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Market Focus : Ivory Coast Tries a Radical Formula for Fiscal Recovery : Alassane Ouattara had to start from zero when he took hold of his country's economic reins eight months ago. Now, international bankers say his policies may have implications for the rest of Africa.


ABIDJAN, Ivory Coast — The bittersweet scent of raw cocoa awaiting shipment overseas still permeates the huge lagoon-side port district here, a reminder that this is the commodity that created Africa's most stunning economic success story.

But a few miles away in the business district known as "The Plateau," the windows of a top-floor office are sealed shut and the air conditioning is on full blast, the better to obliterate the chocolaty smell that symbolizes how reliance on a single major crop also came close to destroying the country.

"We can't continue to be a cocoa economy," says Alassane D. Ouattara, 48, now in his eighth month as economic czar of the Ivory Coast.

In that time Ouattara, a native Ivorian with international banking credentials, has turned Ivory Coast into a closely watched laboratory of Western economic prescriptions for struggling African countries.

In a virtual blitzkrieg against the country's old, hidebound economy, Ouattara has laid off excess government workers and cut bureaucratic costs with a determination that would shame, say, the U.S. Congress.

Most recently, he negotiated to turn over Ivory Coast's huge state-owned electrical utility to a subsidiary of the French industrial giant Bouygues, the first decisive step in what is likely to be the largest program in Africa to privatize a state-dominated economy.

"By African standards, he's moving by absolute lightning speed--even by world standards," says one leading international banker in admiration.

Handed presidential carte blanche to restructure a nation whose bureaucratic bloat and nonchalantly pervasive corruption resemble that of a boom town just past its prime, Ouattara may have one of the hardest jobs in Africa.

Ivory Coast was a forgotten backwater of the French empire when it received its independence in 1960, seemingly doomed to living in the shadow of rich neighbors like Ghana, which was then the economic and political heavyweight of the region.

But its president, Felix Houphouet-Boigny, abjured the pan-Africanist and quasi-socialist policies of Ghana's Kwame Nkrumah. He invited foreign talent to live and work in his country and ordered a single-minded buildup of cocoa- and coffee-producing capacity. Within a few years Ivory Coast was rich, the world's leading cocoa producer.

But the "Ivorian miracle" did not last. When cocoa prices slumped to 15-year lows in the 1980s, the economy followed them into the trough.

By the beginning of 1990, after two years of overpaying farmers for their crops and trying to drive the world price back up by stockpiling cocoa, the country was more or less bankrupt.

A plan to tighten belts by slashing public workers' salaries and imposing an equivalent tax on private workers sent thousands of demonstrators into the streets of Abidjan last spring and sparked violent confrontations with police elsewhere. Houphouet-Boigny's 30-year-old reign was tottering.

The president's answer was to put Ouattara in full charge. An urbane product of Ivorian, French and American schooling, his official title was to be president of the Interministerial Coordination Committee of the Stabilization and Economic Recovery Program; in essence, the president told him to do whatever was necessary to rescue the economy, as fast as he knew how.

Ouattara says he took one look at the government's half-hearted recovery plans, "scrapped everything and started from zero."

He canceled outright the pay cuts and new taxes. He moved to trim the public payroll by firing excess workers, cutting expenses and improving lax customs and tax collections.

He closed 12 Ivorian embassies, including seven in Africa, and laid off 7,000 of the country's 100,000 "temporary" public workers. The fleet of official government cars was slashed by a third, allowing Ouattara to put 4,000 Mercedes-Benz and other vehicles on the block and producing great savings on auto insurance, maintenance and gasoline.

In all, Ouattara claims to have been able to cut government spending by about $2.8 billion and to raise $120 million in new revenues. Ivory Coast's fiscal deficit has dropped from 18% of gross domestic product to 8%, and he expects to show a surplus in three years.

In a way, Ivory Coast may be better equipped for a new economic surge than most of its West African neighbors: Its boom years financed construction of the region's best roads and telephone system, along with European-grade water supplies and electrical utilities.

But cocoa also nurtured a culture of official corruption and favoritism on a scale that became widely visible only when the economy suddenly shrank, the way a receding tide exposes old shipwrecks to view.

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