IMF Executive Board Approves Three-Year Policy Coordination Instrument for Senegal
IMF News, January 10, 2020
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- Published: January 10, 2020
Overview
- On January 10, 2020, the Executive Board of the International Monetary Fund (IMF) approved a new three-year Policy Coordination Instrument (PCI) for Senegal.
- The PCI involves no use of IMF resources; successful completion of program reviews (on a semi-annual fixed schedule) would help signal Senegal’s commitment to continued strong economic policies and structural reforms.
- The PCI will build on lessons from previous IMF-supported programs and aims to support the authorities’ efforts to consolidate macroeconomic stability and foster sustained and inclusive growth.
Executive Board Assessment (Tao Zhang, Deputy Managing Director and Acting Chair)
- “Senegal’s economic performance during the first phase of the Plan Senegal Emergent has been strong. Growth has been robust, buoyed by favorable external conditions and significant public investment, in the context of an improving business environment. Although public debt has increased and the current account deficit has widened, the outlook remains favorable, provided the authorities follow through with their comprehensive reform strategy and measures to consolidate macroeconomic stability.”
- “The authorities’ economic program supported by the Policy Coordination Instrument (PCI) focuses on achieving high, sustainable, and inclusive growth, consolidating macroeconomic stability through prudent fiscal policy and sound debt management, and managing the oil and gas sector in a transparent manner. The PCI will provide an appropriate framework for a close policy dialogue and signal policy priorities and reform commitments to development partners.”
- “The reform agenda’s focus on promoting private sector‑led and inclusive growth is welcome. Policies to support private sector development will need to be well‑targeted and efficient to achieve the program’s objectives.”
- “Fiscal policy will be anchored by the WAEMU convergence criterion to limit the fiscal deficit to 3 percent of GDP. Further progress to better assess and contain fiscal risks is needed, including by clearing unmet obligations from 2017 and 2018, improving the recording and monitoring of arrears, eliminating below‑the‑line operations, and better managing subsidies.”
- “Enhanced domestic revenue mobilization and expenditure efficiency will be essential to create further fiscal space. The medium‑term revenue strategy appropriately targets an increase in the tax‑to‑GDP ratio to 20 percent of GDP by 2023.”
- “Future oil and gas production is likely to have substantial economic benefits. The government’s strong commitment to setting up a transparent framework to manage oil and gas revenues is welcome.”
Recent Economic Developments
- Economic growth averaged 6.5 percent over the past five years, boosted by public investment under phase I of the “Plan Sénégal Émergent” (PSE) and buoyant private consumption.
- Economic growth is estimated at 6 percent in 2019 and inflation remains low at 1.3 percent for the 12-months period ending in October.
- The current account deficit widened in 2018 to 8.8 percent of GDP owing to higher energy and capital goods imports.
- High public financing needs led to a rapid increase in public debt and a widening of the current account deficit.
- The economic outlook remains favorable: after slowing somewhat in 2019, growth is expected to accelerate to 7 percent in 2020-21, supported by the second phase of the PSE, robust activity in agriculture and services and increasing hydrocarbon-related investments, which would also lead to a temporary widening of the current account deficit to about 11 percent of GDP.
- Risks to the outlook include rising security threats in the region, increasing trade barriers, and large swing in energy prices.
Program Summary and Reform Priorities
- The PCI-aligned program is articulated around three main pillars:
- (i) achieving high, sustainable, and inclusive growth;
- (ii) consolidating macroeconomic stability through prudent fiscal policy, including increasing revenues and spending efficiency, and sound debt management;
- (iii) managing the oil and gas sector in a sustainable and transparent manner.
- Reform commitments to promote inclusive growth include:
- improving the judicial system;
- improving the skill-set of the workforce;
- improving access to land and credit;
- improving the functioning of the labor market;
- improving financial inclusion.
- Fiscal policy aims:
- Target a 3 percent of GDP deficit throughout the program period, in line with the WAEMU convergence criterion.
- A medium-term domestic revenue mobilization strategy is being developed with the objective to increase the tax-to-GDP ratio to 20 percent of GDP by 2023.
- Oil and gas governance:
- Authorities aim to set up a strong and transparent governance framework for the hydrocarbon sector; both the legal and fiscal framework are in the process of being updated in line with international best practices.
Selected Economic and Financial Indicators (2017–2024) — Key Figures (as presented)
- GDP at constant prices (annual percentage change)
- 2017: 7.1
- 2018: 6.7
- 2019: 6.0
- 2020: 6.8
- 2021: 7.0
- 2022: 8.4
- 2023: 11.6
- 2024: 8.0
- GDP deflator
- 2017: 0.6
- 2018: 1.1
- 2019: 1.8
- 2020: 1.2
- 2021: 2.4
- 2022: 2.3
- Consumer prices
- Annual average 2017: 1.3
- Annual average 2018: 0.5
- Annual average 2019: 1.0
- Annual average 2020: 1.5
- End of period 2017: -0.7
- End of period 2018: 2.0
- External sector (selected)
- Exports, f.o.b. (CFA francs): 2017: 12.0; 2018: 10.0; 2019: 13.8; 2020: 13.4; 2021: 24.0; 2022: 37.0; 2023: 10.1
- Imports, f.o.b. (CFA francs): 2017: 21.2; 2018: 13.5; 2019: 7.8; 2020: 11.4; 2021: 10.8; 2022: 6.2; 2023: 8.6; 2024: 11.3
- Export volume: 2017: 7.9; 2018: 13.6; 2019: 28.9; 2020: 41.6
- Import volume: 2017: 19.0; 2018: 11.7; 2019: 7.5; 2020: 10.3; 2021: 12.3; 2022: 6.5; 2023: 9.5; 2024: 9.7
- Terms of trade ("–" = deterioration): 2017: -1.3; 2018: 0.4; 2019: 1.4; 2020: -0.8; 2021: 2.6; 2022: -3.5; 2023: -2.5; 2024: -0.2
- Monetary and credit indicators (changes in percent of beginning-of-year broad money)
- Broad money: 2017: 9.2; 2018: 14.2; 2019: 9.1
- Net domestic assets: 2017: 4.8; 2018: 4.9
- Credit to the government (net): 2017: 3.4; 2018: 3.0
- Credit to the economy (net): 2017: 12.9; 2018: 4.4
- Government financial operations (Percent of GDP)
- Revenue: 2017: 19.5; 2018: 18.6; 2019: 20.3; 2020: 20.7; 2021: 21.5; 2022: 22.0; 2023: 22.7; 2024: 23.0
- Grants: 2017: 2.2; 2018: 1.9; 2019: 1.6
- Total expenditure: 2017: 22.5; 2018: 22.2; 2019: 23.7; 2020: 24.5; 2021: 25.0; 2022: 25.7; 2023: 26.0
- Net lending/borrowing (Overall Balance) excluding grants: 2017: -5.2; 2018: -5.6; 2019: -5.7; 2020: -4.9; 2021: -4.8; 2022: -4.7
- Net lending/borrowing (Overall Balance) including grants: 2017: -3.0; 2018: -3.6; 2019: -3.7
- Primary fiscal balance: 2017: -1.1; 2018: -1.6; 2019: -1.8; 2020: -0.9; 2021: -1.5
- Savings and investment (Percent of GDP)
- Current account balance (official transfers included): 2017: -7.3; 2018: -8.8; 2019: -9.2; 2020: -10.7; 2021: -10.5; 2022: -7.7; 2023: -3.8
- Current account balance (official transfers excluded): 2017: -7.8; 2018: -9.0; 2019: -9.4; 2020: -10.9; 2021: -8.0; 2022: -4.1; 2023: -4.0
- Gross domestic investment: 2017: 29.7; 2018: 30.1; 2019: 30.7; 2020: 32.2; 2021: 35.2; 2022: 35.0; 2023: 35.6; 2024: 36.6
- Government investment (Percent of GDP): 2017: 7.7; 2018: 8.5; 2019: 9.4
- Nongovernment investment (Percent of GDP): 2017: 22.9; 2018: 23.2; 2019: 26.8; 2020: 26.2; 2021: 26.4; 2022: 27.2
- Gross national savings: 2017: 22.4; 2018: 24.7; 2019: 27.3; 2020: 31.9; 2021: 32.9
- Public debt (Percent of GDP)
- Total public debt: 2017: 61.2; 2018: 61.4; 2019: 63.7; 2020: 61.9; 2021: 60.8; 2022: 59.6; 2023: 56.0; 2024: 54.7
- Domestic public debt: 2017: 21.4; 2018: 13.0; 2019: 10.2; 2020: 9.8; 2021: 10.9; 2022: 12.7
- External public debt: 2017: 39.8; 2018: 48.5; 2019: 53.5; 2020: 51.9; 2021: 51.0; 2022: 48.8; 2023: 44.5; 2024: 42.0
- Total public debt service (Percent of government revenue): 2017: 28.3; 2018: 42.7; 2019: 29.8; 2020: 22.8; 2021: 19.6; 2022: 22.6
- Memorandum items
- Gross domestic product (CFAF billions): 2017: 12,159; 2018: 13,046; 2019: 13,983; 2020: 15,085; 2021: 16,421; 2022: 18,015; 2023: 20,573; 2024: 22,722
- Gross domestic product (USD billions): 2017: 20.9; 2018: 23.5
- National Currency per U.S. Dollar (Average): 2017: 581; 2018: 555
- Notes on data reporting:
- Based on new national accounts rebased to 2014.
- Reflects reclassification of public investment.
- Starting in 2017 debt level, debt service and government revenue include preliminary data covering the broader public sector.
- Domestic debt includes government securities issued in local currency and held by WAEMU residents.
IMF Communications Department — Press Release No. 20/6 (January 10, 2020)
