The Executive Board of the International Monetary Fund (IMF) completed the first review of Senegal’s economic performance under the program supported by the Policy Support Instrument (PSI)1 approved on June 24, 2015 (see
The macroeconomic outlook remains favorable insofar as reforms are accelerated to open up economic space, particularly to SMEs and FDI. Economic growth is projected at 5.1 percent in 2015 and 5.9 percent in 2016. Inflation remains low and is expected to stay within the 1–2 percent range over the medium term. The current account improved in the first half of 2015 partly owing to lower oil prices.
Program performance through September was broadly satisfactory. All end-June assessment criteria were met but the end-June indicative target on tax revenue was missed because of a shortfall in customs revenue. This shortfall was due to higher than anticipated tax expenditure, the January 2015 introduction of the ECOWAS common external tariff, and lower oil prices. Continued rationalization and better control of public expenditure helped meet the fiscal deficit target despite the shortfall in revenue. All structural benchmarks were met.
Going forward, mitigating risks related to tax revenue shortfalls and accelerating structural reforms to sustain the growth momentum are the main challenges. Meeting the fiscal deficit targets for 2015 and 2016 requires continued revenue raising efforts, streamlining of public consumption and raising the efficiency of public investment. Achieving the Plan Senegal Emergent (PSE) growth targets requires creating economic space for SMEs and FDI. This means accelerating reforms in the energy sector, tackling rent seeking, and improving the business environment.
The PSI is an instrument of the IMF designed for countries that may not need, or want, IMF financial assistance, but still seek IMF advice, monitoring and endorsement of their policies. The PSI helps countries design effective economic programs that, once approved by the IMF’s Executive Board, signal to donors, multilateral development banks, and markets the Fund’s endorsement of a member’s policies (see http://www.imf.org/external/np/exr/facts/psi.htm).
The Executive Board takes decisions under its lapse of time procedure when it is agreed by the Board that a proposal can be considered without convening formal discussions.