Sao Tome and Principe
This small poor island economy has become
increasingly dependent on cocoa since independence 29 years ago.
Cocoa production has substantially declined in recent years because
of drought and mismanagement, but strengthening prices helped boost
export earnings in 2003. Sao Tome has to import all fuels, most
manufactured goods, consumer goods, and a substantial amount of
food. Over the years, it has been unable to service its external
debt and has had to depend on concessional aid and debt
rescheduling. Sao Tome benefited from $200 million in debt relief in
December 2000 under the Highly Indebted Poor Countries (HIPC)
program. Sao Tome's success in implementing structural reforms has
been rewarded by international donors, who pledged increased
assistance in 2001. Considerable potential exists for development of
a tourist industry, and the government has taken steps to expand
facilities in recent years. The government also has attempted to
reduce price controls and subsidies. Sao Tome is optimistic about
the development of petroleum resources in its territorial waters in
the oil-rich Gulf of Guinea; production could begin as early as 2004.
Saudi Arabia
This is an oil-based economy with strong government
controls over major economic activities. Saudi Arabia has the
largest reserves of petroleum in the world (25% of the proved
reserves), ranks as the largest exporter of petroleum, and plays a
leading role in OPEC. The petroleum sector accounts for roughly 75%
of budget revenues, 45% of GDP, and 90% of export earnings. About
40% of GDP comes from the private sector. Roughly five and a half
million foreign workers play an important role in the Saudi economy,
for example, in the oil and service sectors. The government in 1999
announced plans to begin privatizing the electricity companies,
which follows the ongoing privatization of the telecommunications
company. The government is encouraging private sector growth to
lessen the kingdom's dependence on oil and increase employment
opportunities for the swelling Saudi population. Priorities for
government spending in the short term include additional funds for
education and for the water and sewage systems. Economic reforms
proceed cautiously because of deep-rooted political and social
conservatism.
Senegal
In January 1994, Senegal undertook a bold and ambitious
economic reform program with the support of the international donor
community. This reform began with a 50% devaluation of Senegal's
currency, the CFA franc, which was linked at a fixed rate to the
French franc. Government price controls and subsidies have been
steadily dismantled. After seeing its economy contract by 2.1% in
1993, Senegal made an important turnaround, thanks to the reform
program, with real growth in GDP averaging 5% annually during
1995-2003. Annual inflation had been pushed down to the low single
digits. As a member of the West African Economic and Monetary Union
(WAEMU), Senegal is working toward greater regional integration with
a unified external tariff. Senegal also realized full Internet
connectivity in 1996, creating a miniboom in information
technology-based services. Private activity now accounts for 82% of
GDP. On the negative side, Senegal faces deep-seated urban problems
of chronic unemployment, trade union militancy, juvenile
delinquency, and drug addiction.
Serbia and Montenegro
MILOSEVIC-era mismanagement of the economy, an
extended period of economic sanctions, and the damage to
Yugoslavia's infrastructure and industry during the NATO airstrikes
in 1999 have left the economy only half the size it was in 1990.
After the ousting of former Federal Yugoslav President MILOSEVIC in
October 2000, the Democratic Opposition of Serbia (DOS) coalition
government implemented stabilization measures and embarked on an
aggressive market reform program. After renewing its membership in
the IMF in December 2000, Yugoslavia continued to reintegrate into
the international community by rejoining the World Bank (IBRD) and
the European Bank for Reconstruction and Development (EBRD). A World
Bank-European Commission sponsored Donors' Conference held in June
2001 raised $1.3 billion for economic restructuring. An agreement
rescheduling the country's $4.5 billion Paris Club government debts
was concluded in November 2001; it wrote off 66% of the debt. The
smaller republic of Montenegro severed its economy from federal
control and from Serbia during the MILOSEVIC era and continues to
maintain its own central bank, uses the euro instead of the Yugoslav
dinar as official currency, collects customs tariffs, and manages
its own budget. Kosovo, while technically still part of the Federal
Republic of Yugoslavia (now Serbia and Montenegro) according to
United Nations Security Council Resolution 1244, is largely
autonomous under United Nations Interim Administration Mission in
Kosovo (UNMIK) and is greatly dependent on the international
community and the diaspora for financial and technical assistance.
The euro and the Yugoslav dinar are official currencies, and UNMIK
collects taxes and manages the budget. The complexity of Serbia and
Montenegro political relationships, slow progress in privatization,
legal uncertainty over property rights, and scarcity of
foreign-investment are holding back Serbia and Montenegro's economy.
Arrangements with the IMF, especially requirements for fiscal
discipline, are an important element in policy formation. Severe
unemployment remains a key political economic problem.
Seychelles
Since independence in 1976, per capita output in this
Indian Ocean archipelago has expanded to roughly seven times the old
near-subsistence level. Growth has been led by the tourist sector,
which employs about 30% of the labor force and provides more than
70% of hard currency earnings, and by tuna fishing. In recent years
the government has encouraged foreign investment in order to upgrade
hotels and other services. At the same time, the government has
moved to reduce the dependence on tourism by promoting the
development of farming, fishing, and small-scale manufacturing. A
sharp drop illustrated the vulnerability of the tourist sector in
1991-92 due largely to the Gulf war, and once again following the 11
September 2001 terrorist attacks on the US. Other issues facing the
government are the curbing of the budget deficit, including the
containment of social welfare costs, and further privatization of
public enterprises. Growth slowed in 1998-2002, due to sluggish
tourist and tuna sectors. Also, tight controls on exchange rates and
the scarcity of foreign exchange have impaired short-term economic
prospects. The black market value of the Seychelles rupee is half
the official exchange rate; without a devaluation of the currency
the tourist sector should remain sluggish as vacationers seek
cheaper destinations such as Comoros, Mauritius, and Madagascar.
Sierra Leone
Sierra Leone is an extremely poor African nation with
tremendous inequality in income distribution. It does have
substantial mineral, agricultural, and fishery resources. However,
the economic and social infrastructure is not well developed, and
serious social disorders continue to hamper economic development,
following a 11-year civil war. About two-thirds of the working-age
population engages in subsistence agriculture. Manufacturing
consists mainly of the processing of raw materials and of light
manufacturing for the domestic market. Plans continue to reopen
bauxite and rutile mines shut down during the conflict. The major
source of hard currency consists of the mining of diamonds. The fate
of the economy depends upon the maintenance of domestic peace and
the continued receipt of substantial aid from abroad, which is
essential to offset the severe trade imbalance and to supplement
government revenues.
Singapore
Singapore, a highly developed and successful free market
economy, enjoys a remarkably open and corruption-free environment,
stable prices, and a high per capita GDP. The economy depends
heavily on exports, particularly in electronics and manufacturing.
It was hard hit in 2001-03 by the global recession and the slump in
the technology sector. The government hopes to establish a new
growth path that will be less vulnerable to the external business
cycle but is unlikely to abandon efforts to establish Singapore as
Southeast Asia's financial and high-tech hub. Fiscal stimulus, low
interest rates, and global economic recovery should lead to much
improved growth in 2004.
Slovakia
Slovakia has mastered much of the difficult transition from
a centrally planned economy to a modern market economy. The DZURINDA
government made excellent progress during 2001-03 in macroeconomic
stabilization and structural reform. Major privatizations are nearly
complete, the banking sector is almost completely in foreign hands,
and foreign investment has picked up. Slovakia's economy exceeded
expectations in 2001-03, despite the general European slowdown.
Unemployment, at an unacceptable 15% in 2003, remains the economy's
Achilles heel. The government faces other strong challenges in 2004,
especially cutting the budget deficit, containing inflation, and
strengthening the health care system.
Slovenia
Slovenia, with its historical ties to Western Europe,
enjoys a GDP per capita substantially higher than that of the other
transitioning economies of Central Europe. In March 2004, Slovenia
became the first transition country to graduate from borrower status
to donor partner at the World Bank. Privatization of the economy
proceeded at an accelerated pace in 2002-03, and the budget deficit
dropped from 3.0% of GDP in 2002 to 1.6% in 2003. Despite the
economic slowdown in Europe in 2001-03, Slovenia maintained 3%
growth. Structural reforms to improve the business environment allow
for greater foreign participation in Slovenia's economy and help to
lower unemployment. Further measures to curb inflation are also
needed. Corruption and the high degree of coordination between
government, business, and central bank policy are issues of concern
in the run-up to Slovenia's scheduled 1 May 2004 accession to the
European Union.
Solomon Islands
The bulk of the population depends on agriculture,
fishing, and forestry for at least part of their livelihood. Most
manufactured goods and petroleum products must be imported. The
islands are rich in undeveloped mineral resources such as lead,
zinc, nickel, and gold. However, severe ethnic violence, the closing
of key business enterprises, and an empty government treasury have
led to serious economic disarray, indeed near collapse. Tanker
deliveries of crucial fuel supplies (including those for electrical
generation) have become sporadic due to the government's inability
to pay and attacks against ships. Telecommunications are threatened
by the nonpayment of bills and by the lack of technical and
maintenance staff many of whom have left the country. The
disintegration of law and order left the economy in tatters by
mid-2003, and on 24 July 2003 more than 2000 Australian soldiers
entered the Solomon Islands to restore order and to facilitate the
restoration of basic services.