## IMF Survey : New Plan Sets Senegal On Course to Become Emerging Economy

_IMF News, December 24, 2014_

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## Bibliographic details
- Authors: Alexei Kireyev IMF African Department December
- Published: December 24, 2014

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### Economic health check and recent performance
- Growth history:
  - 1995–2005: growth of 4.5 percent, with poverty declining from 68 to 48 percent.
  - 2006–2013: growth decelerated to an average of 3.4 percent.
- Recent shocks and outcomes:
  - Senegal experienced spikes in food and fuel prices, the global financial crisis, regional droughts and floods, and spillovers from the Ebola outbreak.
  - As a result, poverty has declined only slightly and stands at about 47 percent.
- IMF growth projections:
  - GDP growth can rise to 4.5 percent in 2014 and reach 7 percent by 2019, conditional on consistent implementation of reforms while preserving fiscal and debt sustainability.

### Fiscal outlook and public investment
- Fiscal performance and targets:
  - Overall deficit is expected to fall to about 5 percent of GDP in 2014.
  - The 2015 budget targets a further reduction in the deficit to 4.7 percent of GDP.
  - Authorities remain committed to bringing the fiscal deficit in line with the West African Economic and Monetary Union target of 3 percent of GDP in the medium term.
- Policy stance on investment and financing:
  - Authorities expect to limit the deficit by holding back appropriations for new public investment projects until feasibility studies are ready.
  - IMF recommended anchoring plan-related scaling up of public investment on long-term debt sustainability within a medium-term budget framework.
  - Decisions to contract nonconcessional financing should be carefully weighed.
- Fiscal policy measures IMF highlights:
  - Further strengthening of tax and expenditure policy measures.
  - Improved public investment efficiency.
  - Ensure all investment is consistent with earlier fiscal consolidation plans and Senegal’s absorptive capacity.

### "Plan Sénégal Emergent" — objectives and pillars
- Objective:
  - Help Senegal exit the trap of low growth and high poverty and make Senegal a hub for West Africa and an emerging economy by 2035.
- Three pillars of the plan:
  - Higher and sustainable growth through structural transformation;
  - Human development and social protection; and
  - Improved governance, peace, and security.
- Implementation priorities emphasized:
  - Attract foreign investment and increase private investment.
  - Constrain public consumption and increase public savings to create fiscal space for higher public investment in human capital and public infrastructure.
  - Improve delivery of public services and the impact of public spending through public financial management reforms.
  - Strengthen social safety nets.

### Structural reforms and sectoral priorities
- Reforms recommended:
  - Improve business climate and governance.
  - Investment in human capital and public infrastructure.
  - Comprehensive restructuring of the energy sector.
  - Increase export competitiveness.
- Agriculture and exports:
  - Senegal’s export base is relatively well diversified, but high-quality exports bear a comparatively low weight.
  - Sectors with comparatively low quality exports, such as food and live animals, constitute a large share of exported products.
  - With the labor force concentrated in agriculture, policies fostering agricultural product quality may supplement foreign investment–driven export diversification.

### Financial sector and macroprudential concerns
- Financial vulnerabilities to address:
  - Quality of bank assets and the high level of nonperforming loans.
  - Need for continued vigilance and close cooperation with the Banque Centrale des Etats de l’Afrique de l’Ouest and the West African Economic and Monetary Union’s Banking Commission.
  - Improve access to financial services.

### Institutional reforms and budgetary governance
- IMF emphasis on public financing reforms:
  - Strengthen budget institutions and public financing.
  - Focus on macro-fiscal policy design.
  - Develop a medium-term expenditure framework.
  - Improve fiscal discipline in budget execution.

### Experience of peers and feasibility of targets
- Peer-country evidence:
  - Between 1990 and 2013, about 40 countries achieved average growth in real purchasing power per capita GDP of 5 percent or more.
  - Comparator countries cited include Cape Verde, Guyana, Indonesia, Mauritius, Sri Lanka, Tunisia, Uganda, and Vietnam.
- Implication for Senegal:
  - Experience of peers suggests structural reforms could lift Senegal’s growth to 7 percent in the medium term, driven by foreign investment–generated exports.
  - Authorities have engaged in peer learning and held a high-level brainstorming on “Transforming Senegal into a Middle-Income Economy” at IMF headquarters on December 15–17, 2014.

*IMF Survey : New Plan Sets Senegal On Course to Become Emerging Economy*

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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [IMF Country Focus](https://www.imf.org/en/news/country-focus)
- [Read the report](http://www.imf.org/external/index.htm)
- [Senegal and the IMF](http://www.imf.org/external/country/sen/index.htm)
- [Reforms—path to higher status](http://www.imf.org/external/pubs/ft/survey/so/2014/CAR121614A.htm)
- [Sustain Africa’s growth](http://www.imf.org/external/pubs/ft/survey/so/2014/car101114a.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/socar122414a_