Public Debt and the Exchange Rate in the CFA Franc Zone

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Periodical article

Title:	Public Debt and the Exchange Rate in the CFA Franc Zone
Author:	Azan, J-P.
Year:	1997
Periodical:	Journal of African Economies
Volume:	6
Issue:	1
Pages:	54-84
Language:	English
Geographic terms:	French-speaking Africa Subsaharan Africa
Subjects:	public debt franc zone exchange rates Economics and Trade
Link:	http://jae.oxfordjournals.org/content/6/1/54.full.pdf
Abstract:	This paper analyses the macroeconomic policies that were tried to restore macroeconomic stability in the CFA franc zone after the commodity booms of the late 1970s, and the post-1986 crash of export revenues. The focus of the paper is on the real exchange rate, seigniorage and the public debt. The author emphasizes how the accumulation of public debt might result from the commitment not to use the inflation tax. He mainly describes the cases of the three large countries of the CFA zone - Cameroon, Côte d'Ivoire and Senegal, and adds Burkina Faso in order to represent the smaller and poorer economies of the zone. He analyses the real-side adjustment strategy that was adopted until the end of 1993, which was aimed at stabilizing the economies without devaluing the CFA franc. He then shows how the debt problem and misdirected policy decisions led to the historical devaluation of January 1994, the first since 1948. Bibliogr., notes, sum.