IMF Executive Board Completes the First Review of the Arrangements Under the Extended Fund Facility, the Extended Credit Facility, and the Resilience and Sustainability Facility for Senegal

December 13, 2023

  • The International Monetary Fund (IMF) Executive Board completed the first review of the Arrangements under the Extended Fund Facility (EFF), the Extended Credit Facility (ECF), and the Resilience and Sustainability Facility (RSF) for Senegal, providing the country with access to SDR 210.36 million (about US$ 279.31 million).
  • The Senegalese economy continues to face headwinds. Some of the downside risks identified at the time of the program request are materializing, leading to a downward revision of growth and higher inflation projected for 2023/24. Near-term risks remain titled to the downside, but medium-term prospects remain favorable with appropriate policies and the start of hydrocarbon production.
  • The authorities are implementing the structural reforms agreed under the program, including steps to strengthen revenue administration and public financial management, enhance governance and improve the anti-corruption frameworks. Reforms agreed under the RSF are being implemented steadily.

Washington, DC: The IMF Executive Board completed today the first review of the Senegalese authorities’ economic program under the EFF, the ECF, and the RSF Arrangements. The completion of the reviews enables the immediate release to Senegal of about US$ 214.86 million (SDR 161.82 million) under the combined ECF/EFF and about US$ 64.45 million (SDR 48.54 million) under the RSF.

The Senegalese economy continues to face headwinds as it recovers from the COVID-19 pandemic. The country is confronted with multiple shocks, including: (i) the halt of the cereal export agreement between Russia and Ukraine; (ii) the recent imposition of restrictions on rice exports by India; (iii) the appreciation of the U.S. dollar; (iv) increasingly stringent regional and global financial conditions; and (v) instability in some neighboring countries.

Performance under the ECF/EFF/RSF has been satisfactory. All quantitative performance criteria and indicative targets but one for end-June 2023 under the ECF/EFF were met. Four out of six structural benchmarks for the first review of the EFF/ECF program have been implemented, while the remaining two were implemented with small delay. The authorities are also advancing reforms to enhance the governance of public funds, increase transparency, and step-up their anti-corruption framework. The implementation of reforms under the RSF is advancing as planned, supporting Senegal’s effort to build resilience to climate change.

The 2024 budget law approved by the National Assembly, aligns with the agreed-upon deficit target of 3.9 percent of GDP, which underpins policy commitments to support fiscal consolidation and debt sustainability. The fiscal stance embedded in the budget law reflects a steadfast increase in tax revenue to 20 percent of GDP by 2025, and a gradual phasing out of untargeted energy subsidies with a commitment to limit them to 1 percent of GDP in 2024.

Medium-term growth prospects appear more favorable with the oil and gas production set to start in mid-2024, provided appropriate policies are implemented. However, this outlook remains subject to uncertainty and risks are titled to the downside. These include the possibility of a protracted war in Ukraine, an exacerbation of the conflict in the Middle East, higher commodity prices, and tighter financial conditions. Heightened political instability and increased political polarization ahead of the presidential election could further strain the economy. Senegal remains vulnerable to the impacts of climate change.

At the conclusion of the Executive Board’s discussion, Mr. Kenji Okamura, Deputy Managing Director, and Acting Chair, made the following statement:

“Despite facing multiple shocks, Senegal has had a satisfactory performance under the ECF/EFF and RSF arrangements. However, the materialization of some initially identified downside risks during the program request has led to a downward revision of near-term growth and an upward revision of near-term inflation.

“The containment of growing debt vulnerability and the establishment of a downward trajectory for public debt hinge on the successful implementation of a fiscal consolidation strategy aiming for a fiscal deficit of 3 percent of GDP by 2025. Accelerating the medium-term revenue strategy to bolster revenue mobilization, particularly through the reduction of tax expenditures and the broadening of the tax base, is essential. On the expenditure side, a priority is the gradual elimination of untargeted energy subsidies, accompanied by measures to reprioritize spending while safeguarding the most vulnerable. Strengthening the institutional framework for setting energy prices is equally crucial. Prudent public debt management and restricting the borrowing capacity of public sector entities, extending beyond the central government, are vital to mitigate risks to debt sustainability.

“Significant progress has been achieved in implementing structural reforms. It is imperative to sustain the momentum of these reforms, encompassing the reinforcement of governance, enhancement of transparency, improvement of the business environment, and addressing weaknesses in the financial sector to foster more inclusive and private sector-led growth. Urgent attention should be given to rectifying deficiencies in the AML/CFT framework to minimize risks to the financial sector and facilitate an exit from the FATF's grey list.

“Performance under the RSF arrangement was satisfactory. The authorities should maintain the reform momentum and continue to strengthen climate mitigation and adaptation policies, which is essential for catalyzing new investments from donors and the private sector.”

Table 1. Senegal: Selected Economic and Financial Indicators

2021

2022

2023

2024

2025

2026

2027

2028

Act.

Est.

IMF CR 23/250

Proj.

IMF CR 23/250

Proj.

Projections

(Annual percent change)

National income and prices

GDP at constant prices

6.5

4.0

5.3

4.1

10.6

8.3

10.2

5.2

5.1

5.3

Of which: Non-hydrocarbon GDP

6.5

4.0

5.3

4.1

6.0

5.4

6.0

6.0

6.0

6.0

GDP deflator

1.8

8.6

3.2

5.3

2.0

3.7

2.0

2.0

2.0

2.0

Consumer prices
(annual average)

2.2

9.7

5.0

6.5

2.0

3.9

2.0

2.0

2.0

2.0

External sector

Exports, f.o.b. (CFA francs)

26.3

25.5

15.7

-1.2

25.6

31.5

24.8

6.6

7.6

10.1

Imports, f.o.b. (CFA francs)

17.1

42.4

2.0

-3.2

0.7

6.7

9.2

7.6

8.1

9.3

Export volume

12.7

-5.1

17.5

-1.8

27.1

26.6

26.5

6.3

6.6

7.1

Import volume

11.3

7.9

6.8

-0.3

3.5

0.9

7.6

7.5

7.5

7.5

Terms of trade
("–" = deterioration)

6.5

0.2

3.2

3.6

1.7

-1.8

-2.8

0.2

0.4

1.2

Nominal effective exchange rate

1.0

…

…

…

…

…

…

…

…

…

Real effective exchange rate

-1.9

…

…

…

…

…

…

…

…

…

(Changes in percent of beginning-of-year broad money)

Money and Credit

Broad money

15.4

21.6

20.0

17.0

…

10.7

…

…

…

…

Net domestic assets, of which

14.5

24.5

23.1

10.9

…

17.7

…

…

…

…

Credit to the government (net)

6.6

13.0

-0.9

-0.9

…

9.0

…

…

…

…

Credit to the economy (net)

7.0

11.2

15.1

15.0

…

10.1

…

…

…

…

(Percent of GDP, unless otherwise indicated)

Central government operations

Revenue

19.5

19.9

21.5

21.2

21.8

22.0

22.5

23.1

23.3

23.4

Grants

0.9

0.8

1.6

1.5

1.2

1.4

1.2

1.2

1.2

1.2

Total expenditure

25.8

26.6

26.4

26.1

25.7

26.0

25.5

26.1

26.3

26.4

Net lending/borrowing

(including grants)

-6.3

-6.6

-4.9

-4.9

-3.9

-3.9

-3.0

-3.0

-3.0

-3.0

Primary fiscal balance

-4.3

-4.4

-2.2

-2.3

-1.5

-1.2

-0.7

-0.7

-0.7

0.0

Savings and investment

Current account balance

(official transfers included)

-11.2

-19.8

-13.3

-14.5

-6.1

-8.9

-4.8

-4.6

-4.4

-4.4

Gross domestic investment

35.4

46.6

42.5

44.2

36.4

39.3

37.1

35.6

35.3

35.1

of which: Central Government

6.9

5.5

5.7

5.4

7.3

6.4

6.2

6.3

6.3

6.3

Gross national savings

24.3

26.9

29.2

29.7

30.3

30.4

32.3

31.0

30.9

30.8

of which: Central Government

4.9

6.2

5.0

4.9

5.5

5.8

6.4

6.4

6.7

6.7

Public sector debt

Total public debt

73.3

76.0

77.7

79.6

73.2

72.5

67.4

67.2

67.0

65.5

Domestic public debt 1

16.1

19.6

18.5

20.8

16.8

16.8

14.7

15.8

17.2

18.3

External public debt

57.2

56.4

59.3

58.7

56.5

55.7

52.7

51.4

49.8

47.1

Total public debt service

(percent of revenue)

28.6

30.7

32.5

32.2

26.1

27.4

31.5

31.8

30.7

31.7

Memorandum items:

Gross domestic product

(CFAF billions)

15,288

17,268

18,770

18,930

21,176

21,258

23,886

25,624

27,473

29,835

of which non-hydrocarbon

(CFAF billions)

15,288

17,268

18,767

18,930

20,171

20,722

22,503

24,383

26,363

28,807

Gross domestic product

(USD billions)

27.6

…

…

…

…

…

…

…

…

…

Share of hydrocarbon in total GDP

(percent)

…

…

0.0

0.0

4.7

2.5

5.8

4.8

4.0

3.4

National currency per U.S. dollar

(average)

554

…

…

…

…

…

…

…

…

…

WAEMU gross official reserves

(billions of $US)

24.2

18.4

…

15.5

…

15.4

17.0

19.0

22.2

25.6

(percent of broad money)

34.1

24.9

…

18.7

…

16.9

17.1

17.6

19.2

20.6

(months of WAEMU
imports of GNFS)

5.1

4.2

…

3.2

…

3.0

3.1

3.3

3.7

4.1

Source: Senegal authorities; and IMF staff calculations.

1 Domestic debt includes government securities issued in local currency and held by WAEMU residents.

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