IMF Executive Board Completes the Fifth Review Under the Policy Coordination Instrument, and the Second Reviews under the Stand-By Credit Facility and the Stand-By Arrangement, and Request for Augmentation for Senegal

IMF News, June 22, 2022

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Canonical URL: IMF Executive Board Completes the Fifth Review Under the Policy Coordination Instrument, and the Second Reviews under the Stand-By Credit Facility and the Stand-By Arrangement, and Request for Augmentation for Senegal

The Executive Board completed the Fifth Review under the Policy Coordination Instrument (PCI) and the Second Reviews under the Stand-by Arrangement (SBA) and the Arrangement under the Standby Credit Facility (SCF).
The completion of the reviews enables the immediate release of about US$215.78 million (SDR 161.82 million) to Senegal.
The Board approved an augmentation of access and a waiver of the non-observance of a performance criterion, and the modification of a performance criterion and quantitative targets.
Total access under the blended 18-month SBA/SCF arrangements approved in June 2021 was increased by about US$172.6 million (SDR 129.44 million), from about US$650 million (SDR 453 million) at the time of approval, to about US$776.67 million (SDR 582.44 million).

Growth this year was revised down to about 5 percent.
Inflation is expected to reach 5.5 percent, driven by higher food and energy prices.
The authorities adopted a supplementary budget in May 2022 to accommodate temporary and targeted measures to support the most vulnerable and to stabilize food prices consumed by lower and middle-income households.
The new spending incorporated in the supplementary budget will bring the fiscal deficit this year 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.
Despite near-term headwinds, the outlook points to robust economic activity over the medium term provided appropriate policies are implemented; however, the outlook is subject to significant uncertainty and risks are tilted to the downside.

Soaring global fuel and food prices, compounded by the war in Ukraine.
The freeze on trade with Mali due to sanctions by the Economic Community of West African States (ECOWAS).
A protracted war in Ukraine.
A prolonged freeze on trade with Mali.
A flare-up of the COVID-19 pandemic.
A deterioration of the regional security situation.
Rising social demands.
A severe tightening of external financial conditions.
The possible impact of adverse climate conditions.

The authorities’ fiscal policy response appropriately supports vulnerable households through temporary and targeted measures and a relaxation of the fiscal deficit.
Reducing debt vulnerabilities will require steadfast implementation of the 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 an important fiscal risk.
- The recent increase of selective energy prices, carefully designed to protect the most vulnerable, is a step in the right direction to mitigate this risk.
- Over the medium-term, a gradual elimination of energy subsidies is a priority, which should be accompanied by measures to strengthen existing social safety nets.
Fiscal and external resilience should be strengthened through:
- An accelerated implementation of the domestic revenue mobilization strategy.
- Prudent debt management.
- Enhanced spending efficiency, notably by reducing recourse to single source procurement.
Finalizing the fiscal framework to manage oil and gas revenues and improving the business environment to attract private investment and create jobs remain priorities.
Financial system vulnerabilities need monitoring, and deficiencies in the AML/CFT framework need to be tackled with greater urgency to avoid possible negative macroeconomic and reputational repercussions.

Immediate release enabled: US$215.78 million (SDR 161.82 million)
Augmentation of access: about US$172.6 million (SDR 129.44 million)
Original total access (June 2021): about US$650 million (SDR 453 million)
New total access: about US$776.67 million (SDR 582.44 million)
Revised growth this year: about 5 percent
Expected inflation: 5.5 percent
Fiscal deficit after supplementary budget: 6.2 percent of GDP
Initial budget fiscal deficit: 4.8 percent of GDP
Public debt expected in 2022: 75 percent of GDP
Medium-term fiscal consolidation target: fiscal deficit of 3 percent of GDP by 2024

IMF Press Release No. 22/221, June 22, 2022. IMF Communications Department.