One of the causes of under-development in the ACP States, over
and above any errors of management or economic policy options, is the shortage
or indeed. total absence of financial resources. Burkina Faso is badly
handicapped when it comes to money for a sustained programme of development.
Unlike countries with major sources of income -Nigeria and Gabon (oil), for
example, and Cdlvoire and Cameroon (farming, timber and even
petroleum) - Burkina is a landlocked nation whose financial limitations are a
genuine constraint on all economic ambition.
The State Secretary for Finance, Tiraogo Celestin Tiendrebeogo,
told The Courier about the structures and the new Ouagadougou Governments
method of handling State finances.
Our budget is financed mainly by taxes and a look at the
structure of State income shows just how important this tax revenue is. In the
1990 budget, for example, which came to CFAF 96 097 billion, tax revenue
accounted for CFAF 84 961 billion, which is 88.41 %, with non-tax revenue an
estimated CFAF 9 400 billion, or 9.78 %. Then there are what we call the capital
reserves, which are not tied to tax revenue, and they are worth CFAF I 734
billion, or 1.80 % of the budget.
Almost 80 % of this tax revenue is raised on
consumption-it is indirect taxation, that is to say, customs duties accounting
for about 55 % of the total State budget and such things as the business
turnover tax and the duties on tobacco, fuel and locally-made beverages. So
purchase tax is the main source of tax and budget revenue.
An initial remark about the structure of Burkinas budget
and State finances is that income tax and the industrials and commercial profits
taxes only account for about 20 % of the countrys total tax revenue.
Yet the budget could be financed and the percentage of customs
duties and indirect taxation in the State finances reduced in another way, with
the nations potential mineral earnings from, say, the Poura gold deposit.
But as things stand, the income accruing from the working of the mines goes into
repaying the loans (CFAF 23 billion) used to finance the mining concerns-which
nonetheless, Ouagadougou hopes, will be bringing money into the State coffers
The structure of Burkinas State finances is fragile,
obviously, when it comes to pressing on with the job of running the country
without upsetting major economic projects. But President Compaor146;s
Government does not want external financing for the budget. The structure
of our budget shows that we are anxious to avoid financing our operating
expenditure (some CFAF 86 billion in 1989) with loans, subsidies or even grants
as far as possible, Tiendrebeogo said. As he sees it, channelling loans
and subsidies into productive projects (capital spending of CFAF 17 billion in
1989)wouldenable the Government to achieve the twofold aim of getting operating
expenditure under control and speeding up the implementation of development
And the first result of this, he maintained, would be to
make our productive units efficient and able to boost their productivity
and profitability and thereby generate more direct revenue in the form of
industrial and commercial turnover taxes and more indirect revenue in the form
of levies on non-commercial profits and other taxes on consumption-which
would keep up with the increase in income distribution. The Government is
counting on more jobs and company productivity to do this. However, these are
economic forecasts, not controllable data. Imponderables, be they short-term
economic or other factors, could well compromise the success of the States
budget financing policy.
Of course, there are limits to tax pressure and we cannot
rashly expand the basis of assessment, the State Secretary said, but he
still firmly believes that a better performance from the production
units... will push up the national income... and the public finances without any
change to the present tax arrangements.
Someting which bothers us
Heavier taxes on household spending would also raise the cost of
living for low income groups, particularly those on low wages and would
discourage the informal activities which are predominant in the economy and
which make a considerable contribution to the success of any savings policy in
Africa. This is something which bothers us when it comes to recovering
taxes and encouraging savings, Tiendrebeogo said, particularly since,
although the State has limited resources, it still has economic
development ambitions... So we have to be able to release the national
counterparts of the financing for projects run with external funds. Hence
the need for investment resources to prove our will to our external
partners and show them we are making an effort to take an active part in the
economic achievements and not waiting for them to, say, get productive
investments going, he emphasised.
But it has to be said that there are still doubts as to the
States ability to do this properly, as Mr Tiendrebeogo admitted. His
explanation for State intervention in African economies was that private
operators are fairly unenthusiastic about investing in many sectors which are
vital to the national economy, regardless of major tax and other
incentives from the Government. The many reasons for this include the
general weakness of economic structures, i.e. the absence of a market,
infrastructure and skilled workers, red tape and so on-enormous difficulties for
the economy of Burkina and the continent alike and ones which must be solved
by contriving to organise and rationalise our countries
However, the State Secretary for Finance, who is the man
responsible for filling the State coffers, says that the structural adjustment
policy may well not just result in better management. There could be bad effects
Structural adjustment should get State operating expenditure
under control, but it may also mean a big drop in the purchasing power of the
wage-earners on whose purchases much of the tax revenue depends. And as long as
the economy is not really growing, the Government will be ill-placed to check
However, the structural adjustment measures should help cut
operating expenditure by pruning the vast civil service (33 800 staff in 1990 as
against 23 482 in 1983).
The State Secretary said that figures available at the end of
1990 suggested that debt servicing had also taken an encouraging turn, having
gone from 26.35 % of export revenue in 1987 to 20.88 % in 1988. In terms of
volume, the estimate for 1990 was CFAF 17 billion.
This positive trend, he felt, would continue. Thanks to its
special schemes, the European Community would be helping cushion the social
consequences of the structural adjustment measures being run with the return to
good relations between Burkina and the Bretton Woods institutions at the end of
Political upheavals in Burkina have dealt a harsh blow to the
economy, but the country now seems genuinely keen to adjust its aim and put more
stress on economic performance and Government management.