## 1senea2020003 - 1.1 percent in 2020 compared to 5.3 percent in 2019.

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### Overview and context
- The Executive Board of the IMF completed the first review under the Policy Coordination Instrument (PCI) for Senegal. The PCI was approved on January 10, 2020.
- The PCI supports the second phase of the authorities’ national development strategy “Plan Senegal Emergent” and is articulated around three pillars: (i) achieving high, sustainable, and inclusive growth; (ii) consolidating macroeconomic stability through prudent fiscal policy, including increasing revenues and spending efficiency, and sound debt management; and (iii) managing the oil and gas sector in a sustainable and transparent manner.
- The Covid-19 pandemic has significantly altered the outlook, ending a period of buoyant growth averaging about 6 ½ percent over the last 6 years.

### Growth outlook and risks
- Headline projection:
  - GDP growth now projected at 1.1 percent for 2020 compared to 5.3 percent in 2019.
- GDP at constant prices (selected years):
  - 2019: 5.3; 2020: 1.1; 2021: 4.0 and 6.0; 2022: 12.2; 2023: 8.1; 2024: 6.0.
- Sectoral growth (selected):
  - Non-hydrocarbon GDP: 2019: 5.3; 2020: 1.1; 2021: 4.0; 2022: 7.3; 2023: 7.2; 2024: 7.3.
  - Non-agriculture GDP: 2019: 5.8; 2020: 0.9; 2021: 4.1; 2022: 12.9; 2023: 8.3; 2024: 6.0.
- External sector projections (selected):
  - Exports, f.o.b. (CFA francs): 2019: 12.3; 2020: -11.9; 2021: 12.7 and 21.6; 2022: 76.4; 2023: 13.3; 2024: 8.6.
  - Imports, f.o.b. (CFA francs): 2019: 4.7; 2020: -8.2; 2021: 12.1 and 15.8; 2022: 20.5; 2023: 9.2; 2024: 9.4.
  - Current account balance (official transfers included): 2019: -7.7; 2020: -8.8; 2021: -10.2 and -11.0; 2022: -3.9; 2023: -3.9; 2024: -4.5.
- Outlook commentary:
  - A gradual recovery is expected in the second half of 2020 and in 2021, while downside risks prevail.
  - If the pandemic’s impact is stronger-than-envisaged, the economy could shrink in 2020 and recover more gradually.

### Fiscal stance, revised 2020 budget, and key fiscal indicators
- Revised 2020 fiscal stance:
  - Fiscal deficit (including grants) will temporarily increase to 6.1 percent of GDP in 2020.
  - Deficit expected to decline back to 3 percent of GDP by 2022.
  - Revised 2020 budget increases health spending, targets support to the vulnerable, and includes economic stabilization measures.
- Government financial operations (percent of GDP, selected):
  - Revenue: 2019: 20.2; 2020: 21.0; 2021: 20.0 and 20.6; 2022: 21.1; 2023: 21.3; 2024: 22.0.
  - Grants: 2019: 1.6; 2020: 3.5; 2021: 2.5 and 2.4; 2022: 2.0; 2023: 1.7; 2024: 1.7.
  - Total expenditure: 2019: 24.0; 2020: 27.1; 2021: 24.5 and 23.7; 2022: 24.1; 2023: 24.3; 2024: 25.0.
  - Net lending/borrowing (including grants): 2019: -3.8; 2020: -6.1; 2021: -4.5 and -3.0; 2022–2024: -3.0 each year.
  - Primary fiscal balance: 2019: -1.9; 2020: -4.0; 2021: -2.6 and -1.0; 2022: -1.1; 2023: -1.1; 2024: -1.0.
- Public debt and debt service (selected):
  - Total public debt: 2019: 64.1; 2020: 68.6; 2021: 70.4 and 70.5; 2022: 64.5; 2023: 62.3; 2024: 61.3.
  - Domestic public debt: 2019: 10.9; 2020: 11.0; 2021: 12.8 and 13.6; 2022: 14.1; 2023: 15.7; 2024: 16.9.
  - External public debt: 2019: 53.2; 2020: 57.7; 2021: 57.6 and 56.8; 2022: 50.4; 2023: 46.6; 2024: 44.3.
  - Total public debt service as percent of government revenue: 2019: 23.0; 2020: 23.7; 2021: 22.4 and 28.0; 2022: 24.7; 2023: 29.6; 2024: 24.2.

### Policy response, external support, and financing measures
- Authorities’ actions:
  - Significant containment and mitigation actions, supported by development partners and participation in the DSSI.
  - IMF disbursed SDR 323.6 million (about US$ 442 million, 100 percent of quota) under the Rapid Financing Instrument and Rapid Credit Facility in April.
- Debt service suspension:
  - Suspension to Paris Club and G20 creditors between June and December 2020 amounts to about CFAF 90 billion (0.6 percent of GDP), of which about 30 billion in interest.
- Banking sector and monetary policy:
  - Banking system liquidity remains adequate: deposits rose by 7.3 percent y-o-y in April; credit to the economy increased by 2 percent y-o-y while declining 4.2 percent since December.
  - Gross non-performing loans as of end-April: 13.5 percent (down from 13.9 percent at end-December).
  - BCEAO has an accommodative monetary policy stance and a special short-term refinancing window for member-states; COVID-19 bonds have a maturity of 3 months.

### Economic and Social Resilience Program (PRES) — structure and allocations
- PRES fund: CFAF 1,000 billion (7 percent of GDP), organized around four pillars.
- Pillar I — Strengthen the health system:
  - Allocation: CFAF 78.7 billion, 0.54 percent of GDP.
- Pillar II — Strengthen social protection:
  - Allocation: CFAF 103 billion, 0.71 percent of GDP.
  - Food kits for 1 million vulnerable households: CFAF 69 billion, 0.47 percent of GDP.
  - Support for diaspora: CFAF 12.5 billion, 0.1 percent of GDP.
  - Utility bill subsidies for vulnerable households (two months): CFAF 18.5 billion, 0.13 percent of GDP.
  - Livestock safeguarding: CFAF 2 billion, 0.01 percent of GDP.
  - Support for artisanal fishing: CFAF 1 billion, 0.01 percent of GDP.
- Pillar III — Safeguard macroeconomic and financial stability, support private sector and jobs:
  - Allocation: CFAF 760 billion, 5.31 percent of GDP.
  - Partial forgiveness of outstanding tax debts: CFAF 200 billion, 1.38 percent of GDP.
  - Accelerated payment of unmet obligations: CFAF 200 billion, 1.40 percent of GDP.
  - Tax rebates to incentivize companies to keep employees: CFAF 40 billion, 0.27 percent of GDP.
  - SME support and micro-enterprise financing: CFAF 5 billion, 0.04 percent of GDP.
  - Direct support to hardest hit sectors: CFAF 100 billion, 0.69 percent of GDP.
  - Credit guarantee fund: CFAF 70 billion (0.48 percent of GDP), to leverage another CFAF 130 billion from banks.
- Pillar IV — Maintain regular supply of hydrocarbons, medical products, and basic necessities:
  - Allocation: CFAF 77.6 billion, 0.54 percent of GDP.
- Budgetary impact and summary items:
  - Taxes (Pillar III summary line in Covid-19 Fund): 21515 (as appears in Covid-19 Fund).
  - Expenditure: 709351.
  - Savings in response to Covid-19: -95 (Current -20; Capital -75).
  - Covid-19 support measures 1/: 804446 (additional vis-à-vis the 2020 original budget).
  - Accelerated payment of pre-2020 unmet obligations: 200 87.

### Program performance, conditionality, and reform targets
- Program performance:
  - Satisfactory performance; all end-2019 and continuous QTs met except the ceiling on public contracts signed by single tender (missed by small margin).
  - Stock of outstanding comptes de dépôt reduced by CFAF 101.2 billion; remaining CFAF 121 billion programmed to be cleared this year.
- Quantitative and reform target adjustments:
  - QTs for end-June and end-December 2020 recalibrated to reflect pandemic impact; staff supports completion of first PCI review and authorities’ request to modify quantitative targets.
  - Revised quantitative targets proposed for end-June 2020, end-December 2020, and new targets for end-June 2021.
- Selected reform targets and status:
  - Medium-term revenue strategy (MTRS): adopted (RT, end-June 2020).
  - Identify policy options to enhance secondary education attendance: RT met.
  - Retail fuel and electricity price adjustment mechanism: continuous RT met.
  - Some RTs delayed or proposed to be reset or dropped due to crisis (e.g., adoption of new PPP law, draft hydrocarbon revenue laws).

### Transparency, accountability, and PFM reforms
- Transparency commitments:
  - Publish all related tenders, beneficiaries, audit results and quarterly budget execution reports for COVID-19 spending.
  - Authorities committed to disclose debt by public sector borrowing entities to IMF/WBG within 3 months, but no later than September 1.
- PFM reforms and TSA:
  - Inventory of all bank accounts used by public institutions (new RT, end-December 2020).
  - Integrate all accounts into the TSA by 2022 (RT, end-December 2022).
  - Reduce reliance on simplified spending procedures ("comptes de dépôt") progressively over next two years.
  - Cap precautionary reserve at 5 percent of domestically funded investment appropriations (approximately CFAF 40 billion).
  - Cap acceleration of settlement of pre-2019 unmet obligations at CFAF 200 billion for FY 2020.

### Debt management, risks, and mitigation
- Debt assessment and changes:
  - Debt was assessed as sustainable with a moderate risk of debt distress but limited space to absorb further shocks.
  - 2020 debt-to-GDP ratio projected at 68.6 percent (vs. 61.9 percent in the January DSA).
  - Initial 2020 debt limit of FCFA 9,563 billion at PCI approval proposed to be increased to FCFA 10,034 billion (includes buffer of 1 ½ percent of GDP).
- Debt management improvements:
  - Revitalize National Public Debt Committee (CNDP) and adopt operating procedures (RT, end-June 2020).
  - External audit of debt database including SOE debt (proposed RT, end-December 2020).
  - Additional IMF TA to establish platform for monitoring and communication across government units.
- SOE-related fiscal risks:
  - SOE and parastatal debt stocks increased from 7.6 to 8.3 percent of GDP between 2018 and 2019.
  - Air Sénégal: planned direct support of CFAF 12 billion (0.1 percent of GDP) as part of CFAF 100 billion foreseen to support the economy, contingent on adjustment measures.
  - PETROSEN: put on hold efforts to finance shares in recently discovered oil and gas fields.
  - Staff encouraged inclusion of SOE debt within overall debt strategy.

### Hydrocarbons and fiscal prudence
- Hydrocarbon outlook and timing:
  - First oil/gas now expected in 2023 from Sangomar and GTA.
  - COVID-19 increased uncertainty on size, cost and timing; lower world oil prices jeopardize longer-term prospects.
- Revenue management:
  - Draft laws on allocation, management and control of hydrocarbon revenues and FONSIS to be finalized by end-2020 (RTs reset for end-December 2020).
  - Staff recommended refraining from significant new PETROSEN borrowing until project revenue clarity emerges.

### Adverse scenario — macroeconomic and fiscal implications
- Alternative scenario assumptions:
  - More protracted and harmful pandemic; oil and gas production pushed beyond 2023 (assumed not before 2025 in adverse scenario section).
- Key adverse scenario figures (selected):
  - Real GDP growth:
    - 2020 Baseline: 1.1; 2020 Adverse: -1.5.
    - 2021 Baseline: 4.0; 2021 Adverse: 2.5.
    - 2022 Baseline: 6.0; 2022 Adverse: 4.5.
    - 2023 Baseline: 12.1; 2023 Adverse: 7.0.
  - Fiscal balance (percent of GDP):
    - 2020 Baseline: -6.1; 2020 Adverse: -7.0.
    - 2021 Baseline: -4.5; 2021 Adverse: -5.5.
    - 2022 Baseline: -3.0; 2022 Adverse: -4.5.
    - 2023 Baseline: -3.0; 2023 Adverse: -3.7.
  - Gross public debt (percent of GDP):
    - 2020 Baseline: 68.6; 2020 Adverse: 71.2.
    - 2021 Baseline: 70.4; 2021 Adverse: 74.9.
    - 2022 Baseline: 70.5; 2022 Adverse: 77.4.
    - 2023 Baseline: 64.5; 2023 Adverse: 74.5.
  - Current Account Balance (percent of GDP):
    - 2020 Baseline: -8.8; 2020 Adverse: -9.0.
    - 2021 Baseline: -10.2; 2021 Adverse: -10.7.
    - 2022 Baseline: -11.0; 2022 Adverse: -11.7.
    - 2023 Baseline: -3.9; 2023 Adverse: -9.5.
- Policy recommendations if adverse scenario materializes:
  - Mix of adjustment and financing: cuts to domestically-financed investment and non-essential current spending and transfers; streamline tax expenditures.
  - Financing options: additional external concessional financing, further issuances on the regional market, or Fund financial arrangement.

### Medium-Term Revenue Strategy (MTRS) 2020–25 — objectives and reforms
- Objective: bring tax-to-GDP ratio (excluding hydrocarbon flows once online) to 20 percent by 2023 (a 2.6 percentage point increase relative to 2019).
- Three strategic axes:
  - Broadening the tax base and promoting tax consent.
  - Digitalization for accountability and taxpayer service.
  - Modernizing revenue administration governance.
- Selected measures span tax policy, revenue administration modernization, customs modernization, and institutional reforms.
- IMF support: extensive TA from FAD and FAD missions in 2019 and early-2020 contributing to MTRS design.

### Program monitoring, TMU definitions, and reporting requirements
- “Government” defined as budgetary central Government, excluding central bank and public sector outside budgetary central government.
- Quantitative targets include floors, ceilings, and continuous limits (net lending/borrowing, tax revenues, central government’s net financing requirement, nominal public debt ceiling, ceilings on single-tender contracting, floor on social expenditure, ceilings on external payment arrears, etc.).
- Reporting requirements: frequent and detailed reporting (monthly, quarterly, semiannual) on TOFE, SIGFIP tables, debt stocks, public enterprise debt, banking sector indicators, and immediate notification (within three days) of any economic/financial decisions affecting the program.
- Exchange rates used for projections: CFAF/US$ 598 and CFAF/DTS 817 (for evaluating nominal public debt target).

### Financial sector resilience and measures to preserve stability
- Banking sector entered crisis with adequate capital and liquidity buffers.
- Stress test (end-June 2019 data): NPL increase by 75 percent would generate additional regulatory capital requirements of 1.5 percent of GDP.
- Low levels of demand for loan restructuring and payment moratoria granted (about FCFA 30 billion) indicate limited distress so far.
- Authorities to ensure full reporting of relief measures, conduct a comprehensive diagnostic once crisis abates, and inject funds of 0.3 percent of GDP into a state-owned bank with pre-existing weaknesses pending a transparent solution.

### Capacity development, technical assistance, and program support
- Recent TA (including remote missions) supported:
  - design of legal framework and forecasting model for hydrocarbon revenues;
  - operationalization of the national committee for public debt;
  - preparation of medium-term revenue and PFM strategies.
- Staff appraisal highlights:
  - Covid-19 has abruptly ended the recent strong growth spell.
  - Without forceful policy response, risk of increased social tensions and reversal of development gains.
  - Staff welcomes authorities’ impressive response in the revised 2020 budget and urges targeted, transparent implementation.

### Key near-term priorities and recommendations (selected)
- Ensure effective and transparent implementation of emergency measures and full accountability of emergency spending.
- Expand support to the poorest and the informal sector, including SMEs.
- Use temporary fiscal expansion to finance health response, protect livelihoods and support activity.
- Return to a 3 percent of GDP deficit by 2022 to safeguard debt sustainability and regional stability.
- Continue reforms to improve business environment, debt management, revenue mobilization, and public financial management.
- Closely monitor financial stability risks and prepare contingency planning for adverse scenarios.

*Source: IMF staff report for Senegal, First Review under the Policy Coordination Instrument and Request for Modification of Quantitative Targets, June 29, 2020.*

### 1.1 percent in 2020 compared to 5.3 percent in 2019.

### 1senea2020003 - 1.1 percent in 2020 compared to 5.3 percent in 2019.

### Overview and context
- The Executive Board of the IMF completed the first review under the Policy Coordination Instrument (PCI) for Senegal. The PCI was approved on January 10, 2020.
- The PCI supports the second phase of the authorities’ national development strategy “Plan Senegal Emergent” and is articulated around three pillars: (i) achieving high, sustainable, and inclusive growth; (ii) consolidating macroeconomic stability through prudent fiscal policy, including increasing revenues and spending efficiency, and sound debt management; and (iii) managing the oil and gas sector in a sustainable and transparent manner.
- The Covid-19 pandemic has significantly altered the outlook, ending a period of buoyant growth averaging about 6 ½ percent over the last 6 years.

### Growth outlook and risks
- GDP growth projections and related notes:
  - GDP at constant prices: 5.3 (2019), 1.1 (2020), 4.0 (2021), 6.0 (2021), 12.2 (2022), 8.1 (2023), 6.0 (2024).
  - Non-hydrocarbon GDP: 5.3 (2019), 1.1 (2020), 4.0 (2021), 6.0 (2021), 7.3 (2022), 7.2 (2023), 7.3 (2024).
  - Non-agriculture GDP: 5.8 (2019), 0.9 (2020), 4.1 (2021), 6.2 (2021), 12.9 (2022), 8.3 (2023), 6.0 (2024).
- Headline projection: GDP growth is now projected at 1.1 percent for 2020 compared to 5.3 percent in 2019.
- Outlook commentary:
  - A gradual recovery is expected in the second half of 2020 and in 2021, while downside risks prevail.
  - If the pandemic’s impact is stronger-than-envisaged, the economy could shrink in 2020 and recover more gradually.
- External sector projections (selected):
  - Exports, f.o.b. (CFA francs): 12.3 (2019), -11.9 (2020), 12.7 (2021), 21.6 (2021), 76.4 (2022), 13.3 (2023), 8.6 (2024).
  - Imports, f.o.b. (CFA francs): 4.7 (2019), -8.2 (2020), 12.1 (2021), 15.8 (2021), 20.5 (2022), 9.2 (2023), 9.4 (2024).
  - Current account balance (official transfers included): -7.7 (2019), -8.8 (2020), -10.2 (2021), -11.0 (2021), -3.9 (2022), -3.9 (2023), -4.5 (2024).

### Fiscal and public debt outlook
- Revised 2020 budget and fiscal stance:
  - Fiscal deficit (including grants) will temporarily increase to 6.1 percent of GDP in 2020.
  - The deficit is expected to decline back to 3 percent of GDP by 2022, in line with regional fiscal convergence criteria.
  - Staff and authorities agreed on a revised 2020 budget with substantially higher health spending, targeted support to the vulnerable, and economic stabilization measures.
- Government financial operations (selected indicators, percent of GDP):
  - Revenue: 20.2 (2019), 21.0 (2020), 20.0 (2021), 20.6 (2021), 21.1 (2022), 21.3 (2023), 22.0 (2024).
  - Grants: 1.6 (2019), 3.5 (2020), 2.5 (2021), 2.4 (2021), 2.0 (2022), 1.7 (2023), 1.7 (2024).
  - Total expenditure: 24.0 (2019), 27.1 (2020), 24.5 (2021), 23.7 (2021), 24.1 (2022), 24.3 (2023), 25.0 (2024).
  - Net lending/borrowing (including grants): -3.8 (2019), -6.1 (2020), -4.5 (2021), -3.0 (2021), -3.0 (2022), -3.0 (2023), -3.0 (2024).
  - Primary fiscal balance: -1.9 (2019), -4.0 (2020), -2.6 (2021), -1.0 (2021), -1.1 (2022), -1.1 (2023), -1.0 (2024).
- Public debt and debt service:
  - Total public debt: 64.1 (2019), 68.6 (2020), 70.4 (2021), 70.5 (2021), 64.5 (2022), 62.3 (2023), 61.3 (2024).
  - Domestic public debt: 10.9 (2019), 11.0 (2020), 12.8 (2021), 13.6 (2021), 14.1 (2022), 15.7 (2023), 16.9 (2024).
  - External public debt: 53.2 (2019), 57.7 (2020), 57.6 (2021), 56.8 (2021), 50.4 (2022), 46.6 (2023), 44.3 (2024).
  - Total public debt service as percent of government revenue: 23.0 (2019), 23.7 (2020), 22.4 (2021), 28.0 (2021), 24.7 (2022), 29.6 (2023), 24.2 (2024).

### Policy response and external support
- Authorities’ actions and external financing:
  - Authorities have taken significant actions to contain the pandemic and mitigate economic fallout, supported by additional financing from development partners and participation in the G20 and Paris Club-supported Debt Service Suspension Initiative (DSSI).
  - The IMF disbursed SDR 323.6 million (about US$ 442 million, 100 percent of quota) under the Rapid Financing Instrument and Rapid Credit Facility in April.
  - The authorities requested debt service suspension under the DSSI; the suspension of debt service to Paris Club and G20 creditors between June and December 2020 amounts to about CFAF 90 billion (0.6 percent of GDP), of which about 30 billion in interest.
- Banking sector and monetary policy:
  - Banking system liquidity remains adequate. Deposits rose by 7.3 percent y-o-y in April; credit to the economy increased by 2 percent y-o-y while declining 4.2 percent since December.
  - Gross non-performing loans as of end-April declined to 13.5 percent from 13.9 percent at end-December.
  - The BCEAO has an accommodative monetary policy stance aiming at maintaining sufficient liquidity in the regional WAEMU market.
- Program implementation:
  - Program implementation has been good with all but one quantitative target met as of end-December 2019; QTs for end-June and end-December 2020 are being recalibrated to reflect the impact of the pandemic.
  - The IMF staff supports completion of the first PCI review and the authorities’ request for modification of quantitative targets.

### Key near-term challenges and policy recommendations
- Immediate priorities:
  - Effective and transparent implementation of emergency measures to address the crisis is the key near-term challenge.
  - Ensure full transparency and accountability of emergency spending and financing under the Debt Service Relief Initiative; the authorities committed to disclose debt by public sector borrowing entities to IMF/WBG within 3 months, but no later than September 1.
- Targeted support and fiscal stance:
  - Expand support to the poorest and the informal sector, including small and medium sized enterprises, as the crisis unfolds.
  - The temporary fiscal expansion in the revised 2020 budget should finance the health response, protect livelihoods and support activity.
  - Return to a 3 percent of GDP deficit by 2022 is a stated commitment to safeguard debt sustainability and regional stability.
- Structural reforms to support recovery:
  - Continue to focus on improving the business environment and boost private sector investment.
  - Pursue reforms to enhance debt management, revenue mobilization and public financial management.
  - Closely monitor financial stability risks, given the banking sector’s vital role in financing the recovery.

*Source: IMF staff report for Senegal, First Review under the Policy Coordination Instrument and Request for Modification of Quantitative Targets, June 29, 2020.*

### 7.      Regional institutions support WAEMU members’ pandemic response. WAEMU heads

### 7. Regional institutions support WAEMU members’ pandemic response. WAEMU heads

### Regional and central bank support
- WAEMU heads of state temporarily suspended regional convergence criteria, anticipating large revenue shortfalls and additional spending pressures.
- The BCEAO announced measures to preserve financial stability and provide additional liquidity, supplemented by a special short-term refinancing window allowing member-states to access liquidity on the regional financial market.
- These COVID-19 bonds have a maturity of 3 months, and are explicitly designed to address WAEMU countries’ liquidity position as donor financing was being mobilized.

### Senegal: Program performance (PCI)
- Program performance has been satisfactory (PS, ¶15).
- All end-2019 and continuous quantitative targets (QTs) were met except the ceiling for public contracts signed by single tender, which was missed by a small margin.
- The stock of outstanding comptes de dépôt was reduced by CFAF 101.2 billion, in line with the relevant QT; the remaining CFAF 121 billion are programmed to be cleared this year.
- Revenue performance and budget execution through end-May are in line with the proposed revised end-June targets. All continuous QTs have also been met.
- Progress on reforms: continuous reform target (RT) on retail fuel and electricity price adjustment mechanism was met; recurring RT on quarterly reports on cooperation between customs and tax administrations was not met (second report due in April delayed); staff supports authorities’ request to move to biannual reports.
- End-June RTs met: identify policy options to enhance secondary education attendance; adopt a medium-term revenue strategy (MTRS); study the expenditure chain (supported by IMF TA).
- Revised PPP law mostly finalized and to be submitted to Parliament (RT, June 2020).
- Some June RTs delayed due to the crisis and are proposed to be reset or dropped.

### Outlook and risks
- Staff baseline: main impact of the pandemic in 2020Q2 followed by slow recovery in 2020H2 and throughout 2021.
- Growth projections:
  - Expected to moderate to 1.1 percent in 2020 (from a projected 6.8 percent pre-pandemic and 3 percent in April in the RCF/RFI request).
  - Growth projected at 4 percent in 2021.
- Inflation: expected to remain low, anchored by the CFAF/Euro peg.
- Sectoral impacts: hardest-hit sectors hospitality/restaurants, transport and retail; agriculture expected to benefit from government support and favorable rainfall.
- Balance of payments and fiscal outlook:
  - Current account deficit projected at 8.8 percent of GDP in 2020 (vs. 11.3 percent of GDP in the RFI/RCF request), owing to lower equipment and services imports, additional budget grants, and reduced bill for fuel imports.
  - Medium-term current account deficit expected to temporarily increase to 10 percent of GDP due to hydrocarbon-related investments before declining sharply when oil and gas exports set in.
  - 2020 fiscal deficit set to reach 6.1 percent of GDP, before gradually declining to 3 percent in 2022.
  - Public sector debt would peak at about 70 ½ percent of GDP in 2021-22, before resuming its downward trajectory.
  - PCI fully financed; additional financing needs (relative to pre-COVID-19 baseline) almost entirely covered by external concessional financing and DSSI participation; residual covered by issuances on the regional market (now lower relative to initial 2020 budget).
  - WAEMU reserve cover would remain adequate at about 3 months of imports in the medium term, assuming return to a 3 percent of GDP deficit by 2022 and that financing needs starting in 2021 are entirely covered by borrowing on the regional market.

- Alternative (adverse) scenario and risks:
  - Main short-term risks: (i) a more extensive domestic COVID-19 outbreak; (ii) a more protracted or recurrent pandemic pattern.
  - In adverse scenario, growth would drop to -1.5 percent in 2020.
  - Increased pressure on fiscal and current accounts would necessitate additional external financing including grants and cuts in domestically-financed investment and non-priority transfers to keep fiscal deficit close to its current level.
  - Potential financing sources: regional market, extra donor financing, and/or a Fund financial arrangement.

### Authorities’ COVID-19 response: Economic and Social Resilience Program (PRES)
- PRES equivalent to about 7 percent of GDP, organized around 4 pillars:
  - (i) interventions in the health sector;
  - (ii) social measures;
  - (iii) direct (e.g., subsidies to companies in hard-hit sectors such as transport and tourism) and indirect (e.g., through a public-private guarantee fund) support to the economy;
  - (iv) interventions to secure key health, food and energy supplies.
- Resources gathered in a special COVID-19 fund expected to come from government, development partners, and the Senegalese private sector and diaspora and to be fully channeled through the revised 2020 budget.
- Budgetary impact of additional interventions estimated at 3.1 percent of GDP (Annex I).

### Revised 2020 budget and financing
- Revised 2020 budget temporarily brings overall deficit to 6.1 percent of GDP (PS, ¶20), compared with 5.6 percent of GDP deficit in the RCF/RFI request.
- Increase explained by newly announced COVID-19 response measures and downward growth revision, but fully financed by additional donor support and DSSI savings.
- Staff highlighted importance of credible path to return to 3 percent of GDP deficit by 2022.
- Relative to original budget, fiscal revenues projected lower by 2.2 percent of GDP; trade taxes particularly affected.
- Temporary and targeted tax measures include:
  - CFAF 40 billion in tax rebates to incentivize companies to keep employees.
  - Extension of deadline for payment of suspended VAT amounting to CFAF 15 billion.
- Staff urged measures be well-targeted and temporary; welcomed tax and customs administration measures and digitalization (M-tax payments via mobile phones, RT end-December 2020).

### Fiscal composition and reorientation
- Fiscal impact of lower world oil prices:
  - Savings on energy subsidies due to fixed domestic energy prices at end-2019 levels (captured through the Support Fund for Fuel Products’ Imports or FSIPP).
  - Lower volumes reduce oil-related taxation.
  - Authorities do not envisage further short-term changes to domestic fuel and electricity prices; may consider fuller pass-through post-COVID-19.
- Staff supports reorientation of spending in revised budget:
  - Prioritization of spending: identified about 0.7 percent of GDP in savings on current and capital expenditures; resources reoriented toward emergency response.
  - Acceleration of repayment of unmet obligations: revised envelope of CFAF 200 billion (from CFAF 112.6 billion) to settle pre-2020 unmet obligations, with priority to health, construction and energy.
  - Contingency planning: contingency of CFAF 40 billion (0.3 percent of GDP) in domestically-financed investment that will not be allocated unless corresponding revenue materializes.
- Specific figures from Text Table 2 and Text Table 3 (revised fiscal framework, in FCFA billion and percent of GDP) are reflected in the authorities’ fiscal tables and staff estimates (see tables in source).

*International Monetary Fund*

### 18.      Staff and the authorities agreed on the importance of ensuring full transparency

### 18.      Staff and the authorities agreed on the importance of ensuring full transparency

### Transparency, accountability, and COVID-19 spending
- Authorities set up high-level coordination and technical committees with representation of key stakeholders of government and non-government institutions to design and execute the policy response.
- Staff cautioned that strict ex-post spending controls should be implemented because a large part of the additional spending will be through simplified spending procedures (transfers to “comptes de dépôt”).
- The authorities clarified that the financial management of COVID-19 related resources will follow rigorous PFM principles, with a focus on:
  - informing the public;
  - transparent procurement practices; and
  - enhanced audit activities, the results of which will be published (PS, ¶20).

### External financing and the fiscal response
- Development partners are helping to finance the COVID-19 response strategy:
  - New budgetary grants are expected to make up about two thirds of the projected revenue shortfall—equivalent to an extra 1.6 percent of GDP.
  - External budgetary loans, all on concessional terms, are projected to increase by 1.7 percent of GDP (Text Table 3).
  - International Financial Institutions are providing grants and concessional loans amounting to about 1.4 percent of GDP.
- These inflows imply a lower need to issue on the regional market compared to the initial 2020 budget.

### Medium-term revenue strategy and revenue targets
- The new medium-term revenue strategy aims to bring the tax-to-GDP ratio (excluding hydrocarbon related flows once these come online) to 20 percent by 2023, though this target could be delayed by 1-2 years owing to the lower 2020 base and lingering impacts of COVID-19 on 2021 revenues.
- Key actions focus on broadening the tax base by tackling widespread informality and improving compliance, including through digitalization (RT, end-June 2020, Annex III).
- Staff encouraged implementation starting in 2020H2 by:
  - ensuring the implementing unit gets adequate human and IT resources; and
  - adapting the 2020-21 action plan to the COVID-19 context.

### Fiscal risks from SOEs and public investment
- SOE and parastatal debt stocks increased from 7.6 to 8.3 percent of GDP between 2018 and 2019.
- COVID-19 increased fiscal risks related to these debts and current operations of some strategic SOEs.
- Specific SOE developments:
  - Air Sénégal: ambitious growth strategy put on hold; authorities plan to grant direct financial support of CFAF 12 billion or 0.1 percent of GDP as part of the CFAF 100 billion foreseen to support the economy, with direct support strictly limited and contingent on drastic adjustment measures by the company.
  - PETROSEN: has put on hold efforts to finance its shares in the recently discovered oil and gas fields.
  - SENELEC and SAR: impacted by the crisis, though lower world oil prices are reducing their production costs; authorities prioritized settlement of unmet obligations and subsidies owed to the sector to ensure reliable energy supply.

### Expenditure efficiency, PFM reforms, and Treasury Single Account
- Reforms to improve expenditure efficiency and controls are advancing:
  - Switch to program budgeting delayed and now envisaged for the 2021 budget.
  - IMF TA identified options to progressively reduce reliance on simplified or exceptional spending procedures.
  - Authorities plan to reduce use of simplified spending procedures through “comptes de dépôt” by gradually eliminating over the next two years transfers to entities that are legally part of the state and execute corresponding spending under normal procedures (RT, end-December 2020).
  - To strengthen the TSA, authorities are preparing an inventory of all bank accounts used by public institutions (new RT, end-December 2020) and are committed to integrate all these accounts into the TSA by 2022 (RT, end-December 2022).
- Two PFM reforms deemed less critical at this stage are proposed to be streamlined under the PCI:
  - preparation of an investment program consistent with ceilings for authorized commitments; and
  - reform regarding budget commitment letters.

### Debt sustainability, projections, and financing space
- At the time of the RCF/RFI request, debt was assessed as sustainable with a moderate risk of debt distress but limited space to absorb further shocks.
- Compared to the January DSA:
  - 2020 debt-to-GDP ratio is now projected at 68.6 percent in 2020 compared to 61.9 percent in the January DSA.
  - Initial 2020 debt limit of FCFA 9,563 billion at the PCI approval is proposed to be increased to FCFA 10,034 billion (this includes a buffer of 1 ½ percent of GDP).
- Macroeconomic changes:
  - Growth is expected to decline by 1.9 percentage points in 2020 and 1.5 percentage points in 2021.
  - The fiscal deficit is projected to deteriorate by 0.5 percent of GDP in 2020 and 1.2 percent in 2021.
- Mitigating actions by authorities include delaying 0.5 percent of GDP in drawings on externally-financed projects in 2020 and delaying some oil and gas projects.
- Other financing sources: highly concessional financing from the IMF, World Bank, AfDB, EIB, EU, ISDB and BADEA and bilateral creditors; authorities intend to rely more on such concessional borrowing.

### Debt management and oversight improvements
- Debt responsibilities remain split across two ministries and 4-5 different entities, leading to inconsistencies in debt data reporting and weak oversight over new borrowing, particularly by SOEs.
- Progress and planned actions:
  - Revitalizing the National Public Debt Committee (CNDP) including adoption of its operating procedures and forthcoming signing of the related ministerial decree (RT, end-June 2020).
  - External audit of the debt database including SOE debt (proposed new RT, end-December 2020).
  - Additional IMF TA to establish a platform for enhanced monitoring and communication across government units to support CNDP operations.
- Staff noted the importance of including SOE debt within the overall debt strategy in line with the expanded debt perimeter to the public sector.

### Public-private partnerships (PPP) framework
- Authorities are revamping the legal framework for PPPs to finance PSE infrastructure projects while containing fiscal risks:
  - New law requires ex-ante evaluation for all projects above CFAF 2 billion and mandates counter-evaluation by the Ministry of Economy, Planning and Cooperation for unsolicited bids (RT, end-June 2020, reset for end-December 2020).
  - Staff urged setting up a PPP database (RT, end-June 2021) to enhance fiscal risk analysis.

### Inclusive and private sector-led growth (PCI Pillar I)
- Social safety nets and vulnerable households:
  - Staff recommended temporarily scaling up quarterly payments and widening recipients to support vulnerable households; authorities are evaluating this option in cooperation with the World Bank and committed to clean up their national register and double its coverage by end-2021.
  - Authorities prioritized in-kind support to one million households and subsidizing utilities’ bills of the poorest.
  - A June 2020 study highlighted policy options to increase secondary education enrollment, including incentives in the cash transfer program to keep girls in school and expanding rural public schools (PS, ¶15).
- SME support and access to finance:
  - About 99 percent of firms in Senegal are SMEs, 97 percent of which are in the informal sector (National Statistics Agency, 2017).
  - Key SME support initiatives include:
    - partially guaranteed financing of up to CFAF 100 billion;
    - CFAF 5 billion for support of micro-finance institutions;
    - accelerated payment of government arrears; and
    - reorientation of existing SME support schemes.
  - Authorities committed to streamline initiatives with a single-entry point for SMEs seeking support (PS, ¶13).
  - A liquidity support program for viable businesses includes a partial guarantee in the form of a non-remunerated deposit of 20 percent (50 percent for the SME track) of the loan amount; interest rate capped at 3.5 percent per year; 12-month interest payment holidays; 5-to-6-year maturity. Total loans under the scheme could reach CFAF 200 billion (1.4 percent of GDP). Staff urged swift clarification of operational details to ensure full utilization, especially of the CFAF 100bn targeted at SMEs.
- Structural reforms:
  - Progress under the G-20 “Compact with Africa” initiative on financial inclusion, professional education, and labor market legal modernization.
  - A new start-up law adopted to spur entrepreneurism.
  - Staff and authorities agreed to streamline the reform agenda under Pillar I by dropping certain RTs while continuing other reforms as conditions allow.

### Financial stability during the pandemic
- Near-term risks manageable:
  - Banking system entered the crisis with adequate capital and liquidity buffers.
  - Stress test with end-June 2019 data: an NPL increase by 75 percent would generate additional regulatory capital requirements of 1.5 percent of GDP.
  - BCEAO adapted its operating framework to respond to liquidity pressure.
  - Low levels of demand for loan restructuring and payment moratoria granted (about FCFA 30 billion) indicate limited distress so far.
- Authorities should:
  - Ensure banks provide full reporting of relief measures and their impact on balance sheets.
  - Conduct a comprehensive diagnostic once the crisis abates to assess banks’ losses and guide actions.
  - Fulfill commitment to inject funds of 0.3 percent of the GDP in the state-owned bank that had pre-existing weaknesses to bridge the period until stabilization and a transparent solution for its business model is found.
- Financial inclusion and infrastructure:
  - Efforts to accelerate mobile banking services and reduce costs of mobile payments are being accelerated.
  - Authorities work on a new financial inclusion strategy (finalization delayed; end-June RT dropped from RTs).
  - Authorities are incorporating utility companies’ clients into the electronic platform on credit information and plan to implement a unique online collateral registry combining movable and immovable collateral (RT, end-December 2021).
- AML/CFT:
  - Progress made to address GIABA assessment deficiencies; staff encouraged addressing remaining shortcomings to prevent potential FATF gray listing.

### Hydrocarbons: revenue management and uncertainty
- COVID-19 increased uncertainty around development of the hydrocarbon sector for projects that reached final investment decision (Sangomar and GTA):
  - Uncertainties on size, cost and timing of production increased, and lower world oil prices jeopardize longer-term prospects.
  - First oil/gas is now expected in 2023 from both fields.
  - Staff encouraged authorities to refrain from significant new borrowing by PETROSEN until clarity on projects’ net revenue streams.
- Revenue management framework:
  - Technical work on draft laws for allocation, management and control of hydrocarbon revenues and organization of the sovereign wealth fund (FONSIS) is well-advanced; laws expected to be finalized by end-2020 (RT, initially for end-June, now reset for end-December 2020).
  - Next Fund TA step would support work on a medium-term fiscal rule to anchor the path of non-oil primary deficits.

### Program modalities, capacity development, and risks
- Revised quantitative targets proposed for end-June 2020, end-December 2020, and new targets for end-June 2021 based on updated macro framework.
- Reform agenda streamlined to focus on crisis-related needs; several RTs proposed to be dropped and some reset for end-December 2020, including:
  - adoption of the new PPP law;
  - draft law on allocation, management and control of hydrocarbon revenues; and
  - raising prepayments on income taxes at customs.
- Longer-term fiscal reforms (e.g., mandatory ex-ante evaluations for including investments in the budget and the new fiscal framework reflecting hydrocarbon revenues) proposed to be delayed by one year.
- Program financing and risks:
  - Program is fully financed under the revised baseline scenario with substantial external financing from grants and highly concessional loans over the next 12 months.
  - Risks: perceived lack of transparency or uneven allocation of emergency aid could undermine social and political stability; regional pressures on external reserves could require a more restrictive macro stance.
  - Mitigants: authorities’ timely pandemic response and strong track record in implementing Fund-supported programs.
- Central bank safeguards:
  - BCEAO has one recommendation outstanding from the 2018 safeguards assessment related to strengthening the risk management function; assessment found strong overall control culture.

*Source: 1senea2020003 - 18.      Staff and the authorities agreed on the importance of ensuring full transparency*

### 38.      Capacity development activities are closely linked to program priorities and have

### 1senea2020003 - 38.      Capacity development activities are closely linked to program priorities and have

### Capacity development activities
- Recent missions (including some conducted remotely) supported:
  - the design of the legal framework for the management of hydrocarbon revenues and the set-up of a model to forecast hydrocarbon-related revenues;
  - the operationalization of the national committee for public debt;
  - the preparation of the medium-term revenue and PFM strategies.
- A remote March FAD mission launched the multi-year TA project to assist the Senegalese authorities with putting in place a strong framework for the transparent and sustainable management of hydrocarbon-related revenues.

### Staff appraisal: Covid-19 impact on Senegal
- The Covid-19 pandemic is taking a heavy toll on Senegal.
- The recent strong growth spell has ended abruptly.
- Senegal is vulnerable to the Covid-19 shock beyond domestic containment measures because of the importance of remittances, tourism, and the services sector.
- Without a forceful policy response, the crisis risks increasing social tensions and unravelling the development gains made over the last decade.

### Authorities’ response and recommended next steps
- The authorities’ response as included in the revised budget for 2020 is described as impressive, including:
  - substantial increase in health spending;
  - in-kind support and subsidies for the use of electricity and water to help vulnerable households.
- Staff recommendations for next steps:
  - consider stepping up and broadening the reach of the cash transfer program;
  - provide economic stabilization measures including direct support to the most affected sectors, temporary tax relief, accelerated payments of unmet obligations, and partially guaranteed credit to support activity, prevent job losses, and avoid bankruptcies;
  - fully implement the package in the most targeted and cost-effective way;
  - step up support to SMEs (most of which are informal and hard-hit) by reforming and streamlining the multitude of existing schemes.

### Fiscal stance, financing, and transparency
- The temporary loosening of the fiscal stance is judged well-justified and is supported by:
  - spending reprioritization;
  - substantial mobilization of concessional external financing, grants;
  - the temporary suspension of debt service under the DSSI.
- The contingent spending envelope of 0.3 percent of GDP is deemed appropriate given high uncertainty regarding revenue performance.
- Staff welcomes the authorities’ commitment to a credible path toward a 3 percent of GDP deficit by 2022, as conditions normalize.
- Transparency and accountability of emergency spending are emphasized as crucial; authorities committed to:
  - publish all related tenders, beneficiaries, audit results and quarterly budget execution reports;
  - subject all spending to regular ex-post control mechanisms.

### Progress on medium-term program objectives
- Authorities made substantial headway on:
  - the medium-term revenue strategy;
  - preparation of a sound framework to manage hydrocarbon revenues;
  - reforms to improve the business environment including the revised legal framework for PPPs.
- Staff supports the streamlining of the reform agenda and the reduction in less-essential program targets to allow focus on crisis management.

### Downside scenario and contingency planning
- The economy could contract in 2020 if the crisis’ impact proves stronger than expected.
- The authorities should prepare for such an adverse scenario, which would likely require a combination of adjustment and additional financing.
- Possible fiscal-expenditure adjustments:
  - postponing domestically financed investment;
  - cutting non-priority transfers to keep the fiscal deficit close to its current level.
- Potential financing sources:
  - the regional market;
  - additional external support, including from the Fund.

*Source: IMF staff appraisal text from 1senea2020003 (excerpt).*

### 45.      Based on good program performance and the authorities’ decisive response to the

### 1senea2020003 - 45.      Based on good program performance and the authorities’ decisive response to the

### Program review and conditionality
- Staff supports completion of the first review based on good program performance and the authorities’ decisive response to the pandemic, anchored in the revised 2020 budget.
- Staff supports the proposed modification of quantitative targets:
  - End-June and end-December targets on the floor on net lending/borrowing.
  - End-June and end-December targets on the floor on tax revenue.
  - End-December 2020 targets on the ceiling on the central government’s overall net financing requirement.
  - End-December 2020 target on the ceiling on the total nominal public debt.

### Macroeconomic outlook
- Growth:
  - Growth is expected to slow to 1.1 percent in 2020.
  - Recovery is projected gradually after 2020, with a jump in the level of GDP in 2023 because of hydrocarbon production coming online.
- Inflation:
  - Inflation is expected to pick up to 2 percent (CPI, 12 month average).
- Supply and demand dynamics:
  - On the supply side, agriculture and public administration are expected to hold up in 2020.
  - Private demand is expected to be weak in 2020 while expansionary fiscal policy will support economic activity.

### External sector
- Current account:
  - Substantial transfers, notably increasing budget grants, contain the current account deficit in 2020.
  - The current account is financed by FDI and mostly concessional financing.
- Outlook implications:
  - Oil and gas related investments lead to a higher current account deficit before production; exports starting in 2023 are expected to lead to a significant decline in the current account deficit.

### Fiscal and public debt
- Revenue and spending in 2020:
  - Tax revenues are expected to decline in 2020 while grants increase substantially.
  - Overall public spending will pick up to address the Covid-19 crisis.
- Financing and debt dynamics:
  - The increased fiscal deficit will be financed through a mix of domestic and concessional foreign financing.
  - The debt ratio is increasing significantly.
- Program fiscal indicators (as presented in the fiscal tables and figures):
  - Net lending/borrowing (including grants) and related quantitative targets are focal points of program monitoring and have been proposed for modification (end-June and end-December targets).

### Monetary and financial sector
- Credit and banking:
  - Credit to the private sector slowed at the beginning of 2020.
  - The level of NPLs has remained stable and, net of provisioning, is in single digits.
- Monetary aggregates and banking indicators (figures and tables):
  - Broad money and credit developments are tracked in the monetary survey and financial soundness indicators (as presented in the source tables).

### Risk assessment and policy recommendations
- Key risks identified (Risk Assessment Matrix):
  - Prolonged COVID-19 outbreak — Relative likelihood: High; Potential impact: High.
    - Policy response: Prepare for contingency scenario and flexibly adjust policy as necessary to ensure appropriate health policy response and mitigate economic damage.
  - More protectionism — Relative likelihood: High; Potential impact: Medium.
    - Policy response: Continue with export diversification strategy with regard to products and trading partners.
  - Oversupply in the oil market — Relative likelihood: High; Potential impact: High.
    - Policy response: Consider locking in current low energy prices to remove fiscal uncertainty and strengthen automatic pass through to domestic energy prices while protecting vulnerable segments of society.
  - Social discontent and political instability — Relative likelihood: Low; Potential impact: High.
    - Policy response: Ensure transparency and accountability of the social and economic response to COVID-19.
  - Domestic and regional security threats — Relative likelihood: Medium; Potential impact: Medium.
    - Policy response: Ensure that multi-year budget framework allows room to address fiscal contingencies.

*Source: IMF staff and Senegal authorities (as presented in the provided content).*

### Annex I. Senegal’s COVID-19 Response: The Economic and Social

### Annex I. Senegal’s COVID-19 Response: The Economic and Social Resilience Program

### Program overview
- President Macky Sall announced the “Economic and Social Resilience Program” (“Programme de Résilience Economique et Sociale, or PRES), to be financed by a special Force COVID-19 CFAF 1 trillion (7 percent of GDP).
- Interventions are organized around four pillars.

### Pillar I — Strengthen the health system
- Allocation: CFAF 78.7 billion, 0.54 percent of GDP.
- Objective: increase detection and rapid isolation of confirmed cases and strengthen means of prevention and control of infection.

### Pillar II — Strengthen social protection
- Allocation: CFAF 103 billion, 0.71 percent of GDP.
- Measures and allocations:
  - Food kits for 1 million vulnerable households: CFAF 69 billion, 0.47 percent of GDP.
  - Funds to support the diaspora: CFAF 12.5 billion, 0.1 percent of GDP. Target: individuals mainly in the informal sector that have lost any type of income; families of people receiving funds or remittances will also be included.
  - Subsidy to pay utility bills (government will pay electricity and water bills for vulnerable households for two months): CFAF 18.5 billion, 0.13 percent of GDP.
  - Implementation of livestock safeguarding operations: CFAF 2 billion, 0.01 percent of GDP.
  - Support for artisanal fisherman, women processors, fishmongers and aquaculturists: CFAF 1 billion, 0.01 percent of GDP.

### Pillar III — Safeguard macroeconomic and financial stability, support the private sector, and protect jobs
- Allocation: CFAF 760 billion, 5.31 percent of GDP.
- Measures and allocations:
  - Partial forgiveness to companies of outstanding tax debts: CFAF 200 billion, 1.38 percent of GDP.
  - Deadline for payment of suspended VAT extended from 12 to 24 months: CFAF 15 billion, 0.1 percent of GDP.
  - Tax rebates for companies that keep 70% of their workforce and/or keep paying more than 70% of their wages: CFAF 40 billion, 0.27 percent of GDP.
  - Accelerated payment of unmet obligations to the private sector: CFAF 200 billion, 1.40 percent of GDP.
  - Support for micro-enterprises: CFAF 5 billion, 0.04 percent of GDP.
  - Tax deferrals for SMEs and companies in hardest hit economic sectors (amount not specified).
  - Direct support to hardest hit sectors – transport, tourism, construction: CFAF 100 billion, 0.69 percent of GDP.
  - A fund to provide credit guarantees for companies affected by the COVID-19 crisis: CFAF 70 billion (0.48 percent of GDP) through the budget, including with support from the European Investment Bank, which would leverage another CFAF 130 billion from the banking sector. Money deposited in a special account; government portion to be called first; unused resources would flow back to the government (and back to the EIB).

### Pillar IV — Maintain regular supply of hydrocarbons, medical products, pharmaceuticals, and basic necessities
- Allocation: CFAF 77.6 billion, 0.54 percent of GDP.
- Objectives:
  - Strengthen surveillance of the internal market.
  - Ensure adequate stocks for all essential foodstuffs.
  - Maintain prices of main necessities at pre-crisis levels.
  - Ensure access of consumers to high quality products throughout the national territory.
  - Mitigate the impact of COVID-19 on the national supply and facilitation of commercial operations.

### Budgetary implications (summarized items from Covid-19 Fund Measures and budgetary impact)
- Taxes (all under Pillar III - Economic Support): 21515 (as appears in Covid-19 Fund).
  - Partial forgiveness of outstanding tax debts: 2000.
  - Extension of deadline for payment of suspended VAT: 1515.
  - Tax deferrals for SMEs and companies in hardest hit sectors: 00.
  - Accelerated VAT refunds: 00.
- Expenditure: 709351.
- Savings in response to Covid-19: -95 (Current -20; Capital -75).
- Covid-19 support measures 1/: 804446 (additional vis-à-vis the 2020 original budget).
  - Pillar I - COVID-19 health action plan: 79 79.
  - Pillar II - Social safety net (food kits, utility subsidy, diaspora): 103 103.
  - Pillar III - Economic support (tax rebate, direct aid,..): 345 145.
  - Pillar IV - Securing of key supplies: 78 32.
  - Accelerated payment of pre-2020 unmet obligations: 200 87.
- Note: 1/ additional vis-à-vis the 2020 original budget. Source: Ministry of Finance and Budget, Ministry of Economy and Planning, IMF staff estimates.

### Adverse Scenario — macroeconomic and fiscal implications
- Rationale: staff developed an alternative scenario based on a more protracted and harmful pandemic than the baseline; assumes containment takes longer globally and in Senegal and oil and gas production will not start before 2025.
- Growth:
  - Alternative scenario growth drops to -1.5 percent in 2020 and recovers more gradually in 2021 and beyond.
- Fiscal outcomes (adverse scenario compared with baseline, selected years):
  - 2020 fiscal deficit would increase to 7.0 percent of GDP (baseline -6.1 percent).
  - Public debt to GDP ratio would rise to 71.2 percent in 2020 (baseline 68.6 percent) and reach a peak in 2022 with 77.4 percent under the adverse scenario.
- External position:
  - Current Account Balance (percent of GDP): 2020 baseline -8.8; 2020 adverse -9.0.
  - Adverse effects mainly from lower net capital flows; medium-term improvement delayed due to postponed oil and gas exports.
- Policy recommendations if adverse scenario materializes:
  - Mix of adjustment and financing: further cuts to domestically-financed investment and non-essential current spending and transfers to agencies, and streamlining of tax expenditures (estimated at 7 percent of GDP in 2014) to keep the deficit closer to 6 percent of GDP.
  - Financing options: additional external concessional financing (e.g. World Bank), further issuances on the regional market, or Fund financial arrangement.
- Footnote on transfers to agencies: “Current grants”, of which the majority goes to agencies, amounted to 2.6 percent of GDP in 2019 and are estimated at a similar level in the 2020 revised budget.

### Table: Macroeconomic indicators (Baseline vs. Adverse Scenario, selected entries)
- NGDP:
  - 2020 Baseline: 14,307
  - 2020 Adverse: 13,932
  - 2021 Baseline: 15,123
  - 2021 Adverse: 14,503
  - 2022 Baseline: 16,164
  - 2022 Adverse: 15,275
  - 2023 Baseline: 18,890
  - 2023 Adverse: 17,041
- Real GDP growth (percent):
  - 2020 Baseline: 1.1
  - 2020 Adverse: -1.5
  - 2021 Baseline: 4.0
  - 2021 Adverse: 2.5
  - 2022 Baseline: 6.0
  - 2022 Adverse: 4.5
  - 2023 Baseline: 12.1
  - 2023 Adverse: 7.0
- Government revenues (percent of GDP):
  - 2020 Baseline: 21.0
  - 2020 Adverse: 20.7
  - 2021 Baseline: 20.0
  - 2021 Adverse: 20.0
  - 2022 Baseline: 20.6
  - 2022 Adverse: 20.6
  - 2023 Baseline: 21.1
  - 2023 Adverse: 20.5
- Government expenditure (percent of GDP):
  - 2020 Baseline: 27.1
  - 2020 Adverse: 27.7
  - 2021 Baseline: 24.5
  - 2021 Adverse: 25.5
  - 2022 Baseline: 23.6
  - 2022 Adverse: 25.1
  - 2023 Baseline: 24.1
  - 2023 Adverse: 24.2
- Fiscal Balance (percent of GDP) [Fiscal path without additional policy measures]:
  - 2020 Baseline: -6.1
  - 2020 Adverse: -7.0
  - 2021 Baseline: -4.5
  - 2021 Adverse: -5.5
  - 2022 Baseline: -3.0
  - 2022 Adverse: -4.5
  - 2023 Baseline: -3.0
  - 2023 Adverse: -3.7
- Gross Public Debt (percent of GDP):
  - 2020 Baseline: 68.6
  - 2020 Adverse: 71.2
  - 2021 Baseline: 70.4
  - 2021 Adverse: 74.9
  - 2022 Baseline: 70.5
  - 2022 Adverse: 77.4
  - 2023 Baseline: 64.5
  - 2023 Adverse: 74.5
- Current Account Balance (percent of GDP):
  - 2020 Baseline: -8.8
  - 2020 Adverse: -9.0
  - 2021 Baseline: -10.2
  - 2021 Adverse: -10.7
  - 2022 Baseline: -11.0
  - 2022 Adverse: -11.7
  - 2023 Baseline: -3.9
  - 2023 Adverse: -9.5

### Medium-Term Revenue Strategy (MTRS) 2020–25 — objectives and reforms
- Purpose: help implement the second phase of the Plan Sénégal Emergent (PSE) by substantially increasing domestic revenues to reach the WAEMU convergence target of tax-to-GDP ratio of 20 percent and finance the second PSE phase (Priority Action Plan or PAP II).
- Target: tax-to-GDP ratio (excluding hydrocarbon-related flows) of 20 percent by 2023, a 2.6 percentage point increase relative to 2019.
- Three strategic axes:
  - i) broadening of the tax base by promoting a culture of paying taxes,
  - ii) continuing to develop digitalization for better accountability and service to taxpayers,
  - iii) modernizing the revenue administration’s governance.
- Reform areas and selected measures:
  - Tax policy:
    - Increase the number of taxpayers by modernizing methods of identifying taxpayers and their declarations.
    - Establish lasting relationship between tax institutions and user-citizens based on consent to tax and simplification of administrative procedures to facilitate formalization.
    - Simplify management of VAT credits.
    - Simplify taxation of small businesses and remove obstacles to formalization.
    - Neutralize negative impact of certain tax provisions (such as simplified regimes with lower rates for SMEs).
    - Change local and property taxation.
    - Update laws and practices in international taxation.
    - Adopt a new investment code.
    - Introduce measures related to agricultural and environmental taxation.
  - Revenue administration:
    - Promotion of tax consent.
    - Increase controls of the reporting system and taxpayers’ declarations.
    - Modernization of VAT management.
    - Modernization of taxpayer registration.
    - Development of computer systems to better locate companies.
    - Strengthening fair competition between economic players.
    - Strategy to fight tax fraud.
  - Customs administration:
    - Modernize customs clearance operations and standardize application to strengthen risk management after customs clearance.
    - Modernize control of valuations.
    - Master transit and re-export operations by land.
    - Strengthen monitoring of petroleum products.
    - Integrate a new customs regime into the customs code.
  - Institutional reforms:
    - Reinforce collaboration in risk management between administrations.
    - Optimize management of information systems and data collection to reach digital maturity.
    - Improve governance of administrations through performance management, internal and external risk management, renovation of internal control and audit.
    - Develop a relationship of trust with taxpayers by promoting a more neutral/ethical mode of administration and communicating progress in the fight against corruption.
- IMF support:
  - Extensive TA from the IMF’s Fiscal Affairs Department contributed to developing the MTRS.
  - TA missions in April 2019 and September 2019, a September 2019 TADAT diagnostic, and further TA missions at end-2019 and early-2020 assisted the steering committee in producing the first draft of the full strategy.

### Program Statement highlights (from Attachment I and accompanying letter)
- 2020 real GDP growth projected at 1.1 percent of GDP, compared to 5.3 percent in 2019.
- PRES fund of CFAF 1,000 billion established to strengthen health system, support households and diaspora, support firms and employees, and secure supplies.
- Revised 2020 fiscal deficit: 6.1 percent of GDP (compared with 3 percent in the initial 2020 budget); government intends to return gradually to a budget deficit of 3 percent of GDP by 2022.
- PRES funding sources:
  - contributions from citizens and businesses,
  - reframing of the 2020 budget,
  - support of technical and financial partners (PTF),
  - budgetary margins from suspension of bilateral public debt service to G-20 members between June and December 2020 following participation in the Debt Service Suspension Initiative.

*Source: Ministry of Finance and Budget, Ministry of Economy and Planning, IMF staff estimates; excerpts from Annex I–III, Appendix I Program Statement, and attached tables and text.*

### 3.3 percent in April 2020 relative to the same month in 2019.

### 1senea2020003 - 3.3 percent in April 2020 relative to the same month in 2019.

### Overview and Macroeconomic Outlook
- 3.3 percent in April 2020 relative to the same month in 2019.
- The government implemented an economic and social resilience program endowed with a fund of CFAF one thousand (1,000) billion to strengthen the health system and support households, the Senegalese diaspora, firms and employees.
- The resilience program includes four pillars:
  - (i) support for the health sector;
  - (ii) strengthened social resilience for the general public;
  - (iii) macroeconomic and financial stability to support the private sector and maintain employment;
  - (iv) ensuring regular supplies of oil and gas, medical and pharmaceutical products, and essential foodstuffs.
- GDP growth is projected at 1.1 percent for 2020 compared to 5.3 percent in 2019. Forecast assumes gradual recovery as of end-June 2020 and a return to normal over the last quarter of the year.

### Program Performance: Quantitative and Reform Targets
- At end-December 2019, quantitative targets met for:
  - net lending/borrowing;
  - annual requirement for net financing for the government;
  - tax revenue;
  - nominal public debt;
  - social spending.
- Ceiling on government contracts concluded without open competitive tender was exceeded: 17.3 percent (ceiling 15 percent).
- Continuous quantitative targets on exceptional spending procedures and public sector external payments arrears were met.
- Continuous reform targets: implementation of decree for regularly revising fuel prices achieved automatically as international oil prices declined.
- Continuous reform target for quarterly reports on DGID–DGD data interconnection not achieved; second report delayed due to the health crisis. Frequency proposed to change to biannual, next report expected by end-December 2020.
- End-June reform targets with satisfactory progress:
  - study to identify mechanisms for improving enrollment and attendance of children in secondary schools prepared;
  - medium-term revenue strategy finalized;
  - study of the expenditure chain finalized.
- Several reform targets deferred to end-December 2020: revision of legal framework for PPPs; raising prepayments on income taxes at customs; draft legislative text on allocation, management and control of hydrocarbon revenues.
- National Public Debt Committee progress: procedures’ manual adoption and ministerial decree expected for end-June 2020.

### Strategic Objectives and Adjustments to Priority Action Plan (PAP II)
- Crisis will change consumption and production patterns; PAP II for PSE Phase II to be adjusted to:
  - boost local production;
  - enhance resilience and address fragilities and vulnerabilities;
  - safeguard the general public from such crises.
- Revised PAP focuses inter alia on:
  - sustainable industrialization (agro-food, pharmaceutical industries, etc.);
  - development of food agriculture to guarantee food self-sufficiency;
  - strengthened social safety nets;
  - greater role for the private sector.

### Pillar I: Achieving High, Inclusive and Private Sector-Led Growth
- Government committed to stepping up private investment via a publicly financed startup fund, expedited PPPs, and an entrepreneurial framework for inclusive, job-rich growth.
- Revision of the 2014 PPP law to require prior evaluation for PPP projects entailing over CFAF 2 billion; unsolicited bids to receive a second opinion (reform target reset to end-December 2020).
- Private sector development strategy objectives include:
  - effectiveness of private sector support system;
  - structural reforms to improve business climate;
  - innovative financial instruments for financing government and enterprises;
  - customized nonfinancial services.
- Compact with Africa action plan (supported by Germany) emphasizes four priority areas:
  - (i) labor administration and laws;
  - (ii) access to land;
  - (iii) access to finance and development of SMEs;
  - (iv) vocational training.
- Progress under Compact with Africa:
  - law on development of SMEs adopted;
  - tax laws on SMEs and startups renewed in December 2019 budget law;
  - draft law on creation and development of startups adopted;
  - draft law on public-private partnerships for technical and vocational training signed.
- Automation of property, land, and land registries (integrated land management system) scheduled for end-June 2021 (performance target, end-June 2021).
- Social safety nets expansion measures:
  - press ahead with Social Safety Net Support Project (PAFS);
  - maintain existing budget allocation for cash transfers and consider broadening social safety nets focusing on productive social protection and employability of young people and women;
  - update and extend single national registry (RNU) to include at least 1 million households by end-2021 (558,000 households already surveyed).
- One-stop window for SME support under Compact with Africa to be operational by March 2021 with three components:
  - (i) profiling SMEs’ capacity to access financing;
  - (ii) technical assistance to improve eligibility;
  - (iii) web platform to provide financing criteria and enable financial institutions to communicate products/services.
- Education measures from study on enrollment and attendance:
  - incentives under Programme national de Bourses de Sécurité familiale (PNBSF) to keep girls in school;
  - improve schooling coverage in rural areas via collèges de proximité;
  - implement mechanisms for evaluation of teachers, establishments, and the educational system.
- Financial sector measures and facilities:
  - CFAF 200 billion financing facility to support firms impacted by COVID-19 through two windows of CFAF 100 billion apiece (SME window and large enterprise window);
  - facility backed by a government guarantee through a non-remunerated deposit up to an amount of CFAF 70 billion with banks extending loans under the scheme;
  - facility to provide investment credits at favorable rates;
  - very small enterprises financed by microfinance institutions handled by FONGIP through a CFAF 5 billion guarantee line.
- Monitoring and financial sector support:
  - BCEAO banking system reports and surveys to be analyzed in-depth;
  - General Directorate for the Financial Sector and Competitiveness surveyed credit institutions, insurers, and microfinance institutions to assess risks and needs associated with COVID-19;
  - decree authorizing automated treatment of personal data adopted at end-December 2019 (RT, end-December 2021) to incorporate grands facturiers into credit information sharing platform.
- Financial inclusion progress:
  - pension payments automated in April 2020, affecting over 50,000 civil service pensioners;
  - negotiations to implement digital payment/receipt products ongoing;
  - interoperability of digital financial services has made significant headway;
  - national financial inclusion strategy completion expected by end-2020 (initially set for June 2020);
  - WAEMU regional financial education program (PREF) finalized by BCEAO in April 2020.
- BIC database status as of May 31, 2020:
  - total customers: 1,176,696,
  - including 761,271 from credit institutions and decentralized financial systems (SFD),
  - and 415,425 from public utilities (except SENEAU, data being processed).
- Unified on-line collateral registry combining movable collateral and mortgages proposed for end-December 2021 (initially set for end-2020).

### Pillar II: Consolidating Macroeconomic Stability Through a Prudent Fiscal Policy — COVID-19 Response Plan
- The response plan is based on four pillars (reiterated):
  - i. Support for the health sector to cover preventative expenses and care for patients.
  - ii. Strengthened resilience and social cohesion for the general public, including the Senegalese diaspora, encompassing:
    - payment, for the two-month period April-May 2020, of electricity bills for 975,522 households and water bills for 662,000 households;
    - emergency food aid intended for one million economically fragile households;
    - assistance to the diaspora;
    - operations to safeguard livestock;
    - support for artisanal fishermen, women fish-processors, fish wholesalers (mareyeurs) and fish-farmers.
  - iii. Efforts to safeguard macroeconomic and financial stability to support the private sector and preserve jobs. Eligibility criteria for support target severely impacted firms and require:
    - refraining from distributing dividends;
    - preserving jobs and minimum wages for employees;
    - impact defined as total or partial stoppage of activities, furlough status for 50 percent of permanent staff, or a decline of at least 33 percent in revenues over March, April, and May 2020;
    - firms in sectors automatically eligible: tourism and related activities, education, higher education, vocational training, agriculture, the press, culture, etc.
  - Key elements under pillar iii:
    - direct support for most severely impacted sectors including Air Sénégal SA and other sectors (tourism, catering, hotel trade, transportation, education, agriculture, culture);
    - settlement of claims of government suppliers prioritizing sensitive sectors (tourism, transport, agriculture, construction and public works, education, health, energy);
    - implementation of financing facility to enable deferral negotiations with commercial banks; framework agreement signed with banking sector establishing two windows (SME and large enterprises).
    - For the SME facility: government deposit CFAF 50 billion, banks commit to inject CFAF 100 billion for SMEs.
    - For the large enterprise window: government deposit CFAF 20 billion, banks commit to grant CFAF 100 billion in financing.
    - Access requirement: impacted enterprises must have lost at least 33 percent of turnover over a comparable period between n and n-1; for firms without a year of turnover, loss assessed on monthly average revenue in 2019 compared to 2020.
    - Tax- and customs-related package comprising:
      - tax relief arrangements;
      - accelerated refunds of VAT credits;
      - postponing, or suspending, of tax payments;
      - deductibility for tax purposes of gifts made in favor of the Response and Solidarity Fund (FORCE COVID-19);
      - extension from 12 to 24 months for time period allowed for payment of suspended VAT;
      - option for enterprises to retain taxes withheld at source on wages as a public subsidy if furloughed personnel keep their jobs or stay on the payroll at at least 70 percent of their salary.
  - iv. Actions to safeguard regular domestic supplies of water, electricity, fuel, medications, and essential foodstuffs.

*Source: 1senea2020003 - 3.3 percent in April 2020 relative to the same month in 2019.*

### 20.      Fully taking into account the impact of the pandemic on revenue collection and

### Fully taking into account the impact of the pandemic on revenue collection and additional expenditure requirements raises the budget deficit estimated for 2020 to 6.1 percent of GDP

### Fiscal impact and medium-term deficit objective
- Estimated budget deficit for 2020: 6.1 percent of GDP.
- Government commitment to return gradually to a deficit of 3 percent of GDP in accordance with the WAEMU target by 2022.

### Emergency fiscal measures and budget safeguards (supplementary budget law LFR 2020)
- Identify emergency measures to keep the deficit at a maximum of 6.1 percent of GDP if additional revenue shortfalls or expenditure pressures materialize.
- Precautionary reserve: capped at 5 percent of domestically funded investment appropriations (approximately CFAF 40 billion). Mobilization contingent on attainment of revenue objectives at least through end-September.
- Cap acceleration of settlement of pre-2019 unmet obligations at CFAF 200 billion for FY 2020 (CFAF 87 billion more than in the three-year plan announced in the PCI request); additional amounts allocated to energy, transport, health, agriculture, water supply, and higher education.
- Crisis-related measures will be temporary and fully accounted for in the revised budget; tax relief measures will remain strictly temporary and reversed once the crisis has passed.

### Short-term revenue protection and customs/tax administration actions
- Short-term measures to minimize customs and domestic revenue shortfalls; scope of exemptions will not be broadened.
- Customs measures include:
  - Strict application of corrective values.
  - Close monitoring of customs clearance for revenue-generating products.
  - More effective monitoring of goods declared under special arrangements (régimes suspensifs).
  - Implementation of the Value Application (VALOREM) in response to the phaseout of the Import Verification Program.
  - Upgrade of the GRED computer application for electronic processing and monitoring of exemptions (titres d’exonération).
  - Enhanced surveillance of the customs territory to guard against fraudulent rebates.
- DGID measures to ensure tax filing continuity and service delivery:
  - Facilitate telework via a teleconferencing application.
  - Accelerate digitalization and expansion of tax-related remote procedures: (i) M-tax and Mon Espace Perso to be delivered by end-Q3 2020; (ii) one-stop facility for filing financial statements on-line to be launched at end-June 2020.
  - Reinforce results-based management via contracts based on targets and performance between the DG and the Directors under the “Domestic and Land Taxation Management” Program.

### Transparency and accountability for emergency expenditures
- Commitments include:
  - Publishing all related tenders and clarifying procurement procedures.
  - Publishing the list of successful bidders on government contracts.
  - Establishing expenditure controls.
  - Official quarterly budget execution reporting of COVID-19-related expenditures.
  - Annual audit of government contracts to verify procurement regularity for COVID-19 expenditures and publishing results.
  - Entrusting the Audit Office (Cour des comptes) with a special report on execution of COVID-19-related expenditures in the 2020 budget execution report.

### Participation in debt relief and disclosure commitments
- Participation in the G-20 debt service suspension initiative; will benefit from relief on debt service in 2020.
- Resources freed by suspension will help finance the COVID-19 response; government commits to transparent reporting of such spending.
- Commit to disclose debt by public sector borrowing entities (per GFSM 2014) to the IMF and World Bank Group within 3 months, but no later than September 1.
- Government commits to respect the debt limit set under the PCI.

### Revenue strategy and digitalization reforms
- Medium-term revenue strategy (SRMT) finalized to achieve by 2023 a tax-to-GDP ratio (tax ratio excluding natural resources/GDP excluding natural resources) amounting to 20 percent (reform target for June 2020).
- SRMT flagship measures: digitalization, de-compartmentalization, and cross-cutting reforms across government agencies.
- Strategic Execution Unit to begin work in the second half of the year, equipped with human and IT resources, and to prepare semiannual progress reports on annual action plans.
- 2020-21 action plan to include measures to safeguard revenues, broaden the tax base, and expedite digitalization.

### Public financial management (medium-term) reforms
- Continue program budgeting reforms, including:
  - Generalizing the use of commitment authorizations (Autorisations d’Engagement) to encompass all expenditure categories as of 2021.
  - Effective implementation of the decentralization of payment authorization.
  - Preparing the budget law in a program format.
  - Continued improvement of new budget tools (DPBEP, PAP, RAP, etc.).
- Expenditure-chain reforms:
  - Detailed reporting of transfers through treasury deposit accounts (comptes de dépôt) by service category and type of beneficiary for the remainder of 2020.
  - Technical assistance to identify transfers using treasury deposit accounts that can be categorized as “use of goods and services” and “capital expenditure executed by the government” in line with the organic budget law.
  - 2021 budget law and ministerial decree: appropriations to current and capital transfers in favor of non-personalized government services (SNPE) will be capped at 50 percent of total transfers (except defense/national security) and undergo analysis by economic category.
  - From the 2022 budget law, SNPE allocations (excluding defense and national security) will be permanently recorded in “use of goods and services” and “capital expenditure executed by the government”.
  - Balances of existing deposit accounts for these SNPEs will be canceled in accordance with decree No. 21136 of November 21, 2017 (modified), except for SNPEs with their own resources.
  - Beneficiaries of remaining treasury deposit accounts must submit quarterly commitment and disbursement plans.

- Investment project screening:
  - Inclusion in the budget of any new investment project larger than CFAF 1 billion will be subject to a conclusive ex-ante evaluation using the cost/benefit method by the Ministry in charge of planning (excluding sovereignty projects) (reform target, end-December 2021).

- Single treasury account consolidation:
  - Review of accounts of public entities (except externally funded projects) by end-December 2020 (new reform target, end-December).
  - Close and repatriate into the Treasury single account 50 percent of identified accounts by end-2021, remaining 50 percent by end-2022 (reform target, end-December 2022).

- Fiscal risk management:
  - Set up a database for the full range of PPPs and electric power purchasing contracts, presenting budgetary impact and quantifying major fiscal risks (reform target, end-June 2021).
  - Publish a statement of fiscal risks annexed to the draft 2022 budget law (reform target, end-December 2021).

### Debt sustainability and debt management priorities
- End-2019 stock of total nominal public debt: CFAF 8,848.5 billion (64 percent of GDP), below the program ceiling.
- Debt-to-GDP ratio expected to peak in 2022 then resume downward trajectory.
- Debt remains sustainable with a moderate risk of debt distress, with limited space to absorb further short-term shocks.
- Under the Medium-Term Debt Strategy (SDMT), government committed to prudent debt management focused on mobilizing resources with a degree of concessionality aligned with the country’s debt profile; prioritize issuances of government securities in the subregional financial market.

### Short-term reallocations and project loan adjustments
- Drawings of project loans revised downward by CFAF 75 billion and reallocated to finance the Economic and Social Resilience Program (PRES).
- Projects affected by reallocation/delays:
  - Construction of the Olympic stadium in Diamniadio (timing delayed from early 2020).
  - Regional Express Train (TER) phase 2 (Diamniadio-AIBD) launch rescheduled to 2021.
  - Rehabilitation of regional airports: works and disbursements slowed down.

### Comprehensive debt management actions (reform targets)
- Make the National Public Debt Committee (CNDP) fully operational by end-June 2020 (adoption of manual of procedures and signing of ministerial decree) (reform target, end-June 2020).
- Adopt consistent public sector borrowing strategy encompassing SOEs, compatible with the ceiling on nominal debt set under the program.
- Prepare legal framework for authorization of guarantees, endorsements, and on-lending.
- Improve monitoring of debt across the public sector.
- External audit of the database for total public sector debt (including SOE debt) (reform target, end-December 2020).
- Establish a mechanism for monitoring and reporting drawings on project lending between DGB and the Public Debt Directorate.
- IMF technical assistance to help finalize terms of reference for the external audit and to monitor recording improvements.

### Managing oil and gas revenues
- Investment analysis in petroleum sector to consider international hydrocarbons outlook; COVID-19 and geopolitical pressures delayed first gas from Greater Tortue Ahmeyim (GTA) by one year, pushing start of production from 2022 to 2023.
- Government to pursue cautious policy regarding PETROSEN’s financial commitments; measures include:
  - Optimize field development concepts with operators.
  - Secure firm and long-term purchase contracts for LNG.
  - Obtain greater assurances on project profitability before authorizing PETROSEN borrowing with government guarantees.
- Governance framework for oil and gas revenues:
  - Two draft laws (LGRH and FONSIS) delayed by the public health crisis; to be finalized by end-December (LGRH was a reform target for end-June 2020).
  - Apportionment of revenues will consider investment and production scenarios and international outlook for future GTA and Sangomar project phases.
  - Interministerial technical committee to finalize fiscal framework taking account of oil and gas operations by end-December 2021 (reform target, deferred from end-2020).

### Program monitoring and review timetable
- Program monitored via quantitative targets, continuous targets, and reform targets.
- Quantitative targets proposed for end-June 2020, end-December 2020, end-June 2021, and one ongoing quantitative target.
- Review schedule:
  - Second review by December 31, 2020.
  - Third review by June 30, 2021.
  - Fourth review by December 31, 2021.
  - Fifth review by June 30, 2022.
  - Sixth review by December 31, 2022.

*Source: IMF staff and Senegal authorities (Policy Coordination Instrument program documents and Technical Memorandum of Understanding).*

### 1.      Unless otherwise indicated, “Government” in this TMU means the budgetary central

### 1senea2020003 - 1.      Unless otherwise indicated, “Government” in this TMU means the budgetary central

### Definitions and scope
- "Government" means the budgetary central Government of the Republic of Senegal. It excludes the central bank and the public sector outside the budgetary central government (paragraph 3).
- "Public sector" means the government, local governments and all majority government-owned or controlled entities.
- Debt definition: as set out in paragraph 8(a) of the Guidelines on Public Debt Conditionality in Fund Arrangements attached to Executive Board Decision No. 15688-(14/107), adopted December 5, 2014.
  - Debt is a direct, non-contingent liability created under a contractual arrangement requiring payments in assets or services according to a repayment schedule; payments discharge principal and/or interest.
  - Primary forms of debt:
    - Loans, including deposits, bonds (including Treasury Bills), debentures, commercial loans, buyers’ credits, repurchase agreements, and official swap arrangements.
    - Suppliers’ credits: contracts where the supplier permits the obligor to defer payments after delivery/provision of services.
    - Leases: debt equals the present value (at lease inception) of all lease payments expected during the agreement, excluding payments covering operation, repair, or maintenance.
  - Arrears, penalties, judicially awarded damages and interest arising from failure to pay under contractual obligations that constitute debt are debt.
  - Debt guarantees: any explicit legal obligation of the public sector to service a debt in the event of nonpayment by the debtor (payments in cash or in kind).
  - External debt: debt borrowed or serviced in a currency other than the CFA franc, regardless of the residency of the creditor.

### Quantitative program targets — overview
- Targets include floors, ceilings, and continuous limits applied to government fiscal aggregates and operational procedures, with specific definitions, adjustment rules, monitoring frequencies, and reporting lags.

### Floor on Net Lending/Borrowing (overall fiscal balance)
- Definition: Net lending/borrowing = Government’s total revenue minus total expenditure (costs and acquisition net of nonfinancial assets); consistent with the 2001/14 Government Financial Statistics Manual (GFSM).
- Government expenditure defined on a payment order basis accepted by Treasury, including those executed with external resources.
- The quantitative target is set as a floor on the overall fiscal balance as of the beginning of the year.
- Adjustment: The floor including grants is adjusted downward by the amount that budget grants fall short of program projections up to a maximum of CFAF 20 billion at current exchange rates (PS Table 1).
- Reporting Requirement: Authorities will report provisional data on the overall fiscal balance and its components monthly to Fund staff with a lag of no more than 6 weeks after the end of the relative month. Final data no later than two months after reporting provisional data.

### Ceiling on Central Government’s Overall Net Financing Requirement
- Definition: Net overall financing requirement = (i) the overall fiscal balance (as defined above) + (ii) additional borrowing by the Treasury to finance accounts payable (spending out of unutilized appropriations ("comptes de dépôt"), offsets for illiquid revenues "recettes d’ordre", and other below-the-line operations).
- For end-December 2019 and 2020, the target must be lower or equal to the amount indicated in Table 1 of the Program Statement.
- Adjustment: Ceiling adjusted upward by the amount that budget grants fall short of program projections up to a maximum of CFAF 35 billion at current exchange rates (PS Table 1).
- Reporting Requirements:
  - Quarterly within one month from end of quarter: data on additional borrowing by the Treasury to finance accounts payable, including drawdowns of "comptes de dépôt", offsets for "recettes d’ordre", other below-the-line operations, and reconciliation between the budgetary balance and financing made available during the quarter.
  - Quarterly within one month from end of quarter (starting from end of December): data on overall financing requirement including (i) total gross Government debt; (ii) total debt principal repaid by the Government; and (iii) all guarantees granted by the Government for domestic or external loans to suppliers/contractors and any other public or private entity.
  - Monthly within six weeks of end of month: details regarding any Government borrowing (including amounts on-lent and guarantees), grouped as short-term (less than one year) or long-term (one year or more). Applies also to amounts on-lent and guarantees. Projected principal and interest payments reported on a commitment and a disbursement basis.

### Ceiling on the Amount of Budgetary Float
- Definition: Budgetary float (instances de paiement) = outstanding stock of Government expenditures for which bills have been received and validated (difference between dépenses liquidées and dépenses payées) and for which payment delay does not exceed regulatory delays: 90 days after reception and validation of relevant bills (liquidation), except for payments related to domestic debt service where delay is 30 days.
- Target monitored every 6 months.
- Reporting Requirement: Authorities will transmit to Fund staff at the end of each month a SIGFIP (or SIGIF once operational) table showing:
  - all committed expenditure (dépenses engagées),
  - certified expenditures not yet cleared for payment (dépenses liquidées non encore ordonnancées),
  - payment orders (dépenses ordonnancées),
  - payment orders accepted by Treasury (dépenses prises en charge par le Trésor),
  - payments made by Treasury (dépenses payées).
- The SIGFIP table excludes delegations for regions and embassies and lists payments without cash impact. Balances broken down by payer, spending category, maturity, and length of time overdue.
- Quarterly reporting on derogatory procedures: status of 'waiting and provisional imputation' accounts, status of derogatory expenditures by category, status of deposit accounts ("comptes de dépôt") by beneficiary type (i) agencies in the broad sense; (ii) legal entities governed by private law; (iii) private individuals; (iv) non-personalized state services; and (v) commitments related to comfort letters; plus assessment of regularization from one quarter to the next.

### Floor on Tax Revenues
- Definition: Tax revenues = sum of revenues from taxes and levies on income, profits and capital gains, salaries and labor, on assets; taxes on goods and services; on foreign trade and international transactions; and other tax revenues.
- The target is assessed based on data in the quarterly TOFE.
- Petroleum revenues monitored specifically (VAT on oil, excise taxes on oil, customs duties on oil, vehicle taxes, the PSE, and the Petroleum Product Imports Security Fund (FSIPP)).
- Reporting Requirements: Same as for the quantitative target floor on net lending/borrowing.

### Ceiling on The Share of The Value of Public Sector Contracts Signed by Single Tender (percent)
- Definition: Public sector contracts = administrative contracts entered into by the Government or any entity subject to the procurement code for supplies, services, or works.
- "Non-competitive" procurement = award without open competitive tender, without open inquiry and open price.
- Semiannual target applies to total public sector contracts entered into by the Government or any entity subject to the procurement code.
- Exclusions from ceiling:
  - classified purchases;
  - fuel purchases by SENELEC for electricity production reflected in a new regulation obliging SENELEC to buy fuel from SAR on the basis of the current price structure;
  - administrative amendments;
  - riders necessary for final delivery if included in the original contract and compliant with procurement code.
- Reporting Requirements: Government reports semi-annually to Fund staff, with a lag of no more than one month, total amount of public sector contracts and total value of single-tender public sector contracts.

### Floor on Social Expenditure
- Definition: Social spending = spending on health, education, the environment, the judicial system, social safety nets, sanitation, and rural water supply (as contained in the table on social expenditure).
- Floor evaluated semiannually.
- Reporting Requirements: Authorities report semiannual data to Fund staff within two months after each semester.

### Ceiling on Total Nominal Public Debt
- Definition: Debt for this target defined as in paragraph 4, comprises external and domestic debt of the public sector (general government and public nonfinancial corporations as defined in paragraph 3), measured at nominal value.
- Monitoring: annual basis.
- To evaluate this target, foreign-currency debt converted using exchange rates for projection of the debt stock: CFAF/US$ 598 and CFAF/DTS 817.
- Reporting Requirements: Authorities report quarterly data to Fund staff within two months following the end of each quarter.
  - Quarterly, within six weeks after end of quarter: provisional data relating to debts of listed public enterprises (LONASE, SN La Poste, RTS, SN PAD, SONES, SENELEC, APIX, SN HLM, SAED, SNR, SOGIP SA, SAPCO, SODAGRI, CICES, SSPP SOLEIL, PETROSEN, SIRN, SICAP, DDD, MSAD, ONFP, ONAS, CNQP, OFOR, OLAG, FONSIS, AIBD, FERA, ASER, FSE, ANAM, AGPBE, COUD, ACMU, CDC, Dakar Dem Dik, ITA, MIFERSO, CEREEQ, and Air Senegal).
  - Any public enterprise not on the list that contracts debt greater than 5 billion CFA francs during the year will be communicated and added to the list for future reporting.
  - Stock of debt at end December of current and previous year of all these public enterprises, information on newly contracted debt during the year, and principal payments will be communicated within two months after year-end.
  - All retroceded or guaranteed debt emanating from central administration benefiting these public enterprises, and any retroceded or guaranteed debt benefiting private sector enterprises, will be communicated. Data will distinguish between guarantees and debt on-lent to public enterprises and those issued to private sector actors.
  - All commitments by comfort letter will be communicated quarterly within six weeks after end of quarter; if counted elsewhere (e.g., guarantees), this will be explicitly mentioned.

### Ceiling on Spending Undertaken Outside Simplified and Normal Procedures (continuous)
- Definition: Target applies continuously to any procedure other than normal and simplified procedures to execute spending.
- Exclusion: spending on basis of supplemental appropriation order (décret d’avance) in cases of absolute urgency and need in national interest pursuant to Article 23 of the Organic Budget Law; such spending requires signature of the President of the Republic.
- Reporting Requirements: Authorities will report any such procedure immediately to Fund staff.

### Ceiling on Public Sector External Payments Arrears (continuous)
- Definition: External payment arrears = payments owed and not paid when due (per contract terms) on external debt contracted or guaranteed by the public sector. The debt definition in paragraph 4 applies.
- Monitoring: continuous.
- Reporting Requirements: Authorities will promptly report any accumulation of external payments arrears to Fund staff.

### Additional information for program monitoring
- Immediate (within three days after adoption): any decision, circular, edict, supplemental appropriation order, ordinance, or law having economic or financial implications for the current program, including acts that change budget allocations, create new agencies or funds, or create supplemental appropriations.
- Within a maximum lag of 30 days: preliminary data on:
  - Tax receipts and tax and customs assessments by category with corresponding revenue on a monthly basis;
  - Monthly amount of expenditures committed, certified, or for which payment orders have been issued;
  - Monthly situation of checks issued by agencies from their deposit accounts at the Treasury but not paid to beneficiaries, with dates of issuance;
  - Quarterly Debt and Investment Directorate (DDI) report on execution of investment programs;
  - Monthly preliminary Government financial operations table (TOFE) based on Treasury accounts;
  - Provisional monthly balance of the Treasury accounts;
  - Reconciliation tables between SIGFIP and consolidated Treasury accounts, between consolidated Treasury accounts and TOFE for "budgetary revenues and expenditures," and between TOFE and the net treasury position (NTP), on a quarterly basis;
  - Quarterly report on FSE operations in terms of revenues and expenditures;
  - Monthly report on the price structure of fuel products, including an estimate of the necessary subsidy for the rest of the year based on the latest price structure; no later than 4 weeks after publication of the price structure. If domestic prices are higher than international prices, authorities will communicate where in the TOFE the benefits are accounted for.
- Final data: provided as soon as final balances of the Treasury accounts are available, but not later than one month after reporting provisional data.
- Monthly provisional data during program period: current nonwage noninterest expenditures and domestically financed capital expenditures executed through cash advances, with lag no more than 30 days; data drawn from preliminary consolidated Treasury account balances; final data no more than one month after provisional.

### Central bank and financial sector reporting
- The central bank will transmit to Fund staff:
  - Monthly balance sheet of the central bank, with maximum lag of one month;
  - Monthly consolidated balance sheet of banks, with maximum lag of two months;
  - Monetary survey, monthly, with maximum lag of two months;
  - Lending and deposit interest rates of commercial banks, monthly;
  - Prudential supervision and financial soundness indicators for bank financial institutions as reported in the table entitled Situation des Établissements de Crédit vis--à-vis du Dispositif Prudentiel (Survey of Credit Institution Compliance with the Prudential Framework), quarterly, with maximum delay of two months.

*Source: 1senea2020003 - 1.      Unless otherwise indicated, “Government” in this TMU means the budgetary central*

### 28.      The Government will update on a monthly basis on the website established for this purpose

### 28.      The Government will update on a monthly basis on the website established for this purpose

### Monthly transparency and reporting requirements
- The Government will update on a monthly basis on the website established for this purpose the following information:
  - (a) Preliminary TOFE and transition tables with a delay of two months;
  - (b) SIGFIP execution table, the table for the central Government and a summary table including regions, with a delay of two weeks;
  - The amount of the airport tax collected, deposited in the escrow account, and used for the repayment of the loan financing the construction of the new airport, with a delay of one month.
  - Full information on:
    - (i) the operations of the Energy Sector Support Fund (FSE);
    - (ii) investment projects in the power sector;
    - (iii) planning and execution of these projects; and
    - (iv) details of financing and updated costs.

*Statement by Mr. Mohamed-Lemine Raghani Executive Director for Senegal and Mr. Oumar Diakite, Advisor to Executive Director July 17, 2020*

### Recent economic developments and program performance
- Economic impact of Covid-19 and near-term outlook:
  - Economic activity index (excluding agriculture and forestry) contracted by 1.9 percent during the first quarter of 2020.
  - Inflation rose to 3.3 percent in April compared with the same period in 2019.
  - GDP growth is expected to reach 1.1 percent in 2020 from 5.3 percent in 2019 under a scenario of gradual economic recovery; a more severe or prolonged pandemic could lead to a contraction of economic activity.
- Policy support and mitigation:
  - Emergency financing obtained under the RCF/RFI on April 13, 2020 and debt service suspension under the G-20 initiative support the authorities’ social and economic resilience program (PRES).
- Program performance:
  - All quantitative targets (QT) at end-December 2019 were met, except the QT related to the share of government contracts using sole sourcing.
  - All continued QTs were observed.
  - Significant progress on reform targets (RTs) including:
    - Study on mechanisms to improve enrollment and attendance of children in secondary schools (finalized).
    - Medium-term revenue strategy (finalized).
    - Study of the expenditure chain (finalized).
  - Some reform targets postponed to end-December 2020 due to Covid-19 (including legal framework for PPPs and legislation on allocation and management of hydrocarbon revenues).

### Policies and reforms under the PCI-supported program
- PCI three pillars:
  - (i) Achieving high and inclusive private sector-led growth;
  - (ii) Consolidating macroeconomic stability through a prudent budgetary policy;
  - (iii) Managing oil and gas revenues within a sustainable and transparent framework.

A. Achieving high and inclusive private sector-led growth
- Private sector strategy:
  - Structural reforms to improve the business climate and adoption of diversified innovative financing instruments; adoption of best practices in PPPs.
- Compact with Africa (CwA) progress in priority areas: labor legislation, access to land, access to finance, SMEs development, and vocational training.
- One-stop shop underway to coordinate SME support entities and programs.
- Social safety nets:
  - Acceleration of the Support Project for Social Safety Nets (PAFS) to protect youth and women.
  - Maintain current budgetary envelope reserved to cash transfers; consider enlargement of social safety nets in coordination with development partners.
- Financial sector measures:
  - Dedicated financial facility to support large and small and medium enterprises with risk-sharing arrangements with the banking sector to reduce fiscal costs.
  - Monitoring public sector exposures to financial institutions to preserve financial stability.
  - Digitalization measures:
    - Payment of pensions for more than 50,000 retired civil servants digitalized in April 2020.
    - Progress on interoperability of digital financial services initiated by BCEAO.
    - Financial inclusion strategy expected to be completed in December 2020.

B. Consolidating macroeconomic stability through a prudent budgetary policy
- Covid-19 response plan priorities: strengthen health sector, support economic resilience, social cohesion, and restore activity/jobs in tourism, transportation, exports, hospitality and agriculture.
- Fiscal targets and measures:
  - Authorities determined not to exceed the fiscal deficit target of 6.1 percent of GDP on 2020.
  - 2020 supplementary budget includes a precautionary reserve mobilized depending on revenue attainment.
  - Measures to streamline exemptions, facilitate telework in revenue administrations, and complete digitalization of tax return filing and payment procedures.
  - New spending measures will be temporary and targeted to crisis needs.
  - Publish list of successful bidders on government contracts, establish expenditure controls, and entrust the Audit Office (Cour des comptes) to prepare a special report on Covid-19 related expenditures.
- Medium-term fiscal objectives and reforms:
  - Gradual fiscal deficit reduction target of 3 percent of GDP by 2022, in line with WAEMU fiscal convergence criteria.
  - Medium-term revenue strategy (“Stratégie de recettes à moyen terme”, SRMT) to achieve a tax-to-GDP ratio of 20 percent by 2023.
  - Public financial management reforms to include program budgeting, reduction of simplified or derogatory expenditure procedures, improved reporting of transfers through treasury deposit accounts (comptes de dépôt), consolidation of the Treasury Single Account (TSA), and a PPP database to present budgetary impact and quantify major fiscal risks.
- Debt management:
  - Acknowledgement that Senegal’s debt remains at moderate risk of debt distress with little space to absorb further short-term shocks.
  - Commitment to enhance debt management under the medium-term debt strategy (SDMT) by mobilizing highly concessional resources and prioritizing regional financial market financing.
  - Steps to make the National Public Debt Committee (CNDP) fully operational and adopt a consistent public sector borrowing strategy encompassing SOEs and compatible with the nominal debt ceiling under the program, while improving debt data.
  - Authorities seek Fund technical assistance on debt management.

C. Managing oil and gas revenues within a sustainable and transparent framework
- Oil sector timing and prudence:
  - Start of oil production pushed back from 2022 to 2023 due to Covid-19 and global oil industry shocks.
  - Authorities will pursue prudent policy on state financial commitments and require assurances on project profitability prior to providing government guarantees to PETROSEN.
- Legal and fiscal frameworks:
  - Technical work on two draft laws (distribution, supervision and management of hydrocarbon revenues; rules governing the organization and functioning of the Sovereign Fund for Strategic Investments (FONSIS)) delayed and should be finalized by end-December 2020.

### Conclusion and requests to IMF Executive Directors
- Authorities remain strongly committed to their PCI-supported program and continuing reforms to preserve macroeconomic stability, achieve strong economic growth, and improve public financial management and the business environment consistent with PSE Phase II.
- Given Senegal’s satisfactory performance and determination to pursue reforms, the authorities seek Executive Directors’ support for:
  - Completion of the first review under the PCI arrangement; and
  - The request for modification of quantitative targets.

*Fiscal reporting and program statement as presented July 17, 2020.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2020/english/1senea2020003.pdf_