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US: IMF reviews Senegal’s economic performance

The Executive Board of the International Monetary Fund (IMF) has completed the eighth review of Senegal’s economic performance under the programme supported by the Policy Support Instrument (PSI) and also concluded the 2014 Article IV consultation.

An IMF statement, made available to PANA in New York on Tuesday, said the PSI was approved by the IMF Executive Board on 3 December, 2010, and its framework was designed for low-income countries that may not need or want IMF financial assistance, but still seek IMF advice, monitoring and endorsement of their policies.

It noted that PSIs are voluntary and demand driven, and in completing the review, the Board
approved a waiver for non-observance of the assessment criterion on non-concessional borrowing.

It quoted Mr. Min Zhu, IMF’s Deputy Managing Director and acting Board’s Chair, as saying: “The authorities should be commended for successfully maintaining macroeconomic stability, advancing with fiscal consolidation and completing the PSI.”

The statement, however, stated: “Slow implementation of structural reforms has resulted in below par and sluggish growth and this has hampered poverty reduction. In 2014, exogenous shocks, including the spillovers from the Ebola epidemic, have also weighed down growth.”

“To exit the trap of low growth and high poverty, the government has developed an ambitious
programme — ‘Plan Senegal Emergent’ (PSE). The PSE presents a unique opportunity to unlock a broad-based and inclusive growth that will make Senegal an emerging economy.

“The goal of a 7 to 8 percent annual growth is feasible in the medium term but would require a
broadening, deepening and acceleration of structural reforms. Public consumption should be
constrained to create fiscal space for implementation of PSE-related social spending and

“Substantial improvements are required in the regulatory framework and governance, as well as in the quality and efficiency of public investment,” the IMF stated.

It said: “The 2015 budget targets a further reduction in the deficit to 4.7 percent of GDP, less
ambitious than the 4.0 percent of GDP projected earlier. However, the authorities are taking
action to improve the quality of public spending by holding back appropriations for new public
investment projects until feasibility studies are ready.”

It also stressed: “This may mean that in practice the deficit is closer to the initial projections.
Ebola-related shocks could add 0.3 percent of GDP to the deficit in 2015 and the authorities
remain committed to bringing the fiscal deficit in line with the WAEMU target of 3 percent of
GDP in the medium term.”

The statement said that the Executive Board also completed the 2014 Article IV Consultation
with Senegal, and in doing so, it said “Senegal’s macroeconomic situation is stable. Inflation
remains low.”

It stated that the fiscal outlook has improved owing to stronger revenue performance and
expenditure control measures and overall deficit is expected to fall to 5.2 per cent of GDP in
2014 from 5.5 per cent of GDP in 2013.

It also added: “The current account deficit is expected to decline but would stay at about 10 per cent of GDP because of depressed exports.

The IMF noted that the slow implementation of structural reforms and exogenous shocks had continued to weigh down growth, stating: “While progress has been made, particularly in the area of governance and business climate, some delays have accrued in the introduction of the single treasury account, expenditure rationalization, investment expenditure execution, and energy sector reforms.”


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