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Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
January 1999
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Senegal: ESAF

The IMF approved the second annual loan under the Enhanced Structural Adjustment Facility (ESAF) to support Senegal’s economic and financial program. The three-year ESAF loan was approved on April 20, 1998 (see Press Release No. 98/14, IMF Survey, May 27, 1998, page 137) in an original amount of SDR 107.0 million (about $141.9 million), of which SDR 35.7 million (about $47.3 million) has been disbursed. Today’s decision provides Senegal with another SDR 35.7 million to be disbursed during the second annual economic and financial program supported by the ESAF, with SDR 14.3 million (about $18.9 million) available immediately.

In commenting on the Executive Board’s discussion of the request by Senegal, IMF Deputy Managing Director Alassane D. Ouattara made the following statement:

“Directors welcomed Senegal’s continued macroeconomic stability under the ESAF-supported program. Economic performance in 1998 had been strong, with relatively high growth, low inflation, and a decline in the external current account deficit. A broadly similar performance was expected in 1999.

“Directors also welcomed the orientation of fiscal policy to raising revenues and curtailing nonessential expenditures so as to create room for social expenditures to rise without threatening financial stability. They welcomed the planned reduction in domestic debt. Directors looked forward to full implementation of the Common External Tariff of the West African Economic and Monetary Union (WAEMU) on January 1, 2000, which would include reduction in the maximum tariff rate and the elimination of distortionary features of the trade system. Directors attached importance to proceeding as rapidly as possible with the planned reform of the value-added tax, so as to offset revenue losses from tariff reductions.

“Directors emphasized the need for effective government expenditure to promote human resource development, alleviate poverty, and improve Senegal’s social indicators. Directors stressed, in particular, the importance of improvements in education, provision of basic health services, and investment in rural infrastructure. A merit-based system for government salaries was seen as important in improving the efficiency of spending.

“Acceleration and deepening of structural reforms remain central in removing impediments to private enterprise and sustaining economic growth. Directors welcomed the authorities’ program to complete the privatization and restructuring of publicly owned enterprises by end-2000, and emphasized the need for liberalization of the energy and transport sectors. Directors encouraged the authorities to press ahead with their ongoing efforts to strengthen the judicial and legal systems, and improve governance.”

Program summary

The medium-term strategy under the program is to achieve higher growth by raising investment rates and productivity. The program for 1999-2001 seeks to raise real GDP growth to 6.4 percent in 1999 and 6 percent in 2001 from 5.7 percent in 1998. Annual inflation is to be held at around 2 percent, and the external current account deficit (excluding official transfers) is expected to narrow to less than 6 percent of GDP in 2001.

To meet these objectives, the government policies aim at strengthening financial viability while reducing the structural rigidities that have constrained growth in the past. Monetary policy will continue to be conducted at the regional level by the Central Bank of the West African States (BCEAO) through the use ofdirect, market-based instruments.

In 1999, the government will continue to contain the growth of current expenditures to ensure adequate funding for priority social sectors, maintenance of public infrastructure, and investment.

Structural reforms will focus on sustaining the overall strategy to accelerate private-sector-led growth and to achieve a lasting reduction in poverty. Some of the key measures center on finalizing the privatization and restructuring of public enterprises, developing a favorable environment for the private sector, deepening sectoral reforms, improving human resource management, and promoting economic integration among the WAEMU countries.

Senegal joined the IMF on August 31, 1962, and its quota is SDR 161.8 million (about $214.6 million). Its outstanding use of IMF financing currently totals SDR 192.42 million (about $255.2 million).

Senegal: selected economic and financial indicators
199619971199819992,32000320013
Revised programEstimates
(annual percent change)
Real GDP5.25.05.75.76.46.06.0
Consumer prices
(annual average)2.81.81.12.02.02.0
(percent of GDP)
Overall fiscal balance
(commitment basis,
excluding grants)-4.6-2.0-2.0-3.3-4.4-3.4-2.6
External current account
(excluding official
transfers)-8.0-7.8-7.7-6.8-7.0-6.3-5.8

Estimates.

The fiscal projections for 1999 and 2000 are shown including the supplementary budget.

Projections.

Data: Senegalese authorities and IMF staff estimates and projections

Estimates.

The fiscal projections for 1999 and 2000 are shown including the supplementary budget.

Projections.

Data: Senegalese authorities and IMF staff estimates and projections

Press Release No. 99/29, July 12

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