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World > Africa > Senegal > Economy (Notes)

Senegal - Economy (Notes)


ECONOMY
The former capital of French West Africa, Senegal is a semi-arid country located on the westernmost point of Africa. Predominantly rural and with limited natural resources, the country earns foreign exchange from fish, phosphates, peanuts, tourism, and services. Its economy is highly vulnerable to variations in rainfall and changes in world commodity prices. Senegal depends heavily on foreign assistance, which in 2005 represented about 27% of overall government spending (including both current expenditures and capital investment), or $572 million.

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

With an external debt of $4 billion (2005), and with its economic reform program on track, Senegal reached its Heavily Indebted Poor Countries (HIPC) debt relief completion point in April 2004. In 2006, Senegal received $86.2 million (CFA 43.1 billion) in debt relief from HIPC and other multilateral debt forgiveness initiatives. Progress on structural reforms is on track, but the pace of reforms remains slow, as delays occur in implementing a number of measures on the privatization program, good governance issues, and the promotion of private sector activity. For 2006, inflation was at 2.1%. In 2005, tax revenue to gross domestic product (GDP) ratio was 11.1%, and a current account deficit at 7.5%.

Currently, the manufacturing sector is the leading export sector in Senegal with $333 million worth of exports in 2005. The phosphates sector is the second-largest export sector with $193 million in exports, followed by the groundnut sector with $80 million in exports.

Senegal has had moderate success in attracting foreign investment, mostly from France, India, and Morocco. Currently, there are no restrictions on the transfer or repatriation of capital and income earned, or investment financed with convertible foreign exchange. However, the government does limit the amount of foreign exchange individuals may obtain for trips outside Senegal. Outgoing travelers may obtain a maximum of CFA 6 million in euro or foreign currency. Direct U.S. investment in Senegal remains about $100 million, mainly in petroleum marketing, pharmaceuticals manufacturing, chemicals, and banking. Economic assistance, about $700 million a year, comes largely from France, the IMF, the World Bank, and the United States. Canada, Italy, Japan, and Germany also provide assistance.

Senegal has well-developed though costly port facilities, an international airport serving 28 international airlines that serves as a regional hub, and advanced telecommunications infrastructure, including a fiber optics backbone and cellular phone penetration approaching 10% of the population.


Facts at a Glance: Geography - People - Government - Economy - Communications - Transportation - Military - Climate - Current Time - Ranking Positions - CFA Franc BCEAO Exchange Rates
Notes and Commentary: People - Economy - Government and Political Conditions - Historical Highlights - Foreign Relations - Relations with U.S.



Facts at a Glance
Geography
People
Government
Economy
Communications
Transportation
Military
Climate
Current Time
Ranking Positions
CFA Franc BCEAO Exchange Rates


Notes and Commentary
People
Economy
Government and Political Conditions
Historical Highlights
Foreign Relations
Relations with U.S.





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