Senegal project 685-0292 · 1989–1994

In 1986, A.I.D. initiated a program to reform Senegal's system of tax and revenue administration. The program was designed to complement industrial sector reforms managed by the World Bank, since industrial stagnation was largely attributed to years of heavy tariff protection and high taxes on both the agricultural sector and consumers. A.I.D. contributed $14 million in cash transfer funds and $1 million in technical assistance to promote the reforms, almost all of which were implemented by 1988. The Government of Senegal substantially reduced quantitative restrictions on imports; implemented a new commercial investment code; reduced across-the-board tariff protection; and designed a dramatically revised tax revenue system that included major provisions for taxing urban real estate. Contrary to expectations, the immediate impacts of the reforms were negative -- economic activity in the formal industrial sector slowed and government revenues seriously declined. Private firms, accustomed to decades of protection, had made no provisions for competing in an international market. Their competitiveness was also weakened by an unfavorable national political and economic climate, inc

Source: DEC abstract, PN-AAX-242 (1990). The source's own text.