The IMF completes the fourth review under the Policy Coordination Instrument and the first reviews under the Standby Arrangement and the Standby Agreement.

  • Recent indicators suggest that a strong recovery is underway, driven by industrial production, services and retail activity. The number of COVID-19 cases remains relatively low, and around 14% of the adult population is vaccinated.
  • The performance of the program remains satisfactory. Along with the PCI, the SCF / SBA mechanism helps support the authorities’ response to the crisis; promote large-scale recovery; catalyze additional concessional financing; and strengthen the external position of UEMOA. The completion of the first reviews under the SCF / SBA enables the disbursement of SDR 129.4 million (approximately US $ 180 million).
  • Maintaining macroeconomic stability, improving public service delivery, phasing out energy subsidies, increasing investment in education and social protection as well as accelerating reforms aimed at overcoming the main constraints to private sector development will support strong, inclusive and job-rich growth.
  • Washington, DC – January 10, 2022: Today the Executive Board of the International Monetary Fund (IMF) completed the fourth review under the Policy Coordination Instrument (PCI)[1] and the first reviews under the Confirmation Agreement (SBA)[2] and the standby credit facility (SCF) arrangement.[3] Completion of the reviews enables the release of SDR 129.4 million (approximately US $ 180 million), bringing total disbursements under the agreements to SDR 258.8 million (approximately US $ 360 million).

    Senegal’s three-year PCI was approved on January 10, 2020 and is structured around three pillars: (i) achieve inclusive and private sector-led growth, (ii) consolidate macroeconomic stability through prudent fiscal policy and healthy debt, and (iii) manage oil and gas revenues in a sustainable and transparent manner (cf. Press release n ° 20/06).

    Senegal’s 18-month SCF / SBA agreements, for a total amount of 140% of quota, were approved on June 7, 2021 to help support the authorities’ response to the COVID-19 crisis, catalyze concessional finance and strengthen the external position of UEMOA (see press release No. 21/259). The authorities respect their commitments in terms of transparency of expenditure related to COVID-19; they published detailed reports on budget execution, a special audit of the COVID-19 fund and an audit on the regularity of COVID-19 procurement procedures. The final report of the Court of Auditors on the 2020 budget and the execution of COVID-19 expenditure is expected by March 2022.

    The Executive Council also concluded the 2021 Article IV consultation[4]with Senegal.

    A strong economic recovery has been underway since mid-2020, driven by industrial production and the service sector, and growth for 2021 has been revised up from 3 ½ to around 5%. The recovery is expected to continue into 2022 and beyond, with a new temporary boost in oil and gas production in 2023-24.

    The second 2021 Supplementary Budget incorporates additional exceptional expenditure linked to the use of approximately two-thirds of Senegal’s SDR allocation (0.9% of GDP) to support the recovery and strengthen social protection and the health sector. health, including national vaccine production. This, along with additional spending on energy subsidies, will bring the 2021 deficit to 6.3% of GDP. Senegal’s public sector debt is expected to reach 73% of GDP in 2021 before gradually declining to less than 60% of GDP. The 2021 current account deficit is expected to widen to 10.6% of GDP and decline to around 5% of GDP over the medium term. The financial system remained resilient during the pandemic, in part thanks to the accommodative stance of the regional central bank (BCEAO), including providing additional liquidity to banks.

    The outlook indicates sustained and stronger activity as the impact of the pandemic eases, but is subject to significant uncertainty and risks are tilted to the downside. These include repeated outbreaks of COVID-19, a deteriorating regional security situation, delays in starting oil and gas production and a rapid rise in global interest rates.

    At the end of the discussions of the Board of Directors, Mr. Kenji Okamura, Deputy CEO and Interim President, made the following statement:

    “The COVID-19 pandemic has interrupted a decade of strong growth and development progress in Senegal. It caused serious hardship for many households, although the impact on the Senegalese economy was mitigated by the strong response from the authorities. The Senegalese economy is now on the right track for a solid recovery.

    “The outlook is favorable provided the risks and growing vulnerabilities are well managed. Risks are on the downside, including the protracted impact of the pandemic, rising oil prices, a volatile regional security environment, slower implementation of reforms and delays in starting oil production and gas. Public debt has grown steadily in recent years and the risks to debt sustainability need to be carefully monitored.

    “The authorities’ reform program, supported by the Policy Coordination Instrument, the Standby Agreement and the Standby Credit Facility Agreement, remains appropriate to achieve the objectives of the strong and inclusive growth program. while maintaining macroeconomic stability and controlling risks to debt sustainability. .

    “Fiscal policy must remain anchored in credible revenue-based consolidation towards a budget deficit of 3% of GDP by 2024, in accordance with UEMOA commitments. Communication and implementation of the medium-term revenue mobilization strategy and measures to limit fuel subsidies while protecting vulnerable people are essential in this regard.

    “Achieving more inclusive growth will also require further improving the business environment, strengthening the social safety net, expanding access to quality education and tackling youth unemployment. The SDR allocation provides additional leeway to support the health sector and economic recovery. Ongoing reforms to improve public financial management will help to enhance the efficiency and transparency of spending, especially SDR-related spending.

    “While the financial system has remained resilient during the pandemic, long-standing weaknesses will need to be addressed, including gaps in the AML / CFT framework, and reforms to promote financial inclusion should be accelerated. “

    [1]The ICP is a non-financial tool open to all members of the International Monetary Fund (IMF). This allows them to signal their commitment to reform and catalyze funding from other sources. The creation of the ICP is part of the Fund’s broader effort to strengthen the global financial safety net, a network of insurance and lending instruments that countries can draw on if they are faced with a crisis.

    [2]In times of economic crisis, countries often need financing to help them overcome their balance of payments problems. Since its creation in June 1952, the IMF’s SBA has been the lending instrument par excellence for emerging and advanced countries. The SBA was enhanced in 2009 with the Fund’s larger toolbox to be more flexible and responsive to the needs of member countries. Conditions were streamlined and simplified, and more funds were made available from the start. The reform also allows for wider high access as a precaution.

    [3]The SCF provides financial assistance to low-income countries (LICs) with short-term balance of payments needs. The SCF was created under the Poverty Reduction and Growth Trust Fund (PRGT) as part of a broader reform aimed at making the Fund’s financial support more flexible and better suited to the diverse needs of LICs. , including in times of shock or crisis.

    [4]Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with its members, usually annually. A team of employees visits the country, collects economic and financial information and discusses with those responsible for the development and economic policies of the country. Back at headquarters, the staff prepare a report, which forms the basis for the Board’s discussion.

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