IMF Executive Board Completes Fourth Review Under Policy Support Instrument for SenegalPress Release No. 12/477
December 10, 2012
The Executive Board of the International Monetary Fund (IMF) today completed the fourth review of Senegal’s performance under the Policy Support Instrument (PSI). The program is on track and all end-June 2012 assessment criteria were met. The Board also concluded the 2012 Article IV consultation with Senegal. A Public Information Notice will be issued in due course.
The PSI was approved by the Executive Board on December 3, 2010 (see Press Release No. 10/469). 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, Mr. Min Zhu, Deputy Managing Director and Acting Chair, issued the following statement:
“ Senegal’s economic growth has been sluggish in recent years, with implication for poverty reduction. Despite the still challenging external environment, a moderate growth pick up is projected in 2012 and 2013, owing to a rebound in agriculture and the completion of a number of large infrastructure and mining projects. With full implementation of the authorities’ ambitious reform program, supported under the Fund’s Policy Support Instrument, growth should gradually return in the medium term to the level recorded before the global financial crisis. Inflation would remain moderate.
“The authorities’ plan to further reduce the fiscal deficit below 6 percent of GDP in 2012 and 5 percent of GDP in 2013 will help maintain debt sustainability. At the same time, they need to make space for growth-supporting public investments and other priority spending. To achieve this objective, they are committed to reducing the cost of running the government, streamlining public agencies, rationalizing expenditure in key sectors, and phasing out the costly and poorly targeted subsidies while strengthening social safety nets. It will be critical to sustain these efforts over the medium term to achieve a lasting improvement of public spending efficiency and reduction of the fiscal deficit.
“The main medium-term challenge for Senegal is to move to higher, sustainable, and inclusive growth. The authorities’ new development strategy and its focus on inclusiveness are therefore welcome. The government has an important role to play in raising the growth potential, for instance through the provision of critical infrastructure and reforms to improve the business environment. Accelerating the implementation of the new energy investments and the restructuring of SENELEC, the national power utility, is a priority in the short term,” Mr. Zhu added.