Senegal: Sixth Review Under the Policy Coordination Instrument and Third Reviews Under the Stand-By Arrangement and the Arrangement Under the Stand-By Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for Senegal

IMF Staff Country Reports, January 18, 2023

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Canonical URL: Senegal: Sixth Review Under the Policy Coordination Instrument and Third Reviews Under the Stand-By Arrangement and the Arrangement Under the Stand-By Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for Senegal

The paper focuses on Senegal’s Sixth Review under the Policy Coordination Instrument and Third Reviews under the Stand-By Arrangement and the Arrangement under the Standby Credit Facility.
Negative external and domestic influences affecting the Senegalese economy:
- Weaker external demand.
- Rising food and energy prices.
- Tightening financial conditions.
- US dollar appreciation.
Additional country-specific challenges:
- Heightened regional insecurity.
- Growing social demands amid soaring cost of living.

Overall assessment: Program performance was broadly satisfactory.
Quantitative outcomes:
- All end-June 2022 performance criteria were met.
- Two out of three indicative targets were met.
- Three out of nine structural benchmarks were implemented on time.
Revenue and spending developments:
- Revenue collection through end-September was stronger than expected.
- Soaring energy subsidies compelled the government to delay some investment projects.
Budget revision outcome:
- The authorities and staff agreed on a revised 2022 budget that maintains the fiscal deficit at 6.2 percent of gross domestic product, in line with the previous program review.
- The revised budget relies on additional revenue measures and savings to offset larger energy subsidies.

Fiscal pressures:
- Spending pressures are mounting in 2023, complicating the much-needed fiscal consolidation.
Policy focus implied by report findings:
- Strengthen revenue measures and identify savings to manage larger energy subsidies while preserving fiscal targets.
- Monitor and manage emerging risks from external demand slowdown, commodity price shocks, tightening global financial conditions, and exchange rate pressures.