This paper assesses the external sustainability of member countries of the West African
Economic and Monetary Union (WAEMU) over the period 1980–2008. A least square
dummy variable corrected estimation first identifies over the 1980–2004 period, the
lagged current account, unrequited transfer flows and government final consumption
expenditures as the fundamentals of the current account balance. On grounds of the
fitted values of these explanatory variables, the projected medium-term—2005–2008
period—current account deficits drift apart from the stabilizing current account deficits
at external debt benchmarks, suggesting an increase of external debts over the medium
term. The magnitude of adjustments in government final consumption expenditures to
achieve the current account sustainability shows that the extent of adjustments is more
important when the external debt benchmark is less than the WAEMU convergence
norm. This finding calls for fiscal consolidation within the union.