IMF Executive Board Completes Third Review Under Policy Support Instrument for SenegalPress Release No. 12/258
July 13, 2012
The Executive Board of the International Monetary Fund (IMF) today completed the third review of Senegal’s performance under the Policy Support Instrument (PSI). In completing the review, the Executive approved a waiver for nonobservance of the end-December 2011 assessment criterion on the overall fiscal deficit, which was missed by a small margin. All other end-December 2011 quantitative assessment criteria were met.
The PSI for Senegal was approved by the Executive Board on December 3, 2010. The IMF's framework for PSIs is designed for low-income countries that may not need, or want, IMF financial assistance, but still seek IMF advice, monitoring and endorsement of their policies. PSIs are voluntary and demand driven (see Public Information Notice No. 05/145).
Following the Executive Board’s decision on Senegal Mr. Min Zhu Deputy Managing Director and Acting Chair, issued the following statement:
“Following orderly presidential and parliamentary elections, the new Senegalese authorities have confirmed their commitment to the objectives of the PSI-supported program. Program implementation slowed down ahead of the elections, and economic performance was affected by exogenous shocks, including the drought in the Sahel. Growth is expected to resume in 2012, but a weak global environment and regional instability pose important challenges.
“A higher deficit target in 2012 (6.4 percent of GDP) accommodates the impact of exogenous factors, but significant efforts are required to keep the program on track. The authorities’ plans to reduce the cost of running the government and postpone non-priority investment projects are crucial to meeting the deficit target. Over the medium term, the authorities are committed to reducing the fiscal deficit below 5 percent of GDP in 2013 and 4 percent by 2015 to keep public debt on a sustainable path and rebuild fiscal buffers. The authorities’ intention to replace costly general price subsidies, particularly for energy, with an alternative system better targeting the poor is an important step.
“The program’s ambitious structural reform agenda is critical to raising Senegal’s long-term growth potential. Comprehensive tax reform and reform of the energy sector should remain key objectives for 2012. Other priority reform areas include public financial and debt management, tax and customs administration, the financial sector, and measures aimed at removing bottlenecks to growth and improving the business climate and governance,” Mr. Zhu added.