{
  "title": "Efficient Energy Investment and Fiscal Adjustment in Senegal",
  "publication": "IMF Working Papers, March 12, 2014",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/efficient-energy-investment-and-fiscal-adjustment-in-senegal-41418",
  "canonical": "https://www.imf.org/en/publications/wp/issues/2016/12/31/efficient-energy-investment-and-fiscal-adjustment-in-senegal-41418",
  "overlayPath": "/en/publications/wp/issues/2016/12/31/efficient-energy-investment-and-fiscal-adjustment-in-senegal-41418/index.md",
  "summary": "Senegal's fiscal deficit and public debt have been on the rise in recent years owing partly to an ailing and inefficient oil-based energy sector.",
  "sections": [
    {
      "heading": "Summary and main findings",
      "content": "- Senegal's fiscal deficit and public debt have been on the rise in recent years owing partly to an ailing and inefficient oil-based energy sector.\n- Using a two-sector, open-economy, dynamic general equilibrium model, the paper investigates effects of varying fiscal policy instruments one at a time and of policy packages that increase public investment in energy and infrastructure in scenarios with varying degrees of debt finance and with different types of supporting fiscal adjustment.\n- Lowering the fiscal deficit by raising taxes and cutting government expenditure has adverse effects on growth, real wages and the supply of public services.\n- A public investment program that coordinates new investment in low-cost hydroelectric, coal or gas-fired power with a phased contraction of the oil-based sector:\n  - raises the total supply of energy by 70 percent,\n  - increases real wages and real GDP,\n  - stimulates private investment,\n  - and significantly reduces the fiscal deficit in the medium long term.\n- More aggressive investment programs that borrow against future fiscal gains to combine new energy investments with either delayed or frontloaded investments in non-energy infrastructure:\n  - lead to much higher real wages and real GDP,\n  - keep public debt sustainable,\n  - and keep the fiscal deficit low in the medium and long term."
    },
    {
      "heading": "Model, scenarios, and analytical approach",
      "content": "- Model: two-sector, open-economy, dynamic general equilibrium model.\n- Policy experiments:\n  - Varying fiscal policy instruments one at a time.\n  - Policy packages that increase public investment in energy and infrastructure.\n  - Scenarios with varying degrees of debt finance.\n  - Scenarios with different types of supporting fiscal adjustment.\n- Energy investments considered: low-cost hydroelectric, coal, gas-fired power; phased contraction of oil-based sector.\n- Outcome metrics emphasized: total supply of energy, real wages, real GDP, private investment, fiscal deficit, public debt sustainability."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Avoid deficit reduction strategies focused solely on raising taxes and cutting government expenditure because of adverse effects on growth, real wages, and public service supply.\n- Implement coordinated public investment in low-cost energy generation combined with a phased contraction of inefficient oil-based generation to expand energy supply and improve fiscal outcomes.\n- Consider borrowing against future fiscal gains to pursue more aggressive investment programs that combine energy investments with strategic non-energy infrastructure investment, as these can boost real wages and real GDP while maintaining sustainable public debt and low fiscal deficits in the medium and long term.\n\n---\n\n Content in this bundle\n\n- wp1444\n  - wp1444 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp1444 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/efficient-energy-investment-and-fiscal-adjustment-in-senegal-41418"
    }
  ],
  "bullets": [
    "[Markdown version](/en/publications/wp/issues/2016/12/31/efficient-energy-investment-and-fiscal-adjustment-in-senegal-41418/index.md)",
    "[Structured JSON version](/en/publications/wp/issues/2016/12/31/efficient-energy-investment-and-fiscal-adjustment-in-senegal-41418/index.json)",
    "[Bundle manifest](/en/publications/wp/issues/2016/12/31/efficient-energy-investment-and-fiscal-adjustment-in-senegal-41418/bundle-manifest.json)",
    "Authors: Salifou Issoufou, Edward F Buffie, Mouhamadou Bamba Diop, Kalidou Thiaw",
    "Published: March 12, 2014",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781475527728.001",
    "Senegal's fiscal deficit and public debt have been on the rise in recent years owing partly to an ailing and inefficient oil-based energy sector.",
    "Using a two-sector, open-economy, dynamic general equilibrium model, the paper investigates effects of varying fiscal policy instruments one at a time and of policy packages that increase public investment in energy and infrastructure in scenarios with varying degrees of debt finance and with different types of supporting fiscal adjustment.",
    "Lowering the fiscal deficit by raising taxes and cutting government expenditure has adverse effects on growth, real wages and the supply of public services.",
    "A public investment program that coordinates new investment in low-cost hydroelectric, coal or gas-fired power with a phased contraction of the oil-based sector:",
    "More aggressive investment programs that borrow against future fiscal gains to combine new energy investments with either delayed or frontloaded investments in non-energy infrastructure:",
    "Model: two-sector, open-economy, dynamic general equilibrium model.",
    "Policy experiments:",
    "Energy investments considered: low-cost hydroelectric, coal, gas-fired power; phased contraction of oil-based sector.",
    "Outcome metrics emphasized: total supply of energy, real wages, real GDP, private investment, fiscal deficit, public debt sustainability.",
    "Avoid deficit reduction strategies focused solely on raising taxes and cutting government expenditure because of adverse effects on growth, real wages, and public service supply.",
    "Implement coordinated public investment in low-cost energy generation combined with a phased contraction of inefficient oil-based generation to expand energy supply and improve fiscal outcomes.",
    "Consider borrowing against future fiscal gains to pursue more aggressive investment programs that combine energy investments with strategic non-energy infrastructure investment, as these can boost real wages and real GDP while maintaining sustainable public debt and low fiscal deficits in the medium and long term.",
    "**_wp1444**"
  ],
  "related": [
    {
      "title": "_wp1444",
      "role": "document",
      "sourceUrl": "https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2014/_wp1444.pdf",
      "summary": {
        "path": "/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2014/_wp1444.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2014/_wp1444.pdf",
        "mime": "application/pdf"
      }
    }
  ],
  "alternates": {
    "markdown": "/en/publications/wp/issues/2016/12/31/efficient-energy-investment-and-fiscal-adjustment-in-senegal-41418/index.md",
    "json": "/en/publications/wp/issues/2016/12/31/efficient-energy-investment-and-fiscal-adjustment-in-senegal-41418/index.json",
    "bundleManifest": "/en/publications/wp/issues/2016/12/31/efficient-energy-investment-and-fiscal-adjustment-in-senegal-41418/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-17T12:40:34.302Z"
}