IMF boosts aid by $186 million, longer terms

The International Monetary Fund (IMF) boosted financial support for Senegal under the Exogenous Shocks Facility (ESF) by $186 million today and extended the ESF arrangement by six months, to 18 months to help finance the balance-of-payments impact of the global economic crisis. Senegal can draw $50 million immediately.

"Exogenous shocks" are the food prices and other impacts of the high oil prices that buffetted Senegal in the last year. Some questionable government budgeting resulted including failure to pay private contractors for infrastructure. The IMF says those practices have been reformed, but wants to make sure they stay that way.

The IMF says the financial and budget reforms will help gain investment for Senegal while it weathers the international economic slowdown that has started to hit the country.

Chinese knockoffs hurting Senegal's merchants

Flooded with cheap Chinese clothes and other consumer goods, Senegal's merchants say that even quality goods are taking a hit from cheap imitation Chinese products. Chinese goods have been flooding Senegal in recent years, pushing out locally produced products. Chinese merchants have also displaced Senegalese merchants, according to Senegalese shopkeepers.

Now Chinese products are imitating higher quality imports and local craft goods, causing buyers to dispute whether goods are genuine, or refusing to pay higher prices. The market in general is becoming saturated due to the Chinese floods of imports.

Senegalese peddlers, also known for their international presence, are calling for import embargoes and tariffs; others want the Chinese deported. They say that Senegalese manufacture is too fragile and will be crushed by the cheap imported Chinese goods.

Air Phoenix for Senegal?

The fate of Air Senegal is still up in the air according to new sources. After the withdrawal of Royal Moroccan from the airline, Karim Wade, the new infrastructure minister, says that a deal has been struck where Royal Moroccan will provide "operational support" while Senegal's government goes it alone.

But despite the optimism expressed by Karim Wade after the deal, the news reports say that major obstacles stand in the way of any liftoff for Air Senegal, including payments for two airplanes and the approval of the new operations by international air regulators.

More roads but less maintenance

Transportation spending in Senegal has increased much in recent years with road projects like the Cornice and toll roads around Dakar. But keeping up roads across Senegal is underfunded by 50 percent, according to a recent meeting of Senegal business school and government leaders.

Transportation is a key economic development infrastructure. Administrative chief of the Directorate of Land Transport, Papa Souleymane Faye, one of the organizers of the conference, fears new road construction comes at the cost of overall system maintenance. Aging roads and bottlenecks are a growing feature.

One wonders whether Senegal has a capital maintenance program for its roads, adopted by most municipalities in the United States. Many American cities and counties have sophisticated computerized road maintenance programs. But regardless of the sophistication, it ultimately takes money to get it done...

Senegal's fiscal discipline paying off

Senegal's government is starting to see some real benefits for the reforms it has made over the last year to its fiscal policies. Now, Standard & Poor's ratings have improved for Senegal's debt rating, now "B+" in the short-term and "B" for long-term notes. The outlook for government notes changed from "negative" from "stable".

According to the rating agency, the revision reflects "improving the management of public finances," such as progress made in establishing procedures for expenditures, more rigorous budget execution and the ban on cash advances. These improvements are added by statutory payment of arrears (3 percent of GDP in 2008) to suppliers and reducing the budget deficit on the basis of a target of 4 percent in 2009 (including grants) against 7 percent in 2008 (including arrears ). These two measures will help to maintain debt at sustainable levels.

Such discipline now will put Senegal in a strong position when the world economy revives.

Karim Wade takes critical infrastructure ministry

Karim Wade has been appointed the "go to" guy for infrastructure in the Wade government. With the appointment by President Wade, he and his son appear to have shaken off the defeats of last month's local elections.

The junior Wade takes the title of Minister for Transportation and Infrastructure. The appointment is a natural fit for the front man of Senegal's "Concrete Generation" movement. The eager-beaver apparatchiks of the Generation de concrete have pushed modern world infrastructure in Senegal.

The newly minted minister's top priority is sure to be the flightless Air Senegal, its crumbled partnership with Royal Air Morac threatening to ground the national airline permanently, even as the new Dakar airport gets going.

Karim's new job is arguably the most significant in Senegal government. Karim Wade's success or failure will impact on Senegal's quest to be the capital of West Africa.

Air Senegal grounded

Air Senegal International (ASI) has stopped operations as a row between the Senegalese state and majority shareholder Royal Air Maroc (RAM) has grounded all remaining flights, the Moroccan airline said on Friday.

RAM, which owns 51 percent of ASI and had provided several aircraft, recalled its last plane from the airline's fleet earlier this month, leaving ASI, one of West Africa's few reliable carriers, with just two operating planes.

RAM criticised Senegal for the country's unilateral decision in 2007 to take majority control of the airline, a move that has not yet materialised. RAM also says Senegal owes the company about 4 million euros.

RAM has taken a "you want it, you can have it" posture lately, adopting an orderly but insistent withdrawal from the company.