Press Release No. 18/271

IMF Executive Board Completes Sixth Review Under the Policy Support Instrument (PSI) for Senegal

July 2, 2018

• The program aims to support implementation of economic policies and structural reforms to achieve macroeconomic objectives in the Plan Sénégal Emergent (PSE) and meet the regional WAEMU fiscal criteria.

• Growth was robust at 7.2 percent in 2017 and is projected to remain strong over the medium term, while inflation is low.

• The recent rebasing of GDP has increased nominal levels by about 30 percent.

The Executive Board of the International Monetary Fund (IMF) completed the sixth review of Senegal’s economic performance under a program supported by the Policy Support Instrument (PSI). ¹ The program aims to implement economic policies and structural reforms needed to sustain strong growth and ongoing fiscal consolidation to meet the regional fiscal criteria.

In completing the review, the Board also approved the authorities’ request for waiver of non-observance and modification of assessment criteria. The PSI for Senegal was approved on June 24, 2015 (see Press Release No. 15/297 ).

Following the Executive Board discussion, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, made the following statement:

“ Senegal’s reform efforts, as laid out in the Plan Sénégal Emergent (PSE) and aided by the Policy Support Instrument (PSI), have helped to increase growth while maintaining economic stability. Growth reached 7.2 percent in 2017 while inflation remained low and the fiscal deficit was contained to 3 percent of GDP. However, public finances deteriorated, driven mainly by unchanged prices for domestic energy products in the face of higher global energy prices. This deterioration was somewhat offset by new fiscal measures, with an upwards revision of the 2018 fiscal deficit to 3.5 percent.

“The authorities remain committed to PSI fiscal targets. Over the medium term, increased revenues through improving administration and lowering tax expenditures, improved public investment efficiency, and energy price reform would create space to finance Senegal’s development needs in a sustainable manner.

“The authorities have made substantial progress in reducing weaknesses in treasury operations and containing additional financing needs, but a timebound plan to address accumulated energy sector obligations is needed. Together with improvements in debt management and debt coverage, this will support fiscal sustainability.

“Risks to Senegal’s economy have increased but remain manageable. On the domestic side, lack of progress on structural fiscal issues such as revenue mobilization, energy subsidies, and reforms to further reduce the treasury’s additional financing needs could undermine fiscal sustainability. On the external side, security risks in the region could adversely affect investment and growth.

“Senegal’s high growth during the first years of the PSE now needs to be consolidated by further implementing structural reforms and attracting private investment to generate continued high growth, with opportunities for all. This requires tackling impediments to access to credit, cost of energy, and taxation issues, while improving the business environment, including further development of special economic zones, three of which are now operational.”

¹ The PSI is an instrument of the IMF designed for countries that may not need, or want, IMF financial assistance, but still seek IMF advice, monitoring and endorsement of their policies. The PSI helps countries design effective economic programs that, once approved by the IMF's Executive Board, signal to donors, multilateral development banks, and markets the Fund's endorsement of a member's policies (see http://www.imf.org/external/np/exr/facts/psi.htm ).