IMF Executive Board Completes First Review Under the Policy Coordination Instrument for Senegal
IMF News, July 17, 2020
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- Published: July 17, 2020
COVID-19 impact and near-term outlook
- The Covid-19 pandemic is taking a heavy toll on the economy with growth projected at 1.1 percent in 2020 compared to 5.3 percent in 2019.
- Containment measures, lower external demand, reduced remittances, and the sudden stop of travel and tourism are weighing on activity.
- A gradual recovery is expected in the second half of 2020 and 2021 while downside risks prevail.
- Significant uncertainty and downside risks exist on the strength of the recovery.
IMF support and financing
- The IMF disbursed SDR 323.6 million (about US$ 442 million, 100 percent of quota) under the Rapid Financing Instrument and Rapid Credit Facility in April to help Senegal meet urgent balance of payment needs stemming from the pandemic.
- Senegal is participating in the G20 and Paris Club-supported Debt Service Suspension Initiative and has received additional financing from development partners.
Fiscal policy and budgetary response
- Staff and the authorities agreed on a revised 2020 budget reflecting the Covid-19 response with substantially higher health spending, targeted support to the vulnerable, and significant economic stabilization measures.
- The fiscal deficit will temporarily increase to 6.1 percent of GDP and is expected to decline back to 3 percent of GDP by 2022, in line with regional fiscal convergence criteria, as the situation normalizes.
- The authorities committed to return to a 3 percent of GDP deficit by 2022.
- The temporary fiscal expansion in the revised 2020 budget aims to finance the health response, protect livelihoods and support activity.
Program implementation and reforms
- Program implementation has been good with all but one quantitative target met as of end-December 2019.
- Good progress achieved on structural reforms.
- PCI quantitative targets for end-June and end-December 2020 are being recalibrated to reflect the impact of the pandemic, and reform objectives are being streamlined to allow the authorities to focus on the crisis.
- The authorities should continue to focus on improving the business environment and boost private sector investment while pursuing ongoing reforms to enhance debt management, revenue mobilization and public financial management.
- The slowdown exacerbates risks to financial stability which require close monitoring as the banking sector has a vital role to play in financing the recovery.
- The authorities’ commitment to ensure full transparency and accountability of the emergency spending and financing under the Debt Service Relief Initiative is welcome and will support social cohesion and help mobilize external financial support.
- As the crisis continues to unfold, the authorities should expand their support to the poorest and the informal sector, including small and medium sized enterprises.
Policy Coordination Instrument (PCI) objectives
- The PCI for Senegal, approved on January 10, 2020, supports the second phase of the authorities’ national development strategy “Plan Senegal Emergent.”
- The PCI is articulated around three main pillars:
- achieving high, sustainable, and inclusive growth;
- consolidating macroeconomic stability through prudent fiscal policy, including through increasing revenues and spending efficiency, and sound debt management;
- managing the oil and gas sector in a sustainable and transparent manner.
Selected economic and financial indicators (2019–24, as presented)
- GDP at constant prices: 2019: 5.3; 2020: 1.1; 2021: 4.0; 2022: 6.0; 2023: 12.2; 2024: 8.1
- Non-hydrocarbon GDP (partial series): 2019: 7.3; 2020: 7.2
- Hydrocarbon GDP (partial series): 2021: 28.1; 2022: -16.1
- Non-agriculture GDP: 2019: 5.8; 2020: 0.9; 2021: 4.1; 2022: 6.2; 2023: 12.9; 2024: 8.3
- GDP deflator: 2019: 1.7; 2020: 2.5; 2021: 0.8; 2022: 4.2; 2023: 1.6; 2024: 1.5
- Consumer prices, annual average: 2019: 1.0; 2020: 2.0; 2021: 1.9
- Consumer prices, end of period: 2019: 0.6; 2020: 2.8; 2021: 0.4; 2022: 2.4; 2023: 0.7
- Exports, f.o.b. (CFA francs): 2019: 12.3; 2020: -11.9; 2021: 12.7; 2022: 21.6; 2023: 76.4; 2024: 13.3; 2025: 8.6
- Imports, f.o.b. (CFA francs): 2019: 4.7; 2020: -8.2; 2021: 12.1; 2022: 15.8; 2023: 20.5; 2024: 9.2; 2025: 9.4
- Export volume: 2019: -6.3; 2020: 17.1; 2021: 101.7; 2022: 11.1
- Import volume: 2019: 9.0; 2020: 16.1; 2021: 11.6; 2022: 14.7; 2023: 7.7; 2024: 7.5
- Terms of trade ("–" = deterioration): 2019: 3.7; 2020: 3.2; 2021: 3.6; 2022: 0.1; 2023: -16.8
- Nominal effective exchange rate: 2019: -1.3
- Real effective exchange rate: 2019: -4.5
- Broad money (changes in percent of beginning-of-year broad money): 2019: 8.2; 2020: 8.4; 2021: 8.0
- Net domestic assets (changes): 2019: 7.1
- Credit to the government (net): 2019: 1.4
- Government revenue (percent of GDP): 2019: 20.2; 2020: 21.0; 2021: 20.0; 2022: 20.6; 2023: 21.1; 2024: 21.3; 2025: 22.0
- Grants (percent of GDP): 2019: 3.5
- Total expenditure (percent of GDP): 2019: 24.0; 2020: 27.1; 2021: 24.5; 2022: 23.7; 2023: 24.1; 2024: 24.3; 2025: 25.0
- Net lending/borrowing (Overall Balance) excluding grants (percent of GDP): 2019: -5.5; 2020: -9.6; 2021: -7.0; 2022: -5.4; 2023: -4.9; 2024: -4.7
- Net lending/borrowing (including grants): 2019: -3.8; 2020: -6.1; 2021: -3.0
- Net lending/borrowing (excl. SENELEC op.): 2019: -3.1
- Primary fiscal balance: 2019: -1.9; 2020: -4.0; 2021: -2.6; 2022: -1.0; 2023: -1.1
- Current account balance (official transfers included, percent of GDP): 2019: -7.7; 2020: -8.8; 2021: -10.2; 2022: -11.0; 2023: -3.9
- Current account balance (official transfers excluded, percent of GDP): 2019: -7.8; 2020: -10.5; 2021: -11.7; 2022: -4.3; 2023: -4.1
- Gross domestic investment (percent of GDP): 2019: 31.7; 2020: 29.7; 2021: 32.5; 2022: 34.6; 2023: 35.7; 2024: 33.8; 2025: 33.6
- Government investment (percent of GDP, partial series): 2019: 8.7; 2020: 9.7
- Nongovernment investment (percent of GDP, partial series): 2019: 24.4; 2020: 24.2; 2021: 26.2; 2022: 26.6; 2023: 23.9
- Gross national savings (percent of GDP): 2019: 20.9; 2020: 22.3; 2021: 23.6; 2022: 31.8; 2023: 29.9; 2024: 29.1
- Government savings (percent of GDP, partial series): 2019: 6.6; 2020: 6.7; 2021: 8.8; 2022: 10.0; 2023: 10.6; 2024: 17.4; 2025: 13.6; 2026: 16.0; 2027: 16.8; 2028: 22.9; 2029: 19.9; 2030: 18.5
- Total public debt (percent of GDP): 2019: 64.1; 2020: 68.6; 2021: 70.4; 2022: 70.5; 2023: 64.5; 2024: 62.3; 2025: 61.3
- Domestic public debt (percent of GDP): 2019: 10.9; 2020: 11.0; 2021: 12.8; 2022: 14.1; 2023: 15.7; 2024: 16.9
- External public debt (percent of GDP): 2019: 53.2; 2020: 57.7; 2021: 57.6; 2022: 56.8; 2023: 50.4; 2024: 46.6; 2025: 44.3
- Total public debt service (percent of government revenue): 2019: 23.0; 2020: 22.4; 2021: 28.0; 2022: 24.7; 2023: 29.6
- Gross domestic product (CFAF billions): 2019: 13,815; 2020: 14,307; 2021: 15,123; 2022: 16,164; 2023: 18,890; 2024: 20,753; 2025: 22,341
- Gross domestic product (USD billions): 2019: 6.4; 2020: 7.6
- National Currency per U.S. Dollar (Average): 2019: 586
Sources: Senegal authorities; and IMF staff estimates and projections.