## IMF Executive Board Approves US$1.51 billion Under the Extended Fund Facility and Extended Credit Facility, and US$324 million Under the Resilience and Sustainability Facility for Senegal

_IMF News, June 26, 2023_

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## Bibliographic details
- Published: June 26, 2023

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### Program approval and financing
- Executive Board approved a 36-month Extended Credit Facility (ECF) and Extended Fund Facility (EFF) of SDR 1.132 billion (about US$1.51 billion) with Senegal.
- Executive Board also approved an Arrangement Under the Resilience and Sustainability Facility (RSF) of about SDR 242.7 million (about US$324 million).
- The Executive Board’s decision enables an immediate disbursement equivalent to SDR 161.8 million (about US$216 million) under the EFF/ECF.

### Program objectives and policy priorities
- EFF/ECF-supported program objectives:
  - Meet Senegal’s protracted balance of payment needs.
  - Address macroeconomic imbalances.
  - Reduce debt vulnerabilities through growth-friendly fiscal consolidation.
  - Strengthen governance.
  - Deliver more inclusive and job-rich growth.
- RSF objectives:
  - Tackle longer-term structural challenges related to climate change.
  - Support climate change mitigation objectives and accelerate climate change adaptation.
  - Mainstream climate change considerations into the budget process.

### Economic context and recent performance
- Key shocks and challenges affecting Senegal:
  - Rising food and energy prices, tightening financial conditions, weaker external demand, and US dollar appreciation.
  - Heightened regional insecurity and growing socio-political tensions ahead of the presidential elections.
- 2022 outcomes highlighted in the press release:
  - Growth decelerated to 4.0 percent.
  - Inflation accelerated to 9.7 percent.
  - Fiscal and current account deficits widened.
- Medium-term prospects:
  - Oil and gas production set to start in early 2024, supporting more favorable medium-term growth prospects.
  - Risks remain high and heavily tilted to the downside, including lower global growth, tighter financial conditions, prolonged war in Ukraine, further US dollar appreciation, climate-related disasters, deterioration of regional security, and socio-political tensions.

### Fiscal strategy and debt management
- Authorities’ fiscal intentions:
  - Embark on growth-friendly fiscal consolidation to contain the budget deficit at 3 percent of GDP by 2025.
  - Undertake additional revenue measures and improve spending efficiency, including progressive phasing-out of energy subsidies.
  - Strengthen governance, transparency, and anti-corruption frameworks.
- Specific policy recommendations from the Acting Chair’s statement:
  - Accelerate implementation of the medium-term revenue strategy, including streamlining VAT exemptions and broadening the tax base.
  - Gradually eliminate untargeted energy subsidies while strengthening social safety nets.
  - Apply prudent debt management and enhance oversight of SOEs borrowing and public-private partnership operations to mitigate debt sustainability risks.

### Structural reforms, governance, and financial sector
- Recommended structural reforms to promote inclusive, private sector-led growth:
  - Enhance social safety nets.
  - Strengthen governance and transparency.
  - Improve the business environment.
  - Address weaknesses in the financial sector.
- Anti-corruption and AML/CFT priorities:
  - Empower the anti-corruption agency (OFNAC) and strengthen the asset declaration system for public officials.
  - Urgent actions needed to address deficiencies in the AML/CFT framework to avoid negative macroeconomic and reputational repercussions and to exit the FATF’s grey list.

### Climate-related reforms under the RSF
- RSF-supported policy reform focus:
  - Mitigation measures to protect against coastal erosion.
  - Enhance water management to strengthen agriculture.
  - Integrate climate change considerations into the budget process.
  - Leverage synergies with the World Bank, the Global Center on Adaptation, and other development partners to catalyze private climate financing.

### Selected indicators (from Table 1)
- Immediate program parameters and fiscal target:
  - 36-month program.
  - Fiscal deficit target: 3 percent of GDP by 2025.
- Macroeconomic outcomes and projections (selected figures as presented):
  - Growth decelerated to 4.0 percent (2022).
  - Inflation accelerated to 9.7 percent (2022).
  - ECF/EFF: SDR 1.132 billion (about US$1.51 billion).
  - RSF: SDR 242.7 million (about US$324 million).
  - Immediate disbursement: SDR 161.8 million (about US$216 million).
- Public sector debt (listed in table): Total public debt 69.2 73.2 73.3 75.1 76.6 73.7 77.7 70.4 69.5 68.7
- Other table figures cited in the release:
  - Gross domestic product (CFAF billions): 14,101 15319.0 15,288 17092.7 17,268 19093 18,770 21,176 23,202 24,806 26,596

*International Monetary Fund. Press Release No. 23/239, June 26, 2023.*

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## References

- [Kenji Okamura](https://www.imf.org/en/About/senior-officials/Bios/kenji-okamura)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Senegal and the IMF](http://www.imf.org/external/country/SEN/index.htm)
- [The IMF and Good Governance -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/the-imf-and-good-governance)
- [IMF-World Bank Debt Sustainability Framework for Low-Income Countries -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/imf-world-bank-debt-sustainability-framework-for-low-income-countries)
- [Special Drawing Rights (SDRs) -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/special-drawing-rights-sdr)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2023/06/26/pr23239-senegal-imf-executive-board-approves-usd-billion-under-eff-and-ecf-and-usd-million-under-rsf_