Press Release No. 10/279

Press Release No. 10/279
July 2, 2010

An International Monetary Fund (IMF) mission, led by Norbert Funke, visited Dakar from June 25-July 1. At the end of its visit, the mission was received by the President of the Republic, Mr. Abdoulaye Wade. During its stay, the mission met the ministers in charge of the Economy and Finance, the Budget, Infrastructures, and Energy. It also met other officials of the administration and representatives of the private sector and development partners.

With Senegal’s Policy Support Instrument (PSI) ending in November 2010, discussions centered on some reforms, which could form the cornerstone for a next program supported by the Fund.

The discussions were focused on reforms that could accelerate growth, create employment and reduce poverty. They made possible to appreciate the important progress accomplished over the last few years, but also the challenges that still lay ahead.

The mission noted that:

“Economic performance through May has been satisfactory. Monthly indicators of economic activity and revenues are picking-up, pointing to an ongoing economic recovery. Inflation remains low. The authorities appear to be broadly on track to meet key program targets of the PSI for 2010.

We are encouraged by the authorities’ commitment and initiatives to address bottlenecks to growth. Raising trend growth will require continued steps to make the public sector more efficient and structural reforms to increase productivity in the private sector. Key steps include (i) consolidating progress in public financial management; (ii) gradually reducing the fiscal deficit to a medium-term target of about 4 percent of GDP; (iii) enhancing the composition and the quality of spending and increasing tax revenue in the context of large infrastructure investment projects; and (iv) promoting private sector development through an improved business climate, better governance, and a more supportive role of the energy and financial sectors. Accelerating reforms in the energy sector will be particularly important to minimize the risk of supply bottlenecks and a drain on government finances.

The mission plans to return to Dakar during the second half of September to evaluate performance under the last review of the current PSI and to pursue discussions about a successor program.”