Senegal - Economic Recovery Project

 Economic recovery project Report No: ; Type: Report/Evaluation Memorandum ; Country: Senegal; Region: Africa; Sector: Macro/Non-Trade; Major Sector: Economic Policy; ProjectID: P035592 Senegal: Economic Recovery Credit (Credit 2582-SE) The Implementation Completion Report (ICR) for the Senegal Economic Recovery Credit (Credit 2582-SE, in the amount of US$25 million, approved in FY94, fully disbursed in a single tranche, and closed in FY96) was prepared by the Africa Regional Office. Part III of the ICR includes the Borrower's evaluation. The Economic Recovery Credit (ERC) is one of nine economic recovery operations made to CFA member countries immediately following the devaluation of the CFA franc. It provided emergency support to the program of the Government of Senegal to achieve international competitiveness and to restore economic growth. The objectives of the ERC were: to support the Government's reform program, including measures to minimize the adverse social impact of devaluation in the short term; to provide balance of payments support to support the economic recovery; and to continue the policy dialogue for reforms. The ERC achieved its major objectives. Economic growth resumed ( from -2.1 percent in 1993 to 2 percent in 1994 and 4.5 percent in 1995); inflation was below the program goal in 1994; and exports grew by 8.1 percent in real terms in 1994. Although government revenues were initially adversely affected by devaluation and by tax and tariff reform, government expenditures designed to maintain human resources development were protected. The fiscal deficit was higher than projected in 1994 (5.7 percent of GDP compared to a projected 3.6 percent), but it was reduced to 3.2 percent of GDP by 1995, and the tax system has been simplified, at lower rates. The subsidies designed to limit the impact of the rapid increase of prices of basic consumer products on vulnerable groups did not result in significant benefits since the consumer subsidies were poorly targeted. But overall price incentives within the economy have improved to encourage growth in agriculture, tourism, and other sectors. Two major lessons learned are: a single-tranche operation can be an effective instrument in an emergency situation; and specific measures designed to help vulnerable groups during a crisis should be appropriately targeted in order to maximize results. The ICR rates the project outcome as satisfactory, sustainability as likely, and Bank performance as satisfactory; it does not rate institutional development impact. The Operations Evaluation Department agrees with these ratings. The lack of rating for institutional development is appropriate since the operation was mainly designed to deal with emergency measures. The ICR is of satisfactory quality but does not include an Aide-Memoire from the completion mission. No audit is planned.