## Senegal’s poverty reduction strategy paper (PRSP) — First Annual PRSP Progress Report (covers 2003–05)

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---

### Overview and main assessment
- PRSP was distributed to the Executive Boards of IDA and the IMF in October 2002, after endorsement by the Presidential Council in July 2002.
- The PRSP covers the period 2003–05.
- The joint staff assessment concluded that the policies contained in the PRSP provided an adequate framework for the country’s objective to fight poverty.
- The Executive Boards welcomed the PRSP in December 2002 as a sound basis for poverty reduction and concessional financing.
- The first annual PRSP progress report (the Report) provides:
  - (i) progress since December 2002 focusing on main pillars and cross-sectoral themes; and
  - (ii) perspectives for 2004.
- Overall assessment in the Report: first year implementation of the PRSP was adequate.

### Key macroeconomic outcomes (2003)
- Real GDP growth: 6.5 percent in 2003.
- Sectoral growth contributors:
  - the secondary sector expanded by about 6 percent;
  - the tertiary sector expanded by about 4 percent.
- External current account deficit (including current official grants): estimated at 6.5 percent of GDP in 2003, as against 6 percent in 2002.
- Tax/GDP ratio: increased to 18.2 percent of GDP.
- Overall fiscal balance: -1.4 percent of GDP in 2003.
- Basic fiscal balance: 0.6 percent of GDP in 2003.
- PRSP middle-case scenario fiscal assumptions:
  - overall fiscal balance -0.5 percent of GDP;
  - basic fiscal balance 1.4 percent of GDP.
- Inflation: consumer price inflation was virtually absent in 2003.
- Projected output growth expected for 2004-05: 6 percent (staffs recommend programming on the PRSP’s more conservative growth scenarios around 6 percent on average over 2004-05).
- PRSP optimistic growth scenario cited: 7 percent on average over 2003-05 (staffs consider this optimistic scenario not within reach in the near term).

### Fiscal execution, irregularities, and remedial actions
- Spending irregularities discovered in June 2004 revealed severe deficiencies in fiscal discipline and transparency.
- In 2003 the government committed public resources for infrastructure projects without the required budgetary allocation; contracts for these projects amounted to about 1 percent of GDP.
- Payment recording practice: public expenditure is recorded on a payment order basis; some projects executed in 2003 did not affect 2003 fiscal accounts because payment orders were issued only in 2004.
- If recorded on a commitment basis, the 2003 spending would have increased the fiscal deficits reported for 2003 by about ½ percent of GDP.
- Remedial actions begun by authorities:
  - This spending has been fully incorporated in the 2004 budget.
  - Authorities will identify budget lines for all planned infrastructure works in their next annual and three-year public investment programs.
  - Authorities committed to refrain from signing any contract before the required budget allocations are approved by parliament.
  - In consultation with the World Bank and the IMF, authorities will adopt measures to improve procurement practices, including curtailing the use of emergency procedures (without competitive tender), and revising procurement laws to remove loopholes.

### Poverty analysis and trends
- New household data from 2001/02 and a joint government–World Bank study provide improved analysis of poverty.
- Poverty estimates (based on 1994-95 and 2001 household surveys):
  - Share of population living in poverty decreased from 67.9 percent in 1994 (61.4 percent of households) to 57.1 percent in 2001 (48.5 percent of households).
- Geographic and perception details:
  - Decrease in poverty was larger in Dakar and other urban centers than in rural areas.
  - About two-thirds of households identify themselves as poor.
  - One-third of poor and non-poor alike felt poverty had substantially increased in their community over the last five years.
  - Half of the Senegalese population is hopeful that poverty will decrease in the next five years.
- Structural issues in poverty reduction:
  - Poverty is concentrated in rural areas, while government spending continues to be skewed to the central level, to urban areas, and to better-off households.
  - The system for transferring resources from the central government to local governments is inefficient and needs to be made simpler and more predictable.
  - Significant training and capacity building at the local levels are required.
  - Need to enhance development of new private activities, especially small and medium firms, through improved access to credit and commercial information.
- The Report provides limited information on policy initiatives targeting vulnerable groups in 2003; implementing measures to improve living conditions of these groups is highlighted as an important agenda item for year two.

### Sectoral policies — Wealth creation
- PRSP first pillar progress: improvements in the investment climate through tax, regulatory and administrative reforms; progress in structural reforms in water, telecommunication, and electricity sectors; delays in groundnut sector reforms.
- Investment and tax reforms:
  - Corporate income tax rate reduced from 35 to 33 percent.
  - For small enterprises, introduction of a single tax replacing income tax, value-added tax, patent contributions, and social security charges.
  - New investment code adopted in January 2004 broadened eligible sectors and streamlined investment incentives.
- Anticorruption: Parliament passed legislation for the creation of a National Anticorruption Committee in November 2003; committee was set up in May 2004.
- Groundnut sector:
  - Policy Letter for Development of the Groundnut Industry adopted in May 2003.
  - Tender for privatization of SONACOS launched January 2004; authorities expected conclusion by end-May 2004.
  - In June 2004 authorities received only one eligible bid for SONACOS; bid under negotiation given low level relative to independent valuation.
  - If bid is rejected, authorities envisage strengthening SONACOS’s financial position before launching a new privatization strategy in 2005.
- Electricity sector:
  - New Energy Sector Policy Letter adopted in March 2003.
  - SENELEC’s operating cash-flows improved in 2003 with higher collection rates and lower operating costs.
  - Private independent producer (PIP) selected to increase generation capacity by 60MW (equivalent to about 13 percent).
  - Recent decision to cut electricity prices by 5 percent will weaken SENELEC’s financial performance in 2004.
- Staff recommendations for sectoral reporting:
  - Next Report should discuss actions and outcomes in other strategic sectors listed in the PRSP: non-groundnut agriculture, fisheries, industries, tourism, and SMEs.
  - The reform of the Mining Code needs to be addressed.
  - Next Report should discuss how large infrastructure projects (les grands travaux du Chef de l’État such as the new airport and the Dakar-Thiès Highway), and infrastructure projects in Dakar and secondary cities, fit into the poverty reduction strategy.

### Sectoral policies — Capacity building and basic social services
- Government recruitment strategy: recruitment of 15,000 civil servants during 2003-05 to enhance capacity in PRSP sectors including education, health, justice, tax collection, and security.
- Public expenditure management reforms:
  - Two action plans approved supporting public expenditure management reforms (following CFAA and CPAR recommendations) and implementation initiated with donor support.
  - Senegal now meets seven of 16 HIPC benchmark indicators (up from four in 2001) per the joint IMF and World Bank’s HIPC Assessment and Action Plan (AAP).
  - Most important improvements: public expenditure tracking in PRSP priority areas, internal controls, and budget preparation.
  - Significant upgrading still needed in internal and external control of budget execution and state-owned enterprises.
- Authorities should continue efforts to improve transparency, mobilize financial resources, and better allocate spending at central and local government levels.

### Implementation challenges, risks, and priority actions
- Main risks to successful PRSP implementation:
  - Exogenous shocks: drought in 2002; recent sharp increase in oil prices.
  - Endogenous difficulties: implementing structural reforms, particularly governance and the groundnut sector.
- Measures to mitigate risks:
  - Continued efforts to diversify the economy (key element of wealth creation pillar).
  - Donor assistance to cope with exogenous shocks.
  - Tackling endogenous risks through:
    - Sustained efforts to strengthen public financial management, particularly fiscal transparency and procurement practices, at central and local government levels.
    - Improved management of resources transferred to local governments in line with decentralization strategy.
    - Completing reforms in the groundnut and electricity sectors.
    - Further work on integrated sector strategies that link institutional reforms to investment programs.
    - Increasing institutional capacity dedicated to improving governance.
- Other priorities highlighted:
  - Improve fiscal transparency and procurement practices.
  - Strengthen links between policy implementation and PRSP objectives, notably through more and efficient decentralization.
  - Better align public expenditures with PRSP priorities to achieve medium- and long-term targets, especially to improve living conditions of vulnerable groups.
  - Identify binding constraints to improve absorptive capacity in public and private sectors and propose remedial measures.
  - Strengthen monitoring and evaluation through full implementation of institutional framework and periodic reporting on quantitative indicators measuring progress toward PRSP objectives and the Millennium Development Goals (MDGs).

### Allocation of spending to social sectors — overall findings
- The shares of education and health expenditures in total public expenditures were reported as "26.5 percent".
- The shares of education and health expenditures in GDP were reported as "6.0 percent".
- These ratios "increased (by about 0.5 percent) in 2003".
- HIPC resources amounting to "US$153 million in 2000-03" were spent on capital expenditures in social sectors and contributed to this positive trend.
- The aggregate increase masks diverging sectoral trends.

### Education and health sectoral trends (2000-03)
- Education spending:
  - Share of total spending increased from "18.3" to "21.3 percent of total spending".
  - Share of GDP increased from "3.6" to "4.8 percent of GDP".
- Health spending:
  - Share of total spending contracted from "6.4" to "5.1 percent of total spending".
  - Share of GDP contracted from "1.3" to "1.2 percent of GDP".
- Contributing factor to health sector underperformance: "weak implementation capacity in this sector, both at the central and local levels."

### Health sector performance, MDGs, and strategy
- Despite substantial financial resources, contribution to reaching the MDGs has been "uneven", notably in the health sector.
- Progress in "immunization coverage and maternal health programs" was "insufficient for Senegal to attain two objectives that had been set as triggers for its completion point under the enhanced HIPC Initiative."
- The authorities are "developing a new health sector strategy with donors" to meet medium-term objectives; the strategy:
  - Is designed to address "both sectoral and cross-cutting issues in the health sector."
  - Will "target a few specific activities that are expected to produce better outcomes for the Senegalese population living in unhealthy conditions."
- Recommendation: "It would be useful that the next Report provides a detailed account of the implementation of the new strategy in the health sector."

### Decentralization, transfer problems, and service delivery
- Transfers of resources to local communities (which have increasing responsibilities for delivering social services) remain "problematic" despite some progress.
- Persisting problems include:
  - "the slowness of these transfers"
  - "the absence of information about their allocation"
- These problems "continue to explain the relatively poor performance in the social sectors."
- Recommendation: The next Report should include "a more detailed analysis of the government’s decentralization strategy for the delivery of basic social services in the regions," including whether "the assignment of responsibilities to local communities is clear and in line with their administrative capacity."

### Policies for vulnerable groups
- Vulnerable groups identified: "children, handicapped, elderly, and refugees."
- PRSP objectives for vulnerable groups:
  - (i) "improve the social status of vulnerable and marginalized groups;"
  - (ii) "facilitate the access of the indigent populations to basic services, infrastructure and facilities;"
  - (iii) "implement wealth-creating programs adapted to the situation of these target groups;"
  - (iv) "promote community development."
- Finding: The PRSP pillar addressing vulnerable groups "has received little attention from the Senegalese government over the past year."
- Staffs "found only scant references to actions or policies undertaken to improve the living conditions of vulnerable groups in Senegal during 2003."
- Recommendation: "This crucial shortcoming be remedied as soon as possible and covered in depth in the next Report."

### Monitoring and evaluation — institutional framework and indicators
- PRSP monitoring institutional framework includes:
  - "Interministerial Committee chaired by the Prime Minister"
  - "Steering Committee chaired by the Minister of Economy and Finance"
  - "PRSP Secretariat"
  - "regional committees"
- Developments over the past year:
  - The government "reinforced the PRSP Secretariat and created the regional committees."
  - Regional committees created "in each of the eleven regions, chaired by their respective governors."
  - The government "held the first meeting of the Steering Committee in June 2004."
  - The participatory process was strengthened by "the identification of focal points in sectoral ministries, responsible for monitoring the implementation of the Sector Operations Programs."
  - PRSP dissemination efforts included "a series of workshops attended by a variety of representative groups in Senegal."
- Remaining needs:
  - Regional committees "still need to become truly effective," requiring "the harmonization of sectoral strategies in each region."
  - Continued efforts needed to "report on a regular and transparent basis the PRSP results and outcomes to all concerned parties in Senegal."
- Indicators:
  - An agreed "first preliminary set of indicators" exists but there is "an urgent need to validate the list and report on the evolution of the selected indicators during the past few years compared to initial benchmarks and medium-term objectives."

### Conclusion and prioritized recommendations (next twelve months)
- Overall assessment: The first PRSP progress report "provides a fair and encouraging assessment of the first year implementation of the PRSP" and is "comprehensive, highlights the risks ahead, and points to areas for further improvements."
- Positive achievements: "Significant progress ... in strengthening the diagnosis of poverty," initiation of reforms on the first two PRSP pillars—"wealth creation and capacity building," and "sustained strong economic growth, prudent fiscal policy, progress with implementing the broad-ranging structural reform agenda, and a favorable outlook for the period 2004-06."
- Remaining weaknesses: Need to strengthen "fiscal transparency and procurement practices" and complete "reforms in the groundnut and electricity sectors."
- Staffs recommend special attention during the next twelve months to:
  - (i) "reforms aimed at removing obstacles to sustained growth in key strategic sectors such as groundnut and electricity;"
  - (ii) "the remedial actions to address weaknesses in public financial management that led to the breach of fiscal discipline and transparency in 2003;"
  - (iii) "the decentralization of resource allocation, since local governments are expected to receive gradually increasing responsibilities in delivering basic social services, notably in remote areas where poverty is the most acute;"
  - (iv) "a comprehensive review of the rationale for infrastructure projects in Dakar and in secondary cities, and a progress report on their implementation;"
  - (v) "efforts to strengthen the monitoring of progress towards the PRSP objectives and selected indicators consistent with the broader MDG objectives;"
  - (vi) "a better articulation of measures aimed at improving the living conditions of vulnerable groups."
- Final imperative: "It is imperative to develop a better understanding of the link between sectoral policies, investment projects and PRSP medium-term objectives."

*Source: IMF/World Bank assessments and the first annual PRSP progress report on Senegal (2003–05).*

### 1.      Senegal’s poverty reduction strategy paper (PRSP) was distributed to the

### Senegal’s poverty reduction strategy paper (PRSP) — First Annual PRSP Progress Report (covers 2003–05)

### Overview and main assessment
- PRSP was distributed to the Executive Boards of IDA and the IMF in October 2002, after endorsement by the Presidential Council in July 2002.
- The PRSP covers the period 2003–05.
- The joint staff assessment concluded that the policies contained in the PRSP provided an adequate framework for the country’s objective to fight poverty.
- The Executive Boards welcomed the PRSP in December 2002 as a sound basis for poverty reduction and concessional financing.
- The first annual PRSP progress report (the Report) provides: (i) progress since December 2002 focusing on main pillars and cross-sectoral themes; and (ii) perspectives for 2004.
- Overall assessment in the Report: first year implementation of the PRSP was adequate.

### Key macroeconomic outcomes (2003)
- Real GDP growth: 6.5 percent in 2003.
- Sectoral growth contributors: the secondary sector expanded by about 6 percent; the tertiary sector expanded by about 4 percent.
- External current account deficit (including current official grants): estimated at 6.5 percent of GDP in 2003, as against 6 percent in 2002.
- Tax/GDP ratio: increased to 18.2 percent of GDP.
- Overall fiscal balance: -1.4 percent of GDP in 2003.
- Basic fiscal balance: 0.6 percent of GDP in 2003.
- PRSP middle-case scenario fiscal assumptions: overall fiscal balance -0.5 percent of GDP; basic fiscal balance 1.4 percent of GDP.
- Inflation: consumer price inflation was virtually absent in 2003.
- Projected output growth expected for 2004-05: 6 percent (staffs recommend programming on the PRSP’s more conservative growth scenarios around 6 percent on average over 2004-05).
- PRSP optimistic growth scenario cited: 7 percent on average over 2003-05 (staffs consider this optimistic scenario not within reach in the near term).

### Fiscal execution, irregularities, and remedial actions
- Spending irregularities discovered in June 2004 revealed severe deficiencies in fiscal discipline and transparency.
- In 2003 the government committed public resources for infrastructure projects without the required budgetary allocation; contracts for these projects amounted to about 1 percent of GDP.
- Payment recording practice: public expenditure is recorded on a payment order basis; some projects executed in 2003 did not affect 2003 fiscal accounts because payment orders were issued only in 2004.
- If recorded on a commitment basis, the 2003 spending would have increased the fiscal deficits reported for 2003 by about ½ percent of GDP.
- Remedial actions begun by authorities:
  - This spending has been fully incorporated in the 2004 budget.
  - Authorities will identify budget lines for all planned infrastructure works in their next annual and three-year public investment programs.
  - Authorities committed to refrain from signing any contract before the required budget allocations are approved by parliament.
  - In consultation with the World Bank and the IMF, authorities will adopt measures to improve procurement practices, including curtailing the use of emergency procedures (without competitive tender), and revising procurement laws to remove loopholes.

### Poverty analysis and trends
- New household data from 2001/02 and a joint government–World Bank study provide improved analysis of poverty.
- Poverty estimates (based on 1994-95 and 2001 household surveys):
  - Share of population living in poverty decreased from 67.9 percent in 1994 (61.4 percent of households) to 57.1 percent in 2001 (48.5 percent of households).
- Geographic and perception details:
  - Decrease in poverty was larger in Dakar and other urban centers than in rural areas.
  - About two-thirds of households identify themselves as poor.
  - One-third of poor and non-poor alike felt poverty had substantially increased in their community over the last five years.
  - Half of the Senegalese population is hopeful that poverty will decrease in the next five years.
- Structural issues in poverty reduction:
  - Poverty is concentrated in rural areas, while government spending continues to be skewed to the central level, to urban areas, and to better-off households.
  - The system for transferring resources from the central government to local governments is inefficient and needs to be made simpler and more predictable.
  - Significant training and capacity building at the local levels are required.
  - Need to enhance development of new private activities, especially small and medium firms, through improved access to credit and commercial information.
- The Report provides limited information on policy initiatives targeting vulnerable groups in 2003; implementing measures to improve living conditions of these groups is highlighted as an important agenda item for year two.

### Sectoral policies — Wealth creation
- PRSP first pillar progress: improvements in the investment climate through tax, regulatory and administrative reforms; progress in structural reforms in water, telecommunication, and electricity sectors; delays in groundnut sector reforms.
- Investment and tax reforms:
  - Corporate income tax rate reduced from 35 to 33 percent.
  - For small enterprises, introduction of a single tax replacing income tax, value-added tax, patent contributions, and social security charges.
  - New investment code adopted in January 2004 broadened eligible sectors and streamlined investment incentives.
- Anticorruption: Parliament passed legislation for the creation of a National Anticorruption Committee in November 2003; committee was set up in May 2004.
- Groundnut sector:
  - Policy Letter for Development of the Groundnut Industry adopted in May 2003.
  - Tender for privatization of SONACOS launched January 2004; authorities expected conclusion by end-May 2004.
  - In June 2004 authorities received only one eligible bid for SONACOS; bid under negotiation given low level relative to independent valuation.
  - If bid is rejected, authorities envisage strengthening SONACOS’s financial position before launching a new privatization strategy in 2005.
- Electricity sector:
  - New Energy Sector Policy Letter adopted in March 2003.
  - SENELEC’s operating cash-flows improved in 2003 with higher collection rates and lower operating costs.
  - Private independent producer (PIP) selected to increase generation capacity by 60MW (equivalent to about 13 percent).
  - Recent decision to cut electricity prices by 5 percent will weaken SENELEC’s financial performance in 2004.
- Staff recommendations for sectoral reporting:
  - Next Report should discuss actions and outcomes in other strategic sectors listed in the PRSP: non-groundnut agriculture, fisheries, industries, tourism, and SMEs.
  - The reform of the Mining Code needs to be addressed.
  - Next Report should discuss how large infrastructure projects (les grands travaux du Chef de l’État such as the new airport and the Dakar-Thiès Highway), and infrastructure projects in Dakar and secondary cities, fit into the poverty reduction strategy.

### Sectoral policies — Capacity building and basic social services
- Government recruitment strategy: recruitment of 15,000 civil servants during 2003-05 to enhance capacity in PRSP sectors including education, health, justice, tax collection, and security.
- Public expenditure management reforms:
  - Two action plans approved supporting public expenditure management reforms (following CFAA and CPAR recommendations) and implementation initiated with donor support.
  - Senegal now meets seven of 16 HIPC benchmark indicators (up from four in 2001) per the joint IMF and World Bank’s HIPC Assessment and Action Plan (AAP).
  - Most important improvements: public expenditure tracking in PRSP priority areas, internal controls, and budget preparation.
  - Significant upgrading still needed in internal and external control of budget execution and state-owned enterprises.
- Authorities should continue efforts to improve transparency, mobilize financial resources, and better allocate spending at central and local government levels.

### Implementation challenges, risks, and priority actions
- Main risks to successful PRSP implementation:
  - Exogenous shocks: drought in 2002; recent sharp increase in oil prices.
  - Endogenous difficulties: implementing structural reforms, particularly governance and the groundnut sector.
- Measures to mitigate risks:
  - Continued efforts to diversify the economy (key element of wealth creation pillar).
  - Donor assistance to cope with exogenous shocks.
  - Tackling endogenous risks through:
    - Sustained efforts to strengthen public financial management, particularly fiscal transparency and procurement practices, at central and local government levels.
    - Improved management of resources transferred to local governments in line with decentralization strategy.
    - Completing reforms in the groundnut and electricity sectors.
    - Further work on integrated sector strategies that link institutional reforms to investment programs.
    - Increasing institutional capacity dedicated to improving governance.
- Other priorities highlighted:
  - Improve fiscal transparency and procurement practices.
  - Strengthen links between policy implementation and PRSP objectives, notably through more and efficient decentralization.
  - Better align public expenditures with PRSP priorities to achieve medium- and long-term targets, especially to improve living conditions of vulnerable groups.
  - Identify binding constraints to improve absorptive capacity in public and private sectors and propose remedial measures.
  - Strengthen monitoring and evaluation through full implementation of institutional framework and periodic reporting on quantitative indicators measuring progress toward PRSP objectives and the Millennium Development Goals (MDGs).

*Source: IMF/World Bank assessments and the first annual PRSP progress report on Senegal (2003–05).*

### 19.      The allocation of spending towards social sectors continued to improve as both

### _cr05115 - 19.      The allocation of spending towards social sectors continued to improve as both

### Allocation of spending to social sectors — overall findings
- The shares of education and health expenditures in total public expenditures were reported as "26.5 percent".
- The shares of education and health expenditures in GDP were reported as "6.0 percent".
- These ratios "increased (by about 0.5 percent) in 2003".
- HIPC resources amounting to "US$153 million in 2000-03" were spent on capital expenditures in social sectors and contributed to this positive trend.
- The aggregate increase masks diverging sectoral trends.

### Education and health sectoral trends (2000-03)
- Education spending:
  - Share of total spending increased from "18.3" to "21.3 percent of total spending".
  - Share of GDP increased from "3.6" to "4.8 percent of GDP".
- Health spending:
  - Share of total spending contracted from "6.4" to "5.1 percent of total spending".
  - Share of GDP contracted from "1.3" to "1.2 percent of GDP".
- Contributing factor to health sector underperformance: "weak implementation capacity in this sector, both at the central and local levels."

### Health sector performance, MDGs, and strategy
- Despite substantial financial resources, contribution to reaching the MDGs has been "uneven", notably in the health sector.
- Progress in "immunization coverage and maternal health programs" was "insufficient for Senegal to attain two objectives that had been set as triggers for its completion point under the enhanced HIPC Initiative."
- The authorities are "developing a new health sector strategy with donors" to meet medium-term objectives; the strategy:
  - Is designed to address "both sectoral and cross-cutting issues in the health sector."
  - Will "target a few specific activities that are expected to produce better outcomes for the Senegalese population living in unhealthy conditions."
- Recommendation: "It would be useful that the next Report provides a detailed account of the implementation of the new strategy in the health sector."

### Decentralization, transfer problems, and service delivery
- Transfers of resources to local communities (which have increasing responsibilities for delivering social services) remain "problematic" despite some progress.
- Persisting problems include:
  - "the slowness of these transfers"
  - "the absence of information about their allocation"
- These problems "continue to explain the relatively poor performance in the social sectors."
- Recommendation: The next Report should include "a more detailed analysis of the government’s decentralization strategy for the delivery of basic social services in the regions," including whether "the assignment of responsibilities to local communities is clear and in line with their administrative capacity."

### Policies for vulnerable groups
- Vulnerable groups identified: "children, handicapped, elderly, and refugees."
- PRSP objectives for vulnerable groups:
  - (i) "improve the social status of vulnerable and marginalized groups;"
  - (ii) "facilitate the access of the indigent populations to basic services, infrastructure and facilities;"
  - (iii) "implement wealth-creating programs adapted to the situation of these target groups;"
  - (iv) "promote community development."
- Finding: The PRSP pillar addressing vulnerable groups "has received little attention from the Senegalese government over the past year."
- Staffs "found only scant references to actions or policies undertaken to improve the living conditions of vulnerable groups in Senegal during 2003."
- Recommendation: "This crucial shortcoming be remedied as soon as possible and covered in depth in the next Report."

### Monitoring and evaluation — institutional framework and indicators
- PRSP monitoring institutional framework includes:
  - "Interministerial Committee chaired by the Prime Minister"
  - "Steering Committee chaired by the Minister of Economy and Finance"
  - "PRSP Secretariat"
  - "regional committees"
- Developments over the past year:
  - The government "reinforced the PRSP Secretariat and created the regional committees."
  - Regional committees created "in each of the eleven regions, chaired by their respective governors."
  - The government "held the first meeting of the Steering Committee in June 2004."
  - The participatory process was strengthened by "the identification of focal points in sectoral ministries, responsible for monitoring the implementation of the Sector Operations Programs."
  - PRSP dissemination efforts included "a series of workshops attended by a variety of representative groups in Senegal."
- Remaining needs:
  - Regional committees "still need to become truly effective," requiring "the harmonization of sectoral strategies in each region."
  - Continued efforts needed to "report on a regular and transparent basis the PRSP results and outcomes to all concerned parties in Senegal."
- Indicators:
  - An agreed "first preliminary set of indicators" exists but there is "an urgent need to validate the list and report on the evolution of the selected indicators during the past few years compared to initial benchmarks and medium-term objectives."

### Conclusion and prioritized recommendations (next twelve months)
- Overall assessment: The first PRSP progress report "provides a fair and encouraging assessment of the first year implementation of the PRSP" and is "comprehensive, highlights the risks ahead, and points to areas for further improvements."
- Positive achievements: "Significant progress ... in strengthening the diagnosis of poverty," initiation of reforms on the first two PRSP pillars—"wealth creation and capacity building," and "sustained strong economic growth, prudent fiscal policy, progress with implementing the broad-ranging structural reform agenda, and a favorable outlook for the period 2004-06."
- Remaining weaknesses: Need to strengthen "fiscal transparency and procurement practices" and complete "reforms in the groundnut and electricity sectors."
- Staffs recommend special attention during the next twelve months to:
  - (i) "reforms aimed at removing obstacles to sustained growth in key strategic sectors such as groundnut and electricity;"
  - (ii) "the remedial actions to address weaknesses in public financial management that led to the breach of fiscal discipline and transparency in 2003;"
  - (iii) "the decentralization of resource allocation, since local governments are expected to receive gradually increasing responsibilities in delivering basic social services, notably in remote areas where poverty is the most acute;"
  - (iv) "a comprehensive review of the rationale for infrastructure projects in Dakar and in secondary cities, and a progress report on their implementation;"
  - (v) "efforts to strengthen the monitoring of progress towards the PRSP objectives and selected indicators consistent with the broader MDG objectives;"
  - (vi) "a better articulation of measures aimed at improving the living conditions of vulnerable groups."
- Final imperative: "It is imperative to develop a better understanding of the link between sectoral policies, investment projects and PRSP medium-term objectives."

*Source: _cr05115 - 19.      The allocation of spending towards social sectors continued to improve as both*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2005/_cr05115.pdf_