Press Release No. 23/146

IMF Reaches Staff-Level Agreement with Senegal on an Extended Fund Facility (EFF) and Extended Credit Facility (ECF), combined with the Resilience and Sustainability Facility (RSF)

May 11, 2023

• IMF staff and the Senegalese authorities have reached a staff-level agreement on economic and financial policies to be supported by a new 36-month financing arrangement under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) of about US$ 1.526 billion, combined with the Resilience and Sustainability Facility (RSF) of about US$ 327.1 million. The staff level agreement is subject to IMF Management approval and consideration by the Executive Board.
• Policy priorities under the EFF/ECF program include reducing debt vulnerabilities by embarking on a fiscal consolidation, strengthening governance and the anti-money laundering and financing of terrorism (AML/CFT) framework, and delivering a more inclusive and job-rich growth.
• The RSF will support Senegal's climate change mitigation objectives, accelerate the country’s climate change adaptation, and support work to mainstream climate change considerations into the budget process.

At the end of the mission, Mr. Gemayel issued the following statement:

“The IMF team has reached a staff-level agreement on policies and reforms under a 36-month Extended Fund Facility (EFF) and Extended Credit Facility (ECF) with access of SDR 1.132 billion (or about US$1.526 billion, representing 350 percent of quota, combined with the Resilience and Sustainability Facility of SDR 242.7 million (or about US$327.1 million, representing 75 percent of quota ). The financing arrangement under the EFF/ECF will provide a policy anchor in a challenging external and domestic environment and support the authorities’ efforts to advance reforms to build economic resilience. The RSF will support Senegal’s efforts to strengthen its resilience to the effects of climate change. The staff-level agreement is subject to approval by the IMF Management and consideration by the Executive Board. Consideration by the Board is tentatively scheduled for mid-June 2023.

“In 2022, a confluence of external shocks largely linked to the war in Ukraine have hindered the post-Covid-19 recovery, strained public finances, widened external current account deficit, increased debt levels, and eroded regional international reserves. For 2023, global economic slowdown and tighter financial conditions will weigh down on the expected pickup in economic activity. Non-hydrocarbon GDP growth is now projected at 5.3 percent in 2023 (compared to an initial projection of 6 percent). Nevertheless, should oil and gas production start in the fourth quarter of this year, total GDP growth could exceed 8 percent in 2023. Price pressures are abating but remain elevated. Financial conditions in the regional market have substantially tightened.

“The EFF/ECF arrangement will support the authorities’ efforts to safeguard debt sustainability and rebuild depleted buffers. In this regard, the authorities have reiterated their commitments to bringing the fiscal deficit down to 3 percent of GDP by 2025. Achieving such goal will require further revenue mobilization, including streamlining tax exemptions, and phasing out regressive and elevated energy subsidies. Other policy priorities under the EFF/ECF include strengthening governance and the anti-money laundering and financing of terrorism framework (AML/CFT), and delivering a more inclusive and job-rich growth, by strengthening social safety nets, promoting gender equality, and improving the business environment.

“The RSF-supported reforms will help Senegal achieve its National Determined Contribution (NDC) commitments under the 2015 Paris agreement. Reforms will focus on climate mitigation and adaptation measures, and on integrating climate-related considerations into budget preparation, execution, and monitoring.

“The IMF team wishes to thank the authorities and other counterparts for their excellent cooperation and candid and constructive discussions during the mission and reaffirms the IMF’s support to Senegal.”

During the visit, the team met with his Excellency President Macky Sall, head of state; Prime Minister, Amadou Ba; Minister of Armed Forces, Mr. Sidiki Kaba; Minister of Justice, Mr. Ismaïla Madior Fall; Minister of Home Affairs, Mr. Antoine Felix Diome; Minister of Finance and Budget, Mr. Mamadou Moustapha Ba; Minister of Women, Family and Child Protection, Ms. Fatou Diané; the Deputy Governor of the BCEAO, Mr. Norbert Toe; the National Director of the BCEAO, Mr. Ahmadou Al Aminou Lo; senior government officials; representatives of the business community and civil society, and development partners.