Dakar, Senegal: A staff team from the International Monetary Fund (IMF) led by Mr. Edward Gemayel, conducted a mission in Dakar during June 6-19 to review progress under the authorities' economic program supported by the IMF's Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements of SDR 1,132.6 million (about US$ 1.5 billion), combined with the Resilience and Sustainability Facility (RSF) of SDR 242.70 million (about US$320 million). The EFF/ECF and RSF arrangements were approved by the IMF Executive Board on June 26, 2023.
At the conclusion of the mission, Mr. Gemayel issued the following statement:
"The IMF team welcomes the new authorities' commitment to the existing IMF-supported programs. They remain committed to implementing policies aimed at reducing debt vulnerabilities by embarking on a growth-friendly fiscal consolidation, strengthening governance, delivering a more inclusive and job-rich growth, and building resilience to climate change.
"Following the peaceful resolution of the March presidential election, the economic outlook has improved. Economic growth is projected at 7.1 percent in 2024 and 10.1 percent in 2025, with inflation expected to fall and remain within the BCEAO's target range by end-2025. The elevated current account deficit is expected to narrow in 2024-2025, reflecting the impact of the start of the hydrocarbon production and the fiscal consolidation efforts.
"Performance under the Fund-supported programs has been broadly satisfactory despite political tensions in the lead-up to the presidential election and a difficult external environment. All performance criteria for end-December 2023 have been met. All but one indicative targets have been met. Additionally, progress has been made on structural reforms, with three out of six benchmarks for the second review under the EFF/ECF program already completed. Both reform measures under the RSF are on track for completion ahead of the Board meeting scheduled for the second half of July.
"Good progress was made in discussions regarding adjustments to the 2024-25 budget, considering the current cost-of-living crisis. To address rising energy subsidies and interest payments, the government will propose a supplementary budget to parliament, raising the fiscal deficit to 4.5 percent of GDP. This represents a 0.6 percentage point increase from the commitment made at the time of the last review. Additionally, the authorities are also committed to pursuing their fiscal consolidation strategy through enhanced domestic revenue mobilization and decisive implementation of the energy subsidy reform in line with their roadmap to gradually phase-out these subsidies.
"Despite a challenging global and regional financing environment, Senegal has successfully issued a new Eurobond and secured substantial regional financing.
The authorities intend to use this financial leverage for liability management operations, with the goal of enhancing the country's debt sustainability.
"The IMF team welcomes the progress on structural reforms. Key measures include commitments to (i) strengthening the Office for National Anti-Corruption (OFNAC); (ii) adopting a law protecting whistleblowers; and (iii) completing the remaining two measures necessary to exit the Financial Action Task Force (FATF) grey list. Additionally, the authorities are committed to (iv) enhancing governance in the extractive sector by disseminating information on the ultimate beneficiaries of companies engaged in this sector, in line with Senegal's adherence to the Extractive Industries Transparency Initiative (EITI) standards.
"The IMF team wishes to thank the authorities and other counterparts for their excellent cooperation, and candid and constructive discussions during the visit. Discussions will continue in the coming days to finalize the details of some policies prior to reaching a staff-level agreement."
During the mission, the IMF team met with [His Excellency, Prime Minister Ousmane Sonko; Mr. Cheikh Diba, Minister of Finance and Budget; Mr. Abdourahmane Sarr, Minister of Economy, Planning and Cooperation, and other senior government officials. The IMF team also had productive discussions with representatives of civil society and development partners.
