IMF Executive Board Approves for Senegal a US$442 Million Disbursement Under the Rapid Credit Facility and Purchase Under the Rapid Financing Instrument
IMF News, April 13, 2020
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- Published: April 13, 2020
Approval and Financing Details
- The Executive Board approved emergency financial assistance to Senegal totaling US$442 million to address urgent balance-of-payments and fiscal needs related to the COVID-19 pandemic.
- Financing composition:
- Purchase under the Rapid Financing Instrument (RFI): SDR 215.7 million (about US$294.7 million, 67 percent of quota).
- Disbursement under the Rapid Credit Facility (RCF): SDR 107.9 million (US$147.4 million, 33 percent of quota).
Economic Impact of COVID-19 and Short-term Outlook
- The COVID-19 pandemic has substantially reduced economic activity in Senegal, with particularly hard-hit sectors including tourism, transport, construction, and retail.
- The pandemic’s impact in Europe is translating into lower remittances to Senegal.
- The short-term economic outlook has deteriorated significantly, with large uncertainties about the duration and spread of the pandemic.
Authorities’ Response and Use of IMF Financing
- Authorities’ immediate measures include:
- Increasing health spending.
- Providing targeted support to vulnerable households and firms, including through food aid, suspension of utility bill payments for the poorest, and targeted tax relief.
- Role of IMF financing:
- Provide much-needed liquidity to support the authorities’ response.
- Help preserve fiscal space.
- Catalyze further assistance from the international community, preferably in the form of grants.
- The IMF will continue to monitor Senegal’s situation closely and stands ready to provide policy advice and further support as needed.
Statement by Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair
- Key points from the statement:
- The COVID-19 pandemic is creating an urgent balance-of-payments and fiscal financing need for Senegal.
- The IMF’s emergency financing under the RCF and RFI will provide liquidity and could catalyze further donor assistance, preferably grants.
- A temporary widening of the budget deficit is appropriate to mitigate the health and economic impact of the pandemic.
- Macroeconomic policies should continue to be guided by the objectives of the current Policy Coordination Instrument (PCI) to the extent possible.
- Once the crisis abates, a gradual return to the budget deficit target of 3 percent of GDP, in line with regional fiscal rules, is necessary to preserve external and debt sustainability.
- Additional concessional donor support will be critical to close the remaining financing gap, ease the adjustment burden, and preserve Senegal’s economic achievements.
- Ensuring that disbursed funds are used in a well-targeted, cost-effective and transparent manner remains imperative.
Selected Economic and Financial Indicators (2018–2022) — Key Figures
- GDP at constant prices (annual percentage change):
- 2018: 6.4
- 2019: 5.3
- 2020 (Prel.): 3.0
- 2021 (Proj.): 5.5
- 2022 (Proj.): 8.0
- Non-agriculture GDP (annual percentage change):
- 2018: 6.0
- 2019: 5.8
- 2020 (Prel.): 2.7
- 2021 (Proj.): 5.7
- 2022 (Proj.): 8.3
- GDP deflator:
- 2018: -0.5
- 2019: 1.7
- 2020 (Prel.): 2.0
- 2021 (Proj.): 1.4
- Consumer prices, annual average:
- 2018: 0.5
- 2019: 1.0
- 2020 (Prel.): 1.9
- 2021 (Proj.): 1.5
- Exports, f.o.b. (CFA francs) — annual percentage change:
- 2018: 17.8
- 2019: 13.5
- 2020 (Prel.): -3.7
- 2021 (Proj.): 12.3
- 2022 (Proj.): 27.1
- Imports, f.o.b. (CFA francs) — annual percentage change:
- 2018: 16.0
- 2019: 9.4
- 2020 (Prel.): -7.9
- 2021 (Proj.): 13.2
- 2022 (Proj.): 9.5
- Broad money (changes in percent of beginning-of-year broad money):
- 2018: 14.2
- 2019: 8.2
- 2020 (Prel.): 2.9
- Government financial operations (Percent of GDP):
- Revenue:
- 2018: 18.8
- 2019: 20.2
- 2020 (Prel.): 19.3
- 2021 (Proj.): 19.5
- 2022 (Proj.): 20.3
- Total expenditure:
- 2018: 22.4
- 2019: 24.1
- 2020 (Prel.): 25.0
- 2021 (Proj.): 22.8
- 2022 (Proj.): 23.3
- Net lending/borrowing (Overall Balance) excluding grants:
- 2018: -5.6
- 2019: -5.5
- 2020 (Prel.): -7.8
- 2021 (Proj.): -5.3
- 2022 (Proj.): -5.0
- Net lending/borrowing (Overall Balance) including grants:
- 2018: -3.6
- 2019: -3.9
- 2020 (Prel.): -3.3
- 2021 (Proj.): -3.0
- Primary fiscal balance:
- 2018: -1.7
- 2019: -1.9
- 2020 (Prel.): -3.5
- 2021 (Proj.): -1.2
- 2022 (Proj.): -1.1
- Current account balance (official transfers included) — Percent of GDP:
- 2018: -8.8
- 2019: -9.1
- 2020 (Prel.): -11.3
- 2021 (Proj.): -11.4
- 2022 (Proj.): -8.5
- Gross domestic investment:
- 2018: 32.5
- 2019: 33.4
- 2020 (Prel.): 30.4
- 2021 (Proj.): 33.3
- Gross national savings:
- 2018: 23.7
- 2019: 24.3
- 2020 (Prel.): 19.1
- 2021 (Proj.): 21.9
- 2022 (Proj.): 24.9
- Total public debt:
- 2018: 62.1
- 2019: 64.2
- 2020 (Prel.): 67.4
- 2021 (Proj.): 67.6
- 2022 (Proj.): 66.5
- External public debt:
- 2018: 48.1
- 2019: 52.9
- 2020 (Prel.): 54.2
- 2021 (Proj.): 53.9
- 2022 (Proj.): 51.8
- Memorandum items:
- Gross domestic product (CFAF billions):
- 2018: 12,907
- 2019: 13,815
- 2020 (Prel.): 14,516
- 2021 (Proj.): 15,580
- 2022 (Proj.): 17,074
- Gross domestic product (USD billions):
- 2018: 23.2
- 2019: 23.6
- National Currency per U.S. Dollar (Average):
- 2018: 555
- 2019: 586
Policy Recommendations and Financing Needs
- Allow a temporary widening of the budget deficit to address health and economic impacts of the pandemic.
- Continue to be guided by the Policy Coordination Instrument (PCI) objectives where possible.
- Gradually return to a budget deficit target of 3 percent of GDP once the crisis abates, consistent with regional fiscal rules.
- Seek additional concessional donor support, preferably in grants, to close financing gaps and ease adjustment burdens.
- Ensure disbursed funds are well-targeted, cost-effective, and transparent.
Source: IMF press release, April 13, 2020 — IMF Executive Board approval for emergency financing to Senegal.
