The IMF welcomes Senegal’s economic resilience in 2023 despite tensions, but highlights the need for ambitious budgetary and structural reforms to consolidate the favorable outlook.
A team from the International Monetary Fund (IMF), 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 the recent economic situation and to prepare the second review of the program supported by the IMF.
In his final 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%, reflecting a good agricultural campaign and a solid tertiary sector. Inflation also fell faster than expected, falling to 5.9%. “, he declared in a press release received this Friday at APA.
However, high spending on energy subsidies and debt interest had to be offset by reduced investment to contain the deficit to 4.9% of GDP. Public debt increased to 73.4% of GDP, exceeding the UEMOA ceiling.
In the first quarter of 2024, growth was weaker due to election uncertainties, with businesses postponing investments and households reducing spending. Inflation fell to 3.3%.
“ The outlook remains favorable with growth now projected at 7.1% in 2024 compared to 8.3% initially, reflecting a delayed start of gas production “, explained Mr. Gemayel.
To achieve the deficit target of 3.9% of GDP at the end of 2024, ambitious measures to rationalize tax expenditures and improve efficiency will be necessary in an amending budget, in order to target 3% in 2025.
Mr. Gemayel insisted on the need for structural reforms, in particular the revision of the prices of petroleum products and an audit of the electricity company Senelec. The authorities must also make progress on exiting the Financial Action Task Force’s gray list.
The new government has reaffirmed its commitment to continuing the IMF program, aligned with its budgetary, governance and structural transformation priorities.
Discussions for the second review of the expanded credit program are expected to take place in June.
ARD/ac/APA
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