IMF Staff Concludes Visit to Senegal

IMF News, March 14, 2023

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A team from the International Monetary Fund (IMF), led by Mr. Edward Gemayel, conducted a mission during March 8-14, 2023, to take stock of recent economic developments, update macroeconomic projections, and discuss potential options for a new IMF-supported program.
The team met with Prime Minister Amadou Ba; Mr. Mamadou Moustapha Ba, Minister of Finance and Budget; Ms. Oulimata Sarr, Minister of Economy, Planning and Cooperation; Mr. Ahmadou Al Aminou Lo, the National Director of the BCEAO; senior government officials, development partners, representatives of the business community, and civil society.

Real GDP growth is estimated at about 4 percent in 2022, against 4.7 percent expected.
Average inflation reached 9.7 percent, a multi-decade high, largely on account of food inflation.
The slowdown reflected a disappointing harvest season and a contraction in industrial production.
Fiscal revenues are estimated to have slightly underperformed.
Current spending exceeded the target on the back of a higher public wage bill.
Energy subsidies reached the record-level of CFAF 692 billion (4 percent of GDP).
Investment spending was cut to keep the fiscal deficit in check.
Public debt is estimated at 75.0 percent of GDP, of which 67.5 percent of GDP is for the central government.
The current account deficit significantly widened on account of higher imports and debt interest payment.

For 2023, economic activity is projected to rebound, albeit at a slower pace than initially envisaged.
Inflation is projected to moderate to 5 percent in 2023.
The medium-term outlook remains favorable and would benefit from both the start of oil and gas production and the implementation of structural reforms aimed at strengthening private sector participation in economic activity in the context of the phase 3 of the National Development Plan (PSE).

Early signs of tighter financing conditions in the regional bond market call for vigilance and contingency planning.
Policy recommendations:
- Strengthen domestic revenue mobilization.
- Streamline nonpriority spending to ease financing pressures while preserving debt sustainability.
Negotiations for a new IMF-supported program are expected to begin on the sidelines of the IMF and WB Spring Meetings and will continue in Dakar in late April.

Press Release No. 23/71. March 14, 2023. International Monetary Fund.