Senegal - Private Sector Adjustment and Competitiveness Credit Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 16210-SN IMPLEMENTATION COMPLETION REPORT REPUBLIC OF SENEGAL PRIVATE SECTOR ADJUSTMENT AND COMPETITIVENESS CREDIT (Cr. 2681-SN) December30, 1996 Private Sector Finance Africa Region This document has a restricted distribution and may be used by recipients only in the perfonnance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS MEASURES (November30, 1996) 1 m = 1.09 yd US$1 = CFAF 516.55 1 m2 = 10.76 sq ft CFAF 1 = US$0.0019 1 km2 = 0.38 sq mi FISCAL YEAR January 1- December 31 ABBREVIATIONS AND ACRONYMS AP Autorisation Prealable ASAC Agricultural Sector Adjustment Credit (Cr. 2582-SN) BF Belgian Franc CAS Country Assistance Strategy CFAF Communaut Financiere Africaine Franc COSEC Conseil Senegalais des Chargeurs CRG Competitiveness Review Group ESAF Enhanced Structural Adjustment Facility ICR Implementation Completion Report IDA International Development Association IMF International Monetary Fund FIAS Foreign Investment Advisory Services FTZ Free Trade Zone GATT General Agreement on Tarrifs and Trade GOS Government of Senegal MEFP Ministry of Economy, Finance and Planning PSCBP Private Sector Capacity Building Project (Cr. 2759-SN) PSAC Private Sector Adjustment and Competitiveness Credit (Cr. 2681-SN) PFP Policy Framework Paper RRP Report and Recommendation of the President SAL Structural Adjustment Loan SDR Special Drawing Right SFZ Single Factory Zone SMEs Small and Medium size Enterprises VAT Value-Added Tax Vice President J.L. Sarbib Director : A. Ayub Division Chief/Manager T. Allen Staff Member R. Fukui  FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT REPUBLIC OF SENEGAL PRIVATE SECTOR ADJUSTMENTAND COMPETITIVENESSCREDIT (Cr. 2681-SN) TABLE OF CONTENTS PREFACE .................... ....... EVALUATIONSUMMARY .................... . _ . i PARTI. PROJECTIMPLEMENTA TIONASSESSMENT . ............................ ................_ A BACKGROUND .............. . ... .1 B. STATEMENT/EVALUATIONOF OBJECTIVES ............. ........................... . .2 C. ACHIEVEMENTOF PROJECT OBJECTIVES .............. ........................... . . 3 D. MAJOR FACTORS AFFECTING THE PROJECT ...................................... ...5 E. PROJECT SUSTAfNABILITY ... ............................ . .5 F. BANK PERFORMANCE.. ............................ . 6 G. BORROWERPERFORMANCE ............................ . _.. . . 6 H. ASSESSMENTOF OUTCOME ......................-...... 7 I. FUTURE OPERATIONS.. ............................ . 7 J. KEY LESSONS LEARNED.. ............................ . s PARTII - STA TISTICAL TABLES ..... .... ................. . _. 9 Table 1: Summary of Assessments ....................-...... 9 Table 2: Related Bank Loans/Credits ........................... ...10 Table 3: Project Timetable ........................... .. ..... 11 Table 4: StudiesIncludedln Project . ........ . 11 Table 5: Status of Legal Covenants ......... . 12 Table 6: Bank Resources: Staff Inputs ......... 14 Table 7: Bank Resources: Missions ........................... .....14 PART III. APP ENDICE& ........................ .......5 A. BORROWERCONTRIBUTIONTO THE ICR ............................... ....... . 15 B. POLICY MATRIX .................. .. ... ..........23 C. MAP IBRD No. 27218 ........ ..... 31 This document has a restricted distribution and may bc used by recipients only in the pcrformance of their official duties. Its contents may not othen4isc be disclosed without World Bank authorization.   i IMPLEMENTATION COMPLETION REPORT REPUBLIC OF SENEGAL PRIVATE SECTOR ADJUSTMENT AND COMPETITIVENESS CREDIT (Cr. 2681-SN) PREFACE This is the Implementation Completion Report (ICR) for the Private Sector Adjustment and Competitiveness Credit (2681-SN) in Senegal, for which a credit in the amount of SDR 27.6 million (US$ 40 million equivalent) was approved on February 16, 1995 and made effective on February 28, 1995. The credit was closed on October 30, 1996. The first tranche, released upon effectiveness, was fully disbursed by May 12, 1995. The second tranche was released on December 28,1995 and fully disbursed by January 18, 1996. A Belgian grant of BF100 million was disbursed on May 22, 1996, in parallel with the disbursement of the second tranche. The ICR was prepared by Ryu Fukui, Private Sector Finance, Africa Region, with inputs from Cherif Azi, Project Task Manager. It was originally reviewed by Industry and Energy Division, Western Africa Department and, after the reorganization of the Bank, the review was completed by Private Sector Finance, Africa Region. Preparation of this ICR was begun during the Bank supervision mission of July 1995. The ICR is based on material in the project file, data provided by the Ministry of Economy, Finance and Planning, field visits, and discussions with the Ministry's officials. The Borrower contributed to the preparation of the ICR by commenting on the draft ICR, and preparing its own evaluation of the project preparation and execution, which is included as Appendix A in Part III of the ICR.   IMPLEMENTATION COMPLETION REPORT REPUBLIC OF SENEGAL PRIVATE SECTOR ADJUSTMENT AND COMPETITIVENESS CREDIT (Cr. 2681-SN) Borrower: Republic of Senegal Beneficiaries: The Government of Senegal and the private sector Amount: IDA Credit: SDR 27.6 million (US$ 40 million equivalent) Date effective: February 28, 1995 Date closed: October30, 1996 EVALUATION SUMMARY BACKGROUND 1. By the early 1990s, Senegal's economy which had been deteriorating for a number of years was at a low-level equilibrium, characterized by persistent recession and underutilized capacity. Macroeconomic imbalances, declining investment and exports, and shortfalls in public revenue collection from an overvalued real exchange rate made the January 1994 devaluation of the CFA Franc (CFAF) inevitable. Right after the devaluation, the Government of Senegal (GOS) realized that the devaluation alone was not enough and that it had to adopt additional policy and structural reforms to support the development of the private sector. The GOS set out the macroeconomic objectives of a strategy for the 1994-97 period in a Statement of Economic and Social Policies that was submitted to IDA in March 1994. As a part of this medium-term strategy, the GOS adopted a program for private sector development, after having made efforts to build a consensus with the private sector, mainly through seminars and discussions carried out with the Competitiveness Review Group (CRG). The recommendations of the five CRG commissions constituted the basis of the policy reform program that was supported by the Private Sector Adjustment and Competitiveness Credit (PSAC). The PSAC, along with the Agricultural Sector Adjustment Credit (ASAC), formed the main elements of the Country Assistance Strategy (CAS) prepared by the World Bank and the GOS. The CAS and the PSAC were approved by the IDA Board in February 1995 and the ASAC in June 1995. In parallel with these two credits, aimed at helping the private sector to take advantage of the new policy environment rapidly, the Private Sector Capacity Building Project (PSCBP) was prepared and approved by the IDA Board in June 1995. PROJECT OBJECTIVES 2. The overall objective of the PSAC was to support policy measures to stimulate the supply response of the private sector to the January 1994 CFA Franc (CFAF) devaluation. To achieve this goal, the PSAC included a reform program, which aimed to: (a) complete the liberalization of domestic and external trade; (b) improve the export and investment incentive regimes; (c) eliminate rigidities in the labor market; and (d) reduce maritime transportation costs. 3. The project objectives were consistent both with the Bank's lending policy and with the GOS's strategy designed in collaboration with the private sector. Timeliness of disbursement was another major objective of this credit because there was consensus between the GOS and the Bank on the need for prompt adjustment to quickly take advantage of the CFAF devaluation. The four objectives stated in paragraph 2 above were relevant to the overall objective of the project and most reform measures were stated clearly and  ii realistically enough to facilitate their implementation. No significant changes were made in the reform program during implementation. IMPLEMENTATION EXPERIENCE AND RESULTS 4. The outcome of the PSAC is judged satisfactory and the major objectives of the reform program were achieved. All the conditions of the PSAC tranche release were implemented. Of the six measures that were not conditions of disbursement, one measure was partially implemented, while another was implemented with modification. Following are the results that were achieved: (a) Completion of the liberalization of domestic and external trade: All the measures envisaged were implemented; (b) Promotion of exports: All the measures were implemented except for the measure related to the revision of the temporary import regime, which was partially implemented; (c) Promotion of investments: All the measures were implemented; (d) Reduction of labor costs: The measures required under the program were implemented; (e) Reduction of maritime transportation costs: The measures that were conditions of tranche release were implemented and they brought about lower freight costs after the liberalization. However, the measure aimed at improving competitivenessof the port of Dakar was not effected. 5. The project design was appropriate given the time constraint: The GOS and the Bank identified major impediments to private sector development and a realistic package of rapidly implementable reforms, rather than a comprehensive list of reform measures that might need substantial preparation time. The project did not specify action plans at the start for the reform of the free trade regime, the temporary import regime and the fiscal incentive system, but only set out a sequence of actions, including further studies by consultants (however, during implementation action plans were designed: This approach was pragmatic because the project would have been delayed had it included other reform measures and/or awaited the outcome of consultants' studies. However, in any adjustment operation, the optimal balance between timeliness and comprehensivenessof the reform program remains an issue that requires careful consideration. 6. The criteria for judging the achievement of PSAC's final objective, i.e., whether it simulated the private sector supply response to the CFAF devaluation, was not quantified. Although it is difficult to distinguish between the impact of the Government's adjustment measures and that of external factors, recent trends in exports and imports suggest a positive response to the devaluation, while the effect on investments remains to be seen. 7. Most of the PSAC reforms to promote competition in domestic and external trade and to promote exports are likely to be sustainable. However, the impacts of the revised free trade regime and the temporary import system are yet to be determined. The sustainability of investment promotion cannot to be assessed at present because implementation is still ongoing. Measures for introducing flexibility in the labor code and for reducing sea transportation costs are likely to be sustainable. The sustainability of measures for the liberalization of labor conditions in the port of Dakar remains uncertain, as does the success in reducing costs of handling goods in the port and at the airport. 8. The Bank's performance was highly satisfactory overall. Special efforts were made to involve the private sector in designing the project. This consultative approach was an innovative one compared to the approach in previous adjustment operations. During the negotiation process, the Bank's technical support to the GOS was effective in backing up the Govemment officials who faced resistance from vested interests and, as a result, the Bank's support reinforced the Borrower's ownership of PSAC. Particular attention was paid to the Government's commitment during project appraisal. The risk of incomplete implementation of reform measures by the GOS was minimized by heavily front-loading conditions. PSCBP contributed to the successful outcomes of PSAC by reinforcing consultationswith the private sector through the activities of CRG.  iii 9. The Borrower's performance was satisfactory overall. Although the Government's attitude toward the reform measures was cautious at the early stages, the Ministry of Economy, Finance and Planning (MEFP) was committed to the formulation of the reform program; it pursued discussions with the private sector and with the benefit of technical support by the Bank. In particular, the MEFP took a decisive attitude in negotiating the elimination of special agreements granted to some enterprises. In the implementation stage, the Government complied with all the legal covenants and conditions for tranche release by effectively managing the project under the direction of the MEFP. However, the Government has yet to show its sustained commitment and ability to complete, in a timely fashion, the implementation of the action plan of the temporary import regime, the implementation of the new investment incentive system and the adoption of an action plan to improve competitiveness of the port of Dakar. The GOS needs to improve its economic data gathering for project monitoring and evaluation, in order to assess accurately the economic impact of the reform program. Therefore, the GOS needs to: (a) collect and analyze relevant data, including statistics of exports and imports of major products; and (b) pursue the consultative process with the private sector to inforn all stakeholders periodically about results and effectiveness of the reform measures. FUTURE OPERATIONS AND KEY LESSONS LEARNED 10. To follow up on the implementation and assess the effect of the measures that were adopted, the Bank needs to monitor: (a) the impact of the new law of the free trade regime; (b) the amendment of the Customs Code necessary to implement the remaining eight measures referring to the temporary import regime; (c) the implementation of an action plan for a new fiscal incentive regime for investments, in the context of the Policy Framework Paper (PFP) for 1995-98; (d) the validity of the new rate of Conseil senegalais des chargeurs' levy on imported goods; and (e) the implementation of an action plan to improve the competitiveness of the port of Dakar. 11. Following up on the PSAC, sector-specific issues are expected to be addressed in future operations. Several actions being considered by the GOS and the Bank should be implemented in a timely manner in the following sectors: (a) Energy sector the regulatory framework and the issue of administered prices; (b) Water sector pricing of water; (c) Transportation Sector pricing of sea and air transport based on the analysis and recommendations of the ongoing studies under the PSAC; and (d) Telecommunications Sector: supporting measures required to create a competitive environment. 12. Three major lessons can be drawn from implementation of the PSAC: (a) Participation of stakeholdersin the project In preparingadjustmentoperations,the Bank should emphasizethe identification of needed reforms by national stakeholders, and not propose its own program. In the case of the PSAC, the participation of various stakeholders in discussions and their proposals of reform measures ensured a broad support for the project and also reinforced the Government's commitmentto proceed; (b) Commitmentof the Borrower The Borrower needs to give clear signals of its commitment to carry out the proposed reforms early on in the project preparation. In the case of the PSAC, the Bank was able to assess thoroughly the Borrower's commitment by asking the GOS to implement concrete measures before seeking Board approval. In addition, the changes in the political economic environmentbrought about by the CFAF devaluationmade it easier for the GOS to take decisions that would otherwise have been difficult to implement; and (c) Consultation with the private sector for deepening the reforms: The PSAC helped to lift certain, but not all barriers to private sector development. To further deepen the reforms initiated by the PSAC, the GOS should ensure a continuing dialogue with all the stakeholders to identify remaining constraints, and design and implement appropriate reform measures. Economic players, for example, often urge simplification of administrative procedures, such as those of the customs service, which they believe lack transparency and discourage small and medium size enterprises from importing products and creating new enterprises.   I IMPLEMENTATION COMPLETION REPORT REPUBLIC OF SENEGAL PRIVATE SECTOR ADJUSTMENT AND COMPETITIVENESS CREDIT (CR. 2681-SN) PARTI. PROJECTIMPLEMENTATIONASSESSMENT A. BACKGROUND I. Adjustment efforts in 1980s. Senegal's adjustment efforts in the 1980's were supported by International Development Association (IDA)'s four structural adjustment credits and two sector adjustment credits. Overall, the country's performance in implementing and sustaining reforms was mixed. Although some progress was achieved in areas such as liberalization of the economy, improvement of public resource management, and restructuring of the banking sector, the reforms needed to deregulate labor markets were not effectively implemented and monopolies granted to several enterprises were not eliminated. In some areas, reforms implemented were later reversed, such as the reduction of tariff barriers and civil service reform. 2. Adjustment efforts in 1990s. By the early 1990s, Senegal's economy which had been deteriorating for a number of years was at a low-level equilibrium, characterized by persistent recession and underutilized capacity. In 1991-92, relations between the Government of Senegal (GOS) and the World Bank became strained after Senegal was unable to meet all the conditions of the International Monetary Fund (IMF)'s Enhanced Structural Adjustmnent Facility (ESAF) and the IDA's Structural Adjustment Credit (Cr. 2090-SN). This credit was closed without disbursement of third tranche. Although a series of internal adjustments, including cuts in public sector wages, was adopted in 1993 by the GOS to halt the deterioration, this was not sufficientto ensure pompetitiveness of the economy and its growth prospects. Macroeconomic imbalances and declining investments and exports from an overvalued real exchange rate made the January 1994 devaluation of the CFA Franc (CFAF) inevitable. Right after the devaluation, the GOS realized that devaluation alone was not enough and that additional policy and structural reforms were needed to support private sector development, the key elements of which were the provision of a stable macroeconomicenvironmentand a policy and institutional framework favorable to sustained economic growth. The GOS set out the macro-economic objectives of a strategy for the 1994-97 period in a Statement of Economic and Social Policies that was submitted to IDA in March 1994. The policies were elaborated in the Policy Framework Paper (PFP), approved by IDA and the IMF in August 1994. The main thrust of the Government's strategy was to implement long-delayed reforms in external trade, labor markets, and in the agricultural sector, while also implementing measures to improve public sector management, such as adoption of a public investment program, reduction of wages and a program of divestiture of public enterprises. These measures were supported by an IMF Stand-by Arrangement and an IDA Economic Recovery Credit (Cr. 2582- SN), both approved in March 1994. The Stand-by Arrangement was converted into an ESAF operation in August 1994. 3. Private sector development strategy. As a part of its medium-term strategy, the GOS adopted a program for the development of the private sector. A series of discussions was carried out in the Competitiveness Review Group (CRG), established in February 1994, with representatives of the private sector, the labor unions, and the Government. The CRG organized workshops under the five commissions to review constraints to private sector development in: (a) domestic competition and monopolies; (b) export promotion; (c) investment promotion; (d) reduction of transport costs; and (e) labor regulations and cost. The commissions' recommendations formed the basis for the reform program supported by the Private Sector Adjustment and  2 CompetitivenessCredit (PSAC, Cr.2681-SN). This program was presented to IDA in the Letter of Private Sector Development Policy in January 1995. The PSAC, along with the Agricultural Sector Adjustment Credit (ASAC, Cr. 2582-SN), constituted the main elements of the Country Assistance Strategy (CAS) prepared by the Bank and the GOS. The CAS and the PSAC were approved by the IDA board in February 1995 and the ASAC in June 1995. In parallel with these two credits, the Private Sector Capacity Building Project (PSCBP, Cr. 2759-SN) was prepared and approved in June 1995. B. STATEMENT/EVALUATIONOF OBJECTIVES 4. Project objectives, The overall objective of the PSAC was to support policy measures to stimulate the supply response of the private sector to the January 1994 devaluation. To achieve this goal, the PSAC included a reform program, which aimed to: (a) complete the liberalization of domestic and external trade; (b) improve the export and investment incentive regime; (c) eliminate rigidities in the labor market; and (d) reduce maritime transportation costs. 5. Description of reform program. The reform program comprised five components: (a) Promotion of competition in domestic and external trade: As stated in the PFP, the GOS was committed to liberalizing domestic and external trade and creating an environment conducive to increased competition. To this end, it was expected to eliminate: (i) price controls; (ii) non-tariff barriers on imports; and (iii) special agreements granting tax advantages to certain enterprises, protection from imports, and, in some cases, monopolies. (b) Promotion of exports: Although a Free Trade Zone (FTZ) and Single Factory Zone (SFZ) schemes were established respectively in 1974 and 1991, these instruments proved ineffective in promoting exports. The GOS, therefor, committed itself to eliminating the remaining constraints to exports and revising the FTZ and SFZ schemes. The reform program included: (i) abolition of prior authorization (Autorisations Prnalables) to export; (ii) adoption of a revised Free Trade regime; (iii) rationalizationof existing regimes for temporary imports of inputs for exports (regimes douaniers suspensifs); and (iv) simplification of export proceduresto reduce administrativedelays and costs. (c) Promotion of investments: Recognizing the need to rationalize and consolidate all the investment incentives schemes into a simpler, unified, and transparent framework, the GOS decided to implement measures to streamline procedures for establishing new enterprises and to introduce new legislation for investment incentives. Four measures were envisaged under the PSAC: (i) limitation of the list of professions whose exercise requires prior authorization, so that the entry to all other professions would be free; (ii) adoption of a law reducing taxes on the establishment of new enterprises; (iii) rationalization of fiscal incentives on investments through new legislation; and (iv) a new law authorizing the GOS to sell public land to enterprises. (d) Reduction of labor cost: To improve the competitivenessof Senegalese enterprises, the GOS committed itself to rationalize utility tariff in the medium-term, while reducing, in the short-term, the costs of labor and sea transportation. Despite the CFAF devaluation, labor costs were estimated to be higher than in other developing countries of comparable income levels. The PSAC, therefore, supported; (i) adoption of legislation authorizing enterprises to adjust freely the size of their working force; and (ii) termination of the monopoly of the Bureau de la main d'oeuvre portuaire to reduce high handling costs at the port of Dakar.  3 (e) Reduction of maritime transportation costs: To reduce sea transportation costs, the reform program supported: (i) abolition of the monopoly of Compagnie senegalaise de navigation maritime, (ii) restriction of maritime traffic to and from Senegal allocated to national sea carriers to traffic carried out through conference lines; (iii) modification of the management structure of the Conseil senegalais des chargeurs (COSEC) to include a majority of private exporters and importers on its board of directors; (iv) determination of the COSEC levy on imported goods based on a financial audit covering the last three fiscal years; (v) introduction of a system of sealed containers to facilitate transshipment of containers within the port of Dakar and between the port and the FTZ; and (vii) a study of user costs at the port and at the airport of Dakar and measures to improve the performance of Port Autonome de Dakar. 6. Evaluation of objectives. The project objectives were consistent with the CAS, which noted as a critical development issue the facilitation of a private sector supply response by : (a) reducing factor costs; (b) streamlining procedures and incentives; and (c) liberalizing internal and external trade. These objectives served as the basis for the project design and its components. 7. The PSAC objectives were important for creating a social and business climate favorable to sustained economic development. They were also expected to help improving living standards by abolishing monopolies and trade restrictions that were costly to Senegalese consumers. 8. The four objectives of the reform program were consistentwith PSAC's overall objective to maximize the positive effect of the CFAF devaluation, and were translated into specific reform measures. Most reform measures were stated clearly and realistically enough to facilitate their implementation. No significant change was made in the reform measures during implementation. 9. Timeliness of disbursement was another major objective of this credit. There was a consensus between the GOS and the Bank, on the necessity of a timely adjustment operation. This element characterized the project design, both in the contents and sequence of the reform measures included. The initial objective was to obtain Board approval by mid- 1994. 10. The Report and Recommendation of the President (RRP) identified the risk of incomplete implementation and/or reversal of the reform program, since some reform measures had long been on Senegal's agenda. However, the risk was judged to be much smaller than in previous adjustment operations, because the political economic environment in Senegal changed as the devaluation had already made many protective measures unnecessary, including the special protective agreements, and the GOS commitment to reform was stronger than before, as shown by the important reforms implemented in 1993-94. This assessment of the risk was mostly correct and the risk was minimized by heavily front-loadingof the credit conditionalities. C. ACHIEVEMENT OF PROJECT OBJECTIVES 11. Judging by the overall results, the major objectives of the PSAC were reached. All measures that were conditions of tranche release, except the action plan for revising temporary import regimes, were implemented. Of the six measures that were not conditions of disbursement, one measure was implemented incompletely and another with modifications. 12. An assessment of the results achieved by component follows, while the detailed implementation status of the reform measures is given in Appendix B (Policy Matrix).  4 (a) Promotion of competition in domestic and external trade. All measures envisaged by the PSAC were implemented before Board presentation,and the objective of this componentwas substantiallyachieved. (b) Promotion of exports. All measures envisaged under the program were implemented, except the action plan for revising the temporary import regime which was partially implemented. (c) Promotion of investments. All measures envisaged in the program were implemented. (d) Reduction of labor costs. The measures required under the program were implemented. (e) Reduction of maritime transportation costs. The measures that were conditions of tranche release were implemented. Suppliers and users indicated that there was a reduction in freight costs (With the liberalization of sea transportation, according to a leading sea carrier, average fixed rates decreased by approximately 10% for imports and 4% for exports). However, the measure to improve competitiveness of the port of Dakar has not yet been fully implemented. 13. The PSAC also included the achievementof a satisfactory economic framework as a condition of second tranche release. Overall, the macroeconomic objectives for 1995 were attained: (a) real GDP growth was estimated at 4.8%, which is consistent with the objective for the year (4.7%) and 2.8% above the growth rate in 1994; (b) inflationwas estimated at 7.8%, down from 33.2% in 1994, which indicates that the low rate of inflation of the past is likely to be restored when the impact of the devaluation is fully absorbed; and (c) the external current account deficit, excluding official transfers, was estimated at 8%, down from 9.3% in 1994, while the fiscal deficit was estimated at 3.3%, which represents an improvementof 2.4%, compared to the previous year. 14. The PSAC design was appropriate given the tight time constraint to realize a timely adjustment operation soon after the devaluation. The GOS and the Bank identified major impediments to private sector development and a realistic package of rapidly implementablereforms, rather than a comprehensive list of reform measures that might need substantial preparation time. In retrospect, the program could have included measures to tackle other fields, such as transportation and telecommunications. The time constraint also affected the sequencing of some important measures: The project did not specify action plans at the start for the reform of the free trade regime, the temporary import regime and the fiscal incentive system, but only set out a sequence of actions, including further studies by consultants. The action plan to the temporary import regime was partially implemented while only an action plan had been prepared for the reform of the investment incentive system by the time of second tranche release. However, if the project had been more comprehensive by including other reform measures and/or if it had defined the detail of the above three measures by waiting to the outcome of consultant studies, it would have been delayed for several months more. It was therefore reasonable that this approach was not followed. However, in any adjustment operation, the optimal balance between timeliness and comprehensiveness of reform program remains an issue which requires careful consideration. 15. The criteria for judging the achievement of the PSAC's final objectives, i.e. whether the project stimulated a supply response in the private sector to the CFAF devaluation, was not quantified in the RRP. Although it is difficult to distinguish between the impact of the Government's adjustment measures from the impact of external factors, recent trends in exports and imports suggest a positive response to the devaluation, while the effect on investments remains to be seen. Exports showed a steady increase after the CFAF devaluation (the increase in export volume was estimated at 5.7% in 1995); imports of capital goods and intermediate goods increased both in volume and value terms (the increase in import volume of capital goods and intermediate goods was estimated at 5.0% and 8.0%, respectively, in 1995), indicating that production was stimulated after the  5 devaluation, and the effect on investment has yet to be seen; investments registered with Guichet Unique were stagnant in 1995 (0.1% decrease in value terms). D. MAJOR FACTORS AFFECTING THE PROJECT 16. The major factors that affected achievement of the PSAC objectives were: (a) Among the factors not subject to Government control, the approach adopted by the Bank contributed to reinforcing the participation of the private sector and borrower ownership of the PSAC reform program (see paragraph 21-22). On the other hand, the delay in completing the studies by the FIAS consultants on the free trade regime, the investment incentive system and the temporary imports regime, over which the government had no control, postponed second tranche release. Conditions of tranche release should, therefore, only include the implementation of measures over which the Government has full control. (b) Among the factors subject to government control, the commitment which the government showed in preparation and in implementation of reform measures was essential to the successful outcomes of the project (see paragraph 26-28). (c) The participation of stakeholders, i.e. representatives of various economic players in the private sector, was essential for identifying reform measures and for reinforcing the Borrowers' ownership. E. PROJECT SUSTAINABILITY 17. Promotion of competition in domestic and external trade. The reforms implemented to achieve this objective are likely to be sustainable. Liberalization of prices and abolition of prior authorization on imports, of the reference system, and of special agreements for enterprises eliminated vested interests of some previously protected economic players. After the devaluation, it would be hardly justifiable for the Government to reverse these measures, since a large consensus had been built and the reform program is supported by a large constituency. In addition, the CRG which continues to identify impediments to private sector development under the PSCBP, is likely to be an effective watch dog. 18. Promotion of exports. The measures to promote exports through the abolition of prior authorization of exports and simplification of export procedures are likely to be sustainable. The impact of the revised free trade regime and of the temporary import system is still to be determined. As for the free trade regime, it is difficult to predict how much: (a) exports by enterprises that are not in the FTZ will be encouraged by the reduction of their income tax (from 30% to 15%); and (b) establishment or expansion of enterprises in the FTZ will be discouraged by an increase in their income tax (from 0% to 15%). 19. Promotion of investments. The measures to deregulate authorization of professions, reduce taxes for the creation of small and medium sized enterprises (SMEs), and deregulate sale of public land to private enterprise are likely to be sustainable. The incentive system has not been implemented yet and it is not possible, therefore, to assess its sustainability. Its implementation will require a reform of the tax code, which might prove difficult to implement because of its negative impact on the Government tax revenues (i.e., a reduction of import tariffs on capital goods and of corporate tax on profits). Implementation of this measure should be carefully monitored in the PFP process for 1995-98. 20. Enterprise competitiveness Measures to introduce flexibility in the labor code and reduce sea transportation costs and levies of COSEC on imports and exports are likely to be sustainable. However, the  6 sustainability of measures for the liberalization of labor conditions of longshoremen in the port of Dakar still remains to be determined. The sustainability of reduction of handling costs of goods in the port and the airport of Dakar is uncertain. F. BANK PERFORMANCE 21. The Bank's performance in the identification and preparation stages was satisfactory. The workshops of the CRG commissions contributed substantially to identifying impediments to private sector development and in designing the project. This consultative approach developed at the Bank's initiative was innovative, compared to the approach taken in previous adjustment operations. 22. During negotiations with the GOS, the Bank expressed its opinion frankly on the necessary reforms and tried to support Government officials who faced strong resistance to reform mainly from large enterprises protected by special agreements. The Bank team made continuous efforts to support the Government's rationale for reform and pointed up the inefficiency of protectionist measures. The skill mix of the Bank's team was effective and the staff was sufficiently involved in preparation process, which took about a year, to eventually engenderand reinforce the Borrower's ownership of the project. 23. The Bank's performance in project appraisal was highly satisfactory. Based on the experience of past failures which lacked Borrower ownership, particular attention was paid to assessing Government commitment. To minimize the risk of failure, a quick-disbursing operation was designed with conditions that were heavily front-loaded. Of the total of 18 conditions, 13 were conditions of the first tranche release that were implemented before Board presentation. 24. The PSCBP, prepared in parallel to the PSAC, contributed substantiallyto supportingthe project from the preparation stage throughout implementation. It reinforced the consultative process with the private sector, mainly through the CRG activities. CRG functioned well in following implementation of reform measures. Thus, the linkage between the two projects was effective and appreciated by the private sector and the GOS. 25. The Bank's performance in supervision was satisfactory. Major attention was paid to monitoring the implementation of five conditions for the second tranche release. The delay in the completion of FIAS consultants' three studies, which were included among these conditions, postponed the second tranche release (see paragraph 16 a). Given this delay that was not subject to the Government responsibility, the Bank had to decide whether to waive some of the conditions for the release of the second tranche according to the agreed timetable. Because the reform measures in question were crucial, the Bank decided to delay the second tranche release, a reasonablejudgment overall. It was also reassuring that the Bank envisaged a follow up of the implementation of these measures in the PFP for 1995-98. The Bank supervised the project only once in July 1995. However, participation of the task manager in the PFP discussion in September 1995 was an effective follow-up to the modification of the time table. G. BORROWERPERFORMANCE 26. The Borrower's performance in preparation of the reform program was satisfactory overall. Since the program could hurt the interests of some protected economic actors (e.g. monopolies in imported products and labor at the port), the Government's attitude toward the reform measures was prudent at beginning of project preparation. However, the rationale for continuing many protective measures was lost when the political economic environment changed completely after the devaluation. Through seminars and discussions involving the private  7 sector and with the technical support of the Bank, the MEFP was convinced of the need for a reform program and it took a decisive step when it negotiated the elimination of special agreements granted to some enterprises. 27. Management of the PSAC was centralized in the MEFP. Most MEFP officials demonstrated a high degree of ownership and understanding of the rationale and implications of the reform measures. The stakeholders' commitment to the project developed through the private sector's participation in the identification of constraints to their development, including that of small enterprises and merchants. 28. The borrower's performance in implementation of the reform measures was satisfactory, except for the reform of the temporary import regime, implementation of the new investment incentive system, and adoption of an action plan for improving competitiveness of the port of Dakar. The MEFP showed leadership in involving other ministries in the implementation of the reform measures. All legal covenants and conditions for tranche release were met, includingthe achievement of a satisfactoryeconomic framework, the objective for 1995. As for the reform of the temporary import regime, implementation of the new investment incentive system, and adoption of an action plan for improving competitiveness of the port of Dakar, the Government has yet to show its commitment and ability to complete the reform program in a timely fashion. Those measures were to be followed up in the context of the PFP for 1995-98 29. The GOS needs to improve its economic data gathering for project monitoring and evaluation, in order to assess accurately the economic impact of the reform program. It, therefore, needs to : (a) collect and analyze relevant data, including statistics of exports and imports of major products; and (b) pursue the consultativeprocess with the private sector which was taken under the project to inform all stakeholders periodically about the results and effectiveness of the adopted reform measures. 30. The Borrower followed the procurement procedures specified in the Credit Agreement. Audits of the credit were done in September 1996. H. ASSESSMENT OF OUTCOME 31. The overall outcome of the PSAC is judged to be satisfactory. This assessment is based on: (a) satisfactory achievement of the objectives of completing the liberalization of domestic and external trade and reducing maritime transportationcosts; (b) satisfactory project design and ownership of the reform program by the Borrower; (c) sustainability of certain reform measures that were adopted; and (d) satisfactory overall performance of the Bank and of the Borrower. I. FUTURE OPERATIONS 32. To follow up on the implementation and assess the effectiveness of the measures that were adopted, the Bank needs to monitor: (a) the impact of a new law on free trade regime; (b) the amendment of the Customs Code necessary to implement the remaining eight measures of the temporary import regime; (c) the implementation of an action plan for new fiscal incentive regime for investments, in the context of the PFP for 1995-98; (d) the validity of the new rate of COSEC's levy on imported goods; and (e) the implementation of an action plan to improve the competitiveness of the port of Dakar. 33. The PSAC-supported reforms aimed at improving the macroeconomic environment and stimulating the supply response of the private sector. Sector specific issues are expected to be addressed in future operations. To this end, several actions being considered by the GOS and the Bank should be implemented timely in the following sectors: (a) Energy sector the regulatory framework and the issue of administered prices of goods  8 and services, including petroleum products, are to be addressed by an upcoming project to be supported by the Bank and other donors; (b) Water sector pricing of water is to be addressed by an ongoing water supply project; (c) Transportation sector pricing of sea and air transportation is to be addressed by an upcoming Bank operation, based on the analysis and recommendations of the ongoing studies under the PSAC: and (d) Telecommunications sector: a dialogue between the GOS and the telecommunication sector is currently proceeding and it deals with the privatization of SONATEL (Societe Nationale de la Telecommunication). Supporting measures to create a competitive environment in this sector are also required. J. KEY LESSONS LEARNED 34. Three major lessons can be drawn from implementation of the PSAC: (a) Participation of stakeholders in the project In preparing adjustment operations, the Bank should emphasize the identificationof needed reforms by national stakeholders and not propose its own program. In the case of the PSAC, the Bank recommended that the GOS start with discussions through CRG with various stakeholders to identify the impediments to private sector development and the reform measures to eliminate them. As a result, the reform program gained broad support which also reinforced the Government's commitment to proceed. Thus, by encouraging stakeholders' participation in the development of policy options, the Bank directly encouragedthe Borrower's internalization of the reform program. This approach was substantially different from previous adjustment operations in Senegal. (b) Commitment of the Borrower. The Borrower needs to give clear signs of its commitment to carry out the proposed reforms early on in the project preparation. In the case of the PSAC, the Bank was able to assess thoroughly the Government's commitment by asking the GOS to implement concrete measures before seeking Board approval. The Bank made clear that the PSAC would not be presented to the Board unless certain important measures were implemented. The changes in the political economic environment brought about by the devaluation made it easier for the Government to take decisions that would otherwise have been difficult to implement, such as the elimination of special agreements to some large enterprises. In retrospect, the assessment of the Government's commitment was an essential factor in achieving the objectives of this project and it can be replicated in future similar operations. (c) Consultation with the private sector for deepening the reforms. The PSAC helped to lift certain, but not all barriers to private sector development. The reform measures included were not comprehensive mainly due to the time constraint resulting from the necessity for timely realization of the adjustment operation. To further deepen the reforms initiated by the PSAC, the GOS should ensure a continuing dialogue with all the stakeholders to identify remaining constraints, and design and implement appropriate reform measures. Economic players, for example, often urge simplification of administrative procedures, such as those of customs offices, which they believe lack transparency and discourage SMEs from importing products and creating new enterprises.  9 IMPLEMENTATION COMPLETION REPORT REPUBLIC OF SENEGAL PRIVATE SECTOR ADJUSTMENT AND COMPETITIVENESS CREDIT (Cr. 2681-SN) PART II - STATISTICAL TABLES Table 1: Summary of Assessments A. Achievement of objectives Substantial Partial Negligible Not applicable Macroeconomic policies 4 Sector policies 4 Financial objectives l Institutional development l Physical objectives l Poverty reduction l Gender concerns l Other social objectives 4 Environmental objectives l Public sector management l Private sector development 4 Other (specify) B. Project sustainability Likely Unlikely Uncertain 4 C. Bank performance Highly satisfactory Satisfactory Deficient Identification 4 Preparation assistance 4 Appraisal 4 Supervision 4 D. Borrower performance Highly satisfactory Satisfactory Deficient Preparation 4 Implementation 4 Covenant compliance 4 Operation (if applicable) E. Assessment of outcome Highly satisfactory Satisfactory Unsatisfactory Highly Unsatisfactory 4  10 Table 2: Related Bank Loans/Credits Loan/Credittitle Purpose Year of Status approva Preceding Operations StructuralAdjustmentlV Program of macro reforms aimed at consolidating 1990 Closed (Credit2090-SN) progress under previous SAL operations. Particular emphasis to be given to eliminating obstacles to private sector growth and to improving efficiency of public resource management and rationalizingparapublic sector. Economic Recovery Credit (Credit To help to deepen the adjustment program taken since 1994 Closed 2582-SN) 1993, it supported: (i) CFAF devaluation; (ii) increase in key producer prices; (iii) social measures to attenuate the effects of the devaluation. (iv) reduction and simplification of tariffs and domestic taxation; and (vi) protection of social sector expenditures. Simultaneous Operations Private Sector Capacity Building To accelerate the growth of the private sector. it aims to: 1995 On-going Project (i) provide business advisory services through a Private (Credit2759-SE) Sector Foundation; (ii) alleviate policy and regulatory constraints; and (iii) transfer of public enterprises to the private sector and carry out a communicationsprogram. Agricultural Sector Adjustment To support the Government program to resume structural 1995 On-going Credit adjustment in agriculture, it aims to: (i) liberalize domestic (Credit 2582-SN) marketing and pricing of agricultural products; (ii) reform the agricultural trade regime; (iii) privatize the production, processing, and marketing of products still dominated by parastatals; and (iv) prepare a three-year rolling investment program for the agricultural sector. Following Operations Public Sector Management Strengthen institutional capacity to carry out budget 1998 Preparation Operation reform and civil service reform, among others. Energy Sector i11 Operation _n/a_ Preparation Transport Sector 11 Operation 1998 Preparation  I1 Table 3: Project Timetable Steps in project cycle Date planned Date actual/latest estimate Identification n/a January 1994 Initial discussion with IDA n/a March 1994 Pre-appraisal n/a September 1994 Appraisal/Negotiations December 1994/January 1995 December 1994/January 1995 Board presentation February 1995 February 16, 1995 Signing February 1995 February 23, 1995 Effectiveness February 1995 February 28, 1995 Project Completion December 1995 December 28, 1995 Credit closing June 1996 October 30, 1996 Table 4: Studies Included In the Project Study Purpose as defined at Status Impact of study appraisal/redefmed 1. Study on the revision of the (i) to make the incentive tax package Completed Guided a revision of the law relating Free Trade Zone (FTZ) compatible with international practice; (ii) to the FTZ which was approved by to improve the transparency of the the NationalAssembly in Dec. 1995. agreement process; and (iii) to improve the implementationand control of the FTZ 2. Study on the temporary To improve the administrative procedures Completed Guided an action plan aiming to import/drawback regimes of the temporary import and duty drawback improve of customs procedures and (rgimes douaniers suspensifs) systems. procedures relating to merchandise in transit in the port of Dakar. 3. Study on the fiscal incentive To rationalize and consolidate all existing Completed Guided an action plan focusing on regimes schemes of investment incentives and to consolidatingall investment incentives simplify procedures. in the Tax Code. 4. Analysis of the costs of the To analyze the cost of using the port and In progress port and airport of Dakar airport of Dakar and to propose measures to lower the costs.  12 Table 5: Status Of Legal Covenants Credit Covenant Type Present Description of Covenant Com ments Agreement Status Section 3.01 (a) Implementation C The Borrower and the IDA shall from time to time, at Fulfilled the request of either party, exchange views on the progress achieved in carrying out the Program and the actions specified in Schedule 3 to the Development Credit Agreement, 3.01(b) Implementation C Prior to each such exchange of views, the Borrower Fulfilled shall furnish to the IDA for its review and comment a report on the progress achieved in carrying out the Program, in such detail as the IDA shall reasonably request. 3.01(c) Implementation C Without limitation upon the provision of paragraph (a) Fulfilled of the Section, the Borrower shall exchange views with the IDA on any proposed action to be taken after the disbursement of the Credit of the Program, or any action taken under the Program, including any action specified in Schedule 3 to this Agreement. 3.02 Procurement C Except as the IDA shall otherwise agree, procurement Fulfilled of the goods to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 2 to this Agreement. 3.03 (a) Accounts/ C The Borrower shall maintain or cause to be maintained Fulfilled audit records and accounts adequate to reflect in accordance with consistently maintained sound accounting practices the expenditures financed out of the proceeds of the Credit. 3.03 (b) Accounts/ CD The Borrower shall: Finalized in audit 9/96 (i) have the records and accounts referred to in paragraph (a) of this Section, including those for the Special Account, for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the IDA; (ii) furnish to the IDA as soon as available, but in any case not later than six months after the end of each such year, a certified copy of the report of such audit by said auditors, of such scope and in such detail as the IDA shall have reasonably requested; and (iii) furnish to the IDA such other information concerning said records and accounts and the audit  13 Credit CovenantType Present Description of Covenant Comments Agreement Status Section thereof as the IDA shall from time to time reasonably request. 3.03 (c) Accounts/ CD For all expenditures with respect to which withdrawals Finalized in audit from the Credit Account were made on the basis of 9196 statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the IDA has received the audit report for the fiscal year in which the last withdrawal from the Credit Account or payment out of the Special Account was made, all records (contracts, orders, invoices, bills, receipts and other documents, or customs certificates, as appropriate) evidencing such expenditures; (iv) enable the IDA's representatives to examine such records; and (v) ensure that such records and accounts are included in the annual audits referred to in paragraph (b) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. C = covenant complied with CD = complied with after delay CP = complied with partially NC = not complied with  14 Table 6: Bank Resources: Staff Inputs (Staff Weeks) Stage of project cycle Planned Revised Actual Through appraisal n/a 200.9 (preparation, preappraisal) Appraisal-Board n/a 16.0 (negotiation) I Supervision n/a 33.9 Completion n/a 8.4 Total n/a 259.2 n/a: not available Table 7: Bank Resources: Missions Performance rating Days Specialized staff skills Develop- Stage of Project Montb/ Number in represented Implementat ment Types of problems Cycle: year of field -ion status objectives Persons Through appraisal Oi94 3 19 Sr. Project Officer (TM), Participationin Consultant, Economist Competitiveness Seminar and pre- appraisal 03/94 1 14 Sr. ProjectOfficer(TM) Appraisal through Board approval Supervision 07/95 2 10 Sr. Project Officer (TM), S S Second tranche Financial Analyst release conditions Completion 02/96 1 5 Financial Analyst Note: TM=Task Manager  15 PART III. APPENDIXES A. BORROWER CONTRIBUTION TO THE ICR REPUBLIQUE DU SENEGAL Un peuple - Un but - Une foi MINISTERE DE L'ECONOMIE, DES FINANCES ET DU PLAN COMITE DE S UIVI DES PROGR4 MMES DE POLITIOUE ECO0NVOMIQUE RAPPORI DE FIN D 'EXECUTION DUr lPRO.JET D)'AJl[S''E M'ENT SXT'RCJC'U1RE12L ET D)E COMPE'ITIVITE DU SEC TEUIR PRIVE Octobr-e 1996  16 LISTE DES ABBREVIATIONS ET SIGLES PASCO Projet d'Ajustement Structurel et de Competitivite du Secteur Prive FCFA Franc de la Cooperation Financiere Africaine PAST Projet d'Ajustement Sectoriel des Transports PASA Projet d'Ajustement Sectoriel de l'Agriculture MEFP Ministere de l'Economie, des Finances et du Plan SIPOA Societe Industrielle Pharmaceutique de l'Ouest Africain ISLIMA Industrie Senegalaise pour le Linge de maison CSPT Compagnie Senegalaise des Phosphates de Taiba SOCOCIM Societe Commerciale des Ciments ICOTAF Industries Cotonnieres Africaines SODEFITEX Societe de Developpement des Fibres textiles ICS Industries Chimiques du SENEGAL SOTEXKA Societe des textiles de Kaolack SENSAC Societe Senegalaise des Sacs SOCOSAC Soci&te Commerciale du Sac SIPS Societe Industrielle de Papeterie du Senegal SNTI Societe Nationale de Tomate Industrielle SOCAS Societe des Conserveries alimentaires du SENEGAL GMD Grands Moulins de DAKAR PAD Port Autonome de Dakar PME Petites et Moyennes entreprises BMOP Bureau de la Main d'oeuvre Portuaire COSENAM Compagnie Senegalaise de Navigation maritime COSEC Conseil Senegalais des Chargeurs CNUCED Conference des Nations-Unies pour le Commerce et le D6veloppement DCPE Document cadre de Politique Economique IDA International Development Association DAKAR-MARINE Societe de Reparation Navale  17 INTRODUCTION Dans le contexte de surevaluation persistante du FCFA qui a prevalu a partir de 1985, I'ajustement interne mis en oeuvre depuis 1979 a montre ses limites dans la recherche d'une plus grande competitivite et l'instauration d'une croissance economique durable. Malgre un diff&entiel d'inflation favorable au Senegal, les investissements directs s'etaient inscrits A la baisse. les exportations de produits industriels avaient du mal a croitre plus vite que les importations que dopait la surevaluation de la monnaie en l'absence de facteurs exogenes a effets contraires tels que I'attentisme des milieux d'affaires pendant le premier semestre electoral de 1993. Les tendances economiques etaient ainsi incompatibles avec l'objectif de v iabilite des comptes exterieurs. Cette sitLation a conduit a l'operation de devaluation du franc CFA intervenue en Janvier 1994. Cependant, fallait-il egalement prendre des mesures d'accompagnement pour permettre aI l'appareil productif de saisir pleinement les opportunites offertes par cette nouvelle donne. Ces mesures dont la finalite est le developpement de l'offre du secteur prive ont fait l'objet d'un programme d'ajustement structurel et de competitivite (PASCO) soutenu par la Banque %fondiale. I - LES ORIENTATIONS DU PASCO Les principales orientations du PASCO sont: - le renforcement de la concurrence interieure et Famrlioration de la Competitivite des entreprises; - la rationalisation de la fiscalite tant de porte qu'interieure; - la promotion des exportations; - I'amelioration du cadre reglementaire et juridique - 'amrliolration du fonctionnement du marche du travail: - la baisse des couts des facteurs de production; - le renforcement du soutien institutionnel au secteur prive. Pour atteindre les objectifs s'inscrivant dans le cadre des orientations generales ci-dessus rappelees. un plan d'actions a ete adopte. Les mesures specifiques contenues dans ce plan viennent renforcer celles plus globales repertoriees dans le Document-Cadre de Politique Economique 1994-97. 11 - LE PROGRAMME D'ACTIONS ET SA MISE EN OEUVRE (Voir annexe) Quatre axes strategiques composent le programme de reforme. 1) encourager la concurrence dans le domaine du Commerce interieur et des importations. Les programmes de reforme economique inities depuis 1979 ont certes permis de realiser des azancees significatives dans le domaine de la liberalisation, mais 1'existence de prix ;idmitistr6s sur le marche local. de moniopoles de jure. d'avantages fiscaux et de barriercs 11o01  18 tarifaires (autorisations prealables) dressees contre les &hanges constituaient encore des entraves a la concurrence. Dans le but d'eliminer ces entraves, les autorites ont mis en oeuvre des mesures pour limiter le contr6le des prix, lexistence des barrieres non tarifaires et la revision des conventions et protocoles d'accord speciaux dans le sens de leur extinction ou de la reduction des avantages qu'ils accordent. Conformement aux orientations imprimees au PASCO, le contr6le des prix a ete assoupli et des criteres precis ont ete identifies pour guider les restrictions a la liberte des prix afin de proteger la sante des populations et 1'environnement et de combattre les pratiques anticoncurrentielles. Seules les prix de 11 produits et services' sont fixes par voie administrative contre vingt quatre avant la mise en oeuvre du PASCO. Ces produits et services sont soit foumis par des monopoles d'Etat (eau, electricite, telephone) soit relevent du domaine agricole. Les prix de 1'eau evoluent dans le cadre defini par le Troisieme projet Eau et ceux des transports dans celui defini par le PAST. Les prix de l'e1ectricite et des produits petroliers feront l'objet d'un nouvel examen dans le cadre d'un programme d'ajustement de secteur de 1 energie. Entre Aoat 1994 et Novembre 1995, les prix de douze produits ont et& lib6ralis6s2 soit dans le cadre du PASCO, soit dans le cadre du Programme d'Ajustement du secteur Agricole (prix de I'huile d'arachide, prix du riz, prix aux producteurs de l'arachide et du coton). Les barrieres non tarifaires ont ete levees au fur et a mesure. Seules les importations d'or et d'ar.gent en barres et de vetements de seconde main ( leurs importations ont fait l'objet de liberalisation en juillet 1996 ) restaient reglementees pour des raisons de politique monetaire et de sante. En aout 1994, les autorisations prealables frappant les produits suivants ont ete supprimees c.reales (mil. sarrasin, sorgho, etc ..... ), or et bijouterie, magazines et periodiques, noix de cola. engrais mineraux et chimiques, sacs d'emballage en jute et bandes preenregistrees. Quatre autres produits s'ajoutaient a cette liste en octobre et novembre 1994. Dans le cadre du Programme d'Ajustement du Secteur Agricole (PASA), les autorisations prealables frappant les produits agricoles ou agro-industriels tels que le sucre, le riz, les oignons, les bananes. les pommes de terre et les semences de pomme de terre ont ete eliminees. Les Autorites senegalaises ont egalement montre leur volonte de rationaliser la gestion des importations. C'est dans cet esprit que le systeme de reference base sur les valeurs mercuriales a ete supprime (Arrete du MEFP n