APA-Dakar (Senegal) – The IMF hails Senegal’s economic resilience in 2023 despite tensions, but stresses the need for ambitious fiscal and structural reforms to consolidate the favorable outlook.
By Abdourahmane Diallo
An International Monetary Fund (IMF) team led by Mr. Edward Gemayel has just completed a working visit to Senegal from April 25 to May 3, 2024. The objective was to take stock of recent economic developments and prepare for the second review of the IMF-supported program.
In his closing statement, Mr. Gemayel praised the resilience of the Senegalese economy in 2023, despite a difficult context marked by political tensions and external shocks.
“Growth exceeded expectations at 4.6 percent, reflecting a good agricultural campaign and a solid tertiary sector. Inflation also fell faster than expected to 5.9 percent,” he said in a statement received by APA on Friday.
However, high spending on energy subsidies and debt interest had to be offset by a reduction in investment to contain the deficit to 4.9 percent of GDP. Public debt rose to 73.4 percent of GDP, exceeding the UEMOA ceiling.
In the first quarter of 2024, growth was weaker due to electoral uncertainties, with firms postponing investment and households cutting back on spending. Inflation fell to 3.3 percent.
“The outlook remains favorable, with growth now projected at 7.1 percent in 2024, down from 8.3 percent initially, reflecting the delayed start of gas production,” Gemayel said.
To achieve the deficit target of 3.9 percent of GDP by the end of 2024, ambitious measures to rationalize tax expenditures and improve efficiency will be required in an amending budget to target 3 percent in 2025.
Mr. Gemayel stressed the need for structural reforms, including a review of petroleum product prices and an audit of the electricity company SENELEC. The authorities must also make progress in removing the country from the Financial Action Task Force’s gray list.
The new administration has reaffirmed its commitment to pursuing the IMF program in line with its fiscal, governance, and structural transformation priorities.
Discussions for the second review of the Extended Fund Facility are scheduled for June.
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