IMF Executive Board Completes Sixth Review Under the Policy Support Instrument (PSI) for Senegal
IMF News, July 2, 2018
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- IMF Executive Board Completes Sixth Review Under the Policy Support Instrument (PSI) for Senegal
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- Published: July 2, 2018
Program purpose and status
- The PSI for Senegal was approved on June 24, 2015.
- The Executive Board completed the sixth review of Senegal’s economic performance under the PSI and approved the authorities’ request for waiver of non-observance and modification of assessment criteria.
- The program aims to implement economic policies and structural reforms needed to sustain strong growth and ongoing fiscal consolidation and to meet the regional WAEMU fiscal criteria.
Macroeconomic performance
- Growth reached 7.2 percent in 2017.
- Inflation remained low (no numerical inflation figure provided in the source).
- The recent rebasing of GDP has increased nominal levels by about 30 percent.
- The fiscal deficit was contained to 3 percent of GDP in 2017 but was revised upwards for 2018.
Fiscal developments and public finances
- Public finances deteriorated, driven mainly by unchanged prices for domestic energy products in the face of higher global energy prices.
- The 2018 fiscal deficit was revised upwards to 3.5 percent.
- New fiscal measures somewhat offset the deterioration in public finances.
- Progress reported in reducing weaknesses in treasury operations and containing additional financing needs.
- A timebound plan to address accumulated energy sector obligations is needed.
- Improvements in debt management and debt coverage are needed to support fiscal sustainability.
Policy recommendations and authorities’ commitments
- Authorities remain committed to PSI fiscal targets.
- Over the medium term, the following measures were identified to create space to finance development needs sustainably:
- Increased revenues through improving administration and lowering tax expenditures.
- Improved public investment efficiency.
- Energy price reform.
- Further implementation of structural reforms and efforts to attract private investment are needed to consolidate high growth.
- Specific impediments to address include:
- Access to credit.
- Cost of energy.
- Taxation issues.
- Business environment improvements, including further development of special economic zones (three of which are now operational).
Risks and vulnerabilities
- Risks to Senegal’s economy have increased but remain manageable.
- Domestic risks: Lack of progress on structural fiscal issues such as revenue mobilization, energy subsidies, and reforms to reduce the treasury’s additional financing needs could undermine fiscal sustainability.
- External risks: Security risks in the region could adversely affect investment and growth.
Official statement highlights (Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair)
- “Senegal’s reform efforts, as laid out in the Plan Sénégal Emergent (PSE) and aided by the Policy Support Instrument (PSI), have helped to increase growth while maintaining economic stability.”
- Emphasis on consolidating high growth by implementing structural reforms and attracting private investment, with opportunities for all.
Press Release No. 18/271, July 2, 2018, IMF Communications Department.
