SAL I a beginning was made in the reform of public finances, investmont programming, the parastatal sector, producer incentives and agricul.ural institutions.. Government did not however implement the program of agricultural pricing poliies, leading eventually to the cancellation of the second tranche In June 1983. 'The PPAR cites overoptimistic expectations regarding the implementation of difficult policy reforms in the sector as the primae reason for this, together with rapidly 4itq#*erat4g economic conditions caused by droughts in 1980 11 and by -farther team of trade losses, The FuAd 's 9" also was cancelled Ond replaced by a one-year standby program when the Government faited to adopt all agreed fiscal reform "easures. the economic position of Senegal reaua$*e part~* through 194 vithno reduction 14 the eaternal 4eiicit and a weak protUction response. After 40' elections in i-1983, the Government appeared more prepard t9 adopt corrective seasures, in the areas of agricultural pricing and pdblic expenditure control, despite a continuation of the adverse economic environment. Senegal's structural and finaneial problem were compounded in 1983184 by aother severe drought whit* probably reduced agricultural output by up to 40 percent, depressed GDP by at least 4 percent and aggravated the budget and current account deficits. The growing external debt servicing burden hAd also become a major constraint on the'Government*s fiances and balance of payments even taking into account a siiies of debt reachedulings in the period 1981-84. zz. PEO NC AW E N DRI= A. The Government's Medium-Tezm Adjustment Proram (1983-1991) 4. Tht unfavorable economic trends in Senegal had became so serious that the Government requested the Bank to organize a Consultative Group (CG) for Senegal. The Bank then considered that a new round of structural adjustment lending was justified, in part because the Government bad been implementini, a number of reform measurei after 1983 and 'had continued those instituted earlier during SAL I. In preparation for the CG meeting, the Government had prepared, in close consultation with the Bank and the IMF, a 'Medium and Long-Term Economic and Financial Adjustment ProgramO (Programe d'alustement economique et ftn" her a maven et long terme. PAHL) for the period 1985-1992, which was presented to the CG at\its Decembor 1984 meeting. The program provided a macroecona*e framework and p set of obiatives and po4tcies, sect r strategy orientation and guiding principles fog the preparation of appropriate adjustment measures. Against a ba&ground of adverse factors (climate, tems of trade, high populatic6 $rowth), which had to be taken as medium temn constraints the Government and the members of the CG agreed on\three mai problem a;as which had t be addressed: -19- (a) Incentive. Pricing, subsidy and inappropriate incentive policies had discouraged domestic production and had accentuated dependence on imports, Ispecially of foodstuffs. Farmers had not concentrated on the production for the dome"tic market of traditional cereals and partly because of the availability of cheap imports, partly because of the unreliability of technical packages for the rainfed areas. Exports of manufactured goods had essentially stagnated due to excessive protection of the domestic market, to excessive government intervention and regulation, and to policies which had driven up costs and thus appreciated the real excbange rate and reduced export competitivenesl (b) sole o the Goveraent. Over.extension of the public sector and excessive but neffective controls over the use of public funds had brought about an unsustainable expansion in consumption and imports, untenable public sector borrowing, and a large build-up of domestic payment arrears; and (c) Quality of Investment. An excessive share of past Investments had been directed towards poorly conceived, unproductive or slowly implementing projects, resulting in pervasive low returns on investment. 5. The Government and the participants in the CG recognized that the Immediate underlying cause of the economy's disequilibria was an unsustainable level of consumption, though the medium tem issue was how to address the lack of growth\in the production of goods and services. Adjustment, therefore, meant in the first instance a reduction in consumption, public and p.ivate, and in the'second instance improved incentives to agriculture and industry. The donors agreed to obilize sufficient resources (some US$500 million a year) to help sustain sound conditions for growth with equity and to permit the Government to maintain a satisfactory level of Investment. Sustained investment was considered key to future growth and debt servicing. The external resources thus would bolster the low level of domestic savings 6. The Government spelled out its overaliXeconomic goals in its Letter of Development Policy (LDP) of December 1985, which were 8to have Senegal's conditions for sound growth restored by the end of the PAHL implemntation period (1992) and the national savings rate raised sufficiently to finance investments without major recourse to external sources. Furthermore, the overall budget is to be in surplus beginning in 991/92 when the external current account deficit will not exceed 2.8 rcent of GDP cqpared to 10.2 percent in 1984.0 To attain these goals, the 1985 LDP listed five specific objectives of the adjustment programs (a) consolidating the bases of\economic growth by redefining sectoral strategies and by providing incentives for the revival of private investment; (bi improving the efficiency of investments to achieve a GDP growth rate of 3.2Z despite the fact that'the investment rate would be kept at only 14% of GDP; (c) downscaling the public and parapublic sector and improving its management and revitalizing the private sector; \(d) -20- safeguarding long-term growth through newi social services sthategies (education, health. etc.)t and te) restoring balance in Senegal's public finances and external position. 7. \ The program signailed an Important departure for the Government in that private sector initiative rather than Government intervention was expected to be the key means by which these objectives were to be achieved. A new inderial strategy would bring about reforms of the protectici system as well as modernization of industry. A new agricultural policy was to promote cereals as well as export crops. M"!re reliance on farmers, harders and traders qad withdrawal of the State from agricultural production and marketing, together with an appropriate pricing policy, would be the essential instruments of this new policy. a. aLIDeSaS of MAL 11 8. In response to the Government's adoption of the PAM and to the request for financial assistance, the Bank ,approved in January 1986 SAL It for US$64 million ($20 million IDA credit and $44 million SpecAI African Facility credit) with co-financing of $6 million equivalent from a Special Joint Financing Contribution from Switzerland. SAL I was specifically to support the first phase of the PAUL, 1985-1987, with disbursements in two equal tranches, the first available upon effectiveness, the second by November 1986 after a satisfactory performance review and meeting the specified conditions, so that all funds would be expected to be disbursed within 15 months. In a parallel action, the Iff approved an 18-month stand-by arrangement for SDR 76.6 million. 9. The SAL II program is described in detail in ii President's Report (P-4213-SE) dated January 1986. i Its objectives re as followes (a) Policies for Accelerated growth In Production and (i) 4acentive refouns in agriculture to raise icereals output through adjustments In the price of Imported rice, the liberalization of cereals marketing, a floor price support for cereals, measures to improve the productio potential for rainted and irrigated cereals, and the restructuring of rural development agenciess (11) steps to decontrol inaut di)stribution and marketing in the groundanut sector, increase the producer price of groundnuts to improve farmer incomes, and reduce the cost of government support through other measures; and (III) compr9hensive industrial policy reforms. including the adoption of objectives to be pursued in the medium term, implementation of a first set of immediate measures, and preparation of an action plan, aiming inter alia to reluce the levels of effective 21 protection, rationalize the export subsidy system, reduce the rigidities in the labor and wage laws, and progressively eliminate price controles (b) Public Sector ManaeLgent: (i) Implementation of a twoyear pub9l investment proaras which chanele resources to productive sectors and rehabilitation activities based on explicit criteria, refosm of the public investment programming and budgeting process to develop a threo-year 'rolling" investment progragming system, and preparation of the first investment program and consolidated bud get (11) acceleration of 95anMbi ser reforms. Including elaboration of a coherent strategy to guide the restructuring and/or privatization of the bulk of state-owned enterprisess and (iii) reducin. financial diseauilibria through measures to control the growth of expenditures, Improve the revenue base, reduce payment arrears, and reform the agricultural price stabilization fund (CPSP). 10. To achieve the above objectives, the Government agreed to Implement 39 specific monitorable actions. These actions, together with an analysis of their relationship to conditionality for SAL 11, is given in Annex A. 11 C. 'Imlementation of SL 1 and Macrgecnomc Performance 11. In Implementing the SAL 11 actions, the Government fulfilled the required conditions, so that the second tranche\was released only seven months after the credit's approval. 25 out of S9\agreed actions were completed during the SAL It period. Same pf the outstanding actions were rolled over into the action program to be supported by SAL In. Progresss in structural adjustment was satisfactory, with all five second tranche release conditions being iet, and significant progress being made towards reaching the goals set out In the Government's PAHL and the LDP. Senegal did make some headway towards establishing the conditions for achieving sustained per capita growth, creating an Incentive environment which stimulates private investment end mazimises production, and Improving economic mapagement to optimize the use of public resource and promote domestic saings. Relatively little progress was achieved in reducing the 11 See also OED, Report No. 8041, The World Bank and Senegal, 1960-87, August 31, 1989, paras. 65-75, which adopts a different classificatioh of theie actions from that given in the Annex. -22- heavy burden of the parapublic sector ( where many actions were not completed) and in reducing the rigidities in the labor market ( which was scarcely addressed under SAL II ). 12. In terms of macroeconomic performance, the SAL II period, 1985. 1986, showed recovery and progress, due both to stabilisation measures and favorable external factors, such as ainfall. GDP probably grew by about 4.2 percent each in 1985 and 1986, aided by excellent grain and groundnat harvests, as well as by a rebound In industrial activity. Influenced by a sharp decline in import prices for rice and petroleum, and favorable exchange rate movements, the terms of t\rade improved sharply. On the external account, the trade deficit was reduced in spite of a disappointing export earnings performance due to adverse market developments for groundauts. sigher Interest rates on extornal debt agravated the current account, though the deficit amounted to Quly 10.8 percent of GD? in 1986 copared to 18.8 parcent in 1962. Detween 1981 and 198, Soaegals1 outandiung external public debt Increased 2.5 timse, reachtag US$2.2 billion or neatly 70 percent of GDP, Thanks to substantial debt relief by the Paris Club and commercial banks, the debt service ro,io remained manageable at 21 percent of foreign exchange earnings with all external arrears settled at the end of 1986. Continued tight domestic credit and monetary policies helped reduce the Inflation rate from 13 percent in 1984 to 7.5 percent in 1986 and helped slow the appreciation of the real effective exchatge rate. The overall fiscal deficit was riduced fram about 8 percent of GDP In 1982/83 to 2.3 percent in 1985/86. This result was achieved mainly through containment of expenditures and higher revenues accruing from the windfall profits of rice and petroleum Imports, 13.\ The progress achieved by the Government, over this period was instrumental in increasing the flow of external resources to Senegal. In particular, a new one year standby arrangement was agreed with the IMP in November 1986 after the presentation of a first Policy Framework Paper covering the period 1987-90 (ecHO6143). The paper reiterated Goverament commitment to the key strategies for promotion of private sector initiative and greater efficiency in public resource management. Significant progress was made under SAL II towards the creation of an appropriate Institutional framework for the management of the reform program. Vnder the Ministry of Planning and Cooperatton, an Inteministerial Committee wal created supported by a technical body (Le Comite de Suivi de 1'Ajustement Structurel) which has benefitted from UNDP assistance. It was however noted that institutional capacity in the Goverament remained In geneal weak and that technical assistance might be needed in same instances to strengthen technical ministries if Implementation delays \were to be avoided. There were no particular problems associated with procurement and disbursement under SAL \II. - 23 - III. PRMANCE MD E n NDER SAL III A. The Goverament's Policy Framework. 1987-90 14. The Government, in close cooperation with the IMF and the Bank, redefined its basic structural adjustment policies and objectives in the Policy Framework Paper. 1987-90 which,was discussed by the Bank's Board at the end of October 1986. This paper teiterated the key strategies adopted earlier, such as restorting sustained economic and employment growth, promoting private sector initiatives and achieving greater efficiency in public resource management. Furthermore, it lay the groundwork for a second phase of ass"ctural adjustment to be supported by IMP lending as wel as by the ank's UAL UZ later on. To achieve these goals, the Goverament declared its determination to adhere strictly to the agreed tsmetable for introducing industrial and agricultural incentives reform. supported by. a reform of the trade sector to ensure * smooth flow of merchandise transactions and to improve the efficiency of the manutacturing sector. Purthermore, the Goverament \planned to reform the banking sector to restore liquidity. The Government intended to rehabilitate public \ finances by controlling and rationalizing expenditures (wage bill, procurement and transfers among other actions) with special emphasis on Incrasing revenues. 13. The Government'a Letter of Development Policy (LDP) of. April 1987 presented s program which had five principal componentss (i) production and employment incentivesa (11) rehabilitation of the financial system (iii) reform of the parapublic sector; (iv) improved public sector managementI and (v) mitigation of the social impact\of adjustment. The 1987 LDP implied that real progress would be achieved in these five areas so as to remove, or at least substantially reduce, the constraints and inflexibilities that remaind in the economy. B. The Design of SAL II 16. In response to the Government's request, and in support of its ongoing adjustment process, the Bank approved SAL III in May 1987. The principal elements of SAL III, as mentioned in the Pres dent s Report (P-4498-SE of May 4, 1987), are the followings (a) extend the reform of Incentives, including liberalizing the regulatory framework in trade and employment to foster private investmsnt,\ efficient production and exp.rts in agriculture and Industry; (b) rehabilitate the financial sector, restore liquidity to the economy and improve financial intermediation. (c) increase the efficiency of public resource management and restore public savings through an acceleration of the parapublic - 24 - sector reform, Institutionalization of the refom of public investment programing. asengthening of public finance aagement, with particular emphasis on increasing revenues and Improving the information management system$ 17. The tranche release conditions and 143 monitorable actions of SAL III are described in the Presilent's Report, and are summarised in Annex A to this report.' SAL III was approved for US$85.0 million, including a $45.0 million IDA credit and $40 million from the Special African Facility. There was co-financing of $8 million equivalent Special Joint Financing Contribution from Switzerland. Disbursement was foreseen in three tranches, the first for $33 million available upon effectiveness, and the second and third each for $30 million to be released upon satisfactory overall implementation of the program. Performance reviews were anticipated for October-November 1987 and February*March 1988 for the respective tranche releases. C. anteentation.of 84L I%I and Macroeconoak Pedormace 18. A review of the monitorable actions in SAL III disclosed that during the SAL III period, which ended on December 31, 1988 2/, 71 out of 111 final actions had been accomplished. The potential impact on structural adjustment of these actions ranged from policy changes (such as the abolition of quantitative import restrictions) to actions of a technical statistical nature (such as the publication of national account data in constant prices). The review nevertheless suggests that the Implementation of reforms has been generally good, though a closer analysis reveals delays in meeting some targets in the SAL III period. 19. This observation is confirmed by a review of the reports of the various supervision missions. The report of the second supervision mission of November 1987 notes satisfactory overall progress In implementing the program although there are delays in a number of areas. Except for the rationalization of financial relationships between the State and public enterprises, progress In Implementing the parapublic sector reform, the reform of industrial Incentives, and in Improving public resource mobilization was seen to be very good. There were slippages of varying Importance and for reasons which were sometimea beyond government control in a number of actions in the employment, public expenditure management, information management and investment programming components of the program. There were serious delays, and a perceived lack of commitment of the concerned authorities however, In the agricultural component of the program. These slippages and delays were expected to jeopardize the timely implementation of the program and more particularly the fulfillment of tranche release conditions if corrective actions were not rapidly taken. Furthermore, of the ten specific actions whose Implementation was required T/ the credit closing of SAL III was extended from 12/31/88 to 6130/89 to disburse an additional US$5.5 million available from the Fifth Dimension. -25- for second tranche release, six had been satisfactorily completed, two had been modified ( regarda the DS action plan and the special convention for CSS ) and two had still to be fulfilled ( the agricultural pricing study and the setting up of the employment fund ). As a result tranche release was delayed until December 1987 pending a satisfactory resolution of the outstanding actions, which was realised with the employment fund in operation and with a decision to postpone the action plan based on the agricultural pricing study to the third tranche, due to delays in completing the study. 20. Similarly, the report on the third supervision mission of April 1988 noted satisfactory overall progress in Implementing the program though with delays in a number of areas. Significant progress had taken place in reforms of the public Investment program, public resource mobilization, and, industrial Incentives. However, it was Im the agr#cultural sector where many actions had experienced. delays. Satisfactory progress in the latter held up treache release until June 1988, at which point the Bank decided to accept ane modified condition, that is an interim action plan for SONACOS, given that the 8OVACS audit had not been completed as expected. 21. In summary, all Bank supervision missions of SAL III concluded that the Government had made sufficient progress in its structural adjustment program to warrant the tranche releases. Many actions which did not rank as tranche release conditions were not implemented on schedule. These delays retarded the momentum of the adjustment process only in a few areas, such as the agricultural sector. The analysis of SAL III performance also points out shortcomings in three particular reform areas. Firstly, in the area of labor market refom, the required actions were undertaken, but the achievement of the objectives of the reform was at best partial given that the legislation eventually passed for the liberalisation of the labor market was too weak to have a significant impact. Secondly, in the area of privatisation, whilst the expected number of public enterprises were offered for sale, to the end of the SAL III period none were actually sold because of' significant shortcomings in the process of identification and tender. Thirdly, in the area of financial sector restructuring, whilst all planned actions were completed, other than the modiied condition for BNDS, the dimensions of the problem turned out to have been much larger than originally estimated by the Bank and Government such that the actions proposed turn out to have been inadequate to meet the objective. 22. In terms of macro-economic performance, the SAL III period, essentially July 1987 through June 1988, was a year of good progress, greatly aided by favorable weather. Led by the expansion in agricultural output, the real GDP growth rate was estimated at 4.4 percent. The Improved supply conditions, together with tight finanscial policies, contributed to reducing the rate of Inflation to an estimated 2.7 percent which in turn led to A marginal depreciation of the real effective exchange rate. In this period, the fiscal deficit fell to the equivalent of 1.0 percent of GDP. In the external sector, the current account deficit, excluding grants, was reduced to 9.9 percent of GDP. No new domestic and external payments arrears were incurred. -26- 23, Implementation performance continued to be satisfactory. There were no major problems relating to procurement and disbursement. Disbursements were made in June and December 1987 and in June 1988. IV. AIMES OF STRUCTURAL ADJUSTMENT AND THE IMPACT OF THE SALs. WRAT IS DIFFERENT AFTER SAL III? 24. It is too early to link the Government's adjustment, as opposed to stabilisation, efforts with specific macro-economic results such as a higher GDP growth rate or expanded exports. The predominant influences on the performance of the economy during the SAL periods were weather and world market prices for Senegal's principal exports (fish, Sroundnut products atd phosphate) and imports (petroleum and tices), and not necessarily the effects of structural adjustment. It is however possible to evaluate the tapact the far of adjustment measures on the key economic sectors, i.e. agrid"lture, industry, trade, the Government and banking, and to cam to some tentative conclusions about the appropriateness of the reforms and their sequencing. A. Axriculture 25.1 The thrust of adjustment consisted of revitalizing agriculture to increase and diversify agricultural production and exports, and to raise productivity. The strategy consisted of fostering private sector initiative through a change in Incentive policies and a progressive withdrawal of the State from direct involvement in production activities; achieving greater efficiency of public investments, and reforming public ag ncies. Specifically, the Government's New Agricultural Policy (NPA), which was sp rted by SAL II, sought to increase cereals production and privatise internal marketing and import of cereals, expand production and streamline marketing of groundnats, decontrol the supply of agricultural Inputs and reduce subsidies, redefine the role and functions of the rural development agencies, and strengthen the investment planning and management capacity of the Ministry of Rural Development. The record of achievement has been generally good, though subject to significant Implementation delays in the adoption of the pricing and incentives reforis and in the adoption of required measures for SONACOS under SAL III. 26. Under SAL II progress on the following fronts has been significantt, (a) The development of domestic cereals production, stimulated by providing adequate no l protection for domestic cereals production, eliminating most controls on thi internal marketing of cereals; (b) The liberalisation of the groudanut sector, with Oe Government withdrawing from seed distribution'and with the elimination of subsidies to cover the oil milling fixed costs; -27- (c)Th decontrol of fertiliser imports and the reduction of- price Oubsidies; and (M) The scaling back of the activities of the rural development agencies and the revision of contractual agreements (elettres do mission") have been revised for the agencies responsible for irrigation and cotton development, 27. Under SAL III the achievements of SAL It were consolidated and the reforms extended. Specifically, the following actions have been implementeds (a) For cereals, establishing a weekly price information system for the major markets, improving extension services, reducing the consumer price of rice from CFA? 10/kg to CFAP 1301kg VW st maintaining a sufficient margin toencourage domestic cereals productions (0) For grovidnuts, reducing iarmgate prices fro% CEAF 901kg to CVAF 70fkg, rationalising SORAOS operations to reduce procelsing costs, and i*itiatIng an externalImanagement and financial audit of SONACOSI (c) For fertiliser, further reduction of subsidies and complete elimination in 1988189, with total decontrol of compound fertiliser mpOrts (d) The redefinition of the role of the agencies in agricultural development with emphasis on increasing privite sector and coopes tive initiativest (e) Decontrol af neat prices and the elimination of the moopoly on bide and skin trades and (M) Other.reform measures including th4 development of a coherent pricing policy, of a fam credit policy, agricultural diversification into horticulture, development of the Senegal River region. agricultural research and the development of a livestock action plan. B. Industry and Private Investment 28. The.develipment of Senegal's industries had been adversely aftectad by both unfavorable worldite economic conditions and by inappropriate incqnti" plicies. \The principal features of these policies was as followes (a) the priority given to import-substuttion industries which also Inhibited the powth of non-traditional expot e-4domestic arket too small; excessive protetion discouraged exports and Improved effibiency and productivity of enterprises); (b) the proliferation of privileges under special agreements (leading to t" and other exemptions for certain enterprises) had led to distorti6as in the industrial environment, poor - 28 - resource allocation and high unit coats and c) te excessive regulatory constraints on enterprises. Under the SAL programs significant progress was made towards reforming these policies. 29. Under SAL II. a new Industrial Policy (1091) was announced and an action program for industrial refons introduced. The Import of industrial equipment was liberalised. A new tariff code was adopted which rationalised the protection of Senegalese industry, reducing average nominal rates from 462 to 362 and reducing effective protection through increases in tariffs on many industrial inputs. The requirement of prior authorisation of Imports was eliminated for all products which did not compete with Senegalese domestic products. A review was initiated of all special agreements. A new duty draw-back system was introduced (import duty exemption for export production), and a new export subsidy system based on value-added was put into effect. 30. Under SAL III, a revised tariff law and revised product-specific codes were prepared, all quantitative Import restrictions were eliminated. the reference price system for import valuation was refoalated, and a new export subsidy system vas Iatroduced. Progress was also made in the review of the special agreements with Important companies, such as SOCOCIN, CSS and SAL. Furthermore, a new investment code was adopted. which provided for some liberalisation and revised incentives, and created a wone-stop windowo to process applications for new busi"s investments and obtain benefits under the investment code. The new system started operations in January 1988 and by June 1988 had approved 91 applications, with 30 more in process.. The processing time for approvals of routine cases was reduced to three weeks. C. Trade and Price Contios 31. Trade and distribution in Senegal was hampered by overregulation and government interference in normal business operations. No action, outside ?f measures directly associated with the agricultural sector reform, was initiated under SAL I however. Under SAL III, the distribution system was deregulated in ta the distinction between wholesale and retail trade was removed and industries were allowed to directly commercialise production. By decree any restrictions to the free movement of agricultural and other products within Senegal were eliminated, as were controls on industrial prices in competitive sectors. With the removal of quantitative Import restrictions, there is now free trade of manufactured products throughout Senegal. Similarly, most price controls have largely been eliminated under SAL III. On December 29, 1988, the Government removed price controls on certain key commodities and services which had remained subject to control. The only price controls still in effect therefore are those still subject to special agreements between the Goverament and the relevant enterprises (water, electricity, petroleum products, cement, sugar, etc.) or to agricultural policies (groundnauts and paddy). 32. A number of actions were initi4ted under SAL III to promote exte"nI trade through export encouragement. The principal refoss - 29 - successfully Implemented were a simplified importerlexporter registration for fiscal purposes and streamlined customs and other formalities. A beginning was made to revitalize the CICSS, the Senegalese center for external trade promotion. Simlarly, a reorganization and possibly privatization or joint venture was conceived for ASACE, the export insurance agency. Roundtable discussions were organized with the relevant technical institutes to promote product standardization and quality control for exports. I D. Government and Paraublic Sector 33, One of the enduring problems of the Senegalese economy has been the heavy cost and inefficiency of the public sector. Under SALs II and III, a number of reforms have been introduced in the areas of the civil service, of public finances, of the public investment program, of the parapblic enterprises, of information and data management, and of social services. These efforts have had mixed results which suggest, particularly In the areas of civil service and parapublic sector reform, that much remains to be done. 34. The Civ1l Service. Under SALs II and III, limits were set on the size of the civil service. SAL 11 aimed at keeping employment at the end of June .1986 at the same level as a year earlier (70,114), while SAL III specified maintenance of the June 1987 total of 68,000 for one year (actual number in June 1988 reportedly was 68,535). Vhilst these measures were successful, the objectives in hIndsight may be considered to have been too modest to have the desired effects. It should however be r6cognised that it was probably politically infeasible to push for any deeper reforms uadp- SAL III given the initial unemployment effects of the industrial and trade policy and parapublic sector reform programs. Senegal's civil service appears excessive by regional standards, amounting to 9.7 per 1003 population compared to 8.9 in Cote d'Ivoire, 5.7 in Mali and 2.7 in Burkina. Average salaries are surpassed only in Cote d'Ivoire, Gabon and Cameroun. Under SAL II, a reduction was sought in the ratio between goverament personnel expenditures and fiscal receipts (exclusive of grants), from 53 percent in aid-1985 to 48 percent in mid-1988. Under SAL III, a reduction was sought of the wage bill in terms of Government's operating exp itures from 52 percent in aid-1987 to 49 percent in mid- 1989. Whilst these targets have been met, the resultant reduction in the wage bill in both absolute and relative teams appears again to be too modest. Under SAL III,, various other improvemtents were sought though few of the measures were complete at the end of the period. These measures. Included Improving the system of financial and nonfinancial Incentives for civil servants and strengthening of personnel management, among which were conducting a personnel audit and reorganizing the central payroll, office, rehabilitating personnel procedures and computerizing central civil service records. 33. Public Finances. Under both SALs II and III, reforms were to be introduced with the aim of Increasing revenues and reducing expenditures to bring down the overall public deficit. These reforms were by and large successfully implemented. In terms of measures to increase public revenues, a new general tax code was studied under SAL II ( and adopted - 30 - under SAL III ) and a program to recover arrears by the CPSP (price stabilization fund) was instituted. Under SAL III, a new customs code was introduced, and a reorganization of the customs service started. Work on computerizing customs declarations was also initiated. Also under SAL III, the tax base was widened with the implementation of the first phase of tax reform and the taxation of public contracts extended to those financed with external loans. The state property code was reformed and its implementation linked to cadastral refom of the Dakar region. Furthermore, preparatory work was undertaken for the second phase of tax reform, such as extension of the value added tax to the trade sector, introduction of a comprehensive income tax in lieu of the scheduled tax system, esteblishment of a land tax register for the Dakar urban community and computerization of the turnover tax. 36. Regarding public operating expenditures, current expenditures were studied under SAL I and a reduction of budgetary subsidies planned, as was a study of the extent of indirect subsidies benefiting enterprises. Furthermore, a system of monitoring budget subsidies was introduced. Under SAL IlI a study was initiated on the elimination or conversion of indirect subsidies into budget subsidies. A study was completed on Improving the award of goverment procurement contracts. Progress was achieved during SALs II and III on public debt management and the settlement of external debt arrears. The budgetary allocations to the CAA (debt servicing agency) were increased under both SALs by 10 percent annually between mid-1986 and mid-1988. Under SAL III a medium-term plan was established to settle internal arrears and a computerized system was set up to monitor medium and long-term guaranteed and on-lent external debt. A debt inventory was - completed and current payments computerized, including the automatic issue of payment orders for debt service. Also, the administration of exte:tnal grants and subsidies was computerized, as was the domestic public debt. 37. Public Investments. Since economic considerations vert not always high on the list of criteria for public investments, the aconomic return on such investments has traditionally been low. Therefore, under SAL$ II and III, the objective was a drastic improvement in the quality of public investments, subjecting investment to more stringent economic criteria. The Improvements were in general started, but because of the underestimation of the tme required, the implementation of same administrative reforms were delayed. In SAL II the Government comitted itself to a -public investment reform through the preparation of a three- year public investment program (PTIP) for the years 1987188 - 1989/90. Under SAL III, this process was refined by including the prtparation of a project appraisal manual, for which, however, only the section on directly productive investments was completed, leaving the sections on Infrastructure and social servies investments for later completion. In October 1987 project criteria were adopted and so were procedures for the Project Selection Committee. As a further tool, a computerized Oystem'for the financial and physical monitoring of public investments was foreseen in SAL III. Only the financial system was close to becoming operative by the end of SAL III. This having been said, the review of the most recent PTIP suggests that the new policies a0 practices are far from being universally adopted and that the improvements made thus far need to be consolidated by continued Bank advice and by programs for institutional strengthening. 38. Paranublic Enterprises. The Govermeat's thrust for economic growrth in the 1970's was based essentially on the expansion of the public sector and the creation of new parapublic enterprises (PSs). Adverse trends in the world economy and the lak of skills of the public administrators in an environment of heavy-handed government regulation of economic decision-making created increasing inefficiencies. Investment decisions tended to be overly optimistic. This resulted in increasing losses by the fts and corresponding budgetary subsidies. In 1985 the parapublic sector consisted of 62 wholly or majority-owned enterprises and 24 public agencies. In addition the State held indirect participation in 46 enterprises, mostly through the development banks. By that time, the Government recognized that the public sector had been overextended, the performance of the PEs had been below that of comparable private sector entities, and government-PB relations had resulted in elaborate but ineffective administrative controls that had done little to promote efficiency but instead only stifled PE management. 39. Under SAL II ad subsequently SAL III, reform measures were proposed to: (a) reduce the size of the parapublic sector through privatization of viable enterprises or liquidation of unprofitable ones; (b) improve PE performance through restructuring PEs, carrying out enterprise\rehabilitation programs, and instituting a system of contract plans to adt performance targets for those PEs to remain under State ownership; (c) reorient government oversight functions and procedures through promoting the autonomy and accountability of PX management and through developing procedures in setting enterprise objectives and evaluating performance; and (d) rationalize financial relationships between the State and the PEs through increasing the transparency of financial relations and reducing subsidies. 40. Some achievements may be cited from the SAL period. Specifically under SAL II, the size of the parapublic sector was reducod through liquidation of some penterprises, a classification of the portfolio of PZ shares'directly owned by the State was underthke)i further to which 15 whoXly-owned PBs were identified for privatisation, and Government decided to reduce its holdings 4n 13 others. The Government initiated liquidation procedures for 6 mixed enterprises and 3 public agencies, and completed liquidations started before July 198$ in 10 other PEs. To improve PE performance, contract plans (CPO) were signed with 6 PBs and rehabilitation programs were adopted by two PB. Regarding government oversight, a study of the statutory responsibilities of the government oversight agencies was carried out and a new basic law to govern the parapublic sector adopted. Changes introduced include the phased elimination of a priori administrative controls over PEs, stringent financial reporting and auditing requirements, and a clarification of the responsibilities of the State's representatives on b9ards of dirqctors. Furthermore, direct subsidias to PEs were reduced by 5 percent in the' 1986/87 budget and 15 percent in the 1987/88 budget. Further progress was made under SAL III. The liquidation of 7 mixed enterprises was completed in April 1988. Contract plans were negotiated with 11 PEs and those with 5 others initiated. Furthermore, management audits were completed for another 15 Pis. A law was adopted in July 1987 to eliminate a prior controls over a -32- two year period. The reductions of direct subsidies was continued, with a further 15 percent reduction over the 1987188 budget included in the budget for 1988189. However, in May 1988 a decision was taken to study all subsidies, direct and indirect, for each individual Pg, as further across- the-board reductions apparently began to endanger certain enterprises. Reciprocal arrears between the State and the Pb as of June 1985 were brought forward to June and then December 1966 and disputed claims reconciled in August 1987. A settlement plan was adopted to eliminate net arrears on amounts owed to the State over five years, beginning with fiscal year 1987188. Also under SAL III, studies on the supervisory control authorities complementary to the 1987 laws on PEs were carried out and the management of the reform process strengthened, especially by the attachment to the Presidency of the Delegation for Parapublic Reform. 41. The Government initiated action on all major components of the reform program, though implementation was slow as the complexity of the reforms and the degree of resistance to key objectives, especially privatisation, proved greater than originally estimated. Some limited progress has been achieved on reducing the fiscal burden on Government, through the reduction of subsidies and the liquidation of a number of public enterprises. Thus far though the measures adopted have not had an appreciable positive Impact on the financial performance of flu. Additional measures seem necessary in the following areas if the original objectives of the Government are to be met, that iss (a) to further reduce the fiscal burden, effective measures are needed to control indirect subsidies as well as arrears of the Pgea (b) performance contracts need to include all Government obligations and be linked specifically to the availability of resources to carry out objectives (c) to advance the process of privatisation, the management has to be Improved, better candidates put forward and the private sector fully consultedl and Jd) more radical measures are needed to reduce the complexity and inefficiency of the monitoring systems. 42. Information Management. Under SAL III, a series of measures were included to obtain economic and financial data necessary for macro- economic forecasting and policy analysis. These measures were partially implemented by the end of the period. Those measures successfully completed included the preparation of national account data in current prices and the improvement of foreign trade statistics. National account data in constant prices, the economic analysis and forecasting of public current and investment expenditures and household and consumption surveys, including the informal sector were all delayed. The technical capacity of the Government, which was somewhat overestimated, is expected to be reinforced through the Development Management Project. This is expected to have a positive impact on the quality of economic information and should lead to a more accurate and detailed assessment than hitherto of the economic impact of the structural adjustment process to date. 43. Social Dimensions. Thete were no specific social components under SAL II. Under SAL III, the need to take specific actiond to mitigite the social costs of adjustment in the short term was recognised. Several measures were designed to Increase employment or mitigate the hardships of unemployment, especially that brought about by the Implementation of - 33 - adjustment measures. When quantitative Import restrictions were removed, Senegalese industry became more vulnerable to foreign competition, and a nmber of enterprises had to reduce their workforce or even close down. A re-insertion fund was designed to help dismissed workers find new employment or set themselves up in business on their own. Similarly, the revisions of the labor code were designed to make it easier for employers to hire ;ew staff. Finally, the Government issued a declaration on population policy in April 1988 which represents a highly significant step forward and which will serve as a basis for action programs in family planning, maternal and child health care, and skill development to meet the needs of the economy. . Bankina Sector 44. The Senegalese financial system has been characterised in the 1980s by (i) credit expansion to the economy without a corresponding increase in the level of resources; (ii) a rapid deterioration of the banks' portfolios linked to the build up of arrears particularly from PEs; and (11) low profitability due to the high cost of funding, low interest rates and excessive operating costs. As a result, about half of the banking system's outstanding loans are non-performing and the banking system had reached a state of crisis by the end of the SAL III period. While the banking crisis has been building up slowly over time and gained momentum in the early 1980s, the extent of the problem appears not to have been fully realised until June 1987. The measures taken under the SALs were thorefore neither sufficient nor effective in solving the problem whose imensions had been underestimated. This problem can be expected to impact the adjustment process, as a lack of financial intermediation will have a negative effect on the supply side response. However it is intended to treat banking system reform in a more comprehensive fashion under the proposed Banking Sector SECAL. 45. Under SAL II, there were only two studies in the list of actions, one on the modalities for testructuring public financial institutions, completed in December 1987, the other on the ability of the banking sector to recycle the resources injected by the Government through repayment of arrears, which was not completed. In SAL III, in contrast, the banking crisis received somewhat more attention. The Central Bank of the UNDA (BCBAO) had tak6 steps In September 1986 to pave the way for the rehabilitation of banks in crisis in tMMA countries. In particular, the Central Bank entered into qgreements with the Governments and banks for rescheduling defaulted loanO on Its books into 10-year loans with a 3-year grace period at a 6 percent p.a. preferential interest rat*. SAL III izaluded the rehabilitation of the BUDS, the USE and the BCS as well as actions to strengthen the banking system and to facilitate financial intermediation. These actions included a study of the banking system to revise financial policies and to irehabilitate the banks in trouble, increase the minimm capital requirements, reduce the tax on credit interest, and improve control over major banks by the Banking Control Comission. During the SAL III period the study of the banking system was completed in April 1987, the minimum capital requirement for banks was inreased to CFAF 1 billion and the tax on interest paid was reduced. V 34- Rehabil4tation programs were prepared for all three indicated banks, though the plan for SDS cold not be implemented because of lack of agreement from BCZ&O. F. Labor Market and Emplyent\ 46. Senegal has been characterised in the past by an inflexible labor market, in which Government has played a key role in the areas of employment, dismissal, wage setting and conditions of work through the Labor Code. There has been the perception that these regulations, and the manner in which they are interpreted and applied, heavily favor the currently employed workforce and provide a severe disincentive to existing and any new industrial investment. This has proven a difficult subject on which to make progress given the lack of an internal concensus on the pace and substance 9f reform. Consequently, no reforms were included under SAL II and that which was attempted under SAL III was not fully successful in its implementation. 47. Prior to SAL III, the labor market was completely regulated by the Government in regard to employment in the formal sector. An employer was ,bliged to apply at the Government's employment office to hire a worker. This monopoly was abolished under SAL III. In an effort to encourage employment creation through increasing the flexibility of the labor market, legislation was introduced for the revision of the labor code to permit renewal of fixed temn employment contracts. Opposition to this reform resulted in the original legislation not being passed how"Fre though subsequently a one-time renewal of such a contract was permitted. A series of studies was undertaken an the links between labor productivity and wages, the system of the employer's welfare contributions, and worker participation in a firm's equity capital and profit sharing. An evaluation of the efficiency of the Labor Department was carried out further to which the Department was abolished. G. The Senegalese Economy After Three SALs 48. A comparison of Senegal's economy of 1988 with that of 1980 discloses a significant transfaomation, though a transformatio* that has still some way to go in order to achieve sustainable economic growth. The economy is no longer as regulated as it wai in the early 1980s. Quantitative import restrictions and price controls have been mostly removed so that prices move more freely with supply and demand. There is auch more private sector activity in internal trade, transportatio and processing of agriculture comodities. Perhaps o even giiater importance is the direction of future c"ge which the Government has spelled out in various policy statements. The Senegalese economy is to become predominantly a decentralized private enterprise economy with the Government role limited to that of facilitating private initiatives rather than one of controlling and directing qconomie life as i the past. 49. Given this transformation, what have been the effects of structural adjustments to date? These effe;ts have been to a large exte\t - 35 - negative for Senaegalese industry in that there is now much more exposure to international competition while serious rigidities remain in the economy which constrain shifts in resource use to meet market opportunities and to exploit effectively the country's limited comparative advantages. Expenditure reduction measures under the SALa have contributed to reducing the rate of inflation, but insufficient to bring about the significant depreciation in the real effective exchange rate that may be needed to restore the competitiveness of the Senegalese economy. Deeper reform measures to tackle rigidities in the labor market and to reduce costs of production are now needed to bring about a more rapid depreciation. Such measures nonetheless remain "second bests to a devaluation of the nominal exchange rate which action Senegal cannot however take unilaterally given the arrangements in the CFAF zone. Significant reforms have been effected in public finances, and performance as measured by the rate of inflation and the level of the fiscal deficit has improved. These improvements in performance may not be sustainable without deeper reforms to curb expenditures, particularly on civil service salaries and support to the public enterprise sector. 50. Given this evolution, were the assumptions underlying SALs 11 and 'II valid, was the program design correct, and was the sequencing of the actions appropriate? Both SAL9 were conceived as incremental segments of an ongoing medium-term adjustment process and both were broadly based. The analyses in the economic memoranda, sector studies and various policy papers converge in the judment that generally the country's problems were correctly identified. The actions targeted to overcome the shortcomings were broadly correct. The sequencing of actions may not have been ideal, but was appropriate bearing in mind the particularities of Senegal, in particular the difficulties in obtaining a consensus in favor of deeper labor market reforms and the inability to depreciate the aopinal exchange rate. It would have been preferable to have been able to tackle such problems up front, to bring about a sharper reduction in the real effective exchange rate and to put the productive sectors in a better position to exploit the improved economic environment supported by the SALs. However the successful implantation of a liberalised market environment has probably contributed to a better understanding of the need for further structural reform which could be supported under subsequent adjustment leading. V. LESSONS LEARND: OW TO OVERCOME TIE OBSTACLES 51. The preceding analysis of the achievements of SALs IX and III has indicated that, despite significant progress in the implementation of the reform program, there remain significant rigidities in the economy which are constraining the supply side response to these reforms. This explains in part why, despite some macroeconomic improvement, Senegal still seems short of achieving the targets set in the 1985-92 PAML. What lessons have been learned? Mhat are the means and methods for bringing about the - 36 - oecessary-changes and structural reforms to achieve the Government's goals in the time frame that has been set? A. Desin ad Seauehcina of Reforms 52. The economic an4ysis underlying the design of the reform program supported by SALa II and III was broadly correct.\ The fundamental direction in which these reforms were leading the economy, that is the increasing role of the private sector in a liberalised market environment and a reduction in the sole of Government with a refocusing of expediture, appears appropriate for Senegal. The Bank was aware of the extent and depth of the structural problems, not all of which could be tackled simultaneously, given firstly the political constraint* for example of pursuing deeper civil service reforms at the same t1me as the trade and industrial policy reform and the parapublic sector refocm which were expected to have short term negative consequences for employment, and given the constraint that the nominal exchange rate could not be devalued. In one area, that of the banking sector, the extent of the problem was underestimated though the critical information on the extent of the crisis did not come to hand until June 1987. In terms of reform sequencing, it could be argued that, whilst the tradei liberalisation measures introduced uasder SALs 11 and III vere necessar and appropriate, actions to remove supply side rigidities especially in the labor market should have been tackled very early in the refom process. This could have brought about an earlier and more significant Impact on the depreciation of the real exchange rate and helped restore competitiveness of the Senegal economy. Both the Bank and the Government supported the idea of reform, but the measures which would hav introduced greater\labor market flexibiliti could not be fully t*1emented because of political opposition. The pursuit of these reforms would however be a high priority under future adjustment lending. S. Time Needed to Implement Reforms 53. Ihilst the record of achievement in the implementation of actions under SALe 1 and III was generally good and most critical measures \were implemented,. a number of actions were delayed In some areas, notably agricultural incentives, parapublic sector reform, public finance management and economic information. For many actions the necessary technical framework did not exist or the implementing ministries were "ufficiently prepared or suppoted, though this was partly explained by delays in approving and rendering effective the Development Management Project. In other cases, adverse factors lay somewhat outside the control of the Governme4t, such as the availability of consultants or the arrival of equipment. For timely Implementation ot\reform, a realistic assessment of the constraints in each sector is needed, which assessment sho4ld be updated on a regular basis so that apiropriate action can be taken. In the case of Senegal it should be noted that actiod is now proceeding well in many areas which had been subject to previous delays, such as agricultural pricing, the SONACoS reform and the privatisation process. -37- C. Goverament!s Caacity for Refom 54. It is not always easy to assess in advance the Government's capacity to carry through difficult reform. However, a retrospective analysis of actions under SAL. 1 and III suggests that the Government did, have-the technical capability for Implementation subject to two provisos. Firstly, the SAL III program was probably too extensive to have been carrsed out in the period given existing capacity. Secondly, there remains a need for institutional strengthening in some technical, statistical and other specialized fields. Areas where this is particularly the case and where well focused techical assistance and training woul4 be of value, whether under the Development Management Project or a future adjustment operation, would include computerisation and the preparation of national accounts, civil service administration, management of the privatisation process and public investment planning, particularly for increas$ng the capacity of the technical ministries to design projects according to sound economic, technical and financial criteria. the Goernment's resolve to take actions agreed under the programs supported by SALs 11 and III was generally strong, though it was unable to obtain a consensus for significant labor market reform and did not appear to give an initial strong impetus to the privatisation program. 'D. Lemsns for the Ftp 55. For the Government, the Bank and the co-financiers the lessops learned suggest that in the interest of Senegal's moving ahead on the crucial reforms there will have to be further cooperation and coordination on the masures and the conditionality for future adjustment operations. The Implementation of the adjustment measures must be adcompanied by consensus-building efforts by the Government with the various interist groups so that action can proceed rapidly and smoothly in the areas where structural reforms are still re uired. For the Bank it is Imperative that it insist on up-tront actions and strict and timely Implementation of the measures the Government has'egreed to adopt. Future structural adjustment lending should focus on relatively few areas where constraints exist to improved public sector management and Increased investment and exports from, the productive sectors.' Howver it is very Important that the tot4l lending program should give support to the refom process and not try to cover areas of secondary Importanle.. Structural adjustmqat lending should therefore be complemented by sector adjustment lending (SCALs) ad hybrid investmentladjustment operations to deepen reforms In key sectors 6% the economy, in particular agriculture, financial sector, transport and human resource development. To forestall slippage of Implementation the Bank must schedule .frequent and detailed supervision missions and ensure an active role of Resident Mission staff, with a partidular view to supporting technic 1ministries responsible for implementing the respective measures. SENEGAL: STATUS OF SAL II/III ACT"'1S AS OF DECEMBER 31, 1988 SAL KI Origllt Acisal Complotlon Date* $t~tus o" December D1, 188 Aetene er II Tare6 Date. I. IllCENiIVES Ill AUKRICitURE 1. Cerools Policyg Propeatles of Merol develo"Imnt KZ June 19~6 Jine 196. Plon d to arrIvo Pon under lpIennttlion. Prsenh s4M6. progr etIfsctory to te (Coodtan e 6 at 80 food Galt-suffilocy by coreol pollele, ho~er, ~-so6 Asf"lft. tod Tranbo R~kes.e 2000. .OIespeMbIl uth ong-reag. ereal gola. C<S pe læ le to. b* alitød løs tg Søgløing 10-11,000 tonf la 1986/07 CSA tatsrenolon l nes alaI. ais (bout 25,000 tne Ia 19"6/S ) and Jame 1936 5-,000 t~ ia 197/ F local r i o esi. lod to supp rng producer prIess. C~sIntthu with t Sank overy XX svry em Co bsltblofne bv to"en pifce to Govoruss~t reded ratall prlee of si sthefrøm dat of cred1i øe~nb. - beep reo protlos af mor rico frM. CFA 10 to 180 os May 1, 1983. ffeekvae to dt*r*ine ed for the 28. Effect. ar. edue,d bdgt receIpt* ad 4djataco6 la rie. pele, the ntelv* impeot on Imtso1v9o ø adslltio, lovel aad ualog of te eensuns losi e*eals. adustasot. % Effec*vo sopeatløn of tho rIeo KX eginalog July 198Ø. Kntr~idIskrlbutltn EvOafIksol of eperence la oseaien free oo ~ CPP and June 19~6 prlvatised. After oxprlaetotion progres. Reetd ~bold b. parti16p6t190 of private <Coodtion of with private Import., CPSP o* svallebte by March 1989. Impor~ore/trdsrs In Import and .nd Tre~ch. Roloooo) coverø Import øds working ;n distr~obles of rico. - port trough private trdre. 2. Pood Socurity Cowalcolon (COaeIsOrlak de Securlt Allamtoire) S~ og op pris laformtion systam Ix July 18 July 1367-- .ocal ceroel prices are publibed oaeb Saetrdy or ~oany. C8okiel"os øf actlon plan on CSA til 9 er 1987 DØce~ber 19æ7 smpeamntlof og CSA action plan il April 1988 January 19~ IpWoetotlø0 In progros. --- SAL Ul Original A~u1i Coplotion Oabes Slaks on Decmber 31, 1980 -Ac os or III Torgot Dotcs 8.-Sf-e61enalproea-ling (VIIOLe) E1el4jaso-o pérformac of fly. ata III April 1918 0ne instalod, 8 .6bor. being Exporiownt coftbiffs. ~n@6bIg *p of 0-M smita III 18, 1mt^ 1190 KmI t poro6i.n noh fel lvpeads on dsn f flasacing, Ikoly 004a.fi; trio ciosue . fr« FAC. o~prabl.. of plieb ladubWlml III . AprIl 1187 *ui 10 ton. wo far procon~d. warketing problem. (conam~ proseJlg pte* (8m toe). sco.6nos quallAy, pio). Experlaso coblasf. d. Presoiom of local grsa- L..ablåg of solonlo eneasios III ogia 1080/89 Pieot oex~elnom progr= Onging. o is l to roach nbional prégrens scaso. sbarled la Jluly 1g68 .vornag. of spesie s consion progra by oid-IMg. Sal. of lapro~ed csed ab cosI m legia 1g66/89 DPS b~gN. 8. sPR hoead e cos Ongolag. OPS la pimenting b tör~ season - is JuyI 10y If-si ~ oed auttlplti«lon progrsm. Os la nationsl avallablity of iproved cead a04 ditrlbmtion ab.cost -- by Mid-19g. . PIene policy b Peiss andinconalves e6udy III fegiM April 19li Smmer 1987, Roste: Augu F~ebruprg 168 1987 AdopBlen of acuo plIa III s6ber 1987 April 1088 udy proposad woebafisl for prIe. (C~Mdlbion of tad (Firat dreft) deormination and rocom dshift Trancia-tlsaso, to food securlv objecbive. Actiof deferrad to ard vas taec o reduca groundnu snd Traneb Roiof) rice prics GAL II Original Actual Complio Dot4è 4tatus on December a1. 198 Aaosor III Targe6 Daten s- 6. Ore.naa6VSscte Ce~Iral ssrlis ,leb 1imited å II egisale June 196 Stock sa isited to k6,000 er 188/"9 ----o, s6«~ k te entieaed r0,000 tons during 1993/87 soso- tone la 196/8? en~n and at 80,00 ton. to 46,000 ton en 1M7/8 eassön. Ol~a öea free dieträibtona o 18 April 180- April 1936 sdj farmera toesor ~0 a oed or pur~baen froe olI allie * ase. Properana snd i~pSeababim. 'oT a I Jsne 1988 lian piet lptmoan 1986/87 ar ed steumm maetlated a% se*ds pillen pov, lenludig aseures sces. 86,000 toa to 1986/8 and a 90,000 to help farmre etore thäir åeds seder i l 98/8. 1 pr._e endll.es. plmet aan et c ~0bree plan with Ml erch 1987 SUUA08-8E1 serged Docember Takekove 1n SAn . III tihe am ca m %nrgig from tiha 19M. mo con~a l plan. foalon of AC0 nd SEIS. I Complie6oat of aak6 g li thady KI Decmber 1987 Augut 1937 -Ro«meendalone belog implope ted. El Itinten of INed exchange emboldy fil 1988/89 osen To be Iaptomented by June 1 6 PurposMe fi cos r&Nction to SUNACOS. N*we4, seed reneåt ten ta not r~ l vad. Stort 8fiAC08 asdil (operstona) I! August 1987 J~tnei 1988 Implemte io _OIACOS otion plan III March 1988 e31AC0S* Own lateri plan es Audit la *blil so% complote bot WCoditton of Sid ipleented l May 1988 procoeding estiefactorlty Trcane Renee) SAL. II Original Actual Complolon Dato ' Status on De~s 81, 1988 Action. or III TOrgot Sato 7. ocontrol of iporte Forie sIz.oubeldfos appiled In -- 1 _ egnolog-June 1980 Plan Implementåd Cot reduction for 6i ochieved by accordanc with guldeolins outlmd in obiffing burd~n on producern. LOPI ebsdy 4 ~altd to CFAF 24/b^ ~ durlag tho 1988/7 9oemon. oradua reduble of mbidy on III CFA 1/kg, 1987/SS Plan bolag lapfemented a988/89 ta last year of fortiliser forttiIser- CFA 0/kg, 1988/89 mubidies. MFA 0/kg hreafter Dccon"o# of 1~portod compound InI 1989/90 senson Program on torgeb Thor are no aanges ln pla. forbliisere CopIelos of espor qe enseuon of III Docember 1981 march 1988 Comp%Såed previous föruillar progrms~ e. AgrIculturel Crdi6 -Copräv d etetfog programin IItober 197 f6udy not o~red Ia the omof latorminsterial Torklng Oroup sonk fInancing ~stabllshed Jun I988 to coordinato --isal atudy. No Sank finaciag. Group*s declioon *estd to resul% in action planooc. study completed. Compiolion of ~6ody on f1nancial I July 1987 August 1987 Action plan in progrse sItuaIon, of 0CA8. Impåmenatlon of achion plan on farm III Dmcebor 1918 FIanilI plan belog Imlpmented futur, pollies oh fare crod11 oredit since Aguet 1987. dopend on docilons of Wrking Group. -45z IAL 31 friliet Aebuel tesI.ei Dae. S6t... Dn em-er 81, 1988 - Act,... er III Targe6 Dae. 9. Agrieuiloie Di.ersIftee6iea NrbIe~l tte te" Subseeer sedpa .Rens p6be197apebr48 Ad6tee of eo6fe. pla fer brJI."elre Doember 1987 Plan prepared Uareb 1988 InplemenbeUee ba. be. del~ad ~;eegs River øogion III £uplerory ebedy - Teret of eerss. Sey -8 iley 1981 Ce1due68g of a . Jun 18? Sludy le progees DvorsIfweolle of IGRA roereb progreo III Jgne 198? September 1987 In prgree Up8/ISRA ..operable-agremsee II Oulober 1981 Oetober 1987 Adopted 10. S6tenglbeaagsof Im Finezetle6 et ofle66Mae de mIeseloe II . rlar 1890 lapueend with defay for 80MI, "EA, SODEFIU , ad S~8IVAC. Projett sppolal for Mik -reorgansetloe K3% ^Srcb 1987 Evetuation «apled le Møreb 1987 lastelotllee of IR rmergaeletlon Kit April 198? opi.entles delayed by Conklmed delay" Ilely - diareemen between eovernment -and Sanb Sa Lriginl As.e Compeble Oalee S1aug en Damb.r 81, 19s A b§= - PWIr e ~ergul Wea 911. .ad Tentre Cm$.e6Mof .9 rw.. e .o 116a I33 Dem-abr 19U Deloyed. ksele sedusled regata6tene ,y 1g88 uou eaus.u at P ads f%r tining nU Mrch 188 Eopeebed Jeep 188 PrIcMdur. bInga dtne ecoitoeeoeeeap.r6 et bo soss »cmseo6a 1a. LiTeee - Leve~u 6119D piena Z Ju.e 3907 Sepleaber 1987 Plan utl eceplabe to 1aA. ~pluaelon of mucn pla Ix §oum~er 1988 Parbiel lopBamenlIab ta ~ k sqperb ~sghl for slreegte ed Nord 1398. p5el . ThIrd verelen belg finaliMd. 0e36~ of dess1i mst-pICs II JIne 1987 .oember 187 Mee6 pris. drulafd. I16t decent,reI prices dropped Uece* I1.41. of SEus epoip o e CIsng III Draffings J..n 198 SES n. lngor la a s mioply- and bides ,(*~)er) -ffectivet December 1987 Dmecembr 1987 pou16iom. Rstt* of change no1 -e* uvalleble Ruem~r rIng of =wE III Oaelébr 1987 December 187 lpt bllo a progress . - 11. SINCENTIVES IN 200081NY 1. 4e.ee, .eenre Announcne of 0» No Indumrlol H February 198o Fabruarp 1988 Nw policy la placo Policy. 0li SAL II Origiast Acteat Ceapioto 9ote status on Deceber 81, 1988 LAtien, or ZU Trget bte --- 'epilio of 'ioe Progrem for II ime 1986 Jne 19m1 bmp~rt of JMdstr4i4 Gquiest fad6ttrol efera -ibgr~iissd. Pottelil ia ptace. 8. Prsstom syeaem (<) e of new drIfp Isiff Ced 11 ffiJey IM86 jeey M . Adpted by ttenau ta forhes prot.ctton md~ed. snd > depts bp hueeseamb of II. (b)0stober 1988 Assmbl Auue 1936 (Le. dreft IerIte ned. sasfet.ry bo bh. (Csdi..e of eS-fl) Assesietem , , 3ad Irnelle Rälelse) 981950468e9 of prtor GetbeIremas te II Jesy 190 Aul ten-smg.the petats Ia fore, earkt Olborenlsd esegores e rede te ae omn eeorted pb ry 19m ond e616ton laeeresed. esesr (bo 4 a debertaed ta -essiee with Sbe A£.eeieten.). ReWIO et caleblg as0veeblee'Itb II ~18 Zvetory of eetel oesme~te provot. m ltrprise with a *le to ebopted em 198 (tak. op thel poesilto renegttetto i ts a-t IIu) 8eg.t geetr.imbo. Adptes of n'# dräf beek eyete (I.per II July 198W Jety 1980 to fore; wec-procedre bau fövorabte dutp .oespbie~**n m a9 for eprh -- impseo em enterprieee. predeem) Adpöan of oe exp~rt ab.Idy 6yetem I Jaup I98 ,Adptet y NistIoet-A~sebly Juy I forc. b~ud se vet.. odded e border pries (Cenditton c# im <La 8-87) , d Trambo Roloose) Tariff und prodoes-epulf 1e Ced Sobm len of et 189/WI leråff Law 131 Aprit 1988 -Apr 1985 Lam pessed o My 198 - to the Ustlesi Ase7bly (Condlilon of Srd TIrsnebe Rleese) - pretlsomry droft of stady es III September 19?y September ca87 predack-epeefle codos propard by by C8etoe O1r40toroto t1 SAL II original Actual Cowpletten Daton Status on Dec~obor 81, 1988 Or III Targe* Deo - Finollaaiion of 't0~dy III ecember 1987 October 1987 - Su0olos1on to tho AOneMbly of toc III April 19e 8 April 1988 La passed in july 1988 revlslng tho produc-spoolfte codes .iting of qu iltalool roeabi6tona II/III As per ~ckedulo February 1988 There are no longar gny qatitative rtstrietIons o any a facturd produ~ts (excep product fröm South Africa, *rs and drogs). Roferon.e prieå otudy Flodinga preented III §§ay 1987 May 1987 - ActIonian .. III S eptember 198 lievabor 1987 Decree signed -~~ (Codi6loon --- Rovis of oxporb §ncoutivec 2nd Trancho Relos.) - Evalabion of tho oxport oueldy III soptubr-1987 Sptember 1987 M=o ls prosented la sept syBt4Oa (Condittn of ma 188 to National Ass~tbly 2nd Tran~o Rt.ea.~ - Ewauaton of tho drasbec eyte III soptebor 1907 Sopeber 1987 System ea61afactory. No 'cang. (CondtIon,. demred Studi0 o ontorprio. onventions - Flndings prosontod. III April 1987 Stmdy 4ompleted tn April 1987 - AdopUeon of action plan II September 1987 Ccpony-specific action plan Audit ln progress for S0COClm. CSS (Condition of adopted In November 1987. 1 cas~s and tAR co~paed. 0thoro under rovlow 2d Trancbo Reloaoe) r ~vlewed. 6 alditional case no by Interolnisterial COMnIosions on #ooer rolovae hocaus. coapan ies Spe141 Agreementa. Purpoe is nom out of buslnes. vltbdrawal of tan ad other exemptions «flo- SAL. II Original Actual Cople6ioa Date. S6atioue oecember 81. 198 - Action of III Tage Oates. 8.-ovrssbCo~6o Revie of the edalstatlive produres II Decpber 19 oconbor 198 . me lm adopted la so SAL III (Proinoilon of Idutry) en 6so frameork of dmo lobe ro, Augulo 1967. regulotlng blrlag, firing and Doaporory oorl dcmorlm. -S Preparoto of meaures to eaceuego II Docember 198 Ocijy pretimlaery diacusslo. ia SAL job,-rotion by tabou lal..ive II (noceabor 196). Ium. IV. 4. hdutrien %hrh rodulebon la sela t of SAL III. ohargos. Review of KInvelsee Cod.e- - Droft »eml. III April 1967 April 1967 - Fin df III may 1967 May 1987 - S~b 1eolon to th Nollonal Acucåly III July 1967 L. 87-20 odopted by Nat1ooi le force. Investmont Code lItbetlled. (Codition of Ambly la July 197 20d Tranche RoIMM.o) So~1ag up of o ~0n-Stop Wiado wyet~e (guichet unqu.) - Subuucolon of dräft verelon III April 197 April 197 - Adoption of dröft III July 1967 July 1987 ~ASAL It Origbaöl Aetst Ca etea *atee St~ts es c~ 0 1.98 Asetene or III -Turge6 Dates ~ - Syste lapemestetlen lit Augusm pl"M Jeuary 1m88 mFerst-ugppl~ Mait o sproved J~su4ry 1988 .Apptroval os tsae 8 ueeke, 1 .1ab maalims. Syst tefr IIdsetial rqerj aem1~erng - Se6-up ef system . ik U.y-Juue 198? June. 1987 - fmIUeof opere8agpre.edsre. tE September 19f?-Sptme 198? - Syslet tIap enetetes UE 0es~e 198? 1987 System fgeblnestag. Test. completed ng.~~~~* a-i Pw I offer~ of dibrb1te kw#ym9eot8e N. t - Sroeter dressiatiee of dIstribe6Ues IU Aprli 19? hecre. 87-17 adopted June. 1987. Kn plece. by r~*sles - memémao est ee 76-18 of i April 1987 April 1987 Whsre De mmretrleted om69 1m~ Jnasary 1 a? snd co Order 982 of sud fre. trade of ogricultural Feury 8, 1998 o ab&e. fre prode~ts tbro~goe6 smgnj. wswe.e. of agieultaral produ~t. throughaes6 hsel -e SAL. fl Origiml' Acuel C8oMle0o Dats sttus n Dococbr 81, 188 Atioe. or III Torget Date. Eilllamio el coftrol of 1aduobrl08 pricon im compotI6lvO soctors - lubeiea of doroes.to lift III April 1987 April 1987 Prlee Cotrlo* aud quentitativo prico controje ta mtWAM mit6 rwetriboah ro wd. .. trade of reoat of qu~mitativo Ifport mnfacturod pröduct-thougbot Seneg1. restricaom. Regulatt*e os fair u.po Dloa ~ - Lms rogieting coDoei6eo% III . Pr.ilainerv werolon May 1987 With freo trade there e * l pea 0 lq k Fro. trde l operation. . Ploa sf June 1987 los to regulate trade lf lorww, ~ 1 f drf July 18 nor ta WWero ay need for o ny. . Subeloion to whe mablonol september 187 m em6ek lö pa od on suck a lev. lmprter-exprter cerd4 - P~b§eba of doeroem olmplefylpg III May 1987 Docr** 740 posed Ma4 I y 1887. Slupeifled lportor/oporter registrotjon ~el piedres - proceduro ta ffee for fiscM purposes. Eport prsoen agcec - - Imp 40on of SEof PM Cam$itte III July 1987 July 187 Aeto. progrem ia plece. Euport , d tloe procedurm sipled. - OrnaZiol of ourdom ble for III Jono-Septe~ber 1987 4 roudtabie comducted by Sene as ahw- fettu~r oalpilfication of export - Septo ber 1987 foromlt61e - Aotio progre for slapilficoteön of III Novembdr 1887 November 1987 -- Somo s sbw. formlitke SAL II Origiel ActI Comption Det. S6et.e om Dec.mber 81, 988 Aetlnes or Ul Torge qat~- - Stromgtheniag of CICES - Coas~itaIt~to et merk III April 1987 April 1987 - Report - June 1987 June 1987 ~ Admple.of metlom progr= Septesr 198s ~e o laptrmented Isane beteom* k and *ID Com not resolved ro eqperation *f Oar felr fre, ether espef proof~ c~lon etios.- - flobroeterag ef ASAEs XI oraf6ft øoreo April 1987 April 1987 - Plae e r June 1987 June 1987 - Adp6log of eello progra~ Seftome 1987 - September 1987 Prlve1stlmoo diInesolone la progres. - Prømes le flading * private purchsmer or jolut-v~atere partner. QualI4 c~neotl and st~adrdlaatloa - Orgeselzoloenof round tobles ith in April-Jun. 1987 8 roøwdbebl.s organis d by representativ.e of heod T.chae!ogy June 1987. Isabitatei (ITA øt S~tegalme. stendertael~om r'aitFm" (KsN) and t Food and Applied Nutr6tlom Service (SANAS) - Sotig up of øe action plan i Octber 1987 Octoi 1987 Action pla being Implamnted. eept for certa1e loveetaant which requlre f lmncing. SAL II Original Acuel Compioblon Os3e state on December 81, 198 Ac6Isne er III Trgot Date8 IV. PROMOTIIDI OF EI.PLOWil,it Ieprovement la the fuetlonlog of the tlwbe marbe (floalbillty, hutonoy, etc.) --- - Smeeleson t* the AdeSy ofa lau - Jae 1987 June 1987 Propo~ed le Das preatd te the Mo eohlente ~aneply oo plba~see6 and- (Conditloo of1-- lteona Amembly in Jne 1987, ht faoliteto m~aj of flued-tern labor effctvenee) no passed. RevIed text approed coobra~te le Auget 1987. Ptaeme R .1,poly mse eb*lished end ene 68a cely .- - reneet'of ceetraces pera166ed - .blIcahlm#of dolri I July 1987 Ceetelned la Ieu5 mo separato, 61 decre... Evaluafion of cfl~ l vel of Lbor Deparbeen - - Finailaatloe of> Study III May 1987 Deeobr 1987 - mpleentoii1.m ol reforse III Octeor 1987 Labor Sopt cboUlabd la December 1987 Study on linka be~tu.. lbor produ6lvlty ond 8ag - Flma iaation of study1 III May 1997 December 1987 - Dlscuselon and adopono of study III -- July4egue 1987 March 198 e atlons accepted roe«=mdetiene (Condition of *rd Troche Relnso) "A. lt OrI%ilff Aotiel Coopifko aes Sas osimber ß, 1988 - ,m-mli -t- Aeblne r II Trge IfA~egem Iludy of ret.rus et Qb. egetes et -, Itneyg emploer veifer. condribeilon - Pllelta.ble of eludy KII Octeober 1887 December 1987 - a1e.ue.ed ~dslon of sin 6V. 1987-~ t 1reb 4188 e.....a. ecepted re--"---"eo (Condi6ie et ard Treae Blese) Sludy .e ueeg pIdpe ieß le equity mnd pref16.*erlag - PFala1e eloo d .S- 88 O.teb.r 1187 seeseber 1987 - Oleend odep6le. of etedy ItK 81.. 1987-Jaine 1988 Noreb 188- RecomendaUlone eecepte .wemediese (Coadl6lob eof-I --Syd Trenebe mel....se)i ~odmebriel of e nurleg pnd Design et opere6lag procedures. III Septeæbor 8987 Neovember 1987., fl - SAL IX Originl - Adu Co~pIokl1 ndate -D Shtim on Deceber 31, 1988 LØ0S... om LI Tergeb gate" - Sdbbiog op of fnd ig. Dcmbr 1987 ye øpørstlal . Sah parLIGlpøeo pprovod february 1 S - Startop il .Ienery 188 mok $m* Impleæend I baNk b. yu expressed el lingness to p.rbleIp.be v. wE s F it PARA~PWLC ECT 1. *Iooel6buore dpM*t #byl of o1p f marcbl=k 1984LI pdUr lem. 27 to bo Tab op IaSM I. enterpri.e b. bo prt"Uaed or sIvablad, 7 tø,be lIquidetd. ilquide6Ød la 1855. its laplenenao1e. la 1986.- soletle of PIK to b . ilqsided o i øffim l O? erfano deeded a*t to preed privm6asd (Er0 ITA, an~ other:) -blth prIvotla~Ie or liquidaklon. v$ Cholto of pr~cedurø for diemgøge~sØ It September 1987 Oab~r 15, 1967 10 8EH a ffr*d Møne old by Decembor 198 and o9for$ng for sole of søeret I. (Con ot for sie fime b~k øf 1 almd*spitD 2nd Traece~ "efoooo) CIsaøes (SEe) to b. pwva6tad ~(..uo eS 27sl SALI) Chano aegsi statos of IMR, INEP and U ecember 1987 I6 Smplemonted. Toxte intoduced Ton6ø in *pprova proc~s. No tilaP for Ipprovn Fbruary I~S hmpiéton data. Uquidaton øf I Mb and EPIC* in Do ber Septbr 19M7, S Emsad Liqud~o1 of lgt SEM ~pbd t' Sbpproved by C (CCEP( SE(CdIf* -of 2 EPIC liquidotod A i toIs AL aU.) Sad Tr~aabe %Ien) ' sølectIn of second betbch o E (10 to i . Deø~br 19m7 t-L eo louding tiet of 11 ,m~n prlvøtid u ø ter 17) to b. privat6aed (on os løb SA. II) (Co*ditlof of entorprises od July 1987 2nd Trenche Releaso) SSAL II 8rgI . A~te#I Cowpoeotoö n$.e Status on December 81, 1988 Ae61ene e r III Targ.6 9atog 1. RiebabiiItIon Cmpteriaation of iietor dama base II lo~omu~ 198S Nl Impemented finaVr~eilolabIl e oross-arrera II July 19k Joiy Tak on in SAL III wnd ou66tnsa.6prgra>s iaelaa en o 6 d6 onor 3 () mer4 m mlayd. SmDAI, ¯DEWA, DPT - Alo delayed for SOMADIS, CC ocenorate-plan fo oora) ad SIMAC 014~e de olfono 89CAP, DU, MACOS/E EASENLC and MATEL t- (b)>IIC8S3 C~ l.rokn int olloneal Cmnle sit - PAS ahn. 1987 .L0ao ptd July 1987 * 0U2 ber my0 Le adopled Oobir tesn Sioffiffire of piano - IM AEC, i_ VAC, CE.#LM, and III D ~ 1907 eks «e#r~ piano ionpleted In 89f sENELEC, ~0NIVAC, 3071|, SAED gensel for UlmAC ad SAm e#>pled with dalay - RCPS, SONARA, PAD, SmaAC/SES, ORTS IxI oeemlber 1R8^ RCS, NATRA, PAD, SONEES Aellon delayed on gnTS an and r foense for lUNEES apleomnted SOAC0t/SEIB lepIemntatIon of R~ablitatlon Plan UAt. 1 Origins Actesl Compietton Dete Stu cn December 81, iS- Acloms or III Tare Datem må, SICAP, m AR-AIE- PI~ Deember 1087 eap 1987 T deb e49chedullag plan SICAP reskrueburlng not reofifed. Co.t for e0. Auguet 1987 ST debt as *entu$al pråvatixation. DAffiRARINÉ reachedeing for sIup. Iiltati«aan progret. Partner - - fordydock operati, .blb i nm uoprdfl6.ble. 0b oporällons aru vibåg. 90S r~habliblelon cered adr fSCAL for f §an*isi eser. - uRTS, 0itiD 111 heseber 1988 SebebiStlaltes la progroms. Progresu on targ~l. Uie..gesab eudite aos un, aPs, C~#aEIT, aNCAS, Am e 1387 A0 ~ cC~i#ted excep APS whicb s Audit rcommemodatlone modet Pt, i0B, Cm, als, lmC emoC, esep4et~d en Apri l8. '. laptegean.tn C-SNC, Pa, mC, EPA olfseminoalem oo moasm buar t J Iune 1987 April 187 - d lm6o. of procdre and tkle~*bte lix June 1387 Ls 87-19 edpted July 1987 to la progres for progrmsolvo Mm&lataato of b priori ellalnate b priori C~*#ro*e one a, FIMnalI R0elien. bt.e~ Stat. änd Public Enterprisse ~ don.f subeldIes to p pble Ill 1988/87- 6on 5/8 65 realsized oo /88 ner M 8decicion tan to tte I eetor etorp ms 1987/8 - 113 on 8/m, 181 on s/S sboldie (dlm.c ond lodir~o6) for --- 1988/ 8 - a0 ow IN/MS 16| pi~nned la 88/8 bdget on 87/88 e"äb enterprios (Dank financed), es 1989/00 - 80 on Ds/8 forther ocro~s-the-board reductions opparoåtly endangerodserteln - enterprtees. S 11 Original Actuui Coaplhen Oste. Stt. on Da De~ a1 I88 Atons er 11 Targe^ Datoe TabWe rene lIng 6te. f4nansIel _UI June 1967 June 1967 S esamitenat und eg~aat6 pianf with evalable reounes and ctert of syeben to emli.e fiMMGeli k aomlene under -éiast. pions. enfanf ~ to se §ts fWnelal JU June 888 siatree piane relaed Marb 188 Gbolgbie and r th e ~hr (CndIMlm of ter the fifi beSt of 18 Sd Treahb nIee. og s ~ore feseg *uloI of Uu e 18F8 stio6Bo inpimmented inte ota sa progrods parai.i eastor Saornaati system .1free nolrprisea ulaelag. lav tery ef reciproal d~bto as of II Joe 10, 15 ofit os finascal . Abltreblan of diepted alams iay 18 (1) aslilcle of .ro.s-arreare Kmplemutation Sa progr~m., besanig an et Deceaber S1, 1986, with fi~ees yer 1887/88. ~ e«pleted Augus6 1987. Esenar# e cres-lfear and JMyp 1997 (2) Soueaat of di~U o- t~lsbabSo for ~6tna of mat Janary 188. pffle with entserlei enaconlom for m0 of the total (8) 5 ar pyar t pla edpted A.gust 1887. sav~bt of reosc-rraro and Otober 197 (4) Ot arrmre aith stat. liaDtable for ~1meWnt~f nob enterprise4o b etiatd p~eoon with th ~nlag Ps -ver 8 yaro. Inatory of reproc* d~bbe with I1I Ju.. 1187 Ss. abe. Arreare as of 8/80/S a0-floanla cntopricmn (Juiy 1, 1985 brlegbn for~d to $/80/8 nd to Ju~. 80, 186>: e~pMla6.on mnd 12/31/96 roonnlitaUlea of alino mAi. xx erginel Aslta CoMpelbe 8et.e ' Sat. en atcetbr 81, 198 er IIU T.rg6 a-e---- A"1~ ef dlsuted olelam Augoft 1dm as6 lal. issia lauentary and 68Ie6ebie tor Oslaee 1967 Nø6 lapiu.mted ee66tesid et e6 postle for el-, enterele~ le 4. uwg"l éii l amleei Pres.rb 8skel.tlee Io Netn.S Asseblg et se» 41m Juy 1gm l Le W7-19 edopted la July 191. Myplensm~lm lis progreas Iwe . nrspubtle enter ~ ld "eee lsed. I op$*Dm~bleg de09eat comptemeutr tal en Centnef Sed~es f le -Tr et tgreesse. 198? . 0--A 1967 (coentme6 mith -eto 61tudy Osteber 1981 FIire Draf6 omptered Osteber 1967. e L Fit draft July 198 - Ad~lea of se6«.t plan &treh 1198 Se ei6en æ Pl«. Sludy .a heerd et *Ireeere I"» Precedo6len et orperi .ui~ 16 Jun. 19s TrelUs e 6 belog implemåed eios "tmcob 1988. -'-fisøen of n6len pimn September 1987 D.cember 1987 SAL IX OrIgimal Akuot CampIbi.n bot.e 86etse on Deaee 81, 19988- eon or III TsrgIl Pia~ S. 8Strngthening Ueam~eo 6e Seor. Proese Adsls e (» 0W nd(b C( Jn)197June~ 197ebn 10Cnie t addikional poslieine pionnecd ~ ma "t()W ad (h) m Jime 1e87 C~n tl6f de 4e1~or Parep~bla (B~bfin~oed. Benh *ml~t tl~*eteion (b) Jun. 1967, ebenged to elteim e form du Seeeur ParipubIle Vi. PKBLIC fhlhSillf P»~MAN (PP) A.- Xn~læte6onsI Refrm lenets of dobb uonitering systes le EI June 19U6 øl~ IIm plemø~. eferred to M projee6 lcos ggg. f." Oml=e. by Consll Sperieur du PIa of IIf June 1167 Jun. 1997 ~Rer. u uy, I 61s n propsele fer referle bs pleneing (Cosdl6nen of gesi o "ow~ Prøj~. syciem effeslIven4s CpsIty of Bfistry ot Pimning ond os proje" apprlit ~spablity of t~chnicl MInDeries binder - Prospesiv0 ~tudy on ong-er. III oørm eof reforence Jun. 1967 November 1967 - Repert June 1966 No06 oempleted Io Progrees. To bo Impleted April 199. SL -n Origlal Acua# Copil1on Oat e . atötus on Decembr s1, 188 Achtlme or II Tae Daten Decemtrellaa.llo of proje6 ut March 188 ~et Ifplmented. ProlIaInary Progress depends on DOv. MO6. Projeck. lden6Ifisole eand pr~oraten to the ssess~ of ach ,instry*e ~ ~ornent declIned to Impiament la rura dvelope90 wter upply, pubile cpoelty c~peted March 1988. absence of tudy to bo carried och ,.0~d.e eduasnles ad heaIth under D~0ee m ais.ageo* Proje64 o e. not yes t~rted. TO propared aembr 187 to etdy bapecIty of esch inissry. 2. laetes Progravlig sd Execulem Prparalon of drafi thro-year publie I Ju11 1986 Augus^ 1988 Progresm achieved in cem.t~en §me*te~n progre (PIP> 18~/88-U8/90 (CoWdilo of by Overfmaet to PIP refora. PIP ad %lt etoutery rowie by Ued Treche ROIae) -edred by CO ~me6lag April 18?. ohe Aemselasto.. God progrees oted. mual for projo6 ~sprasal lix Jun 1987 Doember 1987, but for direolly yssel os direclty prod. 1nvsteexe e productt¥ lavoetsente oly. övallablo, o fully utillaed by tecanle lalrelrls, oly Mi. Plan. M 1aals ow tnfraslru»tere end social gaete to be completed by Deceer 1988. Oleemimton of pwriedle series of lII December 1987 Mob Implementod. Som oction Serlea mo lnotItutIonali~d. FmS prio and d~fatöre used la project teken In March 1988. date ob. sed to hecember 1988 for salyola 19w02 PI. Dosab defiuleg project solection III Jun 1987 Document issued October 1987 Project Salection Comitteo establ1sh.d9 eritorla and toee and operaing rfim4 oetag to tak place la produres of Projec% Se ~6on Jey I988. Ceamitee SAL nI TOrginl t Acta Compledin Dates Status os December 81, 1983 Ae61es orIII alg~ Date* epicastales of the mp.t.rtIgd - III Ju. 19«w Ploanaeax syit~i Ju.. 198 , fek Gasetence ugo us pbystc&l ~ oring ttu ptere~ ol uyst ac~ te mted. progres aulterla for eemputer CIp09. fimuad 0~1». o ubi Preosor u eproving prooe III -September 1987 Mule6/leptemntd Me progress. 6overnmen deel.tesetudy .d.r O...,. Proje6. mo6 strted. PTIP tor 198/9~.1 ms0/9 c usft ey te III qGm r 19m Ilay 198 falenh ovelämlon of PIP tr~nsm1ètid tha COniat. (COsdIII c$ to Govor~t a J 1eam. a~per6 8rd Tranchs Sal...> r*e ed for dIc~slns with oemml~ la Sept. 18. 0% ~804108. of 1a Cmal,ttco, rhu ad nI Joey IMB Joeyp 19imue T** cmi e, te Pe~rp 1a3 e-semn -- on Im .. od no, a foe... C~si of folbllIty ~tudy for - II September 19m Jan~ary 1987 Take p la 8 III. splmmntatl« fin0 odaater of Oaker region. lm urban ~evt. Projech for Groater Dakar flegion. Co0p1Gbl@. Of progra for r.eeo~ry of I June IM g.1 0 Meogmffit ad trnpronecy lproved. orroåre by CPP and m~ure» to §aprov. cPsp teshaies and fiamnci naag~t. Customs eMIPt SA fl Origiat Atl CePIbMen Dtee Stae o me, t988 Ao68ees or III Torgebb ae.e '0MiMsln of om cem~ene teda to ZU Jine £987 Lam 87-47 o~ssd by ItIMJ am u. la force. Ca85a~i Aeby Daoa tn- i le M 988. - Leper~slO of C rMtene o e~r~ss. t3~ C*~ef6f g of esifieg te and debrl~ed JfCe 1987 Febrmney 1988 b PAP 90 bi l 1*. n o F for stules. en biddlesprecedures eepeesed syste - Isbredusbmn of emperlnd maaUfu6.t Ju.. 1888 Teeted Jely 1988 Nle6 ye6 iabroduced. Torget date lo G eystea (tuebuen. ds ibe . -- Joneery £900. - Apipitee6tea to other uieyebee hueebr £88 ' - -eay. Ilhboly -. (1> il.rgeiseabe of etrustures of III June £987 Ile6106 iepla.cated, exeb linorgeoialoa pleas completed Jane £987, tene seuie, (Si) revic of Lusta.. (a) Iranio ceupleted June 196 beb returned bp slnletry of Feace la perue~l rgItMeMD, and i4 (b) per. re. eebpetd b .b ye6 Juno .88. ffaimld drafto be esattd i -nplotcnAi. of a traMIG4- progr Sa foroe by oust~. to talietbry of Flans ta (e) owrgeiaatioa n*M olb J~ly 1988. eneltd. Tån ~ote Jepiementblea of fieb phat of tax reform Appi1lea of no GeealaTx lod. 1 April 1£87 ta fore nlace February 1987 In pIace. Tan bas wldened, b Incro~eed lins MIePtU Bagging. Appilee*klM of baxateM of pubile ng Jup £987 Septeber 1987 la plce.^ conbste fl ~ ma wit wbh etetal bxon - App lie~bo of th = 1es on roform of III AprIl 1987 April 1987 Under implementetten with cadaster. State Properby Cod. Gen Is Oneresnod tag reooipte. -Atual Coapleblon lote Statue on 0-~oo-r 81, 188 Ac6leas er III Targok botee. ~ Prperokion ad Implemenabklon of osconsd pha of lax reform - G ~nIel applMODllon of VAT la ix 6ed. ostor - Stor' of of dp . beg1inlig of 19s8 8tody ouer~ed In Jaary 1OM8. In progrees. Fint draft due ln August 198 . - Capieblom of t1d -- - £s^#ri intred §Mt of Omuplified 190 Accat*g PatSX - Im e tI End of 19T0 Polleing a ody, lapkeuantiog of II oeapr.hoeive isses tee with aloisetios of tbo sobedsied tax systas , Start of study Jaouary 187 Janu~r 198S. In progff r - Coapleble. of ~t#dy -- Scheduted Ja*y 198. IapIoea1o6eIia End of 1989 lelay libely. Estabi lobuesa of f id ten relöter låt for doem ar UrbsO Cmanudia - ~ aesiN>Sky obed . Pilot otudi comploted Jhtuary Zupk.aanttion 1989-1991 through Co§p=trizatlom - - 1987. MunICip.i and Omelog Dovolopmot Pumecaoof ban roll Projoet; Offctive July 188. Implemenstabl Jennarp 19 Goal Il I0 f inrse. la Dogml tax Srvenu fra rel ästate and businos texes. Cap~ sation of turnemer ta (TCA) III Joltiglon June 1987 June 1987 SAl. o rsoauI Acual Coapihion otes stoo0s o o mber 8, 1988 -- Ae6Meas - .-rI! fre.se - Paalito olo .oIoied. Suppi$w choomn - Imtelation lim progres. CompeGUa March 198. .reslboduItd for m0c 199. Ro.rg'iilaalon of mPID etruleroe Itt JWouary 1988 ~iot-mpleted. opoft of Worklog Awallag approva lb .oruo..l (by>. SroMp oMu~lted to ilalry of Flaao~ in Janmuary 18. 5. iw owed Alleea. aud maagme~l of Ependto Gonoral Cmpe6ao of c#odp ot eurenm II Joey lens Stadi.e nob 6factory. Takem expendiotsee - over la SAL. 8. Pibulag for rduo6l. of badgetary _ K Ju. 198 Rmdusai of tnrolatl im Takop in SAL I. ombold10s nd gllecio~ bl benfJlbry- er ogo epiles only t* corecah o-ebIdlog ubsidloå hd em o*g bom pold by lF. Coaec piom no felmead. Proposal for f~aeltonol ciffelflatio I June 19mI Not roolizod. - Takn up lt SAL 111. of direul wuboldlsg lopi«mnttalom la mhe bdge6 for flocal 1987/88. Mm.ogaol of Civil sorvice Ihwbor of Civil ervomto not 'to oxcod s June 198 Targe respocled. tboir lov' of July 1, 198 (70, 114). SAIL l ' rigieai LuAtei CDmpletio. Da441 SDa~us e December 1. 1988 Aetien. or In Torge ~ D.e Q MM .- - - - ilng aie ofttl olvi~ servis III Ju. 1988 -saue 1987: 67,818) pereem asere (psrk~ eeu nd . (Codi.. o9 (Fbruary 1968: o7,81) eonras6 oaf) et J~. 80, 1987 ievel Urd Tf~nehe Röl~se) (Ju.. 8088: 67,00) (88,000 Nalle of wag.san se aiee leiaI Il June 1986 Aubieved receiple (ather then grets 6 o Juse 198? exceed 583 in 1986/88, 515 im 1988/87, -June. 1988- .nd 483_1. 198/fl. Deduslio of Civil Servie mag. bilis ZI 1987-88 - 68S Auhieved for 1987/88 ln propres oeen eo operalg expmndilsr. 1988-89 - 655 (ield agler.s6 eseaity peid e 1989-90 - 413i public dsbl) Propese fer ieproving Ilie syste of ZII iarch 1988 1.ielmmletd Study proposed mnder OsvelopesmI floessi and aeefi..enoiimaell6ve maae Projeot for .1,l8 servane and public aester epieo.es S6rsnhseiag öf peresni aue.mel II - - Psproli ud16 April 1987 Imp!eeented April51987 - Ro.rgeoialee of cenal rei yol service June 1988 Coneuitea6 reperb' (Co:> Coup.one of soeopeen6 ilanageet c..plewentd Jan. 1987 Preiojoe - Rebelblieo of 8FP procedure.sead 8eptemier 1988. Kepte.enlation i-progre.s Dlays likely c.eatoriabiea of cseel elvii uervich r*erd In Imp, Iew ~Al, II Oriael - Auual Completton Dates Status oo December s1, 1988 Acioner or III Targe Date. Suba<dies bo En~erplefs (a) IdunIft ea and revien of II ( m) June 198 Study comploted by conseuteat, a mo progrees reellenallon of lad~récl lfdirol -e~bidew (b) oableo de bordg (b) otober 198 Ptäblom de bordO. ombeldfos or thbeir repteco~ent by dir~c6 omboidje. Overat$ *%edy under Develoeen venogemoel Projeci. Se msuros ded. (a) I.ploente.baeo of a opele. for III March 1988 (o) March 1988 (a) Celle§ du Seotur Parapubilqu (lEF) meelberiug bdgeb embaldies-(b) 'tisalore sbeldifs. laoldlaq *a=ineaien of ahe (b) No cempltd (6) Olrocien du dget workig o polblility of faolof6i c uslcanloo. celelfIcehtoa of bdge6 ejbeidies. Pol leing ed, proposle en he 111 sev er 1987 Prellminory rtudy completed Study la progreas ro direcl/ind§re~l possiblity of elelmoag and/or September 1987. ombo$ie¥ Ae saudies compl~d oo etorpris cofetrtlg indiech, obefdfes lnt Indiroct ebidis to bo olloalated bdgol subeIdieo or con~erted Nu. direwb 6b1ld1es. OSpecl agromeeen to bo reegotaed. 0 Eup ordicarso o motortola ed gupeb OI Folleboag eledy, propofsfeile provo III becember 1987 o6t kap§aemevd. Study co"plol~d No progrees; Preldonc (UWO) bön not award of govorament contracs. Deceabor 1987. compled review to impleut recomendatlone. 8. Public Deb6 Maenage (a) Pos6 of CFAF 4 bil to priveto II (a) Je. 1988 June 1988 entorprieem and 12 blm to ~he banblg (b) Ju. 1987 June 1987 sector In 198/NS med (b) of 10 bin and at bl relpectivoll 1n 19/87 1. accordance with crilo lstieted In LDP. -stAL II Oristaal Lobetse Complohlmoa Dats ståla M December al, im8 Aeciene et-III T.rgmb Detme sebtoe e of m11 errear op externas II J~tusN8 Jul1 imI8 debt. of6emn etast erre~r Anm*#t 4ert foo @~§Iina e st~t 111, Jees imrJne18 ear~.---- lures~s to4u p.s. ot budgetary 11/111 Ae.s de 8~ Inatesr e budg.n b l locatio to CAA 0. targ6. ålealbon to ohm CM b~acen 198/SV Jamf fi0 - d. pacJ i8N89S0. Juuw.-I988 tapemeneel e of epagriaed uyelo. III for mattori* medi=n uid Ieag-te. Ga*eed and o~-ea ~er dbI - Ensea6ca et ostual poamns Noevember 1587 PobI luwveory eoudöieted Uieveuber 1957. Crreab-peymaa ptised. ~ - AGU~ae lase ot poymem rdrs aud sepb~ 1087 SDI lm~.es pöyayee ordorå eFsiste, pai 3~kede1e and o~tteaelsff y bet i ögt omteae~te ot eofas papable. kefored of ~e1etl debuaom~nte by aEP. CGputrise alujler4ll1m of eternal III Grant* vd. o~idim from oxtoeal ble 4tePr -0elp SAL II OriginaI Actual CoastIeOto. Dele Sl6ae, on December 81, 1988 AdOlo.s or III Targe6 Dale. -- - Encublon lf pie~ned Ond osteal operablnE Jun. 188 em of qre~be coapuerleed WP Gnd Itly y^ to be'l i dd Compuie14o øf domeli pu*11* d~b6 IK - CoplIebia. hoube 1987 tie6 realIadd eo6ple~ely, 8"nklng -er elslog E .saino plaemed and mebuei operal.i.a June 1985 Daba col leolos eerled. tp prgreat. KnbegrlI*s of p*bit dobl t11 Jun. 188 8.f6eare evliablos mel perabeka1. to progres. mø c~peion de0 avaltale.. dab.-proosestag ebl rap1l41 óof- . §c~.ilS bolec. il sopeber 1987 Se ber 197. -ebly Arb 01brem~ne efrdlg to projec ifec .#leted or mfsa peojects and Ptaoll. Pro W«#e o ~a ceIv sep~enmabablon p~tlo før b1iIsbl"o fundb prerd Ifl. I lAIU AND ECSNCMKC AIM FI9MCIAL FtCAST~NG 1. E.eente Stealialke PreporabIea of povimlo1ml mbloefsi eceeunte fropend meh lowt soogy .Sp r 197 GOØ6borigeeIyuie end use of oUmC IK 0-ry 1 . y dae. (1982-1986) Establilbmien6 of.flaelacio cCoenba for IK Do~ceb 1987 Not 4mp0etd. Moar b~an bøf wa INSE tenical asi.bens eatted. Dats h, puble dnlø ~ 0 ebowi (1981/82 nuspended becasof ef of o expenditurem by fost g0»otnm 191/06) data.~ eesing. -je SAL II Origtnat Aclual Ce.ptelle ate. Statuspoo De9~mber S1, 1988 AclIeuo e r III Trg.1 Date. CoWI ~f prowlenet aaiwast III Dm~ 1987 .seenmste r 1988-88 - Im curren6 pries February 1988 tiareb-198* (CemdItlIM of - d Traa~. Rolo~) - Im con~san pris=, nd dcui m ~.taem Apr%i 198 - bl oapleed I progre . ISplementOa6to of persfne6 see. of-: III - lavetory of ~1e410s and plN~ed reorde Apil 1981 - heera0aion of -esaoeteres lieb o.mpbebed In pregress. SI8p14mn~a 0 of syst e Ombir 1988 .eisy Ilkely. - Propre a prepesel for 0at6enal Oteh.r 1987 Ocobr 1987 Sur~ye to bo coMied ot under baohid budet und 4enu p~len ervey -ev.ipmen6 man.ot Pr~jWc6. - Condus6 tw. piSet .erve on Informal ~MDe r 1988 Im pregrese Some ashaoe. seater Establishment ef IEE for 198 III mercb 198 Pbruary 1988 Updiug and appiitaltem of L«s 49 III October 1988 L.a eIdLpaed and dewree. ieesed Mission to Tog ond SMger to ieara- pe Iylng and rö~eIzI0g the May 1989. A*l p preprod. abe .xporI.nce in obber counmoluer staiid6Ioal inforumton olreelte - huly 1988. Ipl~meton ef pregram to- laprovo III December 198 Not Impleoeted Progre» d~pends en 81ocusion of el) foreign 1rade stotlotlc eeter stcdy mo efmputertzatilo of cusos declarations. ReviemAf work of Statistios Oopgrtment III - Compijao o e d m o melm urr Oceor 1987 Octor 1987 - Adapt loff of werk program Jmuary 1087 tut Implemented No progröst SAL I riglmel Atlaa Cmpi610 9ae. hns en 3ca 81, 198 Go~#*er I Terg6 et g . AeøIgneio and ~frilaatil Puseti8eui en oenasie easiye. of IK gerca 188 éei imstemented. Preitinemry repor6in pmropress pubilo urrsa emiatereus teøsste ble et e es t ¯¯ IKI June 19880 ~ Gia6 uebt s*. il. pregre.s, deieye ilkely. f~Ot-y l~r pregramal U pubi a f fl l l1m41"lom StøIy of esdaIiitite for r*smrwsturIg 1K Oncme 1u8m Se"ceber elv tl. Tot= ger In SAL III pubilo 98iennisi Ian614e6øi.s.. Stueto the abliity of the backing Kl Julg 18 Ne6 cespiebd -- Takea ever in A K . laested by m through ø . Uøebittle et the ek -US- ...bi.e et uebittete piea 11U efter esprovel by uonstery mutherios 1987-48 Flyet rebiitetie piee Rebilite6kn pie. ia .iecable c.épleted January 80 with Credit Lyeoele OCI- Enusem ~ li l et.rehebtiti«lea plea III 1987-8 ¯ ub we ve e6 rec~vey by AsArheque le after appreesi by maery hieC J« 1 .- pres. R8w$e *chedled oec. 1988. SAL 3I Origl..i Aeluol Compla614a Da. 51.1.,. oe Decemab.r 1, 1988 Achtem. er III Targeb 8ates __________ - SN 6- toaisen U-oeevg euhrlee III Apri1 1987 May 1987 E~lon :fpprowo by 1987-l8 - PlIa rejeed by CEA Tekc ap under "aig Set.r SEAL seastry otberles(CmwIl6lon of 8. Reom e ardi PloonolMi poldee - S *d ts eablig eyee Aprl 1987 Aprl; 1987 - ~Utlae6e etedy* r00 eate an II Apr 1 -Da 1987 Bwee~fnd offee ie.rported ie Goerame.t .ubai1.ed tlael le6t.i and pesib6ö edeslies ne e6fi piom %oMking e~ter 8ECA. p8em eo bemalog emtr rebblilt4iö tes Jöt$ IM. - Ieera beake* misina .pi - ZIU hmeber 1987 eer.. 0-O88 lesued le a..en 18? Requlresa lm pIeo.. requirenl tCFAF 1 bill (Coadilm et hd Tranke Rolffeis) a loep et vP e,rd lalerel Mäo Eb i.ry lae foro o e pr 1987 -- ten ee. - ee6esl. et the . aon et the 71 1.4.4f F Y 88 I8pDeaaed- #~.l of cPS en interes6 pyble e mhe leee et maely$ o the floes lapet m the tax ref ' '1, SA1. 13 OPiglelAes Colotle h~ om al, 1m Aeinee LednSCnI.e 0rg Stm6c DDate3s 8 Roec~Sp hedoum~ mon8ty auther1il te n prin..y beste - ~8ees to Impiove c Vt W mjr 113 ~ June 1987 be IspIamnted. Isa progees. Camp*e~n of Banklag beke by 66. MkIeg Cmrt <meska SeOor MM ,tretaegnd ceaputerlonSn pm~re ZU Ueder u.y 8 efslner 0o~g«ad by d14-198. upienmnteSloe of optermetlon la ter olensSS de is menis ~ 1 de tRofib Provres. . - M~. 80CIA. Deuseu Pubi91 e of8 pM pot i pell JU June 1988 ~eglereloln en pOmäaeklao ,. ~lhy Projece pded -preretloe (CondIblea et and-Inial meaten plaw.adpted Sod ?re Ue9sen) by GoernQn n Apr i 1988 6~l et geepre - len ef operehles preseduree UR sepe.iaber aSSlen .dsptd Nlneber 1987 - Effeblum opereSlon IIS Seber 1987 Deemaber 197 Fund 1e ln opeream e (CoediSl.s of Uad Irncke f~m....) go - 73 - 'A7M REPUBLIC OF SENEGAL ' $tudies, audits and actions completed under SAL I1 I. Agricultural Incentives Actual Dates a. Actions - Implementation of cereals development From June 1986 11 action program (Second tranche $ondition) - CSA's operation be limited in size and scope From June 1986 - Consultation with Bank on need for rice price adjustments From June 1986 - Private participation in import and July 1986 distribution of rice (Second tranche condition) - Limit fertilizer subsidies Target achieved for 1986-87 - Discontinue free distribution of seed to groundnut farmers April 1986 - Implementation of a seeds action program for groundnut sector Implemented in 1986-87 II. Industrial Incentives. a. Studies and audits - Review existing *Special agreementso with private enterprises December 1986 2/ * Review of administrative procedures December 1986 2/ for Labor Law b. Actions - Announcement of New Industrial Policy February 1986 - Completion of Action Program for Industrial Reform June 1986 - Preparation of a new Tariff Code Law passed August 1986 11 (Second tranche condition) * Elimination of prior authorization for import July 1986 - Adoption of new duty drawback system July 1986 - Adoption of new export subsidy July 1986., Law passed system (Second trache condition) IIL_Public Investment a. Actions - Preparation of draft 3-year program August 1986 1987188 to 1989190 satisfactory to Bank (Second tranche condition) / But present policies may not be compatible with Longterm cereal goals. 2/ Action taken up under SAL III. -74- Page 2of 2 IV. Parapublic Sector Revort a. Actions, - Adoption of a list of enterprises to be privatised or liquidated in 1986 March 1986 31 V. Public Finance a. Stdes - Feasibility study for fiscal cadastre of Dakar region January 1987 4/ - Identification and review of indirect subsidies June 1986 b. Actions - Implementation of Tax Committee report General'tax'Code adopted February 198): j/ - CompletiohIof program of recovery of .arrears by CPSP Juno 1986 - Number of,civil servants not to exceed Target respected July 15, 1985 level June 1986 - R4tio of wages plus salaries to fiscal receipts (other than grants) not to exceed 532 in 1985/86!, 51t in 1986/87 and 43Z in 1987/88 Targets were respected - Payment of CEAF 4 bn to private enterprises and CFAF 12 bn to bahking Targets respected and CIAF 10 ba and CPA? 1bn June 1986 and June 1987 respectively in 1986187 - Settlement of all arrears on external debt July 1986 Studies and Audits I Acttns I Total Completed e4 r21 rp25 Not completed 611 4 1 10 I 14 Total i _ 8 I 31 j 39 1 41st of 27 enterprises to be privatized and 7 to be liquidated. No follow-up action taken in 1986 however. V4 Implementation under SAL III. 1 Recommendations were sub xitted July 1986 1 Includes completion beyond target dates. I A - 75 - Page 1 of 7 REPUBLIC OF SENEGAL Studies, audits and actions completed under SAL III I. Agricultural Incentives Actual Dates a. Studies and audits - Prices and incentives study February 1988 - Cereal marketing cost study August 1987 - Execution report on previous fertilizer programs March 1988 - Study on financial situation of CNCAS August 1967 b. Actions - Setting up price information jystek July 1987 - Implementation of CSA action program January 1988 - Launching of special extension programs July 1988 - Sale of improved seed at cost July 198 - Actions on prices and incentives study%s reduction of rice price 11 may 1988 (Third trauche cnd- 11 - Implementation of SONACOS interim plan May 1988 (Third tranche cond.) - Reduction of fertilizer subsidies Targets achieved for 1987-88 - Diversification of ISRA research program Sept. 1987 - Adoption of SPR/ISRA cooperation agreements Oct. 1987 - Decontrol of domestic meat prices NOV. 1987 - Cancellation of SERAS monopoly on hides and silus Dec. 1987 - Undertaking restructuring of SODESP Dec. 1987 - Government to adapt basic principles of Agricultural,Credit'Policy e1 April 1987 iA. Industrial Incent1e9 a. studies and audits Draft study vpJproduct-specific codes Sept. 1987 Evaluation of ,athe export subsidy system 41 Sept. 1987 (2nd trache cond.) Evaluation of the duty drawback system 41 Sept. 1987 (2nd tranche cond.) 11 Adoption of, mechanisms for agricultural price determination to be taken up u'nder the propasedcAGSECAL. 21 Deferred from 2nd tranche 31 Statement was included in Letter of Development Policy 41 Reform ad been fndertakrn under SAL o. -76- Page 2 of 7 b. Actions - Submission of the 1988189 Tariff Law to the National Assembly, including revision of the product-specific codes S1 ' Apr. 1988 (Third tranche cond.) - Lifting of \quantitative restrictions /1 As per schedule, completed I in February 1988 - Imlementation of action program on reference prices . Decree signed in Nov. 1987 \ (2nd tranche cond.) - Adoption of action plan to review enterprise,special conentions Nov. 1987 (2nd tranche cond.) .Aimination of CSS 4perequations 6l November 1987 l,xparation\of action program to increase CAS productivity and reduce costs 6l May 1987 - Government agrees not to guarantee future CSS loan . May 1987 - Submission of new Investment Code Law passed in July 1987 law to the National Assembly 2nd tranche cond.) stablishment of "ne-Stop-Windowo January 1988 - Establisment of monitoring system for industrial r1forms January 1988 III. Liberalization of trade and commerce a. Actions -,Deregulation of distribution (removing wholesale/retail distinction) De'cree signed June'1987 - Free 'ovement of agrichltural pro4ucts throughout Senegal Decree signed.April 1987 - Publication of decree to lift price controls in pace with\elimination of QRs 4/ April 1987 - Adoption of decrees shmplifying access to Importer-Exporter Card \ay 1987 - Implementation of recommendations to simplify export procedures July 198 - Ro4ndtables on export procedures Sept.'1987 - Adoption of ASACE restructuring prpgram Sept. 1987 - Organation of roundtables on quality contra, and standardization April-June 1987 - Adoption of action plan October 1987 Follow up on SAL 1M - [Actions greed in Supplemental Letter. -77 - ANNE (2) Page 3 of T IV. Ptomotion of Employment a. Studie - Evaluation of effipiency of Labor Department Dec. 1987 - Study on links between labor A poductivity and wages ,.Dec. 1987) - Study of reforms of the system of ) employer welfare contributiO'Os Dec. 1987) (Third tganche cond.)II - Stu4y on workers' participation in ) equity and profit sharing,, Dec. 1987) b. Actions - Submission to the Assembly of Law amending Labor Code to eliminate monopoly of Employment Office on placement a0d allow for renewal of fixod-tern labor contracts 8/ June 1987 (&ffectivenels cond.) - Elmiation of the labor\department December 1987 V. Parapublic Sector Reforms - a. Studies and Audits - Management and financi0l audits of CSS, "CPSP, APS..SOFISEDIT, CNCAS, SAPtO,-SHS. All completed in CSPT, SNSS, SNPC, SIDEC. COSEC, PAD, ONAC, April 1988 SEPFA - Cross debts between Government and non- financial enterprises, as of June 30, '85: arbitration of disputed claims, final inventory of cross-debts and timetable tor settlement 91 January 1988 - same thing for cross debts as of June 30, 1986 January 1988 - Complementary study on control bodies July,1988 - Study on role and Atructure of Boards of Director$ June 1987 7/ The stidies onclded that no change was needed in existing Legal and regulatory framework and that these issues were to be dealt with by enterprises and,trade unions (see Letter of Understanding dated April 22, 1987). 1/ The lav was presented in June 1987 but opposed by the Assembly. A revised text was approved in August 1987, which prqvided oly for the possibility of renewing - fixed-term labor contracts one time. Thus. thl objective of employment flexibility was not achiev4d. 91 Settleant over five years; in progress.- * *.*.g** - -78- A~ (2 b. Actions - Choice of procedures for privatization and:,offering for sale Government shares in first batch of 10 mixed-capital companies (SEKs), II October 15, 1987 U2nd tranche) Complete liquidation of 7 SEMs and a ~Ics)September 1987 4.2nd tranche) (last one completed in April 1988) --Selection of second batch of SEMs (10.to 17) to be privatized (11 enterprises) July 1987 Conversion of PAD and 0EM into national companies, July O9tobep,1987 -.Implementation.of rehabilitation plans for ORTS, CWHTg and Dakar-Marine In *ogress - Dissemination of Manageihent Chart April 1987 - Reduction of subsidies to parapublicl sector enterprises 111 Targetilachieved for 198i.47 and - - 1987-88 - Revision of c6atract-programs to reconcile commitments,vi b budge allocations u'arch 1988 (Third ra - Subaissien to National Assembly of new law on parapublic,sector nd July 1987 issue of implementation decrees (La% adopted and decrees issued) - Adoption of actiod plan on role and structure of Board of Directors December 1987 - Establishment of gComity Consultatif du Secteur Parapublic' anir of the *Daiegation & la Refore du Secteur VOrapublico June 1987 1,0/ None was actually sold as o December 1988 bec*se of inappropriate procedures and oreportednoy)elack of potenticl investors. ill To be cop tiaued until 1990 in_acco(dance with agreed tarts l I' I AJul;& .tob 187 In pogres -79- . .L yg - Page 5 of 7 VI. Planning and Public Investmert Programming a. Actions * Approval by Consel Superieur du Plan of the Planning System reform 121 June 1987 (Effectiveness cond.) - Issue manual for Project Appraisal Deg. 1987 - Issue Project Selection Criteria and operating procedures of Project Selection Committee Oct. 1987 - PTIP for 1988189-4990/91 satisfactory to the Bank May 1988 (Third tranche cond.) VII. Public Finance Management a. Studies and audits - Start study of simplified Accounting Plan and general application of VAT to trade sector 131 January 1988, - Start study of comprehensive income ta;c 131 January 1988 * Feisibility study of real estate tax register for Dakar Urban Community January 1987 - Audit of the civil service payroll April 1987 --Study of indirect subsidies September 1987 b. Actions - SubmUssion of new Customs Code to National Assembly Law pasded in May 1988 First phase of tax reform: February 1987 - Application of new general tax code - Application of taxation of public contracts financed with external loins September 1987 - Application of the 1Ir on reform of Real Estate tax Code April 1987 - Holding sise of total civil service Monitored at 67,381 in personnel at 68,000 as of June 30, 1988 Feb. 88 (Third tranche'cond.) - Reduction of civil service wage bill as percentage of operating expenditures Achieved for 1987-88 141 - Plan for settlement of Government arrears (monitored by IMF) June 1987 121 Reform being implemented 13/ Preparation of secnd pbae of tax reform. 14/ Targets to be achieved for 1988-89 and 1989-90 -89 - Page 6 of 7 - Increase by 10% p.a. of bu getary allocation to the CAA (follow up of SAL II) June 1987 and 1988 - Implementation of computerized system for menitoring medium and long-term guaranteed and on-lent external debt November 1987 Implementation of a system for monitoring budget subsidiqs March 1988 - Compilation of uncommitted balances from completed or frosen projects and prepare program to reallocate funds September 1987 VIII. Economic and financial infowation and f6recasting a. Actions - Completion of provisional national March 1988 'accounts for 1982-86 in current prices (Third tranche cond.) - Establi hment of TEE f?r 1986 February 1988 Revising Law on statistical information circuits. Law adopted and decrees issued May 1988 IX. Banking reforms a. Studies - Study of banking system and adoption April 1987 of action Olan and July 1988 131 - Evaluation of the system of TPS on debtor 1987 interest b. Actions \ Execution of rehabilitation of USB 1988) - Executi9n of rehabilitation lof SCS 1988 - Submission to monetary authorities of rehabilitation plan for BNDS May 1987 16/ - Increase banks' minimm capital ecree issued in June 1987 requirement to CEA? 1 billion (2nd tranche cond.) - Reduction of TPS on creditor interest February 1987 * Establish Computerisation Prog am of DKC June 1988 1J Government Action Plan became the basis for the proposed banking SECAL lI Plan rejected twice by BCEAD. Taken up under,Banking SECAL (2nd tranche cond. waived). -81- Page 7 of 7' X. Social Dimensions a. Actions * Government to formulate a population Comprehensive Policy Statement and policy and action program Action Program adopted April 1988 (Third tranche cond.) - Creation and effective operation of an lmployment Fund 171 Dec. 1987 (2nd tranche cond.) Studies and Audits t Actions I Total I Completed 23 71 94 Not completed 181 13 40 I 52 I Total I 36 I ill I 147 1I With an initial budgetary allocation of 6S$10 million equivalent. -181 Includes completion beyond target dat*s. LIST OF ABBREVIATIONS AND ACRONS ASACE - Agence SAn6galaise d'Assurance Crddit A 1'2kportation (Export Credit Agency) BCEAO - Banque Centrale des Etats de 1'Afrique de l'Ouest (Central Bank of West African State) BCS - Banque Commerciale du S6n6gal (Commercial Bank of Senegal) BNDS - Banque Nationale du Dfveloppement 84dgalaise (National Development'Bank of Senegal) CAA - Caisse Auton6me d'Amortissement (Debt Amortization Fund) CG - Consultative Group CICES - Centre International du Commerce Ext6rieur du S6nfgal (Senegalese Center for External Trade) CSPS - Caisse de P6r6quation et de Stabilisation des Prix (Price Stabilization Fund) CSS - Compagnie Sucribre S4n4galaise (Sugar Manufacturing Enterprise) EFF - Extended Fund Facility (IMF) GDP - Gross Domestic Product IDA - International Development Association IMF - International Monetary Fund LDP - Letter of Development Policy NPA - Nouvelle Politique Agricole (New Agricultural Policy) NPI - New Industrial Policy OED - Operations Evaluation Department PAML - Programme d'Ajustement Economique et Financier & Moyen et & Long Terme (Medium and Long Term Economic and Financial Adjustment Program) PCR - Program Completion Report PE - Public Enterprises PPAR - Program Perfomce Audit Report PREP - Plan A Moyen Terme de Redressement Economique et Financier (Medium-Term Recovery Plan) PTIP - Program Triennal des Investissements Publics (Three Year Public Investment Program) SAL - Structural Adjustment Loan (Credit) SAR - Soci6t6 Africaine de Raffinage (Refinery) SDR - Special Drawing Right SECAL - Sector Adjustment Loan (Credit) SOCOCIM - Soci4t6 Commerciale des Ciments (Cement Manufacturer) SONACOS - Soci4t6 Nationale de Commercialisation deo 016agineux de S6n6gal (Groundnut Processing) UMOA - Union Mon6taire Ouest-Africaine (West African Monetary Union) UNDP - United Nations Devtlopment Program USB - Union S6n6galaise de Banque (Commercial Bank) 1 1
Groupe de la Banque mondiale · Project Performance Assessment Report
Senegal - Second and Third Structural Adjustment Program Projects
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Organisation
Groupe de la Banque mondiale
Type de document
Project Performance Assessment Report
Pays
Sénégal
Source
Banque mondiale