News Brief: IMF Completes Review Under Senegal's PRGF Arrangement and Approves US$12 Million Disbursement
October 1, 2001
The Executive Board of the International Monetary Fund (IMF) has on September 28, 2001 completed the first review of Senegal's third annual arrangement under the Poverty Reduction and Growth Facility (PRGF)1. As a result, Senegal will be able to draw up to SDR 9.00 million (about US$12 million) under the arrangement immediately.
Senegal's three-year PRGF arrangement was approved on April 20, 1998 (see Press Release 99/29), for SDR 107 million (about US138 million). So far, Senegal has drawn SDR 78.47 million (about US$101 million) under the arrangement.
After the Executive Board's discussion on Senegal, Eduardo Aninat, Deputy Managing Director, and Acting Chairman, made the following statement:
"The Senegalese economy continues to grow at a solid pace, while inflation remains low and external competitiveness is strong.
"The Fund commends the government's satisfactory macroeconomic performance and welcomes the recent introduction of a single-rate value-added tax. It will, however, be crucial to address without delay the financial imbalances that have built up in the groundnut and electricity sectors in order to ensure macroeconomic stability and sustained growth in the medium term.
"The Fund looks forward to the implementation of strong structural measures, in cooperation with other development partners, to address the longstanding problems in these sectors. Specifically, in the coming months the public groundnut company will withdraw progressively from the collection of groundnuts and the distribution of seeds and fertilizers. The government also intends to privatize the public electricity company before the end of the year.
"Regarding other structural reforms, the government will address the deficits of the civil service pension system through a revision of the pension law by the end of this year, and it is expected to take all necessary steps to reduce the deficit of the postal service.
"Senegal faces the challenge of achieving sustained economic growth and of ensuring that it leads to lasting and broad-based poverty reduction. The Fund welcomes the participatory process through which the authorities are preparing a poverty reduction strategy paper (PRSP), and progress in updating poverty data should create a firm basis for a strategy that is effectively targeted at improving conditions for the poor. The completion of a sound PRSP with participation of civil society, combined with the maintenance of macroeconomic stability, progress in the government's privatization program, and an increase in primary education spending will lay the foundation for Senegal moving toward the completion point under the enhanced Initiative for Heavily Indebted Poor Countries in 2002," Mr. Aninat said.
1 On November 22, 1999, the IMF's facility for low-income countries, the Enhanced Structural Adjustment Facility (ESAF), was renamed the Poverty Reduction and Growth Facility (PRGF), and its purposes were redefined. It is intended that PRGF-supported programs will in time be based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners and articulated in a Poverty Reduction Strategy Paper (PRSP). This is intended to ensure that each PRGF-supported program is consistent with a comprehensive framework for macroeconomic, structural, and social policies to foster growth and reduce poverty. Senegalese government is maintaining its goal of preparing a full PRSP by end-2001 to enable it to reach the completion point under the Enhanced Heavily indebted Poor Countries (HIPC) Initiative. PRGF loans carry an annual interest rate of 0.5 percent and are repayable over 10 years with a 5 ½ grace period on principal payments.