IMF Staff Concludes Visit to Senegal

IMF News, May 3, 2024

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A team from the International Monetary Fund (IMF), led by Mr. Edward Gemayel, conducted a mission to Senegal from April 26 to May 3, 2024, to take stock of recent economic and political developments and lay the ground for the second review under the existing IMF-supported program.
Discussions for the second review under the Extended Credit Facility (ECF), the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF) arrangements are tentatively planned for June 2024.
During the visit, the IMF team met with His Excellency, Prime Minister Ousmane Sonko; Mr. Cheikh Diba, Minister of Finance and Budget; and other senior government officials. The IMF team also had productive discussions with representatives of the business community and development partners.

Growth surprised on the upside: 4.6 percent.
Inflation dropped to 5.9 percent.
Elevated energy subsidies amounted to CFAF 620 billion or 3.3 percent of GDP.
Fiscal deficit contained at 4.9 percent of GDP, in line with the program target.
Central government debt rose to 73.4 percent of GDP, above the WAEMU ceiling.
Current account deficit remained large at 18.8 percent of GDP, reflecting continued weak exports of goods.

Economic activity in 2024Q1 was weaker than anticipated, reflecting political uncertainties linked to the presidential election.
High frequency indicators suggest subdued activity as businesses postponed investments and consumers cut back on spending.
Headline inflation declined to 3.3 percent (Y-o-Y).
Budget execution in 2024Q1 was marked by a revenue shortfall and an overrun in the energy subsidy.

Economic growth for 2024 is now projected at 7.1 percent, down from 8.3 percent, reflecting weaker economic activity due to the electoral context and delays in gas production to December 2024.
Preliminary end-2023 data suggest that the program remains broadly on track.
Meeting the end-2024 fiscal deficit target of 3.9 percent of GDP will require ambitious measures.

To meet the end-2024 fiscal deficit target of 3.9 percent of GDP and pave the way toward the regional target of 3 percent of GDP in 2025, the IMF highlights the need for:
- Ambitious measures to reduce tax exemptions.
- Measures to enhance spending efficiency, implemented through a supplementary budget.
The government built liquidity buffers in anticipation of the presidential election, contributing to the rise in central government debt (73.4 percent of GDP).

Further efforts are needed to advance the structural reform agenda, including:
- Revising the petroleum product pricing formula.
- Conducting an audit of the electricity company SENELEC to implement a new electricity tariff structure, with a social tariff to support vulnerable households.
Authorities are progressing on measures to exit the Financial Action Task Force’s (FATF) grey list.
The new authorities have reaffirmed their commitment to the existing IMF-supported program and recognize its core pillars align with their strategic goals:
- Enhancing fiscal resilience and reducing debt vulnerabilities.
- Strengthening governance.
- Promoting structural transformation.
- Building resilience to climate change.

The program remains broadly on track based on preliminary end-2023 data.
Achieving fiscal targets will require a supplementary budget and ambitious fiscal measures.
Second review discussions for ECF, EFF, and RSF arrangements are tentatively planned for June 2024.

Press Release No. 24/136