We learn with amazement on the front page of the daily Les Échos that "Senegal is tearing up its agreement with Mauritius".

We learn with amazement on the front page of the daily Les Échos that "Senegal is tearing up its agreement with Mauritius". The truth is that senegal has an appalling laxity in the management of public finances. The national budget is weighed down by the plethora of derogatory regimes granting far too many tax advantages (mining code, free zone, petroleum code, investment code) to investors, most of them foreigners, not to mention this incomprehensible propensity of the State to grant free discounts to multinationals. Meanwhile, the government is shamelessly indebted for prestigious spending, while depriving key sectors of the living wage.

Moreover, the calamitous management of the Covid-19 crisis has proved it sufficiently ! Most of our external debt is indeed directed towards non-priority investments (TER, Arena, National Arena, CICAD, Ministerial City, etc.), a wide open door for embezzlement: embezzlement, overbilling, over-the-counter markets, retro commissions, corruption. To wonder if our leaders have understood the notion of priority ! To believe that they are doing it on purpose ! Their favorite sport is to have fun and squander our resources in every way possible and later turn into costumed beggars at the door of other nations.

The impact of the debt process on the alienation of economic sovereignty is known to all.

Budget deficit = EXPENDITURE – REVENUE
⦁ REVENUE : taxes, customs duties, non-tax revenues, grants
⦁ EXPENDITURE: interest on the debt, salary and operations, goods and services

In 2005 Senegal's public debt amounted to 2465 billion CFA francs, or 22.1% of GDP. The international financial community, including multilateral institutions and national authorities, has worked to reduce the external debt burden of the most heavily indebted poor countries to a sustainable level.

Senegal has rebuilt its public debt, despite the debt cancellations recorded under the Heavily Indebted Poor Countries (HIPC) initiative in 2005 , and barely 15 years later, we are almost back to the starting point. Today, Senegal's debt stock has almost quadrupled to reach 8,231 billion in 2019, or 58% of GDP. It should be noted that debt capacity is not repayment capacity (over-indebtedness ratio). Talking about a state's over-indebtedness is a sign that part of its debt is considered "excessive".

This is intended to legitimize actions such as : rescheduling of maturities (maintenance of the value of the debt, but modification of the schedule), debt reductions (cancellation of part of the debt) debt cancellations. And since the beginning of the Covid-19 pandemic, the demands for a new cancellation of the African debt follow one another, as a ritual of conjuring the pandemic. After the request of the African Ministers of Finance and the African Union for immediate debt relief, it is the turn of the IMF and the World Bank, the G20 and French President Emmanuel Macron, to announce massive relief of the African debt.

TO FIGHT AGAINST INDEBTEDNESS :
STOP TAX HAVENS !

The management of our meagre revenues by our rulers shows all the flaws in the governance of this regime. In terms of tax revenues, Senegal has a low tax burden rate in 2019 of 17.4% (2434/13983 – tax revenues/GDP – LFI2020). In developed countries this rate varies between 30 and 40% according to the OECD (France 46.2%, Germany 37.5%, Japan 30.6%).

In Senegal, we can achieve a tax burden rate of 25%, for an additional 1000 billion in our budget, by exploiting niches. The main niche concerns the revision of tax exemptions granted to certain multinationals, the rationalization of conventions signed mainly with tax havens (Anguilla, the Bahamas, Fiji, Guam, the United States Virgin Islands, the British Virgin Islands, Mauritius, Cayman Islands Luxembourg, Oman, Panama, American Samoa, Samoa, Seychelles, Trinidad and Tobago and Vanuatu, etc.

Because of the principle of no double taxation, we lose a lot of money. Tax havens are mainly characterised by low or no taxes, lack of exchange of information, lack of transparency, lack of substantial activity requirements and so on !
A study by the American organization, The National Bureau of Economic Research (NBER), carried out in 2017, informs that Senegal would be the 8th nation with more money in tax havens. Thus, it is no coincidence that, in our balance of payments 2018 (BCEAO 2018), outgoing investments (FDI + portfolio investments) (1349 billion) are higher than incoming investments (48.6 billion).

At the Paris Club meeting in 2018, the representative of Germany said that  " large-scale growth does not only require substantial foreign investment. On the contrary, the most important investments are those of the Senegalese themselves in their country. Because, first, there are mathematically much more investments if each Senegalese invests in his country, even if it is only small amounts. And second, Senegal would send an important signal, convincing German and other investors that their money is well placed. To date, africans' private capital is mainly placed outside Africa.

Economic development is therefore deprived of an amount of up to 800 billion dollars (476,800 billion CFA francs) hence the following question: why invest in a country in which its own citizens do not invest? "

On February 15, 2018, Ousmane SONKO had alerted the Executive and the National Assembly to the danger of signing " double taxation " agreements that would bind Senegal to countries with the status of tax havens (Mauritius, Luxembourg, ...). The MP had raised the risk incurred (tax evasion) by the State, due to companies operating in the oil sector in particular.

This is the case of Petro-Tim Ltd & Petro-Asia New Co which are both domiciled in the Cayman Islands under the numbers 265741 & 270031. So if our state waits until 2020 to " tear up its agreement with Mauritius " after having endured a tax evasion of more than 150 billion, how much have we lost then with the other tax havens before trying to fill this hole with an untimely debt?

Babo Amadou BA
Member of the National Secretariat for Communication