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Of Economic Assistance ' UNITED A NATIONS Distr- GENERAL A/41/522 22 September 1986 ORIGINAL: ENGLISH Forty-first session Agenda item 82 (b) SPECIAL ECONOMIC AND DISASTER RELIEF ASSISTANCE: SPECIAL PROGRAMMES OF ECONOMIC ASSISTANCE ' Summary reports on Djibouti, Madagascar, Mozambique and Vanuatu Report of the Secretarv-General CONTENTS Paae I. INTRODUCTION ......................................................... 2 11. DJIBOUTI ............................................................. 2 III. MADAGASCAR ........................................................... 8 IV. MOZAMBIQUE ........................................................... 12 V. VANUATU .............................................................. 19 86-23698 205Oi (E) /1.. I:: ‘\' . A/4 l/522 Enqlish Pa9e 2 I. INTRODUCTION 1. The General Assembly, at its Portieth session, adopted a number of resolutions in which the Secretary-General was requested to report to the Assemblv at its forty-first session on the economic situation in a number of developina countries and on the progress made in orqanizina and implementinq special proqrammes of economic assistance for those countries. 2. In order to enhance the efficiency and effectiveness of the special prosrammes of economic assistance, it has been decided that, as of this year, the United Nations Development Programme (UNDP) will assume responsibility for implementinq resolutions calling for such programmes in countries for which there is an active round-table process and where special economic assistance programmes have been integrated into the national presentation at round-table meetings. For 1986, they included the following countries: Benin, Cape Verde, Central African Republic, Chad, Comoros, Eauatorial Guinea, Gambia, Guinea Bissau and Sierra Leone. A summary report prepared by UNDP covering these countries was issued in document A/41/592. 3. The Office for Special Political Questions retains responsibility for implementing special economic assistance resolutions dealing with Djibouti, Guinea, Madaqascar, Mauritania, Mozambique, Nicaragua, Uganda and Vanuatu. The Government of each of these countries was asked whether it wished the report to the General Assembly to be based on the findings of a review mission that would visit the country or whether it would prefer to provide information which would constitute the basis of a brief summary report to the Assembly. The Governments of Djibouti, Guinea, Madagascar, Mozambique and Vanuatu expressed the wish for the second form of report. The summary reports would address major economic developments in each country in the period under review as well as the status of special programmes Of economic assistance. 4. With the exception of Guinea, each country has provided the necessary information for incorporation in this report. Should information on Guinea be received in time, it will be reproduced as an addendum to the present report. II. DJIBOUTI A. Background 5. The special programme of economic assistance for Djibouti was initiated in 1978, in response to General Assembly resolution 32/93 of 17 December 1977 to help the country cope with its serious economic and social problems that were compounded by severe drought. The basic features of the economy of Djibouti were described in some detail in previous reports of the Secretary-General on assistance to Djibouti (A/33/106, A/34/362, A/35/415, A/36/281, A/37/136, A/38/216, sect. VIII, A/39/392, sect. V, and A/40/441, sect. VI). / l . A/41/522 Enql ish Page 3 D. Economic situation 6. l’hc basic constrainto to economic development in Djibouti include a harsh arid environment that provides little scope for agricultural production and a consequent dependence on food imports1 a poor natural resource endowment and thus 110 basis for siqnificant induntriol activity! an unueually high doqree of economic reliance on the tertiary sector associated with the high degree of population concentration in the service-orientad port city of Djiboutit limited skilled and manaqerial human resources) continued dependence on external assistance for budqetary and capital sxpenditureuj and ii relatively hiqh population growth rate, especially when measured aqainut resources. To the above must be added a continuing problem of refugees, which further strains both the resources and the capacity of the Government to deal with the problem. In 1985, there were 30,000 refugees in Djibouti, out of a total population estimated at 450,000. 7. Dj i bout i I B economy, boinq overwhelll~ing?.y dependent on the service sector fservicee provided to international port and airport traffic), has borne the brunt of the world-wide crisie in maritime transport in recent years. 8. In 1985, the decline in the value of the United States dollar - to which the Djibouti franc in linked - and in the price of oil has made Djibouti competitive aqain in tho sale of uoods and services without creating inflationary pressure, which had been kept very low until 1985. The Government continues to qive hiqh priority to encouraqinq private investment in Djibouti, particularly in the auf tcultural, small industry and services sectors. The employment situation should improve durinq the next few vears with the implementation of sizeable investment prnlocts and renewed activity in the private sector. This has been trigqered by increased consumption amonq expatriates whose purchasing power has risen as a result of the decline in thb value of the dollar. 1. Gross national product 9. The lack of consistent and reliable statistical data has made it difficult to establish overall trends in economic performance in Djibouti. Generally, the c?conomy has ramalned ~taqnent throuyhout 1985. Given the 1arrrQ nuh,ber of foreiqnere earning a hiqh income in Djibouti (French army, technical assistants, foreign firms and employees), the national income of the Djiboutiens can only be rtruqhly calculated on the bagis of the gross national product. The Government has thun estimated that the per capita yrose national product (GNP) for 1983 (the last year for which full stetigtics are available) is in the order of $415. It should also be pointed out that Djibouti’s economy is character ized by a high deqree of monetization (it does not produce food for its own consumption) and by hiqh prices, as near!y all Consumer qoods are imported. 2. Pub1 ic finance 10. The cyclical financicll difficulties of the economy stem primarily from the fact that fiscal revenue haa leveled off as a result of the rise in the value of the dollar and its impact on the income of a segment of the foreign population and A/41/522 English Page 4 on domestic prices, expressed in Djibouti francs, of imports from European countries that are Djibouti’s main suppliers. There has also been a decline in external grants to subsidize the budget as donors have also been experiencing financial difficulties. In 1985, the Government continued to implement the austerity programme adopted in 1984. It is likely that this proqramme will be needed beyond 1986. The decline of the dollar and the implementation of projects that are part of the investment programme submitted to the donors' conference in 1983 should eventually lead to an upturn in the economy. 3. Balance of payments 11. Until 1982 Djibouti had an overall balance-of-payments surplus because of the external financing it received (in the form of loans and subsidies). Starting in 1983, the Government was compelled, because of its economic difficulties, to draw on the reserves it had built up since independence. The current account deficit is expected to remain high in 1986-1987 as high imports will be needed to meet the envisaged level of investment. The outlook for the medium and long term remains problematic. 12. External debt totals some $205 million (of which 46 per cent is held by public enterprises) . Servicing of foreign debt will require $8 million in 1986, rising to $11.5 million in 1987. C. Development activities 1. Special programme of economic assistance 13. The last’review of progress made in implementing the special programme of economic assistance for Djibouti is contained in the report of the Secretary- General (A/37/136). At that time, it was indicated that only 4 of the 51 projects of the initial programme had not received any support. These as well as the projects being implemented were incorporated in the investment programme presented to the 1983 donors conference. 2. Donors’ conference and public investment programme 14. The donors’ conference led to the preparation of an investment programme in the public sector; it consisted of 93 investment projects. Pollow-up activities and implementation of the programme have been conducted by a national supervisory committee chaired by the Ministry of Finance and assisted by a 'UNDP/World Bank technical assistance project. As at the end of December 1985, a total of 57 out of 93 projects were fully or partially funded. The total cost of these 57 projects was estimated at some $320 million, of which 63 per cent will be financed by external loans, 11 per cent by grants and 9 per cent by internal resources. Funding for the remaining 17 per cent has yet to be found. 15. In addition, the Government is drawing the attention of the donor community to the other priority projects that are Still without funding (see para. 17). A/4 l/522 Enqlish Paqe 5 16. With rraspect. to rcq,onal efforte, it should be pointed out that the TnterqoVf?rnmPntal Authority for Drouqht srld Development (IGADD) was established officially in January 1986 and a Plan of Action for the countries concerned has been adopted . 17. ‘I’here are plans to hold a second donors’ conference in November 1986. Preparations for the conference will be carried out with technical assistance from the United Nations system and the Commieaion of the European Communities, projectePub1 ic investment (In million8 of United Ststss dollars1 Coet Remarks (Eat imatsd in AGRTCUL’l’URE March 1985) Water Tad jourah aqr icultural 0.50 Project submitted to the donors’ enqinear inq base conference with the same cost estimate. Installation of solar 0.56 Project submitted to the donors’ pumps conference with the same cost astimate.
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