Political Background

Senegal gained independence from France in 1960 and was among the countries that pioneered democracy in sub Saharan Africa. However, although the multiparty system is one of the oldest on the continent, the Socialist Party was able to monopolise power for 40 years. The party was finally defeated in presidential elections in March 2000. President Abdou Diouf was replaced by veteran opposition leader Abdoulaye Wade in what was seen as a significant triumph for the constitutional process in Africa. Mr Wade is supported by a coalition government, and a referendum before the end of 2000 will decide on the new constitution. Progress has been made towards a solution to the political problem in the southern Casamance region of the country where there has been conflict between the government and rebel forces.

Economic and Social Indicators

Senegal’s per capita income in 1998 was US$520, marginally above the sub Saharan average. The principal export commodity is fish, and the agricultural sector employs the bulk of the workforce. The main trading partner is France, also the country’s largest bilateral creditor. Senegal recently joined the West African Economic and Monetary Union. Aid funded projects are combatting the problem of land degradation. Social indicators are generally below average for the region. For example, public expenditure on education was 3.7 percent of GNP in 1997, compared to a regional average of 5.4 percent. Life expectancy was 52 years in 1998 and Senegal is ranked 155 out of 174 countries on the Human Development Index.

Debt Analysis

Senegal is a Heavily InDebted poor Country (HIPC) with a total Debt stock in 1998 of US$3.9 billion, almost three times higher than the 1980 level. The Debt is almost entirely held by official creditors, predominantly multilateral institutions, with the largest share due to the World Bank’s International Development Association (IDA). Actual Debt service of US$323 million for 1998 has increased 31 percent on the 1997 figure and is the highest since 1990. Key inDebtedness ratios also indicate a worrying trend. The present value of Debt to export ratio, which has increased steadily to a level of 187 percent, is unsustainable even when measured against IMF/World Bank figures. Debt service to exports is running at the highest level since 1989. Senegal paid out US$1.28 in Debt servicing for every dollar received in grants for 1998, making it a typical example of a sub Saharan African country caught in the cycle of constantly spending aid money to repay Debts. Approximately one quarter of government revenue is spent on servicing the Debt. Senegal reached decision point under the previous HIPC initiative and was declared by the World Bank as having a sustainable level of Debt. The country reached decision point under HIPC 2 in June 2000, but will only see a reduction in Debt of US$850miliion (US$488 million net present value). Senegal is in the third year of its current US$140 million Poverty Reduction and Growth Facility (PRGF) programme.