## SENEGAL FIFTH REVIEW UNDER THE POLICY COORDINATION INSTRUMENT, SECOND REVIEWS UNDER THE STAND-BY ARRANGEMENT AND THE ARRANGEMENT UNDER THE STANDBY CREDIT FACILITY, AND REQUESTS FOR AUGMENTATION OF ACCESS, WAIVER OF THE NONOBSERVANCE OF A PERFORMANCE CRITERION, AND MODIFICATION OF A PERFORMANCE CRITERION AND QUANTITATIVE TARGETS

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### Context and Outlook
- External shocks and policy response:
  - Soaring global fuel and food prices, the war in Ukraine, and the freeze on trade with Mali due to ECOWAS sanctions disrupting the post-pandemic recovery.
  - Growth revised down to about 5 percent in 2022.
  - Inflation expected to reach 5.5 percent in 2022.
  - Authorities adopted a supplementary budget in May 2022; 2022 fiscal deficit revised to 6.2 percent of GDP (from 4.8 percent in the initial budget).
  - Public debt expected to reach 75 percent of GDP in 2022.
- Downside risks (listed):
  - a protracted war in Ukraine;
  - a prolonged freeze on trade with Mali;
  - a flare-up of the COVID-19 pandemic;
  - deterioration of the regional security situation;
  - rising social demands;
  - severe tightening of external financial conditions;
  - adverse climate conditions.
- Financing request:
  - Authorities requested an augmentation of access under the SBA and SCF of SDR129.44 million (40 percent of quota) to cover higher short-term balance of payments needs and bolster food security.

### Recent Economic Developments (key figures)
- Output and sectors:
  - 2021 growth: 6.1 percent.
  - Non-agriculture growth: +7.1 percent.
  - Secondary sector: +10.9 percent.
  - Tertiary sector: +5.7 percent.
  - Agricultural production: -2 percent.
- Inflation and prices:
  - Average annual inflation in 2021: 2.2 percent.
  - Inflation by April 2022: 7.0 percent y-o-y.
  - Food prices increase by April 2022: 11.3 percent y-o-y.
  - Core inflation (excluding food and energy): rose by less than 2 percent y-o-y but exceeded pre-pandemic levels.
- External position:
  - Current account deficit (2021): 13.3 percent of GDP.
  - Trade deficit (2021): 21.1 percent of GDP.
  - Remittances (2021): 10.6 percent of GDP.
- Financial sector and fiscal:
  - Broad money growth in 2021: 15.6 percent.
  - Credit to the economy in 2021: +12 percent; 13.9 percent y-o-y in 2022Q1.
  - Stock of nonperforming loans as of end-March 2022: 11.3 percent.
  - Banking sector capital adequacy ratio: 12 percent.
  - Fiscal deficit in 2021: 6.3 percent of GDP.
- 2021 fiscal table (CFAF, billions; percent of GDP):
  - Revenues and grants: 2,981 (19.5 percent of GDP).
  - Revenues (excl. grants): 2,850 (18.6 percent of GDP).
  - Tax Revenues: 2,595 (16.9 percent of GDP).
  - Grants: 131 (0.9 percent of GDP).
  - Expenditure: 3,945 (25.8 percent of GDP).
  - Investment: 1,407 (9.2 percent of GDP).
  - Balance: -964 (-6.3 percent of GDP).
- Public debt:
  - Public debt at end-2021: 73 percent of GDP.
  - Clearance of pre-2020 unmet obligations: total repayments between 2019 and 2021 = 3 percent of GDP.
  - Sukuk issuance in April 2022 by a state-owned enterprise: 2 percent of GDP.

### Program Performance (through end-December 2021)
- Quantitative performance criteria (PCs/QTs):
  - All but one quantitative PC/QT met.
  - Tax revenues shortfall: 0.6 percent of GDP (half due to off-budget treatment of road fund (TUR) revenues; remainder due to weak VAT performance and weaker-than-expected yield of a mid-2021 revenue package).
- Indicative targets (ITs/QTs):
  - One out of three ITs met (floor on social spending met with significant margin).
  - Ceiling on share of contracts awarded through single-source procurement breached.
  - Ceiling on use of simplified procedures for non-personalized services exceeded target temporarily due to large clearance of unmet obligations in 2021Q4.
- Structural benchmarks:
  - Four out of eight December structural benchmarks met.
  - Unmet SBs include: digitalizing land management system, online collateral registry (pilot expected by November), reducing tax exemptions for a gain of 0.2 percent of GDP (now expected in the 2023 budget), merging funds supporting youth and women employment and entrepreneurship (budgetarily completed; legal acts due before year-end).
- Governance and audits:
  - Publication of two key reports by the Fonds Force COVID-19 monitoring committee and the Public Procurement Regulatory Authority completed.
  - Audit court finalizing special report; publication expected in July instead of March.

### Fiscal Policy, Supplementary Budget, and Energy Subsidies
- Supplementary budget approved May 2022:
  - Revised overall deficit target: 6.2 percent of GDP—1.4 percentage point higher than prior commitment.
  - Deficit-increasing measures: 1.7 percent of GDP to cope with food and energy shock; public sector wage increases: 0.6 percent of GDP; additional security-related spending: 0.4 percent of GDP.
  - Identified savings: 0.7 percent of GDP; revenue-enhancing measures: 0.4 percent of GDP.
- Energy subsidy specifics:
  - 2022 budget assumed energy subsidies = 0.9 percent of GDP (based on US$75 per barrel).
  - Staff estimates: at current oil prices and unchanged domestic prices, subsidies would triple to 3 percent of GDP.
  - Required immediate increases to eliminate subsidies: fuel +60 percent and electricity +55 percent (approximate levels noted in staff analysis).
- Measures to manage subsidies and protect households:
  - Adjust selected energy prices to generate savings ≈ 0.4 percent of GDP while shielding lower income households.
  - Allocate additional resources to subsidies (+0.9 percent of GDP) in supplementary budget; further adjust prices (0.3 percent of GDP) if needed.
  - Tap budgetary reserves ≈ 0.5 percent of GDP (pre-identified investment projects to postpone).

### Revenue Mobilization, PFM, and Procurement
- Revenue measures and progress:
  - Maintain domestic revenue projections based on exceptional revenue from a land sale and reforms to expand tax base.
  - Domestic revenues increased by 29 percent through April (y-o-y).
  - Number of registered companies increased by 80 percent since end-2020.
  - MTRS implementing unit set up; target: non-oil tax to non-oil GDP ratio of 20 percent by 2024.
- PFM progress:
  - Treasury Single Account (TSA) implementation ongoing; closure of 65 percent of non-necessary government accounts reported (targeted closures continuing).
  - Transition to program budgeting completed for central government.
  - Single-sourced procurement remains above program target of 15 percent; planned update to procurement code to limit unsolicited offers.
  - Staff recommends stronger safeguards in new procurement code and monitoring single-sourced contracts by contract value.

### Oil and Gas Revenue Management
- Hydrocarbons revenue management law adopted and complemented with implementing decrees to set up forecasting committee and intergenerational savings and stabilization funds.
- Non-oil fiscal anchor to become operational as part of 2023–26 medium-term fiscal framework.
- Fund staff to provide capacity development.

### Financial Sector and AML/CFT
- Banking sector:
  - Renewed attention to restructuring three non-systemically ailing banks and the postal group (La Poste/Poste Finance).
  - Staff recommended liquidation for banks unable to meet minimum solvency requirements by agreed timeframes.
- AML/CFT:
  - Adoption of thirteen legal and regulatory acts; further efforts needed including targeted financial sanctions.
  - Full implementation of AML/CFT action plan by September 2022 identified as critical to avoid enhanced FATF oversight consequences.

### Social Protection and Inclusive Growth
- Social safety net expansion:
  - Aim to double coverage of national database for social protection (RNU) to one million households (almost half of population); expected finalization by June 2023 (delay acknowledged).
  - Cash transfers can be executed via mobile money; authority committed to switching to digital payments by November 2022 (proposed new SB for November 2022).
  - Three-year emergency program for youth employment continues with annual envelope ≈ 1 percent of GDP.
- Private sector:
  - New strategy for private sector development (SNDSP) to support businesses and develop value chains.

### Financing, Augmentation Request, and Market Access
- Augmentation request:
  - Increase in access equal to 40 percent of Senegal’s quota (SDR 129.44 million): two-thirds under SBA (SDR 86.29 million) and one-third under SCF (SDR 43.15 million).
  - Disbursement in two equal tranches of 20 percent (SDR 64.72 million each).
  - Proposed augmentation equals 0.6 percent of GDP.
- Financing mix and support:
  - World Bank and African Development Bank expected to provide higher-than-programmed budget support of 0.5 percent of GDP in 2022.
  - Fund financing intended to catalyze additional financing; good prospects for additional bilateral financing.
- Market access:
  - Senegal has access to regional securities market and Eurobond market; recent Eurobond issuance in June 2021 and CFAF 330 billion sukuk in April 2022.

### Program Modifications, Conditionality, and Benchmarks
- Staff supports:
  - Completion of the fifth PCI review and second reviews under the SBA and SCF.
  - Augmentation of access (SDR129.44 million).
  - Waiver of non-observance of end-December 2021 tax revenue floor PC based on corrective actions.
  - Modification of the June 2022 PC/QT on net lending/borrowing in line with the revised budget.
- Structural benchmark adjustments:
  - New SB proposed to modernize payment modalities of flagship cash transfer program relying on mobile payments (November 2022).
  - Structural benchmark on energy subsidies for June proposed to be removed as unrealistic given shock magnitude and recent measures.
  - Additional time requested for SBs on fiscal framework for oil and gas revenues, publication of roadmap to eliminate energy subsidies, and update of PPP and PPA database.

### Debt Sustainability and DSA Highlights
- Public debt profile:
  - Public debt rose from 63.6 percent of GDP at end-2019 to 73.2 percent at end-2021.
  - Central government debt: 67.4 percent of GDP (end-2021).
  - External debt: 57 percent of GDP.
- Debt service and liquidity:
  - Public external debt service to exports: 21.8 percent in 2021.
  - Public external debt service projected to average about 17 percent of exports and of revenues over medium term.
  - Total public debt service projected to average around 29 percent of revenues and grants over the next five years.
- DSA baseline assumptions and projections:
  - Real GDP growth 2022: 5 percent; medium-term non-oil trend growth: 6 percent; temporary boost in 2023–24 from hydrocarbon production (growth in 2023 and 2024 expected to average around 10 percent before leveling to about 5 percent).
  - Current account deficit: about 13 percent of GDP in 2022, narrowing to about 4 percent of GDP over medium term as oil and gas exports start in late 2023.
  - Total public debt (percent of GDP) entries: 2020: 69.2; 2021: 73.0; 2022: 73.2; 2023: 71.6; 2024: 75.1; 2025: 71.4; 2026: 65.7; 2027: 64.2.
- Debt carrying capacity and risk:
  - Debt carrying capacity (composite) used: 3.25.
  - Senegal assessed at moderate risk of debt distress with limited space to absorb shocks.
  - Stress tests highlight vulnerability to a growth shock; standard growth shock simulates growth of 2.4 percent in 2022–23 and would set public debt indicators on an explosive path under that extreme scenario.

### Financing Requirement Tables (selected aggregates, CFAF billions)
- Total Financing Requirement (sample series): 2479, 2603, 2468, 2686, 2267, 2202, 2191, 2572, 2656.
- Current account balance (excluding budget grants) (sample series): 1627, 2055, 1597, 2275, 1712, 944, 968, 1016, 1241.
- Debt Amortization (excl. regional market securities) (sample series): 323, 266, 423, 447, 374, 474, 414, 618, 607.
- Total Financing Sources (sample series): 2318, 2414, 1991, 2003, 2096, 2045, 2057, 2436, 2518.
- Residual Financing Gap (sample series): 71, 71, 254, 372, 0, 0, 0, 0, 0.
  - IMF (SBA/SCF) used to cover gaps in projections where applicable.

### Annex Findings on War in Ukraine and Sanctions Spillovers
- Transmission and exposures:
  - Exports to Mali: 20 percent of total exports (3.8 percent of GDP); trade of about 1 percent of GDP affected by sanctions (notably cement).
  - Imports from Russia and Ukraine: 7 percent of total imports (2.5 percent of GDP) including refined petroleum products, wheat, fertilizers, iron bars.
  - Pass-through estimates to domestic food prices: world food prices → domestic food prices = 25 percent; exchange rate depreciation → domestic food prices = 36 percent.
- Energy and resource outlook:
  - Senegal expected to become an oil and gas producer in 2023 (Sangomar) and 2024 (GTA LNG with Mauritania), with Yakaar Teranga preparation advanced.

### Food Inflation, Social Impact, and Policy Recommendations (Annex II)
- Global and domestic food inflation:
  - Global food prices up 23.5 percent in April 2022 y-o-y.
  - Senegal food inflation in April 2022: 11.3 percent (10.6 percent in February; 10.1 percent in March).
  - Bread price increase: 17 percent.
- Social distribution:
  - Food accounts for 44.1 percent of overall consumption on average; poor households spend 53.4 percent of income on food.
  - Poverty (2019): rural 53.6 percent; urban 29.9 percent; national poverty 37.8 percent.
  - 35 percent of population faces food insecurity nationally; 41.5 percent in rural areas.
- Policy responses and fiscal impact:
  - September 2021 tax reductions/suspensions on staples; February 2022 package extended exemptions and increased subsidies for local rice production.
  - Expected fiscal impact in 2022: about 0.5 percent of GDP.
  - IMF estimate: subsidies benefit richest 20 percent on average six times more than poorest 20 percent.
- Recommendations:
  - Short term: maintain tax reductions on staples; consider cash transfers targeting the most vulnerable.
  - Medium term: strengthen social safety nets and digital targeting (RNU), gradually pass-through international prices once SSN strengthened, and boost agricultural productivity.

### Staff Appraisal and Key Policy Recommendations
- Staff assessment:
  - Senegal recovered well from pandemic; 2021 growth exceeded expectations.
  - Near-term outlook highly uncertain due to global energy and food price shocks and the war in Ukraine.
  - Authorities’ calibrated fiscal relaxation to protect the most vulnerable is appropriate in the near term.
  - Policy buffers have shrunk; public debt at elevated levels.
- Recommended medium-term priorities:
  - Implement a credible medium-term fiscal consolidation to reach fiscal deficit of 3 percent of GDP by 2024.
  - Gradually phase out energy subsidies while expanding targeted social safety nets.
  - Strengthen domestic revenue mobilization (MTRS) and spending efficiency.
  - Restrain borrowing by public sector entities beyond central government; prioritize concessional financing.
  - Strengthen debt management, transparency, and PFM (including procurement).
  - Address banking sector vulnerabilities, including timely decisions on three undercapitalized banks.
  - Fully implement AML/CFT action plan by September 2022.

_Italic: Source — IMF staff report excerpts and tables from 1senea2022003 (Senegal country report chapter)._

### 582.44 million).

### SENEGAL FIFTH REVIEW UNDER THE POLICY COORDINATION INSTRUMENT, SECOND REVIEWS UNDER THE STAND-BY ARRANGEMENT AND THE ARRANGEMENT UNDER THE STANDBY CREDIT FACILITY, AND REQUESTS FOR AUGMENTATION OF ACCESS, WAIVER OF THE NONOBSERVANCE OF A PERFORMANCE CRITERION, AND MODIFICATION OF A PERFORMANCE CRITERION AND QUANTITATIVE TARGETS

### Context and Outlook
- Soaring global fuel and food prices, compounded by the war in Ukraine and the freeze on trade with Mali due to ECOWAS sanctions, are disrupting the post-pandemic recovery and exacerbating policy trade-offs.
- Growth was revised down to about 5 percent in 2022.
- Inflation is expected to reach 5.5 percent in 2022, driven by higher food and energy prices.
- The authorities adopted a supplementary budget in May 2022 to support the most vulnerable and stabilize food prices while preserving debt sustainability.
- The supplementary budget will bring the fiscal deficit in 2022 to 6.2 percent of GDP compared to 4.8 percent of GDP in the initial budget.
- Public debt is expected to reach 75 percent of GDP in 2022.
- Medium-term outlook is robust provided appropriate policies are implemented, but subject to significant downside risks, including:
  - a protracted war in Ukraine,
  - a prolonged freeze on trade with Mali,
  - a flare-up of the COVID-19 pandemic,
  - deterioration of the regional security situation,
  - rising social demands,
  - severe tightening of external financial conditions,
  - adverse climate conditions.
- Authorities requested an augmentation of access under the SBA and SCF of SDR129.44 million (40 percent of quota) to cover higher short-term balance of payments needs and to bolster food security.

### Recent Economic Developments
- 2021 growth rebounded to 6.1 percent (higher than projected 5 percent).
  - Non-agriculture growth: +7.1 percent.
  - Secondary sector: +10.9 percent.
  - Tertiary sector: +5.7 percent.
  - Agricultural production: -2 percent.
- Inflation:
  - Average annual inflation in 2021: 2.2 percent.
  - Inflation by April 2022: 7.0 percent y-o-y.
  - Food prices increased by 11.3 percent y-o-y by April 2022.
  - Core inflation (excluding food and energy) rose by less than 2 percent y-o-y but exceeded pre-pandemic levels.
- COVID-19 vaccination:
  - Only 15 percent of the population (15 years and older) is fully vaccinated.
- External position:
  - Current account deficit estimated at 13.3 percent of GDP in 2021.
  - Trade deficit: 21.1 percent of GDP in 2021.
  - Remittances: 10.6 percent of GDP in 2021.
- Financial sector:
  - Broad money grew by 15.6 percent in 2021.
  - Credit to the economy: +12 percent in 2021; 13.9 percent y-o-y in 2022Q1.
  - Stock of nonperforming loans as of end-March 2022: 11.3 percent.
  - Banking sector capital adequacy ratio: 12 percent.
- Fiscal developments:
  - Fiscal deficit in 2021: 6.3 percent of GDP (in line with program target).
  - 2021 fiscal table highlights (in billions CFAF unless otherwise indicated):
    - Revenues and grants: 2,981 (19.5 percent of GDP).
    - Revenues (excl. grants): 2,850 (18.6 percent of GDP).
    - Tax Revenues: 2,595 (16.9 percent of GDP).
    - Grants: 131 (0.9 percent of GDP).
    - Expenditure: 3,945 (25.8 percent of GDP).
    - Investment: 1,407 (9.2 percent of GDP).
    - Balance: -964 (-6.3 percent of GDP).
  - Use of the SDR allocation (SDR Allocation 246; Percent of GDP 1.6%):
    - 2021 expenditure: 141 (0.9 percent of GDP).
    - Health sector: 33.
    - COVID-19 response: 18.
    - Production of vaccines: 2.
    - Investment in hospitals: 13.
    - Cash Transfers: 5.
    - Accelerated clearance of unmet obligations: 103.
    - Additional financing: 105.
    - Financial transactions: 55.
    - 2022 financing: 50.
- Public debt:
  - Public debt stood at 73 percent of GDP at end-2021.
  - Clearance of pre-2020 unmet obligations brought total repayments between 2019 and 2021 to 3 percent of GDP.
  - In April 2022, a state-owned enterprise issued Sukuks (2 percent of GDP) to finance the purchase of currently leased public office buildings.

### Program Performance
- Performance through end-December 2021 was broadly satisfactory.
  - All but one quantitative performance criteria (PCs/QTs) were met.
    - PCs/QTs on the deficit, net financing requirement, debt ceiling, and non-accumulation of external arrears were met.
    - Tax revenues fell short by 0.6 percent of GDP (half due to off-budget treatment of road fund (TUR) revenues; remainder due to weak VAT performance and weaker-than-expected yield of a mid-2021 revenue package).
  - Indicative targets:
    - One out of three indicative targets (ITs/QTs) were met (floor on social spending met with significant margin).
    - Ceiling on share of contracts awarded through single-source procurement was breached.
    - Ceiling on use of simplified procedures for non-personalized services exceeded target temporarily due to large clearance of unmet obligations in 2021Q4.
  - Structural benchmarks:
    - Four out of eight December structural benchmarks were met.
    - Unmet SBs included:
      - Digitalizing the land management system (operational later this year).
      - Setting up an online collateral registry (pilot expected by November).
      - Reducing tax exemptions for a gain of 0.2 percent of GDP (now expected in the 2023 budget).
      - Merging funds supporting youth and women employment and entrepreneurship (budgetarily completed; legal acts to close nonoperational agencies due before year-end).
  - Governance and audits:
    - Governance measures regarding COVID-19 spending mostly implemented with publication of two key reports by the Fonds Force COVID-19 monitoring committee and the Public Procurement Regulatory Authority.
    - Audit court finalizing special report; transmission to government for comments; publication now expected in July instead of March.
    - Authorities should follow up on audit findings and investigate potential misuse of funds, preparing an action plan once the audit court report is finalized.

### Policy Discussions (Selected Priorities and Staff Views)
- Immediate priorities discussed:
  - Addressing impact of higher food and fuel prices while preserving debt sustainability.
  - Promoting fiscal and debt sustainability.
  - Fostering private sector-led growth.
- Fiscal stance and measures:
  - The authorities’ fiscal response supports vulnerable households through temporary and targeted measures and a relaxation of the fiscal deficit.
  - Medium-term fiscal consolidation strategy anchored by reaching a fiscal deficit of 3 percent of GDP by 2024.
  - Rising energy subsidies due to higher global oil prices are a significant fiscal risk.
    - Recent increase of selective energy prices, designed to protect the most vulnerable, is a step to mitigate the risk.
    - Over the medium term, gradual elimination of energy subsidies is a priority, to be accompanied by measures to strengthen social safety nets.
  - Strengthen fiscal and external resilience through:
    - Accelerated implementation of domestic revenue mobilization strategy.
    - Prudent debt management.
    - Enhanced spending efficiency, notably reducing recourse to single source procurement.
  - Finalize fiscal framework to manage oil and gas revenues and improve business environment to attract private investment and create jobs.
- Financial sector and AML/CFT:
  - The financial system is overall sound, but vulnerabilities need monitoring.
  - Deficiencies in the AML/CFT framework need urgent attention to avoid negative macroeconomic and reputational repercussions.
- Staff support and requests:
  - Staff supports authorities’ requests for:
    - Completion of the fifth PCI review and second reviews under the SBA and SCF,
    - Augmentation of access (SDR129.44 million),
    - Modification of a performance criterion and quantitative target.

*International Monetary Fund — June 7, 2022*

### 14.      Senegal’s near-term outlook is impacted by the war in Ukraine, the terms of trade

### 14.      Senegal’s near-term outlook is impacted by the war in Ukraine, the terms of trade shock, and the ECOWAS sanctions against Mali; however, medium term prospects should remain robust provided appropriate policies are implemented (Text Figure 2) (MEFP ¶17, ¶18)

### Near-term macroeconomic outlook
- Growth:
  - Growth in 2022 revised down to 5 percent (-0.5 percentage point compared to the 4th review).
  - Estimated medium-term non-oil trend growth: 6 percent.
  - Growth in 2023 and 2024 expected to average around 10 percent before leveling off around 5 percent (temporary boost from oil and gas production).
- Inflation:
  - Projected to pick up to 5.5 percent this year (+3 percentage points compared to the 4th review) driven by higher food and energy prices.
  - Projected to decline to 2 percent over the medium term.
- External position:
  - Current account deficit expected to remain at about 13 percent of GDP in 2022.
  - Over the medium term, current account deficit expected to narrow to about 4 percent of GDP as oil and gas exports start in late 2023.

### Uncertainty and risks
- Risks are tilted to the downside (Annex IV).
- Upside risk: Higher oil and gas prices and European efforts to reduce reliance on Russian energy imports could increase hydrocarbon-related investments.
- Downside risks include:
  - Protracted war in Ukraine and sanctions against Russia with supply disruptions.
  - Prolonged freeze on trade with Mali affecting production and exports.
  - Renewed COVID-19 flare-up including lockdowns.
  - Deterioration of regional security, rising social tensions, slower reform implementation ahead of July parliamentary elections.
  - Severe tightening of external financial conditions and adverse weather conditions (MEFP ¶19).

### Fiscal pressures and the supplementary budget
- Fiscal pressures built since adoption of the 2022 budget amid soaring food and energy prices, strikes in health and education, and heightened regional insecurity.
- Energy subsidies:
  - 2022 budget included 0.9 percent of GDP for energy subsidies based on an average price of US$75 per barrel.
  - Staff estimates that at current oil prices and unchanged fuel and electricity prices, subsidies would triple to 3 percent of GDP.
  - An immediate increase in fuel and electricity prices of about 60 percent and 55 percent, respectively, would be required to eliminate the need for subsidies going forward.
- Supplementary budget approved in May:
  - Revised budget targets an overall deficit of 6.2 percent of GDP—1.4 percentage point higher than the commitment at the time of the last review.
  - Deficit-increasing measures: 1.7 percent of GDP to cope with food and energy price shock; public sector wage increases of 0.6 percent of GDP; additional security-related spending of 0.4 percent of GDP (MEFP ¶20).
  - Identified savings of 0.7 percent of GDP and revenue-enhancing measures of 0.4 percent of GDP to contain the deficit.
- Text Table 3 fiscal items (figures listed in source in CFAF bn and % of GDP; fiscal impact totals referenced in the source).

### Managing energy subsidies and protecting vulnerable households
- Agreed priority: contain wasteful subsidies while protecting the most vulnerable (Text Figure 3).
- Measures agreed:
  - Adjust selected energy prices to generate savings of about 0.4 percent of GDP while shielding lower income households.
  - Allocate additional resources to subsidies (+0.9 percent of GDP) in the supplementary budget.
  - Further adjust prices (0.3 percent of GDP), if needed.
  - Tap into budgetary reserves (about 0.5 percent of GDP) comprising pre-identified investment projects that could be postponed (MEFP ¶20).
- Food insecurity response (food inflation exceeded 11 percent in April y/y):
  - Lift customs duties and VAT on selected staple foods (wheat, flour, vegetable oil, rice, and sugar) — 0.4 percent of GDP.
  - Emergency one-off cash transfer operation to support income of about 25 percent of the population — 0.3 percent of GDP.
  - Increase subsidies for local food production — 0.1 percent of GDP (MEFP ¶21).

### Revenue, expenditure, and financing measures in the supplementary budget
- Revenue measures:
  - Maintain domestic revenue projections based on exceptional revenue from a land sale and reforms to expand the tax base.
  - Additional measures: slight increase of personal income tax on high earners; bolster cooperation between tax and customs; strengthen customs controls.
  - Domestic revenues increased by 29 percent through April (y-o-y).
  - Number of registered companies increased by 80 percent since end-2020.
- Expenditure measures:
  - Identified savings of 0.6 percent of GDP by postponing investment projects (infrastructure, digitalization, transport) by a year and reducing transfers to public agencies.
- Budgetary reserve:
  - Reserve of 0.5 percent of GDP to guard against fiscal risks and cover possible additional energy subsidy needs (of which 0.2 percent of GDP general reserve and 0.3 percent of GDP pre-identified investment projects).
- Additional financing:
  - World Bank and African Development Bank expected to provide higher than programmed budget support this year of 0.5 percent of GDP.
  - Augmentation of Fund financing: 0.6 percent of GDP.
  - Together these cover about 2/3 of additional financing needs; the remainder expected to be raised on the regional market (MEFP ¶24).

### Medium-term fiscal consolidation and debt sustainability
- Fiscal framework:
  - Aim to reach a fiscal deficit of 3 percent of GDP by 2024.
  - Requires a sizeable annual improvement in the primary balance of 1.5 percent of GDP in 2023 and 2024.
  - Growth-friendly consolidation will focus on: (i) strengthening debt management, (ii) gradually phasing out energy subsidies, (iii) strengthening domestic revenue mobilization, (iv) enhancing fiscal transparency and procurement, and (v) implementing the new oil and gas revenue management framework (MEFP ¶25).
- Public debt:
  - Senegal remains at moderate risk of debt distress with limited space to absorb future shocks (see DSA).
  - New borrowing by state-owned enterprises expected to increase debt/GDP ratio to 75 percent by end-2022.
  - Medium-term public debt-to-GDP expected to steadily decline driven by robust growth and revenue-based fiscal adjustment towards the regional deficit target (MEFP ¶26).
- Borrowing guidance:
  - Staff emphasized refraining from any additional external borrowing in 2022 and, starting in 2023, to limit new borrowing to concessional financing unless investment has high returns.

### Debt management and transparency measures
- Strengthen effectiveness of debt management practices and oversight by the national debt committee (CNDP); implementation of the authorities’ action plan following last year’s debt audit is needed to strengthen quality and timeliness of SOE debt data (MEFP ¶27).
- Note: recent sukuk issuance of CFAF 330bn did not go through regular CNDP procedures.

### Revenue mobilization and public financial management reforms
- Revenue mobilization:
  - Target: non-oil tax to non-oil GDP ratio of 20 percent by 2024 requires decisive break with past performance.
  - Progress: increased registered taxpayers, digitalization, improved coordination between tax and customs, MTRS implementing unit set up, and quantitative evaluation framework for MTRS monitoring (SB, June 2022).
  - Shortcomings: tax policy lacks strategic direction; reduction of regressive tax exemptions has fallen short; taxpayer compliance unsatisfactory due to limited effectiveness of controls and incomplete implementation of automatic customs fee for non-compliant importers (MEFP ¶25, ¶27-28).
- PFM and procurement:
  - Updating 2018 PFM reform strategy is underway and should be finalized quickly.
  - Treasury single account (TSA) implementation ongoing with closure of 65 percent of non-necessary government accounts.
  - Transition to program budgeting completed for central government.
  - Need to use and strengthen commitment, procurement, and cash plans (MEFP ¶28-30).
  - Single-sourced procurement remains above program target of 15 percent; authorities intend to update procurement code to strictly limit unsolicited offers (SB, June 2022).
  - Staff recommended stronger safeguards in new code, stronger justifications for waivers invoked for public interest, and monitoring single-sourced contracts based on value of contracts rather than number of contracts.

### Oil and gas revenue management
- Hydrocarbons revenue management law adopted and complemented with implementing decrees to set up a committee for revenue forecasting and intergenerational savings and stabilization funds (MEFP ¶31).
- Non-oil fiscal anchor in the law will become operational as part of the 2023-26 medium-term fiscal framework (SB, June 2022).
- Fund staff to provide capacity development.

### Financial sector stability and AML/CFT
- Banking and postal group:
  - Renewed attention to restructuring three non-systemically ailing banks and the postal group.
  - Staff recommended liquidation for banks unable to meet minimum solvency requirements by agreed timeframes.
  - For “La Poste”, enforce administrative measures to limit budgetary risks and quickly implement restructuring roadmap (MEFP ¶37-38).
- AML/CFT:
  - Progress on technical compliance with adoption of thirteen legal and regulatory acts; further efforts needed, including targeted financial sanctions.
  - Authorities working to strengthen effectiveness, raise awareness, and strengthen supervision and technical capacities of DNFBPs.
  - Staff emphasized completing implementation of the action plan by the September 2022 deadline to avoid possible negative macroeconomic repercussions if Senegal remains on FATF enhanced oversight list (MEFP ¶41-42).

### Social protection and inclusive growth
- Social safety net expansion and inclusion objectives:
  - Aim to double coverage of national database for social protection (RNU) to one million households (almost half of the population); expected finalization by June 2023.
  - Cash transfers can now be executed via mobile money instead of national post office; authorities committed to switching to digital payments by November 2022 (proposed new SB for November 2022).
  - Three-year emergency program for youth employment continues with an annual envelope of about 1 percent of GDP.
  - New strategy for private sector development to support businesses and develop value chains (MEFP ¶32-35).

*Source: IMF staff report content provided in the supplied chapter text.*

### 35.      The authorities have

### 35.      The authorities have

### Augmentation request and immediate financing implications
- The authorities have requested an augmentation of access to cover the additional short-term balance of payments needs.
- The external position has deteriorated since the last review owing to higher commodity and food prices, resulting in an additional short-term balance of payments needs.
- The proposed augmentation of 40 percent of quota with a 2:1 ratio SBA/SCF as specified in the letter of intent (0.6 percent of GDP) will help cope with rising and volatile food and oil prices and bolster food security.
- As is normally the case for WAEMU member countries, disbursements will be on-lent from the central bank for direct budget support.
- Fund financing will catalyze additional financing from the World Bank and the African Development Bank, which are increasing their budget support by 0.5 percent of GDP in 2022.
- There are good prospects for additional financing from a major bilateral partner.

### Financing matrix and program share (Text Table 4 summary as presented)
- Financing 4.46.1
- Budget support (grants and loans)1.42.4
- Multilateral1.12.1
- Bilateral 0.30.3
- Prospective financing (bilateral partner)...0.3
- Exceptional Financing (DSSI + Vaccination Campaign)0.90.9
- SBA/SCF (without augmentation)2.12.2
- SBA/SCF augmentation (40 percent of quota)...0.6
- Share of Fund financing - with augmentation (in percent)46
- Share of Fund financing - without augmentation (in percent)4836

### Program financing status and market access
- The program is fully financed, with firm commitments for the remainder of the program.
- Concessional donor financing is firmly committed.
- Senegal has access to the regional securities market at relatively favorable conditions.
- Senegal has access to the Eurobond market, though spreads increased following the tightening of monetary conditions in advanced economies.

### Conditionality, benchmarks, and institutional adjustments
- Staff supports the authorities’ requests for a waiver of non-observance of one PC based on corrective actions and for modification of one June 2022 PC/QT.
- The authorities included the revenues collected by the road fund in the budget perimeter and increased personal income taxes in the supplementary budget.
- Strong revenue performance in 2022Q1 suggests MTRS implementation is yielding positive results.
- It is proposed to modify the June PC/QT on the deficit in line with the revised budget.
- A new structural benchmark is proposed to support social protection: modernize the payment modalities of the flagship cash transfer program by relying on mobile payments (new SB, November 2022), which will replace the SB to extend the national registry to one million households; the latter will not be completed before 2023.
- The structural benchmark regarding energy subsidies for June is proposed to be removed as it is no longer realistic given the magnitude of the shock and steps taken in June to limit energy subsidies.
- The authorities request more time to complete structural benchmarks regarding:
  - the adoption of a fiscal framework reflecting upcoming oil and gas revenues,
  - the publication of the roadmap to gradually eliminate energy subsidies,
  - the update of the database for PPPs and power purchase agreements.

### Repayment capacity and program risks
- Senegal’s capacity to repay the Fund remains adequate.
- With the proposed augmentation, repayments to the Fund will peak at 4.6 instead of 3.8 percent of government revenues and 3.4 instead of 2.7 percent of exports of goods and services in 2026.
- While Senegal has a strong record of timely repayment of Fund obligations, the materialization of risks to the program could affect repayment capacity.
- The program faces material but manageable risks, including:
  - subsequent waves of COVID-19,
  - fiscal risks including high energy subsidy needs and possible tax revenue shortfalls,
  - social unrest,
  - delays to the reform agenda given upcoming legislative and presidential elections.
- Risks are mitigated through policy actions, including reforms to moderate energy subsidies, increase domestic revenue, and improve debt and expenditure management.

### Safeguards, capacity development, and timelines
- The BCEAO has implemented all recommendations provided in the 2018 safeguards assessment; the assessment found that the BCEAO has broadly appropriate governance arrangements and a robust control environment.
- In line with the safeguards policy’s four-year cycle for regional central banks, an update assessment of the BCEAO is due in 2022.
- Capacity development is well-aligned with the program objectives (Annex VI). It supports implementation of the MTRS, public financial management reforms, the fiscal framework to manage oil and gas revenue, and efforts to improve the quality and timeliness of macroeconomic data.
- Full implementation of the AML/CFT action plan by September 2022, notably with regard to targeted financial sanctions, is identified as critical.

### Staff appraisal — macroeconomic outlook and recommended policies
- Senegal’s economy recovered well from the pandemic; growth in 2021 exceeded expectation, helped by a swift and decisive policy response.
- However, Senegal’s economic outlook is highly uncertain due to soaring global energy and food prices, a less favorable external environment, and the war in Ukraine; near-term effects include deteriorated growth prospects, increased inflationary pressure, wider fiscal and external current account deficits, and rising food insecurity.
- The authorities’ response to the new challenges is assessed as appropriate and carefully calibrated to protect the most vulnerable; staff supports the relaxation of the fiscal deficit in the current year to accommodate temporary and targeted measures.
- Policy buffers have significantly shrunk; public debt has risen steadily and is at elevated levels, driven by the pandemic and the war in Ukraine.
- Key medium-term fiscal priorities and recommendations:
  - steadfastly implement a credible medium-term fiscal consolidation strategy,
  - restrain the borrowing capacity of public sector entities beyond the central government,
  - ensure that the fiscal deficit converges to 3 percent of GDP by 2024,
  - streamline energy subsidies as an urgent priority (energy subsidies would triple in 2022 if left unchecked),
  - gradually phase out energy subsidies while using the improved social safety net to provide targeted support to vulnerable households,
  - bolster fiscal resilience through domestic revenue mobilization, energy subsidy reform, sound management of oil and gas revenues, improved spending transparency and efficiency, and limiting fiscal risks including from the state-owned Post company,
  - address pockets of vulnerability in the banking sector, including timely decisions on three undercapitalized banks,
  - fully implement the AML/CFT action plan by September 2022 to avoid negative macroeconomic repercussions from enhanced Financial Action Task Force oversight.

*Text derived from the IMF country documentation for Senegal (CR/22/08), pages indicated in supplied content.*

### 50.      Based on the program performance, the additional balance of payment needs, the

### 1senea2022003 - 50.

### Program assessment and IMF staff recommendation
- Based on the program performance, the additional balance of payment needs, the strength of the authorities’ response to recent shocks and policy program, and their commitment to medium-term fiscal sustainability, staff supports the completion of the fifth review under the PCI, second reviews under the SBA and SCF, and the augmentation of access.
- Staff supports the request for a waiver of non-observance of the end-December 2021 PC on the floor on tax revenue based on corrective actions and the modification to the June PC on the floor on net lending/borrowing.
- The policies outlined in the attached LOI are adequate to achieve the program's goals.

### Real and external sector performance (2015–21)
- Growth in 2021 returned to the pre-pandemic trajectory.
- Inflation declined to 2.2 percent.
- The rebound was driven by private demand, notably investment, with a strong expansion of the secondary and tertiary sector.
- The current account deficit widened primarily reflecting services imports related to the hydrocarbon projects and was mostly financed by FDI and concessional loans.
- Visual indicators presented (2015–21): Real GDP growth (annual percent change), contributions to GDP growth (demand and supply sides), current account main components (percent of GDP), capital and financial account (percent of GDP), and CPI inflation (12 month average).

### Fiscal and financial indicators (2015–21)
- Budget and project grants in 2021 fell and the tax-to-GDP ratio remained broadly unchanged, while spending increased significantly.
- Net financing needs were covered externally and the public sector debt ratio increased to 73 percent of GDP.
- Credit growth accelerated in line with the recovery and non-performing loans have decreased over time.
- Key point values and trends shown in figures: revenue (percent GDP), expenditure composition (percent GDP), financing (percent GDP), debt and deficit (percent GDP), credit to the private sector (percent change, 3-month moving average), and non-performing loans (percent of total loans).

### Economic outlook and medium-term projections (2021–27)
- Non-oil growth is expected to be around 6 percent in the medium term while headline growth fluctuates with expected oil and gas production volumes.
- The current account deficit is expected to decline to about 4 percent of GDP due to oil and gas exports.
- An increase in tax revenues is expected to drive the medium-term fiscal consolidation.
- Projected central government fiscal performance (percent GDP) components shown: Revenue, Hydrocarbon Revenue, Current Expenditure, Capital Expenditure.
- Projected real GDP growth: GDP (growth) and Non-Oil GDP (growth) series presented for 2021–2027.
- Projected current account balance (percent GDP) series for 2021–2027 with components Goods (net), Services (net), Current transfers (net), Income (net).

### Selected economic and financial indicators (highlights from Table 1 and balance of payments tables)
- GDP at constant prices (selected projected entries): 2023: 1.3; 2024: 5.0; 2025: 6.1; 2026: 5.5; 2027: 5.0 (note: table layout shows multiple series; source entries preserved).
- Consumer prices (annual average) series includes values: 2021: 2.5; 2022: 2.5; 2023: 2.2; 2024: 2.5; 2025: 5.5; 2026: 3.1; 2027: 2.0.
- Current account balance (official transfers included) (percent of GDP): 2021: -10.9; 2022: -10.6; 2023: -13.3; 2024: -9.4; 2025: -13.2; 2026: -8.8; 2027: -4.2.
- Total public debt (percent of GDP): 2020: 69.2; 2021: 73.0; 2022: 73.2; 2023: 71.6; 2024: 75.1; 2025: 71.4; 2026: 65.7; 2027: 64.2.
- Share of hydrocarbon in total GDP (%) (memorandum): 2024 onward shows entries including 1.4; 4.7; 4.6; 3.8; 3.0 (table-format preserves values as presented).
- Balance of payments (Billions of CFAF) selected 2023–2027 projections:
  - Current account (Act./Proj.): 2020: -1,532; 2021: -1,614; 2022: -2,038; 2023: -1,552; 2024: -2,229; 2025: -1,656; 2026: -896; 2027: -941; 2027 (continued): -987; 2027 further: -1,210 (table contains multiple columns—values preserved as in source).
  - Exports, f.o.b. (CFA francs): selected entries include 2020: 2,411; 2021: 2,823; 2022: 3,047; 2023: 3,095; 2024: 3,589; 2025: 4,291; 2026: 5,755; 2027: 6,036; later entries up to 6,311.
  - Imports, f.o.b. (CFA francs): selected entries include 2020: -4,020; 2021: -4,532; 2022: -4,753; 2023: -4,900; 2024: -5,994; 2025: -6,431; 2026: -7,072; 2027: -7,351; later entries up to -8,089.
  - Direct investment (financial account, Billions of CFAF): sample entries 2020: 1,005; 2021: 1,196; 2022: 1,379; 2023: 1,330; 2024: 1,330; 2025: 1,163; 2026: 951; 2027: 986; subsequent years: 1,023; 1,063.
- Balance of payments (percent of GDP) highlights:
  - Current account (percent of GDP): 2021: -10.9; 2022: -10.6; 2023: -13.3; 2024: -9.4; 2025: -13.2; 2026: -8.8; 2027: -4.2.
  - Exports, f.o.b. (percent of GDP): 2021: 17.1; 2022: 18.5; 2023: 19.9; 2024: 18.8; 2025: 21.2; 2026: 22.7; 2027: 26.9; further entries: 26.4; 25.0; 24.1.
  - Imports, f.o.b. (percent of GDP): 2021: -28.5; 2022: -29.7; 2023: -31.0; 2024: -29.7; 2025: -35.4; 2026: -34.1; 2027: -33.1; later entries: -32.2; -31.0; -30.9.

### Fiscal central government operations (selected figures from Tables 4–5)
- Revenue and Grants (Billions of CFAF): 2020: 2,843; 2021: 3,109; 2022: 2,978; 2023: 3,461; 2024: 3,498; 2025: 3,999; 2026: 4,620; 2027: 5,119; subsequent entries up to 6,045.
- Taxes (Billions of CFAF): 2020: 2,368; 2021: 2,691; 2022: 2,593; 2023: 3,025; 2024: 3,052; 2025: 3,550; 2026: 4,143; 2027: 4,637; later entries to 5,497.
- Total expenditure (Percent of GDP): 2020: 26.6; 2021: 26.7; 2022: 25.7; 2023: 26.9; 2024: 25.7; 2025: 24.6; 2026: 25.4; 2027: 25.5; beyond to 26.1.
- Net lending/borrowing (including grants) (Percent of GDP): 2020: -6.4; 2021: -6.3; 2022: -6.3; 2023: -4.7; 2024: -6.2; 2025: -4.5; 2026: -3.0; 2027: -3.0; projections continuing at -3.0.
- Primary fiscal balance (Percent of GDP): 2020: -4.4; 2021: -4.2; 2022: -4.3; 2023: -2.6; 2024: -4.2; 2025: -2.5; 2026: -0.9; 2027: -0.9; further entries -0.9 to -0.8.

### Monetary and financial sector highlights (Tables 6–7)
- Broad money (growth and levels): broad money growth entries include 12.3, 15.3, 15.6, 13.0, 12.0, 10.6 (annual percentage change as presented).
- Credit to the economy (net) (change in percent of beginning-of-period broad money): series includes 1.2, 3.7, 12.7, 5.1, 11.3, 8.0.
- Financial soundness indicators (selected): Regulatory capital to risk weighted assets series includes 19.1, 14.5, 13.6, 11.8, 13.1, 11.9, 12.1 (2015–2021); Gross NPLs to total loans series includes 19.3, 18.0, 16.2, 13.1, 13.9, 13.3, 13.1 (2015–2021).

_Italic: Source — Senegal: IMF staff report excerpts and tables as provided in the supplied content unit._

### 1. Total Financing Requirement

### 1. Total Financing Requirement

### Total financing requirement and components
- Total Financing Requirement (CFAF billions): 2479, 2603, 2468, 2686, 2267, 2202, 2191, 2572, 2656
- Current account balance (excluding budget grants) (CFAF billions): 1627, 2055, 1597, 2275, 1712, 944, 968, 1016, 1241
- Debt Amortization (excl. regional market securities) (CFAF billions): 323, 266, 423, 447, 374, 474, 414, 618, 607
- Repayment to the Fund (CFAF billions): 0, 0, 0, 0, 44, 105, 144, 188, 127
- Change in Net Foreign Assets BCEAO (- increase) (CFAF billions): -530, -282, -448, 35, -137, -679, -666, -750, -681
- Change in Net Foreign Assets (Other depository institutions) (- increase) (CFAF billions): 0, 0, 0, 0, 0, 0, 0, 0, 0
- Errors and Omissions (CFAF billions): 0, 0, 0, 0, 0, 0, 0, 0, 0

### Total financing sources (CFAF billions)
- Total Financing Sources: 2318, 2414, 1991, 2003, 2096, 2045, 2057, 2436, 2518
- Foreign direct investment (net): 1196, 1379, 1330, 1330, 1163, 951, 986, 1023, 1063
- Regional market financing from non-residents (net): 199, 250, 78, 216, 336, 210, 260, 257, 219
- Project grants and loans: 723, 579, 805, 710, 812, 844, 876, 911, 946
- Other capital flows (net): 199, 207, -222, -253, -216, 41, -66, 245, 290

### Total financing needs, expected financing, and residual gap (CFAF billions)
- Total Financing Needs: 161, 189, 477, 683, 171, 157, 135, 136, 138
- Expected Financing: 90, 117, 223, 312, 171, 157, 135, 136, 138
  - Budget support (grants + loans): 60, 87, 178, 267, 171, 157, 135, 136, 138
  - Vaccination campaign financing (World Bank): 30, 30, 45, 45, 0, 0, 0, 0, 0
- Residual Financing Gap: 71, 71, 254, 372, 0, 0, 0, 0, 0
  - IMF (SBA/SCF): 0, 0, 254, 266, 0, 0, 0, 0, 0
  - SBA/SCF augmentation: ..., ..., ..., 106, ..., ..., ..., ..., ...
  - DSSI: 71, 71, 0, 0, 0, 0, 0, 0, 0

Sources: Senegalese authorities; and IMF staff calculations.
- Note 1) "This is not indicative of the country’s impact on WAEMU’s aggregate external position or the pooled WAEMU reserves since the data contains intra-WAEMU flows from the current, capital and financial account."
- Note 2) "For 2020 RFI/RCF disbursement. SBA/SCF in 2021/22; only undisbursed amounts."

### Observations from financing tables
- A sizeable Residual Financing Gap emerges in the earlier periods (71, 71, 254, 372 CFAF billions) and is covered in part by IMF instruments (SBA/SCF) in the projection where applicable.
- Foreign direct investment (net) and project grants and loans are consistently large components of financing sources across the series presented.
- Change in Net Foreign Assets at BCEAO shows substantial negative movements in several entries (e.g., -530, -679, -750), indicating reserve dynamics.

---

### IMF obligations and capacity to repay (SDR millions and CFA francs)
- IMF obligations based on existing credit (SDR millions) — Principal by year: 0.00, 53.93, 129.45, 149.81, 105.46, 51.52, 40.73, 35.94, 15.58, 0.00, 0.00
- IMF obligations based on existing credit — Charges and interest by year: 3.05, 5.93, 4.50, 2.31, 0.74, 0.04, 0.01, 0.01, 0.01, 0.01, 0.01
- IMF obligations based on existing and prospective credit (SDR millions) — Principal by year: 0.00, 53.93, 129.45, 176.77, 231.29, 156.38, 64.71, 59.93, 33.57, 0.00, 0.00
- IMF obligations based on existing and prospective credit — Charges and interest by year: 4.81, 9.20, 7.88, 5.64, 3.17, 0.83, 0.02, 0.01, 0.01, 0.01, 0.01

- Total obligations based on existing and prospective credit (SDR Millions): 906.0, 852.1, 722.7, 545.9, 314.6, 158.2, 93.5, 33.6, 0.0, 0.0, 0.0
- Total obligations in CFA francs: 715.4, 699.1, 591.1, 444.5, 255.7, 128.5, 76.0, 27.3, 0.0, 0.0, 0.0
- Percent of GDP: 4.7, 4.1, 3.1, 2.1, 1.1, 0.5, 0.3, 0.1, 0.0, 0.0, 0.0
- Percent of quota: 280.0, 263.3, 223.3, 168.7, 97.2, 48.9, 28.9, 10.4, 0.0, 0.0, 0.0

### Net use of IMF credit and debt service ratios
- Net use of IMF credit (SDR millions) — Disbursements: 453.1, 0.0, 0.0, 0.0, 0.0, 0.0, 0.0, 0.0, 0.0, 0.0, 1.0
- Repayments and repurchases (SDR millions): 4.8, 63.1, 137.3, 182.4, 234.5, 157.2, 64.7, 59.9, 33.6, 0.0, 0.0
- Percent of government revenue: 0.2, 1.8, 3.4, 3.9, 4.6, 2.9, 1.1, 0.9, 0.5, 0.0, 0.0
- Percent of exports of goods and services: 0.1, 1.5, 2.7, 2.8, 3.4, 2.2, 0.9, 0.8, 0.4, 0.0, 0.0
- Percent of external debt service: 0.7, 8.7, 16.7, 17.7, 20.9, 11.1, 4.6, 4.7, 3.2, 0.0, 0.0

### Memorandum items (CFA francs, billions where indicated)
- Nominal GDP (billions of CFA francs): 15,319; 16,922; 18,881; 21,371; 22,849; 24,467; 26,211; 28,633; 30,771; 33,038; 35,469
- Exports of goods and services (billions of CFA francs): 3,552; 4,226; 5,001; 6,543; 6,866; 7,077; 7,412; 7,767; 8,302; 8,957; 9,855
- Government revenue (billions of CFA francs): 2978.3; 3498.0; 3999.0; 4620.3; 5119.4; 5508.1; 6044.7; 6687.1; 7188.1; 7694.3; 8276.9
- External Debt service (billions of CFA francs): 736.1; 727.2; 822.9; 1028.4; 1119.6; 1415.7; 1397.0; 1272.3; 1054.1; 1092.6; 1368.7
- IMF Quota (SDR millions): 323.6 (each year listed)
- CFA francs/SDR (period average): 790, 820, 818, 814, 813, 812, 813, 813, 813, 813, 813

---

### Annex I — Macroeconomic Spillovers from the War in Ukraine and Sanctions against Mali

### Key findings on external shocks and transmission
- Higher global oil and food prices coupled with reduced external demand are expected to:
  - Weigh on growth
  - Increase inflationary pressure
  - Worsen the external and fiscal positions
  - Financial spillovers are expected to be less important
- Over the medium-term, Senegal may benefit from higher oil and gas prices and a re-orientation of Europe’s demand for gas, given unexploited oil and gas reserves.
- Sanctions against Mali and the war in Ukraine affect Senegal through:
  - Direct trade disruptions with Mali, Russia, and Ukraine
  - Reduced global supply of key commodities
  - Price increases for oil and food
  - Reduced external demand and tighter external financial conditions

### Quantified exposures and trade links
- Exports to Mali: account for 20 percent of total exports (or 3.8 percent of GDP); include petroleum products, food, and cement. Trade of about 1 percent of GDP is affected by the sanctions (notably cement).
- Imports from Russia and Ukraine: account for 7 percent of total imports (or 2.5 percent of GDP) consisting of refined petroleum products, wheat, fertilizers, and iron bars.
- Financial exposure: Senegalese banks hold a relatively small share of Malian regional market bonds and do not have significant claims against Mali’s banking system or non-financial corporations. Minimal direct financial linkages with Ukraine and Russia.

### Energy and resource outlook
- Senegal expected to become an oil and gas producer in 2023.
- Projects: Sangomar (oil) and GTA (LNG with Mauritania) expected to start production in 2023 and 2024, respectively. Preparation for Yakaar Teranga is advanced.

### Mitigating measures and policy suggestions (from text figure summary)
- Fiscal policy: limit energy subsidies to create fiscal space; provide targeted fiscal support to the most vulnerable (cash transfers); increase direct support to the agricultural sector; consider IMF support (augmentation of access).
- Banking system: Senegal’s banking system is in a good shape to extend liquidity and support to the economy.

---

### Annex II — Food Inflation in Senegal: Impact and Policies

### Drivers and recent developments
- Global food prices up 23.5 percent in April 2022 from a year earlier.
- Russia and Ukraine share of global exports: about 25 percent of global wheat exports, 75 percent of sunflower oil exports, and 15 percent of corn exports.
- Russia and Belarus account for about one fifth of global fertilizer exports.
- In Senegal:
  - Over 70 percent of rice and all wheat are imported; 64 percent of wheat and rice imports come from Russia and Ukraine (footnote: "The shares of wheat imports from Russia and Ukraine account for 52 percent and 14 percent of total wheat imports of Senegal, respectively.")
  - Pass-through estimates from world food prices and exchange rate depreciation to domestic food prices are 25 percent and 36 percent, respectively.
  - Food inflation: 11.3 percent in April 2022 (10.6 percent in February; 10.1 percent in March).
  - Price for bread increased by 17 percent.
  - Headline inflation: 7.0 percent y-o-y in April 2022 (from 2.2 percent at end-December 2021).
  - After a deterioration of 2.4 percent in 2021, Senegal’s Terms of Trade (ToT) are projected to deteriorate further by 2.2 percent in 2022.

### Social and distributional impacts
- Food accounts for 44.1 percent of overall consumption on average; poor households spend 53.4 percent of their income on food.
- 2019 poverty and food insecurity:
  - Poverty rate in 2019: 53.6 percent in rural areas; 29.9 percent in urban areas.
  - National poverty fell from 57 percent in 2001 to 37.8 percent in 2019.
  - Gini index: 35.6 percent in 2011 to 35.1 percent in 2019.
  - 35 percent of the population faces food insecurity nationally; 41.5 percent in rural areas.

### Policy responses implemented and fiscal impact
- September 2021 package: reduction/suspension of VAT and customs duties on several key staple foods (wheat, corn, vegetable oil, sugar).
- February 2022 package: extended suspension of customs duties to staples like rice; higher subsidies for local rice production (32 CFAF per kg to lower price for consumers) and agricultural inputs; lowered administrative prices for vegetable oil, rice, and sugar.
  - Examples of administrative price changes in February: vegetable oil from CFAF 1,200 to 1,100 per liter; rice from CFAF 15,000 per bag of 50 kg to CFAF 13,750; sugar from 625 CFAF to CFAF 600 per kg.
- Expected fiscal impact in 2022: about 0.5 percent of GDP.
- IMF estimate on subsidy incidence: subsidies benefit on average the richest 20 percent of households six time more than the poorest 20 percent.

### Policy recommendations
- Short-term options:
  - Maintain current tax reduction measures for an interim period since they target key staple foods consumed by the poorest.
  - Consider cash transfers as a more targeted option to support the most vulnerable.
- Medium-term options:
  - Strengthen the social safety net (SSN) by updating and broadening the social registry "Registre National Unique" to include the vulnerable, and prioritize digital tools for targeting and delivery of income support.
  - Gradually pass-through international prices to domestic prices as SSN is strengthened to promote efficiency, mitigate balance of payments impact, and reduce negative externalities and smuggling.
  - Structural measures to boost agricultural productivity, including improving efficiency of programs supporting agricultural inputs for small and medium-sized farmers.
- Communication and transparency:
  - Implement an extensive communication strategy highlighting the magnitude of tax reductions and subsidies, their distribution between rich and poor, and crowding out effects on other priority spending (e.g., health and education).
  - Aim to build broad consensus for price pass-through combined with targeted protection measures.

*Source: IMF staff calculations; Senegalese authorities; IMF staff.*

### Annex II. Figure 1. Food Inflation in Senegal

### Annex II. Figure 1. Food Inflation in Senegal

### Key findings
- The current spike in global food prices is comparable in size to 2007-08 and 2010-11 shocks.
- Food account for almost half of CPI basket.
- Food inflation is a key driver of cost of living in Senegal.
- Food inflation is strongly correlated to global food prices evolution.
- Food inflation is also correlated to global fertilizer prices.
- Food inflation is correlated, to a lesser extent, to global shipping cost.

*Source : Harver, ANSD and IMF Staff Calculations.*

### Appendix I. Letter of Intent/Program Statement

### Appendix I. Letter of Intent/Program Statement

### Program performance and compliance (end-December 2021)
- All quantitative performance criteria were met except the floor on tax revenues; tax revenues fell short of the program target due to:
  - non-integration in the budget of the road tax (TUR);
  - poor performance of the VAT, including suspension of VAT on wheat flour;
  - fiscal measures to stabilize prices of certain staple foods.
- The government requests a waiver for non-observance of the tax revenue performance criterion.
- Two of three indicative targets were not met, including the ceiling on single-sourced procurement contracts.
  - The government will revise the public procurement code to better regulate single-sourced procurement contracts.
- Four out of eight structural benchmarks for end-December 2021 were met; delays and partial achievements include:
  - Publication of the Audit Court special report on COVID-19 spending delayed to July 2022 (scope extended to include Q1 2021).
  - Commitment to implement key recommendations from the Audit Court report.

### Key macroeconomic outcomes for 2021
- Real GDP growth: 6.1 percent (estimate), versus forecast of 5 percent.
  - Nonagricultural activity: +7.1 percent.
  - Secondary sector: +10.9 percent.
  - Tertiary sector: +5.7 percent.
  - Agricultural production: -2.0 percent.
- Inflation (2021 average): 2.2 percent; food inflation: 2.9 percent.
- Current account and trade:
  - Current account deficit: 13.3 percent of GDP in 2021, up from 10.9 percent of GDP in 2020.
  - Trade deficit for goods: 11.2 percent of GDP in 2021 (11.4 percent of GDP in 2020).
  - Trade deficit for services widened to 9.7 percent of GDP in 2021 from 7.2 percent of GDP in 2020.
  - Remittances: 10.6 percent of GDP in 2021.
  - Notable export performances in 2021: phosphoric acid +75.0 percent; oil products +25.5 percent; groundnut products +39.7 percent.
  - Goods imports increase: 18.3 percent in 2021; oil imports +30.5 percent; food imports +9.6 percent.
- Money and external positions:
  - Money supply growth: 15.3 percent in 2021.
  - BCEAO net foreign assets boosted by Eurobond issuance and IMF assistance (SDR allocation and other).
- Banking sector (end-2021 vs end-2020):
  - Banks’ equity: +6.4 percent.
  - Solvency ratio: 12.0 percent (12.4 percent at end-December 2020).
  - Gross NPL ratio: 11.5 percent (13.3 percent at end-December 2020).
  - Provisioning rate: 68.2 percent.
  - Deferred principal payments and overdue payments at end-January 2022: CFAF 3.8 billion and CFAF 10.7 billion respectively.
  - Residual principal of deferred claims: 0.2 percent of banking sector loans.
  - At end-January 2022, credit institutions posted a solvency ratio above the minimum threshold of 11.3 percent except for three institutions (small share).

### Fiscal accounts and public debt (2021)
- Budget deficit (end-December 2021): 6.3 percent of GDP.
- Total revenue (excluding grants): CFAF 2850 billion (CFAF 23 billion below projected level).
- Tax revenue shortfall: CFAF 67 billion (target CFAF 2661 billion).
  - Taxes on goods and services: CFAF 128.9 billion below projections (including CFAF 45.6 billion from off-budget TUR and CFAF 14 billion from VAT suspension on wheat flour).
  - Nontax revenue overperformance: CFAF 73 billion (payment of exceptional dividends by Senelec).
- Total expenditures: CFAF 3945 billion (~97 percent of target), including SDR allocation use for health, social spending, and clearing unmet obligations.
- Net lending/borrowing (fiscal deficit, program measure): CFAF 965 billion (target CFAF 967 billion).
- Net government financing: CFAF 965 billion (target CFAF 997 billion).
- Total nominal public debt (program exchange rate): CFAF 10997 billion (target CFAF 11270 billion).
- Public debt composition (end-2021):
  - Total public debt: 73.2 percent of GDP.
  - Central government debt: 67.2 percent of GDP.
  - State-owned enterprises and other public agencies: 5.9 percent of GDP.
  - Central government debt increased by 15.6 percent in 2021: from CFAF 8903.3 billion to CFAF 10297.6 billion.
  - Central government external debt: CFAF 7623.3 billion (74 percent of central government debt), versus 78.0 percent at end-2020 (CFAF 6946.3 billion).
  - Domestic debt: CFAF 2673.7 billion (26 percent), versus 21.9 percent at end-2020 (CFAF 1597.1 billion).
  - Debt of state-owned enterprises and other public agencies rose by 7 percent: from CFAF 849.7 billion to CFAF 909.9 billion; foreign debt of these entities: CFAF 495.8 billion (54.5 percent).

### Structural benchmark and transparency progress
- Structural benchmarks achieved (4 of 8 by end-December 2021):
  - Semi-annual report on linking and exchange of information between DGID and DGD produced.
  - Sufficient budgetary appropriations for energy subsidies included in second 2021 Supplementary Budget Law.
  - Study identifying bank accounts of public entities completed; roadmap for TSA coverage and account closings proposed (closure actions by end-June 2022 targeted).
  - Statement of budget risks appended to 2022 Budget Law.
- Structural benchmarks not yet met (but progress underway):
  - 2022 Initial Budget Law did not include measures to reduce tax expenditure by at least CFAF 25 billion; some measures included in annexes to Supplementary Budget Law passed end-May 2022.
  - Digitalization of land management procedures: application delivered in May 2022; deployment underway.
  - Single collateral registry (movable collateral and mortgages) to become operational for pilot centers in November 2022.
  - Merging of funds for youth and women entrepreneurship is fiscally effective; legal dissolution acts expected by end of 2022.
- Transparency on Force COVID-19 Fund:
  - 2021 quarterly budget execution reports published regularly (including Force COVID-19 Fund).
  - Force COVID-19 Fund Monitoring Committee report published in September 2021.
  - ARMP audit on Force COVID-19 Fund procurement published in November 2021.
  - Interim Audit Report of the Audit Court forwarded to government on May 31, 2022; government has 30 days to submit observations before final report expected by mid-July 2022.

### Shocks, risks, and 2022 policy responses
- New shocks and risks facing Senegal:
  - Soaring global energy and food prices and supply-chain disruptions due to the war in Ukraine and containment measures in China.
  - Impact of ECOWAS sanctions against Mali (Senegal's largest trading partner).
  - Domestic wage demands by teachers and healthcare worker unions.
- 2022 Supplementary Budget Law (approved in May) features:
  - Increase of the budgetary envelope for energy subsidies of 1 percent of GDP to offset higher oil prices (global oil price increased by 50 percent compared to assumption in initial budget).
  - Additional measures including cash transfers and removal of taxes on certain staple foods.
  - Government decision to limit energy subsidies to a maximum of 2 percent of GDP in 2022.
  - Government will, if needed, make gradual and targeted adjustments to fuel and electricity prices.
  - Government maintains revenue targets in the Supplementary Budget Law, relying on improved tax administration performance and mobilization of exceptional revenues.
- Fiscal consolidation and revenue mobilization:
  - Determination to maintain debt sustainability via fiscal consolidation through rigorous implementation of the Medium-Term Revenue Mobilization Strategy (MTRS) in 2023-2024 and gradual phasing out of regressive energy subsidies.
  - Ongoing effort to improve and expand the single national registry to deliver rapid, targeted support to households in the event of food and fuel price shocks.
- Debt policy and management:
  - Preference for concessional borrowing; non-concessional borrowing limited to projects with high internal rate of return.
  - Strengthen debt management: improve collection, monitoring and management of debt of public and quasi-public entities and public-private partnerships.
  - Complete fiscal framework for transparent and sustainable management of hydrocarbon revenues before 2023.
  - Continue implementing action plan to exit enhanced FATF monitoring.

### Financing request and IMF program modifications
- In line with the revised macroeconomic framework, the government requests modification of the performance criterion on the net lending/borrowing floor (overall fiscal balance).
- Request to cover additional short-term balance of payments needs:
  - Increase in access equal to 40 percent of Senegal’s quota (SDR 129.44 million):
    - Two-thirds under the Stand-By Arrangement: SDR 86.29 million.
    - One-third under the Stand-By Credit Facility: SDR 43.15 million.
  - Disbursement in two equal tranches of 20 percent (SDR 64.72 million each).
  - These resources will, in line with procedures for existing access, be on-lent to the Government via the central bank.
- Request for IMF reviews and disbursement:
  - Conclusion of the fifth review under the Policy Coordination Instrument (PCI).
  - Second review under the Stand-By Credit Facility/Stand-By Arrangement.
  - Disbursement of 50 percent of the quota: SDR 161.82 million.
- Government commitments:
  - Continue to consult with the IMF before adopting additional measures or in the event of changes to policies in the Memorandum of Economic and Financial Policies.
  - Provide regular information as specified in the Technical Memorandum of Understanding (TMU).
  - Authorizes IMF publication of the letter, the Memorandum, the TMU, and the Staff Report.

### Early 2022 developments and risks (Q1 2022)
- Composite index of economic activity (excluding agriculture and forestry) increased by 5.6 percent on average during first three months of 2022:
  - Secondary sector: +5 percent.
  - Tertiary sector: +7.5 percent.
  - Livestock: -4.5 percent.
  - Fishing: -3.1 percent.
- Inflation developments:
  - Headline inflation reached 6.3 percent at end-March 2022 (year-on-year); peaked at 6.5 percent at end-February 2022.
  - Domestic food inflation: 10.1 percent in March 2022; peaked at 10.6 percent in February 2022 (year-on-year).
  - Core inflation (excluding energy and food): averaged 1.3 percent in 2021 and increased to 2.1 percent in March 2022 (year-on-year).

*Source: Appendix I. Letter of Intent/Program Statement (Dakar, Senegal, June 07, 2022).*

### 16.      Budget execution during the first quarter of 2022 was in line with the target. Total

### 16.      Budget execution during the first quarter of 2022 was in line with the target. Total

### Budget execution — Q1 2022
- Total revenue collection (excluding grants): CFAF 693.3 billion, exceeding the objective by CFAF 32.7 billion.
- Revenues at end-March 2022 increased by CFAF 194 billion in absolute terms compared to last year, and 40 percent in relative terms.
- Total expenditure: CFAF 1441.8 billion.
- Wages at end-March 2022: CFAF 227.2 billion against an annual forecast of CFAF 952 billion (execution rate of 24 percent). Payments were made to 162,457 public officials.
- Current spending: allocated CFAF 1170.3 billion; executed CFAF 456.6 billion (execution rate of 39.8 percent).
- Capital expenditure: CFAF 626 billion versus Initial Budget Law allocation of CFAF 1819.5 billion (execution rate of 34.4 percent).

### Near-term macroeconomic outlook and risks
- 2022 growth revised downward to approximately 5 percent from an initial forecast of 5.5 percent (downward revision of one half of a percentage point) due to rising world oil and food prices and slower activity in major trading partners.
- Inflation projected at approximately 5.5 percent in 2022, driven by the sharp rise in food prices.
- Current account deficit expected to be approximately 13 percent of GDP due to deterioration in the terms of trade.
- Medium-term outlook: economic growth expected to average 10 percent during 2023-24 with start of hydrocarbon production.
- Inflation expected to gradually return to medium-term target of 2 percent.
- Current account deficit expected to improve substantially over the medium term with hydrocarbon production, reduced imports of related services, and resumption of tourism activity.
- Downside risks highlighted:
  - Further spike in global oil and food prices could lead to social unrest and pressure on external and fiscal balances.
  - Further slowdown in global growth and more aggressive monetary tightening could compress external demand and hurt growth.
  - Resurgence of the pandemic, deteriorating regional security, and climate shocks (droughts and floods) could negatively affect activity.

### 2022 Supplementary Budget Law (LFR) — objectives and additional spending
- Purpose: mitigate global headwinds, meet commitments to social partners, and enhance security in light of regional terrorism.
- Additional expenditure in LFR: CFAF 323.5 billion, including:
  - Energy subsidies: revised upwards by CFAF 150 billion, bringing total for 2022 to CFAF 300 billion; government adjusted some energy prices on June 5 and may undertake further targeted price adjustments if necessary.
  - Wage bill: fiscal cost of measures to make remuneration fairer in education, health, defense and national security: approximately CFAF 100 billion.
  - Security: additional CFAF 73.5 billion to strengthen defense and national security resources.

### Social and targeted support measures in the LFR
- Forgone tax revenue to stabilize prices of certain staple foods: CFAF 72.2 billion.
- Exceptional cash transfer supported by highly concessional World Bank financing: CFAF 43 billion.
- Increased agricultural subsidies envelope to address fertilizer price increases: CFAF 10 billion.

### Revenue projections and tax administration targets under the LFR
- LFR projects increase in revenue (including grants) of CFAF 37.1 billion due to exceptional revenue and intensified tax collection.
- Exceptional revenue components cited:
  - National refinery (SAR): CFAF 48.9 billion.
  - Cross-debt settlement between border control management and Sécuriport: CFAF 5.2 billion.
  - Upward revision of projected proceeds from road use tax (TUR): CFAF 13 billion.
  - Decline in project grants reducing revenue by CFAF 30 billion.
- Tax administration targets:
  - Directorate General of Customs (DGD) target: CFAF 997 billion. Measures to achieve target include governance of valuations, better control of exemptions, and permanent availability of GAINDE software under PROMAD.
  - Directorate-General of Taxes and Government Properties (DGID) target: CFAF 2110 billion. Drivers: uptick in current revenue to end-April 2022, administrative measures with estimated impact of CFAF 22.5 billion, and exceptional revenues of CFAF 88.7 billion (primarily sale of former airport land and SAR).
  - Directorate General of Public Accounting and Treasury (DGCPT) target: CFAF 125 billion.

### Deficit containment and savings measures in the LFR
- Target to limit budget deficit to CFAF 1055 billion.
- Measures to save CFAF 104.1 billion:
  - Externally financed investments via project loans lowered to CFAF 515 billion from CFAF 580 billion (reduction of CFAF 65 billion).
  - Investments financed with domestic resources revised downward by CFAF 30 billion.
  - Current transfers: saving of CFAF 9.1 billion.
  - Precautionary reserve: CFAF 50 billion.
  - General reserve: CFAF 30 billion.

### Government financing needs and planned coverage
- Government financing needs: CFAF 1963.8 billion.
- Planned coverage:
  - Project loans: CFAF 515 billion.
  - Program loans: CFAF 107 billion.
  - 2021 financing surplus carried forward to 2022: CFAF 120.7 billion.
  - IMF disbursements: CFAF 254 billion.
  - Recourse to regional market financing: CFAF 967 billion.

### Medium-Term Fiscal Framework and revenue mobilization
- Fiscal deficit target: 3 percent of GDP by 2024 (WAEMU Council of Ministers decision).
- Key measures:
  - Accelerate implementation of the medium-term revenue mobilization strategy (MTRS).
  - Digitalization of tax collection by 2023 via the SENFINANCES solution, which will:
    - Generalize use of unique identifier based on national identification number for unified portal for tele-declaration, telepayment, and online requests.
    - Integrate management tool to monitor processing times and supervision initiatives.
    - Interconnect tax, customs, treasury, and budget administrations to enable collection, processing, and use of transaction data for supervision, fraud fight, and informal sector expansion efforts.
  - Redrafting regulatory framework on the Joint Tax-Customs Control Brigade beginning June 2022 to monitor investment commitments by beneficiaries of preferential systems.
  - Reform of the Evaluation Committee for tax exemptions to enable permanent monitoring and produce annual report on tax exemptions within six months after fiscal year end (enabled by SENFINANCES automation).
  - Performance monitoring framework for tax administrations, including clear indicators, being finalized with IMF technical assistance (structural benchmark, end-June 2022). Decree establishing monitoring mechanisms adopted in April 2022.

### Energy subsidy phase-out plan
- Gradual phasing out of energy subsidies beginning in 2023.
- Implementation tools:
  - Update and application of existing decrees on fuel and electricity price adjustment.
  - Efforts to sustainably reduce electricity and fuel production costs (including gas-to-power strategy and national refinery investments).
  - Use targeted support to most vulnerable households via existing social safety net and temporary measures instead of generalized subsidies.
  - Roadmap under development including path to automatic price adjustment, communication phase, and support measures for vulnerable households (structural benchmark, end of June 2022).

### Debt sustainability and debt management
- Debt Sustainability Analysis: Senegal at moderate risk of debt distress with a very limited buffer to absorb shocks.
- Borrowing policy: prioritize concessional external borrowing; use non-concessional borrowing only for high internal rate of return projects.
- CFAF 330 billion Sukuk issued by SOGEPA in April 2022 (local currency). Tranches:
  - First tranche: maturity 7 years; CFAF 51.6 billion.
  - Second tranche: maturity 10 years; CFAF 57.5 billion.
  - Third tranche: maturity 15 years with a two-year grace period; CFAF 220.9 billion.
- Use of proceeds: bulk to buy back property transferred by government to SOGEPA as collateral for Sukuk; remainder for further property investments for the state.
- External commercial debt issuance by Blaise Diagne International Airport in Dakar (AIBD) scheduled for 2022 to finance air hub project (AIBD expansion and regional airports).

### Strengthening debt management systems
- Action plan implementation following audit of debt database management platform, including:
  - Updating access rights in Debt Management Platform (DAIDA).
  - Redrafting DAIDA add-on modules.
  - Implementing data quality management process supported by ISO 9001:2015 certification of Public Debt Directorate.
  - Implementing business continuity plan (strengthening production, backup, and network servers).
  - Strengthening parametric security against malicious access.
  - Capacity-building for debt managers and deployment of staff.
  - Resources made available to Public Debt Directorate to cover support function.
- Planned incorporation of SOE and other public agency debt into debt-monitoring platform; scope and costs under evaluation.

### Strengthening Public Financial Management (PFM)
- Launch implementation of updated public financial management reform strategy; initial matrix updated to reflect developments since 2018.
- Six strategic areas retained; updates to expected results, interim results, and actions.
- Technical validation workshop to be organized no later than June 30, 2022; implementation effective from second half of 2022 after new dates and targets finalized.
- Treasury Single Account (TSA) implementation:
  - Of 276 bank accounts identified in 2020, 100 closed by December 31, 2021.
  - Study identified 87 bank accounts to be closed by June 30, 2022; 11 belong to EPICs operating in commercial sector and will remain for banking services not provided by treasury; on this basis 76 bank accounts will be closed on June 30, 2022.
  - Remaining 89 accounts (financial, higher education, health sectors) to follow gradual, participatory closure approach due to social sensitivity and specialized activities; progress report planned by end of July 2022.

*International Monetary Fund — Senegal country report chapter*

### 30.      The government will pursue the reforms aimed at improving budget execution.

### 30.      The government will pursue the reforms aimed at improving budget execution.

### Decentralization of spending authorizations and SYSBUDGEP
- Decentralization of spending authorizations effective since January 2022 in all constitutional institutions and ministries, in accordance with the Organic Budget Law.
- Decree 2021–1799 appointing the delegated and secondary authorizing officers signed on December 31, 2021.
- Training sessions organized for new stakeholders on the budget execution procedure in the SYSBUDGEP information system.
- A SYSBUDGEP user guide and a user manual for authorizing officers were made available to the new stakeholders.
- Initial assessment at the end of the first quarter of 2022 observed that new stakeholders have gained a proper understanding of the process.

### Budget documentation, cash flow planning, and commitment planning
- The budget documentation for the 2022 Budget Law was supplemented with a cash flow plan.
- A budget module was designed in SYSBUDGEP to enable stakeholders in the expenditure workflow to prepare commitment plans coordinated with the procurement plan in SYSBUDGEP and the cash flow plan.
- All ministries and institutions were able to prepare 2022 commitment plans in the information system.
- A workshop in the last quarter of 2021 shared infra-annual planning instruments for budget execution and preparation of quarterly expenditure ceilings in line with the estimated cash flow plan.
- The draft decree on intra-annual planning was consulted and validated at the technical level; its signature will formally establish the framework for management dialog at the level of the Minister of Finance and the Budget and at the various key authorizing officers.

### Reclassification of transfer expenditure and capital transfers
- Significant progress made in reclassification of transfer expenditure, including subsidies, undertaken by the Directorate General of Budget, Public Accounting, and Treasury.
- Specific budget lines for transfers to the agricultural and energy sectors were identified to be reclassified as subsidies as soon as they are programmed to facilitate proper classification for execution purposes.
- Technical exchanges should be finalized in 2022 for the new classification to be considered in budgetary programming from 2023.
- Reclassification of capital transfers into investments executed by the government in the budget continued in 2022.
- Delegated project management instruction signed in May 2022 describing the procedure for execution of capital expenditure carried out in project management delegated by implementing agencies; specifies roles and mechanisms for effective public expenditure execution.

### Project selection, evaluation, and AE/CP budgeting
- Number of projects and programs evaluated annually increased from 12 in 2015 to 50 in 2020, and to 86 in 2021.
- Projects evaluated in 2021 correspond to a total volume of CFAF 3059 billion.
- Evaluated projects are covered in an annex to the 2022 Draft Budget Law.
- In 2022, approximately 90 feasibility studies are planned.
- Budgeting for investment projects with a prior commitment authorization and payment appropriation (AE/CP) approach in place since 2020.
- SYSBUDGEP takes into account presentation of capital expenditure with the AE/CP approach.
- Guidelines provided in the 2023/2025 budget framework circular to ensure public investments are optimally budgeted and subject to infra-annual monitoring.
- Information collection tools for more effective programming and monitoring are being validated by the technical services of the Directorate General of Budget for use in the 2023 Draft Budget Law preparation.

### Making SIGIF operational: steps and requirements
- All technical issues from the SIGIF audit by the General Finance Inspectorate have been resolved, including change management and user training in the regions.
- Next steps:
  - Make all shared ministerial and regional service centers operational and establish management control units in all ministries and institutions.
  - Identify and appoint all stakeholders in the new management workflow (persons responsible for actions and activities, delegated authorizing officers, secondary authorizing officers, funds and assets accountants, order accountants, and materials accountants) in all ministries and institutions.
  - Start budget preparation activities in all ministries and institutions exclusively through the SIGIF platform completely under the results-based management approach.
  - In shared ministerial and regional service centers, organize real twofold control of 2021 budget execution, using the SIGIF production function in all activities carried out on the SYSBUDGEP and ASTER platforms, and use this twofold control to make all stakeholders in the SIGIF expenditure chain operational.
  - Note: Some stakeholders in the Directorate General of Public Accounting and Treasury (e.g., treasury general revenue or general treasury cash authorities) might obtain statements and information to which they currently do not have access.
  - Ensure SIGIF is used exclusively for budget execution as soon as the budget is prepared exclusively with SIGIF by stakeholders in the new management workflow.

### Publication of the Table of Government Financial Operations
- Since 2016, Senegal has been regularly preparing the consolidated statement of government financial operations as part of joining the Special Data Dissemination Standard (SDDS).
- Financial operations expanded to extrabudgetary entities, local units of government, and social security agencies; drafts with inclusion of public companies are available with support from AFRITAC West.
- The government will begin to publish this statement on September 30, 2022.

### Strengthening PPP budget-risk management
- Substantial progress with implementation of the new PPP framework.
- Identification and prioritization phase for first potential PPP projects in progress with firm CPCS recruited by the World Bank.
- Capacity development with PPP experts recruited by the PPP Unit (UNAPPP).
- At the end of the selection phase, a fiscal sustainability study will be conducted for each selected project.
- Budget impact in the preparation phase will be covered primarily by project preparation funds, provided that the initial allocation of US$1 million under the Growth and Employment Acceleration Program (PACE) is available.
- Projects authorized by the interministerial committee will not be launched until preliminary assessment and opinion on budget sustainability are completed.
- New law requires each contracting authority project to be incorporated into the public expenditure budget cycle, including government budget projections.
- Activity to review portfolio of potential PPP projects planned by July 2022 between the Directorate General of Budget and the PPP Support Unit; mechanisms will be agreed to establish a database to monitor budget and contingent commitments in connection with PPPs.
- Database may be initialized with new PPP projects envisaged and by incorporating results of an inventory of existing PPP projects via sector ministry requests during budget programming.

### Completing operational framework for hydrocarbons revenue (overview)
- The government will complete the operational framework for transparent, sustainable management of future revenue from exploitation of hydrocarbons before 2023.
- The Draft Law on Management of Revenue from the Exploitation of Hydrocarbons (LGRH) was promulgated on April 19, 2022; various provisions are being made operational.
- Initial work to target a non-oil fiscal balance finalized at end of May 2022.
- Methodology for benchmark revenue forecasting provided in the draft law will be determined by decree.
- Legal and operational frameworks for governance and management of the Intergenerational Fund will be specified in new rules establishing the organization and operation of the Sovereign Strategic Investment Fund (FONSIS), implementing decrees, decree establishing duties/composition/operating procedures of the Forecasting and Evaluation Committee, and provisions establishing management and administration mechanisms for each Fund; these will be submitted to the Council of Ministers by August 31, 2022.

### Strengthening population resilience and social safety nets
- Update of the Single National Register (SNR) completed with data reconciliation phase in the Sédhiou regions.
- Updated SNR database being used for emergency cash assistance program funded by the World Bank.
- Extension target from 542,956 to one million (1,000,000) households: poverty map validated with ANSD and World Bank experts; extension scheduled to be completed in October 2022 experienced delays; target (1,000,000 households) will not be achieved in 2022.
- Second half of 2022 used for community targeting; expansion to 1,000,000 households will be completed by June 2023.
- Draft order establishing the Monitoring Committee for Decree No. 2021-1052 of August 2, 2021 on the SNR in process of being signed.
- Action plan with extensive communication component developed.
- General Directorate for Social Protection and National Solidarity (DGPSN) undertaking digitization of payment of transfers with an integrated computer platform allowing interoperability of the PNBSF database with money transfer operator systems.
- Government committed to moving to digital payment of regular cash transfers by November 30, 2022.

### Emergency Socio-Economic Integration and Youth Employment Program (XËYU NDAW NI)
- Program in its second year.
- For 2022 fiscal year, an envelope of CFAF 150 billion allocated to this program.
- As of May 3, 2022, reported expenditures of CFAF 78.5 billion, representing an implementation rate of 52.3 percent.
- Spending includes recruitment programs (security personnel, teachers (5,000 people)), volunteers for cleaning public spaces, reforestation, stadium workers, health, culture, tourism sectors; support to productive activities through government/employer agreements; socio-economic integration of young people and women via integrated farm development programs, urban renewal operations (street paving, road repair and maintenance) and credits granted by the General Directorate for Rapid Entrepreneurship among Women and Youth (DER/FJ) and Islamic microfinance.

### Reforms and operational adjustments for youth employment program
- Reform of governance and management of the program has been delayed.
- Government remains committed to:
  - Establishing a unique identifier and a database of recipients of public funding.
  - Taking action to dissolve entrepreneurship funds whose budgetary allocations have been cut.
  - Finalizing the assessment report on the existing system of support for women, young people, and SMEs.
  - Continuing establishment of employment and entrepreneurship hubs as one-stop shops in the country’s 46 departments.

### Agricultural resilience and food security programs
- Government will accelerate implementation of programs: Support for Implementation of the National Horticulture Recovery Program and Improvement of Agricultural Productivity in the South and Southeast Regions, cereal development program (wheat, millet, sorghum, maize, fonio), national rice self-sufficiency program, large-scale initiative to develop plant proteins in Africa.
- Ministry of Agriculture and Rural Equipment finalized an Agricultural Program for Food Autonomy and Sustainability (PASAD).
- PASAD objectives: increase agricultural production and productivity, diversify crops and production systems, strengthen agricultural services, improve governance of the agricultural sector.
- Specific measures:
  - Implementation of a research program to propose appropriate varieties and effective technical methods for targeted agro-ecological areas.
  - Application of supportive measures for introduction and accelerated development of wheat farming in Senegal.
  - Development of a sub-program for technology transfer and training of producers in wheat-growing techniques.
  - Increasing horticultural production in the Niayes area (Dakar, Thiès, Louga, and Saint-Louis regions) and the groundnut basin.
  - Optimization of agricultural productivity in southern and southeastern regions (administrative regions of Kolda, Sédhiou, Ziguinchor, Kédougou, and Tambacounda, except for the Department of Bakel).
  - Strengthening hydro-agricultural infrastructure in river valleys and secondary lowlands.
  - Increasing production of appropriate seeds for different agro-ecological areas.
  - Facilitating access to inputs and equipment.
  - Significantly increasing investments in sustainable food production and resilient agricultural value chains.

### National Private Sector Development Strategy (SNDSP) and business environment reforms
- SNDSP developed as overall framework to promote domestic private sector, competitive industries, and private sector-led growth.
- Process participatory and inclusive with government, private sector, and development partners.
- SNDSP strategic objectives by 2035:
  - 3,000,000 formal jobs;
  - 300,000 formal companies;
  - 300 leading companies.
- SNDSP structured around five (5) programs with a five-year action plan:
  - Program 1: Support for national companies
  - Program 2: Competitiveness strategies for the different sectors
  - Program 3: A pro-business government
  - Program 4: Attraction and development of regional and multinational firms
  - Program 5: Public-private Dialogue and partnerships.

### Specific reforms to improve business environment
- One-stop shop at the Agency for the Development and Support of SMEs (ADEPME) to streamline SME support via integrated information system (SIGIPME) and digitize key processes for SME access to finance; discussions to harmonize Employment and Training Hubs and the decision to make the General Directorate for Rapid Entrepreneurship the one-stop shop for youth and women's empowerment.
- Hybrid Investment Fund (OYASS Capital Fund) incorporated as a joint-stock company in November 2021; recruitment for a fund manager under way; pre-qualification phase approved; second phase of tender to be launched after legal structuring discussions with KFW and the World Bank; expected to be operational by June 2022.
- Land reforms and single collateral registry online formalized by Decree No. 2021-420 of April 2, 2021, on operating procedures of the Trade and Personal Property Credit Registry.
  - Unified collateral registry will be complete only after digitization of the land registry to interconnect real estate under mortgage with collateral database.
  - Digitization of the land registry slated for the first half of 2023 for the entire territory; pilot phase covering Dakar, Ngor-Almadies, Rufisque, and Mbour scheduled for end-November 2022 at the latest.
- Revision of the investment code underway, coordinated by steering and technical committees; overview document adopted by steering committee in July 2022.
  - Reform Steering Committee held a workshop on December 13 and 14, 2021, to review assessment report.
  - Finalization and adoption of the new investment code expected by June 30, 2022.

### Stabilizing the financial sector: bank restructurings and solvency
- Restructuring process of three distressed non-systemic banks continuing.
- Banking Commission audit mission visited two of the three targeted institutions in the first quarter of 2022; restructuring ongoing for these two banks.
- One bank, with largest share of capital held by the country’s main microfinance institution, has taken steps to complete the second phase of its capital increase before the end of 2022; first phase of CFAF 15 billion already completed.
- Second bank presented a restructuring plan requiring government intervention given risks identified in liabilities, particularly those related to customer deposits; government intervention in the form of a subordinated loan could be considered, subject to participation of certain institutional depositors in recapitalization.
- Banking Commission’s audit mission conclusions should quantify capital requirements definitively.
- Third bank received government support to complete capital increase; at end-December 2021 the bank had a solvency ratio of 9.6 percent, compared to required minimum of 11.3 percent; at end-February 2022 solvency ratio stood at 14.2 percent owing to the capital increase.

*Source: 1senea2022003 - 30.      The government will pursue the reforms aimed at improving budget execution.*

### 40.      The government intends to accelerate the restructuring of the national company La

### 40.      The government intends to accelerate the restructuring of the national company La Poste.

### Restructuring and financial stabilization of La Poste and Poste Finance
- A new roadmap will be developed by the Inter-Ministerial Restructuring Subcommittee no later than June 30, 2022, to reflect new strategic guidance from the Head of State regarding the recapitalization, restructuring, recovery plan, restoring the financial situation, and institutional transformation of Poste Finance.
- In the meantime, with a view to restoring the company's financial equilibrium:
  - A cost accounting system for determining fair remuneration for the public service, developed by an internationally recognized firm, was the subject of a workshop sponsored by the Telecommunications and Postal Regulatory Authority (ARTP).
  - To reinforce separation of entities and avoid the use of Poste Finance cash by La Poste, intra-group transactions (in particular those between La Poste and Poste Finance) are subject to a financial agreement that provides for:
    - monthly reconciliation and joint balancing of the amounts, and
    - settlement of the balance within the first 10 days of the following month by the debtor entity.
  - This financial agreement will be signed no later than June 30, 2022.

### FATF enhanced surveillance and AML/CFT reforms
- Objective: Remove Senegal from Enhanced Surveillance by the Financial Action Task Force (FATF) for Strategic Deficiencies in Combating Money Laundering and Terrorist Financing.
- Legislative and regulatory actions adopted (thirteen (13) major acts), including:
  - Broader legal regime for the collection, updating, and storage of information on beneficial owners through the amendment of the General Tax Code.
  - Complete criminalization of the financing of terrorism and establishment of the National Office for the Recovery of Criminal Assets (ONRAC) through the amendment of the Criminal Code and Code of Criminal Procedure.
  - Organization and operation of the National Office for the Recovery of Criminal Assets; the General Director of the ONRAC was appointed in early December 2021.
  - Appointment of the chairperson of the Administrative Freeze Advisory Commission (CCGA) in October 2021; the CCGA held its first meeting on December 1, 2021.
- Regional and institutional updates:
  - CIMA updated AML/CFT procedures applicable to insurance companies with Regulation No. 001/CIMA/PCMA/PCE/SG 2021 of March 3, 2021.
  - WAMU Council of Ministers adopted the uniform law on stock market offenses by decision dated September 23, 2021.
  - CREPMF adopted texts subsequent to Instruction No. 59/2019/CREPMF of September 30, 2019, on AML/CFT internal control for WAMU financial markets.
- National Risk Assessment:
  - The National Committee, supported by an international firm provided by the European Union, launched the update of the National Risk Assessment for Money Laundering and Terrorist Financing in accordance with FATF Recommendation 1.
  - Work scheduled over ninety (90) days beginning the last week of December 2021; results will be accompanied by an action plan.
- Operational progress and statistics:
  - Number of suspicious transaction reports filed by reporting entities: 371.
  - On-site inspections by supervisors: 53 missions carried out by supervisors.
  - Reports sent to the Public Prosecutor by the National Financial Intelligence Unit (CENTIF): 24.
  - Prosecutions initiated by the Public Prosecutor for AML/CFT crimes: 66 (some resulting from parallel investigations by police and gendarmerie).

### Remaining AML/CFT challenges (government commitments)
- Reviewing the WAEMU uniform law to fill remaining gaps.
- Strengthening judicial cooperation.
- Strengthening oversight and supervision of reporting entities in general and non-financial institutions in particular.
- Launching the operation of the Administrative Freeze Advisory Board for effective targeted financial sanctions.
- Operationalization of the register of beneficial owners.
- Direct access by the CENTIF to national databases.

### Program monitoring: PCI and SBF/SBA frameworks and targets
- Under the Policy Coordination Instrument (PCI), program monitoring uses quantitative targets, continuous targets, and reform targets. Quantitative targets for end-June 2022 and a continuous quantitative target are proposed.
- The sixth review under the PCI should be completed by December 31, 2022.
- Under the Stand-By Credit Facility/Stand-By Arrangement, the program will undergo semi-annual reviews and be monitored using performance criteria, indicative targets, and structural benchmarks. Definitions are provided in the Technical Memorandum of Understanding attached to the Memorandum.

### Selected quantitative targets and performance indicators (as reported)
- Table 1a / Table 1c selected indicators and outcomes:
  - Floor on net lending/borrowing:
    - Prog. -620; Act. -617; Status: Met (Jun. 2021 QT)
    - Prog. -967; Act. -965; Status: Met (Dec. 2021 QT)
    - Prog. -518; Act. -772; Status: (Jun. 2022 Prop. QT)
  - Ceiling on central government's overall net financing requirement:
    - Prog. ...; Act. ...; Status ...
    - Prog. ...; Act. 997; Act. 965; Status: Met (Dec. 2021 QT)
  - Floor on tax revenue:
    - Prog. 1,082; Act. 1144; Status: Met (Jun. 2021 QT)
    - Prog. 2,661; Act. 2,594; Status: Not Met (Dec. 2021 QT)
    - Prog. 1,361; Act. 1,361; Status: (Jun. 2022 Prop. QT)
  - Ceiling on the share of the value of public sector contracts signed by single tender (percent):
    - Prog. 15; Act. 57; Status: Not Met (Jun. 2021 QT)
    - Prog. 15; Act. 25; Status: Not Met (Dec. 2021 QT)
    - Prog. 15; Act. 15; Status: (Jun. 2022 Prop. QT)
  - Floor on social expenditures (percent of total spending):
    - Prog. 35; Act. 40; Status: Met (Jun. 2021 QT)
    - Prog. 35; Act. 40; Status: Met (Dec. 2021 QT)
    - Prog. 40; Act. 40; Status: (Jun. 2022 Prop. QT)
  - Ceiling on total nominal public debt (CFAF billion):
    - Prog. ...; Act. ...; Dec. 2021 Prog. 11,270; Act. 10,997; Status: Met
  - Ceiling on spending through simplified procedures for non-personalized services:
    - Prog. 25; Act. 3; Status: Met (Jun. 2021 QT)
    - Prog. 3; Act. 5; Status: Not Met (Dec. 2021 QT)
    - Prog. 2; Act. 2; Status: (Jun. 2022 Prop. QT)
  - Ceiling on public sector external payment arrears (stock): Prog. 0; Act. 0; Status: Met (all reported test dates)
- Memorandum items:
  - Program grants: reported 13 and 17 (periods as shown in tables).
  - Net Domestic and Regional Financing of the Government: reported 500 (Prog.), Act. 432 (Dec. 2021 QT).

### Structural benchmarks and reform targets (selected items, status, and dates)
- Set up a centralized and integrated land management system which will digitalize land management procedures.
  - Target date: End December 2021
  - Status: Not Met
- Update and extend the existing single national registry (RNU) to include at least 1 million households (beyond the 558,000 already surveyed).
  - Target date: End October 2022
  - Proposed modification: Proposed to be removed as it will take more time
- Government to adopt a "circulaire" to make digital payments under the regular cash transfer program starting in 2023 (following DGPSN evaluation of platform).
  - Target date: End November 2022
  - Status: New SB
- Put in place a collateral registry accessible online combining movable collateral and mortgages in cooperation with the BCEAO.
  - Target date: End December 2021
  - Status: Not Met
- Prepare a semi-annual report on the use of information from the interconnection and cooperation between the customs and the tax administration.
  - Target date: semi-annual starting with end December 2020
  - Status: Met
- Adopt an evaluation framework to monitor performance of revenue administrations (DGID, DGD) on a monthly/quarterly basis based on quantitative targets.
  - Target date: End June 2022
- Publish the tax expenditure report for year N-2 annually on the website of the Ministry of Finance and Budget.
  - Target date: Annually, starting at end June 2021
  - Status: Met
- Include in the 2022 budget law measures aiming at reducing tax expenditures by at least CFAF 25 billion.
  - Target date: End December 2021
  - Status: Not Met
- Expand the tax base by increasing registered taxpayers at the Directorate in charge of small and micro-enterprises by 75,000 and tax at the source an additional 40,000 employees regularly contributing to pension and social security funds.
  - Target date: End June 2022
- Fully implement the decree for the mechanism to regularly revise fuel prices; if not used, include necessary budget allocations in a supplementary budget and settle amounts of fuel subsidies and tariff compensation due within 90 days following validation.
  - Ongoing from January 2020
  - Status: Met (Discontinued from January 10, 2022)
- Government commits to limiting energy subsidies to a maximum of FCFA 150 billion in 2022 via specified mechanisms; proposed to be removed as no longer attainable.
  - Target date: End June 2022
  - Proposed modification: Proposed to be removed as it is no longer attainable
- Publish a roadmap to gradually eliminate energy subsidies from 2023 onwards, including communication phase and measures to protect the vulnerable.
  - Target date: End June 2022
  - Status: Reset for September as more time is needed for completion
- Merge all funds for financing of youth and women into a single fund.
  - Target date: End December
  - Status: Not Met
- Revise the legal framework for public procurement to rely more on open, competitive tenders and limit single-source tenders and spontaneous offers in line with best international practices.
  - Target date: End June 2022
- Identify all bank accounts of public entities with own revenues to determine accounts to be closed at end of June 2022 and set a roadmap for gradual closure into the treasury single account.
  - Target date: End December 2021
  - Status: Met
- Update quarterly the database for all PPPs and existing and future power purchase agreements with identification of budgetary impact and quantitative assessment of main fiscal risks.
  - Target date: End June 2022
  - Status: Reset for September as more time is needed for completion
- Publish a fiscal risk statement as annex to the 2022 budget law.
  - Target date: End December 2021
  - Status: Met
- Adopt a new fiscal framework with a long-term budgetary anchor guaranteeing sharing of hydrocarbon revenues with future generations and a short-term operational rule (excluding oil and gas revenues).
  - Target date: End June 2022
  - Status: Reset for August as more time is needed for completion

*Source: IMF staff report content provided in the supplied document excerpt.*

### 5.      Adjustment. The floor including grants is adjusted upward or downward by the amount that

### 5. Adjustment.

### Adjustment mechanism
- The floor including grants is adjusted upward or downward by the amount that budget grants exceed or fall short of program projections up to a maximum amount as specified in Table 1 of the memorandum of economic and financial policies.
- If budget grants exceed their projected level, the floor on net lending/borrowing, or the overall fiscal balance, will be reduced by up to a maximum amount as specified in Table 1 of the memorandum of economic and financial policies.

### Reporting Requirement (fiscal balance)
- During the program period, the authorities will report provisional data on the overall fiscal balance (program definition) and its components monthly to Fund staff with a lag of no more than 6 weeks after the end of the relative month.
- Data on revenues and expenditure included in the calculation will be drawn mainly from preliminary Treasury account balances.
- Final data will be provided as soon as the final balances of the Treasury accounts are available, but no later than two months after the reporting of the provisional data.

### Ceiling on Central Government’s Overall Net Financing Requirement
- Definition:
  - Net overall financing requirement = (i) the overall fiscal balance (as defined for the quantitative performance criterion on net lending/borrowing) + (ii) additional borrowing by the Treasury to finance accounts payable (spending by ministries out of unutilized appropriations from past budgets (drawdown of the “comptes de dépôt”), offsets for illiquid revenues (“recettes d’ordre”) and other below-the-line operations).
  - For end-December 2021, this quantitative performance criterion would need to be lower or equal to the amount indicated in Table 1 of the memorandum of economic and financial policies.
- Adjustment:
  - The ceiling is adjusted downward or upward by the amount that budget grants exceed or fall short of program projections up to a maximum amount as specified in Table 1 of the memorandum of economic and financial policies.
  - If budget grants exceed their projected level, the floor on net lending/borrowing, or the overall fiscal balance, will be reduced by up to a maximum amount as specified in Table 1 of the memorandum of economic and financial policies.

### Reporting Requirements (financing requirement)
- Data related to additional Treasury borrowing to finance accounts payable:
  - Sent quarterly within a period of one month from the end of the quarter.
  - Comprises: spending by ministries out of unutilized appropriations from past budgets (drawdown of the “comptes de dépôt”); offsets for illiquid revenues (“recettes d’ordre”) and other below-the-line operations; reconciliation between the budgetary balance and the financing made available during the respective quarter.
- Data related to the overall financing requirement:
  - Sent quarterly within a period of one month from the end of the quarter, starting from the end of December.
  - Must include: (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 its suppliers and contractors and any other public or private entity.
  - Details regarding any Government borrowing (including amounts on-lent and any guarantee granted) will be reported monthly within six weeks of the end of the month.
  - Borrowings grouped as short-term (less than one year) or long-term (one year or more).
  - Data on projected principal and interest payments will be reported on a commitment and a disbursement basis.

### 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 quantitative performance criterion will be assessed based on data provided in the quarterly TOFE.
  - Petroleum revenues are subject to specific monitoring: VAT on oil, excise taxes on oil, customs duties on oil, vehicle taxes, the PSE, and the Petroleum Product Imports Security Fund (FSIPP).
- Reporting Requirement:
  - Same as for the quantitative performance criterion on net lending/borrowing.

### Ceiling on Total Nominal Public Debt
- Definition:
  - Debt comprises external and domestic debt of the public sector (general government and public nonfinancial corporations) and is measured at its nominal value.
  - The ceiling will be monitored on an annual basis.
  - To evaluate this target, debt denominated in foreign currency will be converted at the exchange rate for the projection of the debt stock, notably for 2020 CFAF/US$ 598 and CFAF/SDR 817 for 2021 CFAF/US$ 534.5 and CFAF/SDR 775.8.
- Reporting Requirements:
  - Authorities will report quarterly data to Fund staff within two months following the end of each quarter.
  - As part of the program, authorities will transmit quarterly to IMF staff, within six weeks after the end of the quarter, provisional data relating to the debts of the following 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, Air Senegal and SONACOS.
  - Any debt contracted during the year by a public enterprise not included in the above list and which is greater than 5 billion CFA francs will also be communicated and the enterprise added to the list for future reporting.
  - The stock of debt at end December of the current and previous year of all these public enterprises, as well as information on newly contracted debt during the year and principal payments, will be communicated within two months after the end of the year.
  - All retroceded or guaranteed debt emanating from the central administration benefiting these public enterprises and enterprises in the private sector will be communicated, distinguishing between guarantees and debt on-lent.
  - All commitments by comfort letter will be communicated quarterly within six weeks after the end of the quarter; if already counted in another category this will be explicitly mentioned.

### Ceiling on Public Sector External Payments Arrears (Continuous)
- Definition:
  - External payment arrears = payments owed and not paid when due on external debt contracted or guaranteed by the public sector (definition of external debt given in paragraph 4 applicable).
  - Quantitative performance criterion on external payments arrears will be monitored on a continuous basis.
- Reporting Requirements:
  - The authorities will promptly report any accumulation of external payments arrears to Fund staff.

### Indicative Targets (Quantitative Targets Under the PCI) and Memorandum Item
- 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 entities subject to the procurement code for supplies, services, or works.
    - Public procurement is "non-competitive" when awarded without open competitive tender and without an open inquiry and open price.
    - The semiannual indicative target applies to total public sector contracts entered by the Government or entities subject to the procurement code.
    - Exclusions: classified purchases; fuel purchases by SENELEC for electricity production reflected in a new regulation imposing on SENELEC to buy fuel from SAR on the basis of the current price structure; administrative amendments; riders necessary for final delivery included in the original contract provided they comply with the procurement code.
  - Reporting Requirements:
    - Government will report semi-annually to Fund staff, with a lag of no more than one month, the total amount of public sector contracts and the total value of all 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).
  - The floor will be evaluated on a semiannual basis.
- Reporting Requirements:
  - Authorities will report semiannual data to Fund staff within two months after each semester.

### Ceiling on Spending Through Simplified Procedures for Non-personalized Services
- Definition:
  - Indicative target = share of central government expenditures for non-personalized services executed through simplified procedures in total transfers (procedures: “Demandes de mise en règlement immédiat” (DMRI) and “Dépenses sans ordonnancement préalable” (DSOP)).
- Reporting Requirements:
  - Government will report semi-annually to Fund staff the total amount of spending on transfers, and the total amount of spending for non-personalized services executed through transfers on treasury deposit accounts, within six weeks of the end of each semester.

### Net Domestic and Regional Financing of the Government (memorandum item)
- Definition:
  - Net domestic and regional financing (based on the TOFE) = sum of net accumulation of liabilities including (i) securities issued on the regional market (WAEMU), including T-bills, T-bonds, and Sukkuk; and (ii) direct domestic loans in CFAF (including other loans and excluding the counterpart of IMF financing).
  - Accumulation of other accounts payable does not correspond to domestic or regional financing for this memorandum item.
  - The indicative target will be monitored annually for the budgetary central government.
- Reporting Requirements:
  - Data transmitted quarterly with the TOFE and a maximum delay of two months.

### Additional Information for Program Monitoring
- Timing and items to be transmitted to Fund staff (electronic format, if possible):
  - 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 agencies or funds).
  - 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 report of the Debt and Investment Directorate (DDI) on execution of investment programs.
    - Monthly preliminary Government financial operations table (TOFE) based on the 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.
    - A 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 the publication of the price structure. If domestic prices are higher than international prices, authorities will communicate in which part of the TOFE the benefits are accounted for.
  - Final data will be provided as soon as final balances of the Treasury accounts are available, but not later than one month after reporting of provisional data.
- Monthly and quarterly monitoring:
  - Provisional data on current nonwage noninterest expenditures and domestically financed capital expenditures executed through cash advances: monthly with a lag of no more than 30 days; final data no more than one month after provisional reporting.
  - Monthly SIGFIP (or SIGIF once operational) table showing committed expenditure, certified expenditures not yet cleared for payment, payment orders, payment orders accepted by the Treasury, and payments made by the Treasury; excluding delegations for regions and embassies; listing payments without cash impact; balances broken down by payer, spending category, maturity and length of time overdue.
  - Quarterly reports on expenditures using derogatory procedures: status of ‘waiting and provisional imputation’ accounts; status of derogatory expenditures by category; status of deposit accounts by beneficiary type; assessment of regularization from one quarter to the next.
- Central bank reporting:
  - Monthly consolidated balance sheet of banks with a maximum lag of two months.
  - Monetary survey monthly with a maximum lag of two months.
  - Lending and deposit interest rates of commercial banks on a semi-annual basis.
  - Prudential supervision and financial soundness indicators: semi-annual; maximum delay of four and a half months after closing of accounts for prudential ratios and six months for financial soundness indicators.
- Public dissemination:
  - Government will update monthly on the designated website:
    - Preliminary TOFE and transition tables with a delay of two months.
    - 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.

### Debt Sustainability Analysis — Key Findings and Assumptions
- Risk of external debt distress: Moderate
- Overall risk of debt distress: Moderate
- Granularity in the risk rating: Limited space to absorb shocks
- Application of judgment: No
- Main assessment points:
  - Public debt is projected to commence a downward trajectory in 2023, driven by a positive interest-rate growth differential and revenue-based fiscal consolidation.
  - Key assumptions underpinning the assessment:
    - (i) a boost to growth, exports, and fiscal revenues from hydrocarbon production over the medium term;
    - (ii) fiscal deficits that converge to the regional convergence criterion of 3 percent of GDP by 2024; and
    - (iii) medium-term potential growth of about 5 percent of GDP.
  - Projections are subject to significant uncertainty. Stated risks include:
    - Prolonged war between Russia and Ukraine leading to higher commodity prices, weaker external demand, slower growth, and higher fiscal costs from subsidies.
    - New COVID variants, regional security challenges, higher external financing costs, and potential delays to hydrocarbon projects.
    - One potential upside risk: increased demand for hydrocarbons from Europe as they seek alternative energy sources.
- Policy recommendations to maintain debt sustainability:
  - Prudent borrowing strategy that prioritizes concessional external borrowing and domestic regional financing.
  - Continued efforts to strengthen debt management.
  - Broader fiscal policy should seek to increase fiscal space over the medium-term primarily by expanding the revenue base and eliminating costly energy subsidies.

- Debt carrying capacity: 3.25 (calculated based on the April 2022 WEO and 2020 World Bank Country Policy and Institutional Assessment (CPIA) score).
- Prepared by staffs of the International Monetary Fund and the International Development Association, June 7, 2022.

*Source: 1senea2022003 - 5. Adjustment. The floor including grants is adjusted upward or downward by the amount that (IMF PDF).*

### 1.      This DSA uses a broad definition of public debt. The assessment includes public and publicly

### 1senea2022003 - 1.      This DSA uses a broad definition of public debt. The assessment includes public and publicly

### Coverage of public sector debt and data quality
- DSA scope:
  - Includes public and publicly guaranteed (PPG) debt held by (i) the central government, (ii) para-public entities, and (iii) state-owned enterprises (SOEs).
  - Uses a currency-based definition of external and domestic debt due to data constraints.
  - Debt to the regional development bank (BOAD) treated as domestic debt since January 2020; as of end-2021 BOAD stock = 1.3 percent of GDP.
- Data quality and governance:
  - Recent audit found no major weaknesses but noted risks in timeliness and reliability of SOE debt data.
  - Authorities are implementing an action plan; a circular and decree to improve SOE debt reporting are beginning to improve visibility.
  - The national debt committee (CNDP), chaired by the Minister of Finance, reviews large public investment decisions including SOEs; vigilance required to ensure consistent application.
- Perimeter notes:
  - Inclusion of para-public enterprises and SOEs began in 2017, creating a structural break in the data.
  - The 2018 public sector balance sheet compiled with Fund TA.

### Public debt levels and composition
- Evolution:
  - Public debt rose by about 10 percentage points of GDP from end-2019 to end-2021.
  - Debt: 63.6 percent of GDP at end-2019 → 73.2 percent of GDP at end-2021.
- Composition (central government majority):
  - Central government debt = 67.4 percent of GDP (majority of public debt), just below regional ceiling of 70 percent.
  - Bulk is external debt = 57 percent of GDP.
  - For central government, largest external debt sources: multilateral institutions, Eurobonds, bilateral official lending.

### Debt service and financing conditions
- External and total debt service:
  - Public external debt service to exports = 21.8 percent in 2021.
  - Projected to average about 17 percent of exports over the medium term.
  - Public external debt service projected to average about 17 percent of revenues over the medium term.
  - Total public debt service projected to average around 29 percent of revenues and grants over the same period.
  - Debt service projected to remain substantial, averaging about 28 percent of total revenues and grants over the next five years.
- Financing sources and market access:
  - Increased financing from multilateral and bilateral partners: World Bank + AfDB budget support combined = 0.5 percent of GDP, potentially scaling up by 0.2 percent of GDP; Germany assessing higher budget support in 2022.
  - Fund financing (including proposed augmentation) would cover 53 percent of financing need over entire program period.
  - Senegal has regional securities market access and Eurobond access; issued EUR775 million Eurobond in June 2021 and a CFAF 330 billion sukuk in April 2022 (2 percent of GDP).
  - Sukuk issued via a new SOE; proceeds primarily to buy back leased buildings.
  - Planned airport investments included in DSA = 1.6 percent of GDP over 2022-24.
- DSSI participation:
  - DSSI provided CFAF 30 billion in debt service relief (0.2 percent of GDP) over May–December 2020 and CFAF 71 billion (0.5 percent of GDP) in 2021.
  - Deferred payments to be made over 2022–27, averaging about CFAF 17 billion per year.

### Baseline macroeconomic assumptions (selected)
- Real GDP growth:
  - 2022 estimate = 5 percent (previous DSA: 5.5 percent).
  - Long run growth expected to average about 5 percent.
- Oil and gas:
  - Baseline includes Sangomar (SNE) and Greater Tortue Ahmeyim (GTA); production expected to begin in the fourth quarter of 2023.
  - Petrosen remaining financing needs estimated at CFAF 987 billion from 2022 through 2037; assumed financed as external commercial debt.
- Inflation:
  - Projected to increase in 2022 to 5 ½ percent; medium-term average expected = 2 percent.
- Public sector deficit:
  - Estimated at 7.3 percent of GDP in 2022 (includes central government deficit and net lending/borrowing of SOEs).
  - Projected to stabilize at around 3 percent of GDP over the medium term as central government deficit converges to regional target of 3 percent of GDP in 2024.
- Revenues:
  - Public sector revenues = 28.4 percent of GDP in 2021.
  - Projected to increase to about 31 percent of GDP; non-hydrocarbon tax revenues projected to rise from 17 percent to 20 percent of non-hydrocarbon GDP by 2024.
- Current account:
  - Baseline assumes current account deficit ≈ 13 percent of GDP in 2022 (increase ~4 percent of GDP since previous DSA).
  - Sharp decline in current account deficit from 2023 as oil and gas exports come online.

### Borrowing strategy and realism of adjustment
- Borrowing strategy:
  - Two-thirds of the higher 2022 fiscal deficit financed by World Bank, AfDB, and proposed Fund augmentation; remaining third financed on regional market.
  - Medium-term strategy: continued multilateral support and gradual shift from USD-denominated external financing to EUR-denominated debt.
  - Assumes domestic borrowing averages about 46 percent of total financing over 2022–27 (small increase from 40 percent projected for 2022).
  - Eurobond issuance assumed to gradually increase (new issuances equivalent to stock of maturing Eurobonds plus 20-30 percent).
- Realism tools:
  - Assumed primary balance adjustment of 4.3 percent of GDP over 2022–24 is in the top quartile historically for LICs.
  - Much of adjustment expected from unwinding energy subsidy costs and implementation of Medium-Term Revenue Strategy.
  - Tools do not signal concerns on government investment share or investment contribution to growth; large residuals reflect one-off expansion of public debt perimeter in 2017.

### Stress tests, scenarios, and debt carrying capacity
- Debt carrying capacity:
  - Composite Indicator (CI) = 3.25 based on April 2022 WEO and World Bank CPIA 2020; classification: Strong.
- Stress tests applied:
  - Standard stress tests plus a market financing shock tailored for outstanding Eurobonds.
  - Market shock assumptions: temporary increase in cost of new commercial external borrowing by 400 basis points, a nominal depreciation of the CFAF relative to the US dollar, shortening of maturities and grace periods.
  - Default financial sector shock used in contingent liability stress test = 5 percent of GDP (banks recapitalization needs estimated < 1 percent of GDP).
- External DSA outcomes:
  - Under baseline, external debt indicators remain below thresholds; PV of debt/GDP close to risk threshold in first year then declines.
  - PV debt-to-exports declines sharply in 2023–24 due to hydrocarbon export growth.
  - Liquidity indicators (external debt service to exports; to revenues) remain below thresholds throughout projection.
  - Under sensitivity analysis, all four external debt risk indicators breach thresholds; combination shocks and export shocks most adverse.
  - External debt distress risk rating from stress tests = Moderate.
- Market financing risk:
  - Spreads have widened beyond EMBI benchmark.
  - Under shock, debt service-to-exports ratio would breach the risk threshold in 2026–2028, corresponding with Eurobond principal payments and peak repayments to the Fund.
  - Recommendation: active debt management to smooth debt service peaks to reduce medium-term market financing vulnerabilities.
- Overall public debt distress:
  - No breaches of overall public debt risk indicator in baseline.
  - Total public debt projected to peak ≈ 75 percent of GDP in 2022 then gradually decline.
  - PV of public debt to GDP very close to risk threshold in 2022–2023 under baseline, declining to below 60 over the medium term.
  - PV of debt to revenues projected to gradually decline.

### Selected key figures (as reported)
- Public debt levels:
  - 63.6 percent of GDP at end-2019.
  - 73.2 percent of GDP at end-2021.
  - Central government debt = 67.4 percent of GDP.
  - External debt = 57 percent of GDP.
- Debt service and shares:
  - Public external debt service to exports = 21.8 percent in 2021.
  - Projected public external debt service ≈ 17 percent of exports (medium term).
  - Projected public external debt service ≈ 17 percent of revenues (medium term).
  - Projected total public debt service ≈ 29 percent of revenues and grants (medium term).
  - Debt service projected to average ≈ 28 percent of total revenues and grants over next five years.
- Financing and issuances:
  - EUR775 million Eurobond issued June 2021.
  - CFAF 330 billion sukuk issued April 2022 = 2 percent of GDP.
  - Petrosen financing needs = CFAF 987 billion (2022–2037).
  - DSSI relief: CFAF 30 billion (0.2 percent of GDP) in 2020; CFAF 71 billion (0.5 percent of GDP) in 2021.
  - Deferred DSSI payments average ≈ CFAF 17 billion per year over 2022–27.
- Macroeconomic projections (selected):
  - Real GDP growth 2022 = 5 percent.
  - Inflation 2022 = 5 ½ percent; medium-term = 2 percent.
  - Public sector deficit 2022 = 7.3 percent of GDP.
  - Public sector revenues 2021 = 28.4 percent of GDP; projected ≈ 31 percent of GDP.
  - Current account deficit 2022 ≈ 13 percent of GDP.
- DSA assumptions on financing mix:
  - Domestic borrowing assumed ≈ 46 percent of total financing over 2022–27 (projected 40 percent for 2022).

*Source: IMF staff calculations and Senegalese authorities (1senea2022003).*

### 17.      Stress tests indicate that Senegal is most vulnerable to a growth shock. Under the standard

### 17.      Stress tests indicate that Senegal is most vulnerable to a growth shock. Under the standard

### Stress test results
- The standard growth shock simulates a growth rate of 2.4 percent in 2022–23.
- Under this shock, all three public debt indicators would be set on an explosive growth path.
- The scenario is described as an extreme shock that ignores the expected rebound from COVID-19 and growth impact of hydrocarbon production.
- The breaches under the stress tests result in a public sector debt distress risk rating of Moderate.

### Risk rating and vulnerabilities
- Senegal remains at moderate risk of external debt distress, with limited space to absorb shocks.
- Characterization of "limited space to absorb shocks" reflects that realization of the median observed shock is expected to result in a downgrade to high risk of debt distress.
- Key vulnerabilities and external dependencies:
  - Vulnerability to growth and export shocks.
  - Heightened uncertainty over the global economic outlook.
  - Near-term outlook depends primarily on external developments, primarily related to the spillovers from Russia’s invasion of Ukraine.
  - Sustained higher commodity prices would negatively impact Senegal’s terms of trade and fiscal balances (due to subsidies).
  - Slower global growth could hinder the recovery.
  - Still-limited access and uptake of vaccines leaves the country vulnerable to future waves of COVID-19.
  - A tightening in global financial conditions would raise the cost of external financing.
  - Risks from natural disasters and a deterioration in regional security.
  - Significant delays in hydrocarbon production would have a material impact on growth and revenues.
  - Upside risks include sustained higher oil prices, potential higher demand from Europe for alternative energy sources, and investments in higher tourism capacity at regional airports.

- Overall assessment: Senegal’s overall risk of debt distress remains moderate.
- Policy implications from elevated debt service: prioritize further efforts to mobilize additional domestic revenues and seek out concessional borrowing in the near term.

### Policy recommendations and financing strategy
- Aim to return to the regional deficit target by 2024, complemented with reforms to contain fiscal risks and enhance debt management.
- Prudent borrowing strategy should leave space for further downside risks to materialize:
  - Exercise restraint on new borrowing initiatives.
  - Focus on concessional and domestic regional financing.
  - Continue efforts to strengthen debt management and actively manage potential financing risks from maturing Eurobonds in the medium-term.
- Fiscal policy should seek to increase fiscal space over the medium-term to provide room to respond to future shocks by:
  - Enhancing the revenue base.
  - Gradually eliminating costly subsidies to food and energy over the medium-term.

*https://www.imf.org/-/media/files/publications/cr/2022/english/1senea2022003.pdf*

### 22.      The authorities broadly agree with staff’s analysis. They share the outlook and assessment of

### 22.      The authorities broadly agree with staff’s analysis. They share the outlook and assessment of

### Authorities’ outlook and policy stance
- The authorities broadly agree with staff’s analysis and share the outlook and assessment of debt risks.
- They recognize that the margin to absorb new shocks is limited.
- They remain optimistic about the positive impact of the hydrocarbon projects on medium-term growth and the positive spillovers to many related sectors.
- Policy intentions:
  - Gradually reduce reliance on borrowing by growing domestic revenues through the implementation of the MTRS.
  - Contain fiscal deficits in line with regional targets.
  - Proactively manage public debt, smooth debt service payments, and further mitigate risks to the debt profile.

### Stress tests and risk classification (figures and captions)
- Figures present indicators of Public and Publicly Guaranteed (PPG) External Debt and Public Debt under alternative scenarios, 2022–32.
- Stress-test framing and notes:
  - "The most extreme stress test is the test that yields the highest ratio in or before 2032."
  - One-off breach treatment: "The stress test with a one-off breach is also presented (if any), while the one-off breach is deemed away for mechanical signals."
  - Note: "All the additional financing needs generated by the shocks under the stress tests are assumed to be covered by PPG external MLT debt in the external DSA. Default terms of marginal debt are based on baseline 10-year projections."
- Identified "Most extreme shock" presentations include Combination, Exports, and Growth depending on the indicator.
- Market-financing risk indicators include GFN and EMBI spreads; benchmark breaches are noted in figure captions (e.g., "Breach of benchmark Yes").

### Debt dynamics and realism tools
- Figure 3: Driver of Debt Dynamics—Baseline Scenario, 2017–32, decomposing past and projected debt changes into:
  - Residual
  - Price and exchange rate
  - Real GDP growth
  - Nominal interest rate
  - Current account + FDI
  - Other debt-creating flows
- Figure 4: Realism Tools, 2016–27 (presented as part of DSA annex figures).

### Key baseline external debt statistics (Table 1 excerpts)
- External debt (nominal) series (selected cells from Table 1):
  - 2019: 72.7
  - 2020: 75.8
  - 2021: 74.3
  - 2022: 74.6
  - 2023: 69.2
  - 2024: 63.0
  - 2025: 59.9
  - 2026: 56.9
  - 2027: 54.4
  - 2032: 44.3
  - 2042: 27.3
- of which: public and publicly guaranteed (PPG):
  - 2019: 52.6
  - 2020: 54.4
  - 2021: 57.1
  - 2022: 57.5
  - 2023: 53.6
  - 2024: 49.1
  - 2025: 46.7
  - 2026: 44.4
  - 2027: 42.4
  - 2032: 34.8
  - 2042: 20.3
- Change in external debt (selected):
  - 2019: -2.4
  - 2020: 3.1
  - 2021: -1.5
  - 2022: 0.3
  - 2023: -5.5
  - 2024: -6.2
  - 2025: -3.1
- Sustainability indicators (PV of PPG external debt):
  - PV of PPG external debt-to-GDP ratio (selected sequence shown): 50.2 52.9 49.3 45.0 42.9 41.0 39.4 32.1 19.3
  - PV of PPG external debt-to-exports ratio (selected sequence shown): 216.3 211.6 186.2 147.2 142.7 141.7 139.5 111.0 42.3
  - PPG debt service-to-exports ratio (selected values): 13.3 22.8 20.7 17.2 16.5 15.7 16.3 20.0 18.8 13.5 5.3
  - PPG debt service-to-revenue ratio (selected values): 11.4 17.5 17.4 15.3 15.2 16.5 16.3 19.2 17.7 12.9 7.7
- Gross external financing need (Billion of U.S. dollars) (selected): 1.3 1.8 2.5 2.6 2.0 1.3 1.5 2.0 2.3 2.3 5.5

### Key macroeconomic assumptions (Table 1 excerpts)
- Real GDP growth (in percent) (selected):
  - 2019: 4.6
  - 2020: 1.3
  - 2021: 6.1
  - 2022: 5.0
  - 2023: 8.3
  - 2024: 10.9
  - 2025: 4.8
  - 2026: 5.0
  - 2027: 5.1
  - 2032: 5.4
  - 2042: 4.3
- Effective interest rate (percent) (selected): 3.6 3.3 2.6 2.3 2.7 2.9 3.0 3.1 3.2 3.4 3.3 2.7 3.1
- Government revenues (excluding grants, in percent of GDP) (selected):
  - 2019: 29.0
  - 2020: 26.9
  - 2021: 27.6
  - 2022: 28.1
  - 2023: 28.6
  - 2024: 29.2
  - 2025: 30.1
  - 2026: 30.1
  - 2027: 30.2
  - 2032: 30.2
  - 2042: 31.4

### Public sector debt (Table 2 excerpts)
- Public sector debt (selected):
  - 2019: 63.6
  - 2020: 69.2
  - 2021: 73.2
  - 2022: 75.1
  - 2023: 71.4
  - 2024: 65.7
  - 2025: 64.2
  - 2026: 62.9
  - 2027: 61.7
  - 2032: 55.9
  - 2042: 18.9
- of which: external debt (public sector):
  - 2019: 52.6
  - 2020: 54.4
  - 2021: 57.1
  - 2022: 57.5
  - 2023: 53.6
  - 2024: 49.1
  - 2025: 46.7
  - 2026: 44.4
  - 2027: 42.4
  - 2032: 34.8
  - 2042: 20.3
- Change in public sector debt (selected):
  - 2019: 2.1
  - 2020: 5.6
  - 2021: 4.0
  - 2022: 1.9
  - 2023: -3.7
  - 2024: -5.7
- Primary deficit (selected): 3.1 4.5 5.0 4.9 2.5 0.7 0.7 0.7 0.6 0.6
- PV of public debt-to-GDP ratio (selected sequence shown): 68.6 69.3 66.0 60.8 59.6 58.9 58.1 52.9 17.9
- Debt service-to-revenue and grants ratio (selected series): 21.2 25.1 27.5 25.1 26.0 26.8 29.8 32.5 29.1 27.5 27.2

### Sensitivity analysis summary (Tables 3 and 4 excerpts)
- Table 3: Sensitivity Analysis for Key Indicators of Public and PPG External Debt, 2022–32:
  - Baseline and alternative scenarios and bound/tailored tests are reported for:
    - Debt service-to-revenue ratio (Baseline series: 21 21 18 6 14 7 14 3 9 3? — values presented in table format)
    - PV of debt-to-GDP ratio (Baseline series shown as 212 186 147 143 142 140 139 135 129 121 111 111? — values reported in tabular arrays)
    - PV of debt-to-exports ratio and Debt service-to-exports ratio under multiple scenarios; bold values indicate breaches of thresholds.
  - Tailored tests shown include Combined contingent liabilities (C1), Natural disaster (C2), Commodity price (C3), Market Financing (C4); some tailored tests marked "n.a." where not applicable.
- Table 4: Sensitivity Analysis for Key Indicators of Public Debt, 2022–32:
  - Baseline and alternative scenarios for PV of Debt-to-GDP Ratio, PV of Debt-to-Revenue Ratio, and Debt Service-to-Revenue Ratio are presented across scenarios B1–B6 and C1–C4.
  - TOTAL public debt benchmark shown as 70 across projection horizon in the table.

*Source: Country authorities; and staff estimates and projections.*

### Annex I. Debt Holder Profile Table

### Annex I. Debt Holder Profile Table

### Debt decomposition and key fiscal/backdrop indicators
- Nominal GDP: 26398
- Stock of public sector debt stood at 73.2 percent of GDP (end-2021); up from 69.2 percent of GDP in 2020.
- Budget execution resulted in a deficit of 6.3 percent of GDP (2021), consistent with the program target.
- Total revenue (excluding grants) fell short of target; total expenditure reached 97 percent of the target.
- Current account deficit worsened to 13.3 percent of GDP in 2021 (up from 10.9 percent in 2020).
- Remittances represented 10.6 percent of GDP (surplus in secondary income account).
- Real GDP growth in 2021: 6.1 percent (against a forecast of 5 percent).
- Projected real GDP growth for 2022: 5 percent (downward revision from 5.5 percent).
- Authorities’ medium-term growth expectation: averaging 10 percent over the period 2023-24 (on the back of prospective hydrocarbon production).
- Average inflation in 2021: 2.2 percent; food inflation: 2.9 percent.
- Inflation projected in 2022: around 5.5 percent.
- Banking sector: capital adequacy strengthened by 6.4 percent compared to 2020; non-performing loans fell from 13.3 percent at end-December 2020 to 11.5 percent at end-December 2021.

### Program performance and fiscal policy targets
- All end-December 2021 performance criteria were met except the floor on tax revenue (authorities request a waiver; corrective actions included in the 2022 Supplementary Budget Law).
- Indicative target on social spending reached 40 percent of total spending (exceeding the floor of 35 percent).
- Two indicative targets missed: ceiling on spending through simplified procedures for non-personalized government services; ceiling on government contracts using sole sourcing procurement.
- Structural benchmarks/reform targets: 4 of 8 met.
- Medium-term fiscal policy anchor: gradual reduction of the fiscal deficit to 3 percent of GDP by 2024 (in accordance with regional commitments).
- Supplementary Budget Law (approved May 2022) aims to limit the fiscal deficit to 6.2 percent of GDP in 2022; includes higher energy subsidies, foregone tax revenue to stabilize basic food prices, exceptional cash transfers, and increased agricultural subsidies.
- Measures in supplementary budget: revenue-increasing measures and savings via reductions in externally-financed and domestically-financed investments, and current transfers to agencies; includes precautionary and management reserves.

### Debt management, guarantees, and policy stance
- Authorities consider Senegal’s debt sustainable with a moderate risk of debt distress, with little space to absorb further short-term shocks.
- Commitment to a prudent debt policy focused on mobilizing highly concessional resources and giving priority to financing through the regional market.
- Plan to upgrade debt management and data through a computerized database management.
- Collateralized debt and contingent liabilities reported in annex table (entries shown as 000 in table).
- Memo items in annex table indicate collateralized debt and contingent liabilities categories (with explanatory footnotes describing collateralization and other explicit contingent liabilities).

### Public financial management, cash management, and transparency measures
- Continued reforms to improve budget execution and evaluation/selection of investment projects; updated budget and financial management reform strategy planned for implementation in second half of 2022.
- Treasury Single Account (TSA) consolidation: of the 276 bank accounts identified in 2020, 100 accounts were closed as of December 31, 2021; 87 more will be closed by end-June 2022; 89 remaining accounts belong to entities operating in financial sector, higher education and health sectors (gradual participatory approach envisaged).
- Progress on transparency and accountability of “Force-Covid-19” expenditures: quarterly budget execution reports for 2021 published; monitoring committee report published on-line in September 2021; audit of the Public Procurement Regulatory Agency (ARMP) report published November 2021; audit court provisional report submitted end-May 2022, final report expected by mid-July 2022.
- Efforts to complete operational framework for transparent and sustainable management of future hydrocarbon revenues by 2023: draft Law (LGRH) promulgated April 2022; preparatory work on methodology for forecasting reference revenues and framework for governance and intergenerational Fund ongoing.

### Social protection, private sector, and structural reforms
- Authorities plan to extend single national register (Registre National Unique, RNU) coverage for exceptional cash transfers from 542,956 to one million households by June 2023.
- Plan to promote digital payment of regular cash transfers by November 2022.
- Emergency socio-economic integration of youth employment program to continue; commitments to establish a unique identifier and database of recipients of public funding and create single windows for employment and entrepreneurship services in the 46 departments.
- Private sector strategy adopted (Stratégie Nationale de Développement du Secteur Privé, SNDSP) to promote competitive value chains in agriculture, agrobusiness, infrastructure, hydrocarbons, digital economy, tourism, and finance; emphasis on rationalizing support mechanisms to SMEs and digitalizing key processes including access to financing.
- Financial sector restructuring: ongoing for three non-systemic banks; postal office restructuring/recapitalization/recovery roadmap to be finalized by end-June 2022.
- AML/CFT: continued implementation of the action plan to remove Senegal from enhanced oversight by the Financial Action Task Force (FATAF), including review of the Uniform Law of the WAEMU, strengthening judicial cooperation, and strengthening control and oversight of reporting entities.

### Policy recommendations, near-term actions, and requests
- Authorities request an augmentation of access under the SBA and SCF by 40 percent of quota (SDR 129.44 million) to address additional balance of payments needs in 2022.
- Request a waiver for the nonobservance of a performance criterion (tax revenue floor) for which corrective actions have been taken.
- Request modification of a performance criterion and quantitative target in line with the revised macroeconomic framework.
- Planned fiscal measures: phase out energy subsidies starting 2023 by updating and implementing fuel and electricity price revision decrees; rely on targeted mechanisms for vulnerable groups via social safety nets and temporary support rather than untargeted subsidies.
- Strengthen revenue mobilization via broadening the tax base and enhancing efficiency of revenue agencies through ambitious digital innovations and reorganization under the Medium-Term Revenue Strategy (MTRS).
- Continue prudent debt policy, upgrade debt management systems, and prioritize concessional and regional financing.

*Source: Annex I. Debt Holder Profile Table and accompanying Senegal authorities’ statement (June 22, 2022).*

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_Source: https://www.imf.org/-/media/files/publications/cr/2022/english/1senea2022003.pdf_