IMF Staff Completes Review Mission to Senegal

IMF News, November 17, 2020

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A staff team led by Ms. Corinne Deléchat conducted a virtual mission from November 5-16, 2020 as part of the second review of the IMF’s Policy Coordination Instrument (PCI) approved in January 2020.
The IMF team reached staff-level agreement with the authorities on economic and financial policies that could support approval of the second review of their three-year program under the PCI.
The IMF Executive Board could consider the second review in the first half of January 2021.
End-of-mission press releases convey preliminary findings; staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.

The pandemic’s economic impact was significant in the first half of 2020, but the recovery appears stronger than previously forecast due to:
- lifting of lockdown measures;
- steady decline in infections and hospitalizations since August; and
- favorable prospects for the 2020-21 agricultural campaign.
As a result, the economic contraction of 0.7 percent anticipated could be avoided.
Economic activity is projected to rebound at around 5 percent in 2021.
The favorable outlook is subject to significant uncertainty and will largely depend on the course of the pandemic globally and in Senegal.

Budget execution has been broadly satisfactory and is expected to result in a deficit of about 6 ½ percent of GDP in 2020.
- This outcome is in line with the program’s objective adjusted for a shortfall in grants, due to the delay to 2021 of a budget support disbursement planned for 2020.
The mission welcomed the priorities of the draft 2021 budget, which aim at supporting the recovery while setting the path for a gradual return to the WAEMU deficit anchor by 2023.
The mission and the authorities concurred on the importance of boosting revenue collection to secure the fiscal consolidation objectives, highlighting:
- the need for streamlining exemptions;
- authorities’ commitments to resume publication of an annual tax expenditure report attached to the budget documentation; and
- enhancing transparency of fuel-related taxes.
Efforts to strengthen public financial management in 2021 include:
- implementation of program budgeting; and
- reduction of spending executed through deposit accounts (“comptes de dépôt”) as enshrined in the draft 2021 budget law.

Performance under the PCI-supported program remains solid.
- At end-June, five out of seven quantitative targets were met.
- Reform targets met included:
- finalization of the Medium-Term Revenue Strategy (MTRS);
- undertaking studies on the expenditure chain and overcoming obstacles on girls’ education; and
- establishment of the National Public Debt Committee (CNDP).
The mission welcomed progress on:
- revising the legal framework on public private partnerships (PPPs); and
- setting up the appropriate legal framework to manage hydrocarbon revenues.
The mission made recommendations to align hydrocarbon revenue management and PPP frameworks with international best practices.

The mission commended the authorities for strong implementation of the Economic and Social Resilience Program (PRES), which was instrumental in cushioning the pandemic’s impact.
The mission welcomed authorities’ commitments regarding accountability and transparency in COVID-19 related spending execution, notably:
- continued publication of regular budget execution reports;
- publication of the special report on the "Force COVID-19" fund by the monitoring committee; and
- an audit by the Audit Court.
The mission welcomed authorities’ plans to update and broaden the single national registry of vulnerable households to support expanded social safety nets post-pandemic.
The mission emphasized the importance of pursuing ongoing reforms supported by the “Compact with Africa” to improve the business environment and to streamline entities and funds dedicated to SME support as essential to unlock inclusive private sector-led growth.

IMF staff statement, November 17, 2020.