Senegal: Sixth Review Under the Policy Support Instrument and Request for Modification of an Assessment Criterion—Staff Report; Informational Annex; Press Release and Executive Director’s Statement

 
 
Publication Date: January 08, 2014
 
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Summary: KEY ISSUES Context. GDP growth is on track to reach 4 percent in 2013 and is projected to increase to 4.6 percent in 2014. Inflation has been declining, following a good harvest, and should stay below 1 percent in 2013 and below 2 percent in 2014. The cabinet was reshuffled in early September. This change was broadly viewed as a move to accelerate reforms ahead of local elections scheduled for the spring of 2014. Program implementation. While all quantitative program targets for mid-2013 were met, structural reform implementation slowed significantly during the summer and most structural benchmarks were not met by their respective deadlines. A number of critical reforms not covered by benchmarks also experienced limited progress. Fiscal outlook. The 2013 deficit target of 5.4 percent of GDP is projected to be met. The deficit would further decrease to 4.9 percent of GDP in 2014. This will require strengthening the revenue base, as recurrent revenue shortfalls have complicated fiscal management and required inefficient expenditure cuts in the past few years. The revenue mobilization efforts will hinge on tax administration reforms, as the tax system needs to stabilize after the introduction of the new tax code. Substantial current expenditure streamlining is also expected in 2014. It will contribute to the reduction of the deficit while allowing for higher public investment and the development of the social safety net. Reforming the State. The reform of agencies will improve transparency of public spending, expenditure control, fiscal management, and the efficiency of public spending. Beyond the restructuring of existing agencies, better supervision of remaining agencies and better application of rules governing the creation of new ones will be critical. Other efforts to increase the efficiency of public expenditure, such as generalizing cost-benefit analysis for the selection of projects and better control over the wage bill, should continue. Energy sector. Slow reforms in this sector represent a major obstacle to economic growth and carry substantial fiscal risks. Insufficient progress has been recorded in the implementation of the authorities’ strategy to introduce more cost-effective production technologies and improve the efficiency of SENELEC. It is critical to adopt a realistic timeline for the implementation of the investment plan and to focus efforts on a few large projects that are most critical. Better communication with all stakeholders on the situation of the sector, the reform strategy and its implementation is also needed. Staff recommends completion of the sixth PSI review.
 
Series: Country Report No. 14/4
Subject(s): Policy Support Instrument | Fiscal policy | Budget deficits | Fiscal reforms | Financial management | Energy sector | Economic indicators | Staff Reports | Press releases | Performance criteria modifications | Senegal

Notes Also available in French
 
English
Publication Date: January 08, 2014
ISBN/ISSN: 9781484340011/1934-7685 Format: Paper
Stock No: 1SENEA2014001 Pages: 66
Price:
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