Further Liberalization Takes Effect in WAEMU Zone Countries

• Pages: 78

Page 78

The progress of 32 sub-Saharan African countries, from independence through December 1997, in liberalizing their financial sectors is the subject of IMF Occasional Paper 169, Financial Sector Development in Sub-Saharan African Countries, published in September 1998 (see IMF Survey, November 16, 1998, page 365). The paper also recommended how these countries could sustain and accelerate the modernization that is under way in many of them. Since the release of the Occasional Paper, the countries of the West African Economic and Monetary Union (WAEMU) (Benin, Burkina Faso, Côte d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo) have implemented a number of measures that modify the overall picture of financial sector development. In September 1998, a regional stock exchange was established in Abidjan, Côte d'Ivoire, which will open new opportunities to investors. In November 1998, the Council of Ministers of the WAEMU adopted a regulation that unified the exchange regulations for all member countries, with the ultimate objective of achieving greater liberalization of external financial transactions. These are important steps that should encourage direct investment and boost the development of capital markets in these countries. Below is a brief review of the new regulatory framework for exchange transactions.

Regarding current account transactions, the freedom of transfers within the WAEMU remains a fundamental principle in the new framework. While most other features of the original regulatory framework remain in place, the new regulations ease the screening of selected current account transactions and liberalize forward cover for imports and exports. In particular, indicative limits for tourist allocations to resident travelers have been abolished, and the ceiling for transfers abroad without supporting documents was raised from CFAF...