IMF Staff Concludes a Staff-Level Agreement with Senegal Under the Policy Coordination Instrument

IMF News, September 23, 2019

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Canonical URL: IMF Staff Concludes a Staff-Level Agreement with Senegal Under the Policy Coordination Instrument

An IMF staff team, led by Ms. Corinne Deléchat, visited Dakar from September 12 to 23, 2019 to discuss a three-year programme supported by the Policy Coordination Instrument (PCI).
“The IMF mission and Senegalese authorities reached an agreement on a set of macroeconomic policies and structural reforms that could facilitate the approval of a new program under the PCI."
The approval of this program will be submitted to the IMF Executive Board for consideration by mid-December 2019.
The PCI is an instrument introduced by the IMF in 2017 to support countries that can benefit from IMF support under a program, but that do not need financial resources from the IMF.
The program will support the implementation of the second phase of the Emerging Senegal Plan (Plan Sénégal Émergent – PSE II).

Growth projections:
- 6% in 2019
- 7% in 2020-21
- Additional momentum expected with the start of commercial production of hydrocarbons in 2022
Inflation:
- Expected to remain low over the medium term
Current account:
- Expected to increase until 2021 due to imports for hydrocarbon project construction
- Expected to decline once oil and gas production and exports begin

Government intentions and targets:
- Maintain the budget deficit target at 3% in 2019 and beyond
- Ensure the settlement of its outstanding obligations to the private sector
2019 fiscal framework:
- Includes a one-off operation to clear unpaid obligations to the state-owned electricity company
- Short-term measures deployed to increase the rate of revenue collection and to meet the objectives of the supplementary budget law of July 2019
2020 budget preparation:
- Based on continued efforts to increase revenue mobilization and to streamline the government's operating expenses, taking into account the need to meet the government's financial commitments for earlier years
WAEMU convergence and fiscal anchors:
- Compliance with WAEMU objectives of maintaining the budget deficit at 3% of GDP
- Objective to increase tax collection to a minimum of 20% of GDP
Medium-Term Revenue Strategy:
- Being developed to widen the tax base and boost domestic resource mobilization, essential for financing PSE II
Fiscal policy aim:
- Maintain the sustainability of public finances and medium-term debt sustainability (Pillar II)

First pillar: Accelerate private sector development for strong and inclusive growth through:
- (i) Modernization of infrastructure and strengthening of human capital
- (ii) Improvement of the business environment by upgrading the legal framework, particularly by the reform of the labor code
- (iii) Facilitation of access to property rights and modernization of commercial law
- (iv) Broadening of access to funding for private companies, particularly for small and medium enterprises
Social and inclusion objectives:
- Reduce economic and social disparities between urban and rural areas
- Increase economic opportunities for women and youth

Aim to establish a sustainable and transparent governance framework for newly-discovered hydrocarbon resources
Government intends to implement a management framework in line with best practices
Program supports establishing sustainable and transparent management of the recent hydrocarbon discoveries

The mission met with:
- His Excellency, Mr. Macky Sall, President of the Republic
- Mr. Abdoulaye Daouda Diallo, Minister of Finance and Budget
- Mr. Amadou Hott, Minister of Economy, Planning and Cooperation
- Mr. Mouhamadou Makhtar Cissé, Minister of Oil and Energy
- Mr. Ahmadou Lo, BCEAO National Director
- Other senior officials, development partners and representatives from the private sector
The team expressed gratitude for the authorities’ hospitality, quality of work, excellent collaboration and constructive dialogue
Next programme approval step:
- Submission to the IMF Executive Board for consideration by mid-December 2019

IMF Press Release No. 19/346 — September 23, 2019