This paper discusses results of a fiscal transparency evaluation (FTE) in Senegal. This evaluation puts forward a number of recommendations that would enable Senegal to continue to improve its fiscal transparency while strengthening the fiscal risk management framework. The recommendations relate to five objectives and are accompanied by an Action Plan. Practical examples have been included in the report to back the various recommendations and facilitate their implementation. The paper also highlights that fiscal reporting practices in Senegal can be improved in light of the IMF’s Fiscal Transparency Code. It has been observed that the fiscal and accounting reforms undertaken in the past few years can be expected to enhance fiscal transparency in the medium term. Project appraisal and selection mechanisms have recently been revamped and there is now more information regarding their feasibility available to the general public. The FTE finds that Senegal is positioned at the average level for countries of similar income and institutional capacity.


This paper discusses results of a fiscal transparency evaluation (FTE) in Senegal. This evaluation puts forward a number of recommendations that would enable Senegal to continue to improve its fiscal transparency while strengthening the fiscal risk management framework. The recommendations relate to five objectives and are accompanied by an Action Plan. Practical examples have been included in the report to back the various recommendations and facilitate their implementation. The paper also highlights that fiscal reporting practices in Senegal can be improved in light of the IMF’s Fiscal Transparency Code. It has been observed that the fiscal and accounting reforms undertaken in the past few years can be expected to enhance fiscal transparency in the medium term. Project appraisal and selection mechanisms have recently been revamped and there is now more information regarding their feasibility available to the general public. The FTE finds that Senegal is positioned at the average level for countries of similar income and institutional capacity.


Fiscal reports should provide a comprehensive, relevant, timely, and reliable overview of the government’s financial position and performance.

1. This chapter seeks to provide an evaluation of fiscal reporting practices in Senegal with respect to the standards of Pillar I of the Fiscal Transparency Code. It therefore looks at the following four dimensions of Pillar I:

  1. Coverage of institutions, stocks and flows;

  2. The frequency and timeliness of fiscal reporting;

  3. The quality, accessibility and comparability of fiscal reports; and

  4. The integrity of fiscal reports.

2. Fiscal reports must provide a comprehensive description of the fiscal activities of the public sector and its sub-sectors, in keeping with international standards. To that end, fiscal reports, comprising budget execution reports, government finance statistics (GFS) and government accounts, must:

  • Cover all entities engaged in public sector activities;

  • Cover all assets, liabilities, revenue, expenditure, financing sources and other flows;

  • Be published frequently and at regular time intervals;

  • Present fiscal information using classifications (nomenclature) that facilitate international comparisons;

  • Provide linkages among fiscal aggregates and explain possible discrepancies between or within fiscal reports; and

  • Be drawn up, in the case of GFS, by an independent agency and submitted for review by a higher supervisory body.

3. The transparency of public sector fiscal information in Senegal varies. Numerous reports covering budgetary central government accounts exist and are published on a regular basis. However, financial statements for the central government extrabudgetary units, for the social security funds, for the subnational governments, and for most public corporations are not published. Best practices in government accounting require publication of the financial statements of autonomous entities. Expanding the coverage of the TOFE to include those entities will enhance transparency. Nevertheless, significant efforts have been made in recent years to improve the centralization and compilation of public sector data.

4. Since 2015, GFS in Senegal have been compiled following the Government Finance Statistics Manual (GFSM) 2001. Senegal is the first country in the West African Economic and Monetary Union (WAEMU) to present its Government Fiscal Operations Table (TOFE) in accordance with WAEMU Directive 2009 on the TOFE, which is consistent with GFSM 2001. However, Senegal’s current government accounting system does not allow for the compilation of statistics in line with all GFSM specifications. Thus, transactions are recorded using a hybrid (cash basis and accrual basis) accounting system. Likewise, government balance sheet data remain partial and fragmented.

5. Most general government fiscal reports are centralized in the Ministry of Economy, Finance and Planning (MEFP) (Table 1.0). Thus, General Directorate of Government Accounting and Treasury (DGCPT) is responsible for compiling the GFS. It is also responsible for consolidating the budget execution (revenue and expenditure) accounts of the government accounting officers (comptables publics) and for compiling the main government financial statements. The budget execution reports are prepared by the General Directorate of Budget (DGB). For its part, the Public Debt Directorate produces information on both domestic and external public debt. Finally, the Parapublic Sector Directorate (DSP) produces reports on budget execution and the indebtedness of public entities, agencies, and related institutions, as well as of public corporations.

Table 1.0.

List of Fiscal Reports

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Note: BCG: budgetary central government; CG: central government; ECG: extrabudgetary central government; GI: government institutions; PC: public corporations; SNG: subnational governments; M: monthly; Q: quarterly; A: annual; SSF: social security funds; NA: National Accounts; n/a: not available

1.1. Fiscal Reporting Coverage

1.1.1. Coverage of institutions


6. Since end-2017, Senegal has been producing a consolidated annual TOFE covering all sub-sectors of public administration. The expanded GFS coverage improves measurement of the activities of the public administration and of its relations with other sectors of the economy. Nevertheless, there are remaining gaps with respect to a comprehensive compilation of data for all extrabudgetary entities and public corporations. For instance, the reports on extrabudgetary entities only cover a fraction of such entities. The public corporation data are not consolidated with government accounts and the available reports mainly cover only those corporations’ indebtedness and government equity. For that reason, the establishment of a parapublic sector observatory2 and of a subnational government finance observatory aims at strengthening the dissemination of public sector fiscal data to the general public.

Figure 1.1.
Figure 1.1.

Composition of the Public Sector (Expenditure as a percentage of GDP1, 2016)

Citation: IMF Staff Country Reports 2019, 034; 10.5089/9781484397084.002.A001

Source: MEFP. Note: Expenditures for the public sector, general government sub-sectors and central government are consolidated.

7. In 2016, the Senegalese public sector includes 826 entities with different legal status (Figure 1.1 and Table 1.1):

  • Central government3 comprises 201 entities, including 30 ministries, 10 republican institutions (Presidency, National Assembly, Supreme Court, and so on), 11 Special Treasury accounts (CST), and 150 extrabudgetary units (government institutions, agencies and other similar bodies);

  • The subnational governments sub-sector comprises 42 departments containing 557 communes (including 5 towns [villes]);

  • The social security funds sub-sector comprises the Social Security Fund (CSS/SSF) and the pension institution (Institution de prévoyance retraite du Sénégal–IPRES), and handles family, workplace accident, occupational disease-related and retirement benefits.

  • Statistically, public corporations comprise 19 non-financial corporations (public utilities, energy, transportation, trade, real estate, telecommunications, and lotteries) and 5 financial corporations (deposits, investment and insurance), including the national directorate of the BCEAO.

Table 1.1.

Institutional and Financial Breakdown: Revenue, Expenditure and Net Balance, 2016

(As a percentage of GDP)

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Source: MEFP, ANSD, and estimates by the mission.

8. General government expenditure accounted for 33.1 percent of GDP in 2016, of which 31.4 percent was central government expenditure. Extrabudgetary central government units, with expenditure equivalent to 9.5 percent of GDP, are an important part of fiscal policy. Expenditure by subnational governments and social security funds amounted to only 2.1 percent of GDP in 2016.

9. Expanding GFS coverage to include public corporations would have a significant impact on fiscal aggregates. (Figure 1.2). Revenue would increase from 30.3 percent of GDP for general government to 36.4 percent for the public sector, while expenditure would increase from 33.1 to 38.1 percent, thereby lowering the deficit in 2016 from 2.8 to 1.7 percent of GDP. Furthermore, the gross debt would increase from 97.2 percent of GDP for general government to 121.1 percent of GDP for the whole of the public sector, while net financial worth (valeur financière nette) would go from -74.0 to -84.0 percent.

Figure 1.2.
Figure 1.2.

Coverage of the Public Sector in Statistical Reports, 2016

(As a percentage of total expenditure)

Citation: IMF Staff Country Reports 2019, 034; 10.5089/9781484397084.002.A001

Source: IMF staff.

1.1.2. Coverage of stocks

Not met

10. Senegal does not meet the basic practice requirement that fiscal reports must include cash flow, deposits and all debt. Whilst some financial asset and liability data are compiled, they are fragmented and include gaps. The DDP publishes a quarterly statistics bulletin on the public debt covering loans and debt securities issued by the government. That bulletin does not take other government debt into account, particularly accounts payable, amounts owed to social security funds, government entity deposits in the Treasury, comfort letter-related amounts, actuarial liabilities in respect of pensions for civilian and military personnel, or obligations from public-private partnerships (PPPs). The DSP likewise publishes a report that keeps track of government equity investments at cost price in public and private corporations and of annual revaluations of that portfolio.

11. Current accounting practices do not make it possible to establish the government’s net worth (patrimoine de l’État). The trial balance of Treasury is not based on an accrual-based approach and cannot therefore be used to reconstruct all outstanding assets and liabilities. While it makes it possible to identify certain components of the balance sheet, this information is not published in a report. The same holds for the trial balances of subnational governments. An action plan is currently implemented to modernize government accounting by 2020.

12. The majority of parapublic sector entities produce complete annual financial statements,4 but they are not consolidated in the fiscal reports. They are transmitted to the DSP. However, most parapublic sector accrual-based data (données patrimoniales) are not yet included in statistical reports covering all balance sheet accounts which allow measuring the financial net worth or the net worth of all those sub-sectors. Reports on the execution of extrabudgetary units are published and present some information on their debt5 but not in a comprehensive manner. The establishment of a parapublic sector observatory will help the move toward more comprehensive reporting and boost dissemination of data to the public. A report on parapublic sector indebtedness has been produced but covers only the years 2013 and 2014.

13. A significant portion of Senegal’s balance sheet6 is not measured in the public reports (Figure 1.3). For the consolidated public sector, according to mission estimates, this portion amounts to 27 percent of GDP for financial assets and 51 percent of GDP for liabilities. For general government, this portion is 17 percent of GDP for financial assets and 39 percent of GDP for liabilities.

Figure 1.3.
Figure 1.3.

Balance Sheet and Coverage in Fiscal Reports, 2016

(As a percentage of GDP)

Citation: IMF Staff Country Reports 2019, 034; 10.5089/9781484397084.002.A001

Sources: MEFP, ANSD, BCEAO, and IMF staff estimates.

14. The consolidated gross public sector debt in Senegal equals to 121.1 percent7 of 2016 GDP (Figure 1.4). Central government accounts for most of this, with a gross debt equivalent to 97.2 percent of GDP. Public corporations, not including the Central Bank, have liabilities8 equivalent to 16.8 percent of GDP. Social security funds and subnational governments have very little gross debt.

15. Actuarial liabilities relating to retirement pensions for civilian and military personnel equals to 28.1 percent of GDP in 2016, according to a mission estimate. These liabilities correspond to cumulative pension entitlements9 at the end of fiscal year 2016, accrued by current and retired civil servants and beneficiaries. As in other countries in the WAEMU area, this pension scheme is an unfunded and non-autonomous with predefined benefits. It is managed by the National Retirement Fund (FNR), which is part of the budgetary central government sub-sector. These liabilities are still, however, relatively insignificant compared to those of other countries.

Figure 1.4.
Figure 1.4.

Public Sector Gross Liabilities, 2016

(As a percentage of GDP)

Citation: IMF Staff Country Reports 2019, 034; 10.5089/9781484397084.002.A001

Source: IMF estimates.

1.1.3. Coverage of flows


16. Government accounting practice is essentially on cash-basis. The BGCT does not provide sound information for preparing the Government Fiscal Operations Table (TOFE), even though improvements and amendments under way may achieve this goal by 2020. GFS in Senegal are currently based on a hybrid accounting system half way between cash-basis and accrual accounting. Indeed, the TOFE relies on monitoring of budget execution, based on actual collections in the case of revenue and on a payment order basis in the case of expenditure. Thus, the consolidated general government TOFE shows all fiscal transactions and the financing operations derived from them. The financing operation flows are broken down by type of asset and liability, and by residence of the counterparty, pursuant to GFSM 2001/2014. Using this system, it is possible to track amounts still payable and government arrears for the current period.

17. Coverage of economic flows is not exhaustive in fiscal and overall accounting, or in the GFS. Accrual based government accounting (comptabilité de l’Etat en droits constatés et patrimoniale) is not effective yet, preventing the recording of non-monetary flows (accrued interest not yet due, in-kind transactions, fixed capital consumption). Similarly, other economic flows (holding gains and losses and other changes in volume) are not recorded either, making it impossible to achieve complete integration of stocks and flows (for instance, regarding the data on foreign currency-denominated debt (Figure 1.7).

1.1.4. Coverage of tax expenditure

Not met

18. Since fiscal year 2008, internal revenue departments have been producing a detailed report on shortfalls due to tax expenditures. That Tax Expenditure Evaluation Report is written by a technical committee coordinated by the General Directorate of Taxes and Property (DGID). It follows several good practices in respect of content, above all: (i) presentation of a comprehensive list of tax expenditures; (ii) quantitative estimates of shortfalls revenue for most of them10; (iii) aggregated presentation of those costs under several different classifications (sectoral, by type of tax, etc.); and (iv) studies of the socio-economic impact of tax expenditures in certain sectors (such as the mining or microfinance sectors). That report is the administration’s sole communication channel for disclosing the aggregate fiscal cost of tax expenditures.

Figure 1.5.
Figure 1.5.

Regional Comparison of Revenue Forgone Due to Tax Expenditure

(As a percentage of GDP)

Citation: IMF Staff Country Reports 2019, 034; 10.5089/9781484397084.002.A001

Source: evaluations by the authorities in each country.

19. The public access to data on the fiscal impact of tax expenditures and the understanding of what is at stake are limited because the report is not published on a regular basis. The evaluation of the fiscal cost of tax expenditures in 2014 was produced at the end of 2016 and is available online. The evaluation for fiscal year 2015 has been completed, but the report has not been published11, which contravenes the annual publication obligation established in the 2009 WAEMU directive on the transparency code and in the 2012 law transposing the directive.12 The fiscal cost of the quantified tax expenditures (7.8 percent in 2014, or CFAF 588 billion) is relatively high compared to other countries in the sub-region, such as Côte d’Ivoire, Mali or other African countries (Figure 1.5), which suggests both that the inventory of tax expenditures is relatively comprehensive in Senegal and that the government’s success in curbing them has been limited. Publication of the reports for 2015 and 2016 would enable the government to sensitize the public and Parliament to the need to continue efforts to rationalize tax expenditures, especially exemptions for economic and social purposes.

1.2. Frequency and Timeliness of Fiscal Reporting

1.2.1. Frequency of in-year reports


20. Several monthly or quarterly fiscal reports are produced and published in Senegal.

Regarding the monitoring of government budget execution, the DGB produces and publishes a quarterly report (within no more than 45 days of the end of the quarter). The Economic Forecasting and Studies Directorate (DPEE) publishes a provisional monthly survey (the timeliness of which varies) and a monthly note on economic conditions (within 30 days of the end of the month). The Parapublic Sector Directorate (DSP) likewise produces and publishes a quarterly budget execution report on government institutions, agencies and administrative bodies (whose timeliness also varies). About the domestic and external debt, the Public Debt Directorate (DDP) produces and publishes a quarterly statistics bulletin within no more than 90 days of the end of the quarter. The current monthly TOFE, covering budgetary central government, is produced within 45 days of the end of the month. Good practice requires that quarterly reports be published within one month.

21. In November 2017, Senegal officially subscribed to the IMF’s Special Data Dissemination Standard (SDDS). It thereby became the fourth country in Sub-Saharan Africa and the first in the WAEMU area to join the SDDS. In order to observe the new GFS dissemination standard in effect, Senegal commits to publishing the monthly TOFE and the quarterly statement of central government debt, using an open data model, within one month and one quarter, respectively. The consolidated general government TOFE is to be published within no more than six months. Finally, metadata produced according to the standard will facilitate user interpretation of the GFS.

1.2.2. Timeliness of publication of annual financial statements


22. Senegal presents annual statements to the supreme audit institution, the Court of Accounts consistently with the provisions of WAEMU Directive No. 07/2009 setting forth general rules governing public accounting. Pursuant to Article 80 of the Directive, the MEFP compiles the annual government accounts by no later than six months after the end of the fiscal year (by June 30). These accounts comprise the Fiscal Management General account (CGAF)13 and the financial statements used to prepare the annual fiscal statement law (loi de règlement) accompanied by a Court of Accounts report on budget execution and a general statement certifying compliance.

23. In 2017, the Court of Accounts received the draft final budget, the CGAF and the budget execution record of spending officers for the fiscal year (Compte administratif de l’Ordonnateur de la gestion) by the deadlines set in the Directive. However, as in previous years, the delay in producing key operating accounts is such that they cannot be considered when issuing the general statement of conformity (DGC). The Court of Accounts did not receive the outstanding public debt statement until December 5, 2017. It is also worth mentioning that there is scope for improving the quality of the CGAF, particularly regarding the use of provisional data (mainly due to delays in compiling the trial balance of Treasury beyond the additional time normally allowed for) and the presence of recurrent errors.

24. The Court of Accounts transmitted its report on execution of the 2016 budget to the National Assembly on December 28, 2017. Thus, the annual financial statements were published just before the 12-month deadline from the end of fiscal year 2016. A good practice would require publication within 9 months. Nevertheless, the mission notes that for fiscal years 2015 and 2014, it took 19 and 16 months, respectively, for the statements to be published.

1.3. Quality of Fiscal Reporting

1.3.1. Classification


25. Senegal has adopted a legal framework that includes a budgetary and accounting nomenclature compliant to international classification standards (e.g., GFSM 2001, Classification of Functions of Government [COFOG]). This framework is established by the Organic Budget Law (LOLF) and two implementing instruments.14 Fiscal revenues are shown according to economic classification while expenditures follow administrative and economic classifications. These classifications are used for budget preparation and execution and for accounting (draft Budget Review Law, CGAF).

26. Some classification shortcomings make it difficult to reconcile the authorizing officers’ and the accounting officers’ accounts (comptes des ordonnateurs et des comptables). Numerous inconsistencies identified during execution (e.g., the presence of wage or current components in the capital chapters) complicate efforts to monitor and analyze the accounts and require manual reprocessing work at the end of the fiscal year. In addition, since execution of the payroll is performed according to the employee registration number rather than according to his or her administrative attachment, execution of_wage bill appropriations is manually reconstructed ex post for accounting purposes. Work on remedying these anomalies is currently being carried out in the DGB and the DGCPT. Eventually, the SIGIF integrated reporting system should make it possible to automate the budgetary-accounting process.

27. More work is needed on both functional and programmatic classifications. Some work on implementing the functional classification system has been carried out and it is now available in the information system. However, it is not used for budget preparation and monitoring or for drafting fiscal reports. For its part, the programmatic classification system is being implemented and is not yet fully in place. It is therefore not yet used for budget preparation, approval or execution and at this stage functions mostly for information purposes. The ministerial order approving the final list of programs is still pending.

1.3.2. Internal consistency


28. The internal consistency indicator requires three kinds of reconciliation of data from different sources. These reconciliations seek to (i) ensure consistency between calculation of the fiscal balance and calculation of its financing; (ii) spell out the sources of the discrepancy between the stock of debt holdings and debt issuance/redemption; and (iii) approximate financing and the change in debt stock. In Senegal, only the second reconciliation is performed, and it could be improved.

29. Reconciliation between the fiscal balance and financing is performed in the Government Fiscal Operations Table (TOFE) published by the Economic Studies and Statistics Division (DEES) of the DGCPT. The DEES provides a consistent presentation of the budgetary central government deficit, on the one hand, and, on the other, total sources for financing the deficit. The gap between the two calculation methods, shown in the Errors and Omissions line, has been less than 0.1 percent of GDP, on average, for the past 15 years (Figure 1.6). However, it is not, strictly speaking, a reconciliation between the data and those of creditors.

30. The authorities do present a debt stock/debt flow adjustment, but it remains largely unaccounted for. A framework for calculating the stock/flow adjustment, namely, the gap between the change in the stock of debt and the deficit, is provided in an annex to the Debt Sustainability Analysis Report for recent years. That framework breaks down the outstanding debt to GDP ratio fluctuation according to identified debt-creating flows – primary deficit, the in-built dynamic of the debt (in response to the interest rate and the exchange rate) – and a residual value. That residual amount, which is significant in the case of Senegal (Figure 1.7), may be linked to changes in the scope of the debt, changes in its rating, or debt relief.

Figure 1.6.
Figure 1.6.

Gap Between Calculations of the Deficit and its Financing

(As a percentage of GDP)

Citation: IMF Staff Country Reports 2019, 034; 10.5089/9781484397084.002.A001

Source: DEES.
Figure 1.7.
Figure 1.7.

Explanation of Changes in Outstanding Debt Between 2014 and 2016

(As a percentage of GDP)

Citation: IMF Staff Country Reports 2019, 034; 10.5089/9781484397084.002.A001

Source: DDP. “Interest rate”: effect of the gap between the real interest rate and real growth of GDP. “Exchange rate”: effect of the depreciation of the real exchange rate.

31. The government does not publish any reconciliation between debt issued and debt held by creditors. The West African Monetary Union (WAMU) Securities Agency (UMOA titres), which supports the issuance of domestic debt securities in WAEMU countries publishes a geographical breakdown of government securities holders in Senegal in its quarterly bulletin. In addition, WAEMU requires that the WAMU Securities Agency produce a monthly report on the breakdown of holdings of Senegalese Treasury bills and bonds in the second market, based on the data transmitted each month by authorized subscribers (particularly, primary dealers in Treasury securities).15 WAEMU rules state that it is up the BCEAO National Office in Senegal to disseminate this report extensively. However, the report is currently not available, due to the failure to transmit the data and to the fact that the administration does not know to what third parties those securities may have been transferred.

1.3.3. Historical revisions


32. Major revisions are gradually being made to macroeconomic statistics. They entail implementation of the GFSM 2001/2014, of SNA 2008, and of the change of the base year.16 These revisions enable the authorities, investors, technical and financial partners, and the public to better assess progresses made and improvements of public policies effectiveness. One good transparency practice is to disclose and explain any revisions of fiscal statistics.

33. Following the national accounts reevaluation, 2014 GDP was increased by almost 30%. That increase is largely due to the upturn in value added of the tertiary sector.17 A summary of the revisions undertaken during the reevaluation of the national accounts was disseminated by the ANSD. It describes and explains the main methodological changes and their impacts on the time series.

34. There has been no publication explaining the impact of the main methodological changes made in the revised TOFE in June 2015, following the migration to GFSM 2001.

Senegal is the first WAEMU country to have shifted to a GFSM 2001-based presentation of the TOFE, pursuant to the related WAEMU directive. To this day, the gradual adoption of the GFSM 2001 prescriptions has not been accompanied by any publication describing and explaining the methodological changes, in particular regarding the new classification, the reclassification of operations and the expanded data coverage.

1.4. Integrity of Fiscal Reporting

1.4.1. Statistical integrity


35. Responsibilities for compiling and publishing statistical data are clearly established.

Government fiscal statistics are compiled by the DEES, and real sector statistics by the ANSD. The National Directorate of the BCEAO produces the balance of payments and financial and monetary statistics. All those data are, for the most part, compiled and disseminated in accordance with recognized international standards. However, for financial and monetary statistics, the MFSM 2000 is still the applicable standard for the National Directorate of the BCEAO.18 And regarding the TOFE, the shift to GFSM 2001/2014 is so far limited to classification and presentation of data.

36. Senegal does not publish GFS based on functional classification of general government. Since the functional fiscal classification is still being implemented, expenditures by functions are not yet reported in the GFS yearbook published by the Statistics Department at the IMF.

37. Senegal shares the schedule of data publication for the on-going month and at least for the up-coming three months. This schedule encompasses all macroeconomic statistics. In addition, fiscal statistics (government operations and public debt) are published with the periodicity and timeliness required by the SDDS.

38. Strengthening the institutions in charge of statistical integrity is an ongoing task. A National Statistics Council (CNS) and a Technical Committee for Statistical Programs (CTPS) are in charge of coordinating the compilation and dissemination of the statistical data produced by the departments and agencies of the national statistics system under the Prime Minister’s authority. They also perform an advisory function within the national statistics system. The CNS can implement recommendations. In addition, the DGCTP has created a TOFE sub-committee responsible for implementing GFS according to GFSM 2001/2014. This committee gathers the main producers and users of GFS data and could provide a basis for an expanded GFS committee in the future. These initiatives reinforce the adoption of international standards and the harmonization and consistency of the data derived from the various macroeconomic statistics systems

1.4.2. External Audit


39. Senegal’s Court of Accounts meets the main criteria for independence required by international standards. Its area of expertise is defined by the Constitution and Organic Law No, 2012-23 of December 27, 2012, on the Court of Accounts (Articles 29 to 32). Its competence encompasses jurisdictional supervision over the accounts compiled by government accounting officers (Article 29), supervision of budget execution (Article 30), oversight of the parapublic sector (Article 31), and punishment of administrative misconduct (Article 32).

40. In accordance with its oversight functions, the Court of Accounts produces and publishes several reports (Table 1.2). Each year, the MEFP submits a series of documents to the Court of Accounts for review. These documents are: the draft Budget Review Law, the CGAF, the authorizing officer’s budget execution record (compte administratif), the BGCT, and the balances compiled by the principal accounting officers. After the Court of Accounts has reviewed them, it produces the Report on Execution of the Budget Law (RELF) accompanied by a general statement of conformity (DGC). The various reports and documents produced by the Court of Accounts are published online but they need to be up-dated.

41. The Court of Accounts analyzes budget execution and verifies the various documents for consistency. Through the RELF and the DGC, the Court of Accounts compares execution of the budget law against the initial authorization and verifies consistency between the different documents and financial statements (for instance, consistency between the final and initial balances). The Court of Accounts may express reservations with respect to the discrepancies detected. Thus, regarding execution of the 2016 budget, the Court of Accounts highlighted inconsistencies between the budget execution record (compte administratif) and the Fiscal Management General Account (CGAF), due to matching issues between the budget classification (NBE) and the Government Chart of Accounts (PCE).

42. The Court of Accounts does not certify the national accounts. This does not fall within its current competences. Moreover, the government has not yet begun publishing financial statements. Certification by the Court of Accounts is envisaged but is currently a long-term objective, given that strengthening current supervision is deemed a priority.

Table 1.2.

Contents of Court of Accounts Outputs

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Source: Court of Accounts.

1.4.3. Comparability of fiscal data


43. Fiscal forecasting, budgets, and the various related fiscal reports are presented in a way which ensures comparability. The presentation of revenue and expenditure shows some uniformity according to economic and administrative classifications in the fiscal forecasting, the draft budget laws (PLF), the budget law execution report (RELF) and the fiscal management general account (CGAF). The fiscal reports on monitoring of execution contain an adequately disaggregated reconciliation between fiscal forecasts and outturns. (Table 1.3).

44. There is no formal process for reconciling the GFS with fiscal accounting. In the absence of this formal process no reconciling table can be elaborated. The new economic budget classification of the WAEMU, currently being implemented, harmonized with the economic classification used for the GFSM 2001 will enhance the consistency of the fiscal data resulting from fiscal accounting with the GFS.

Table 1.3.

Budget Outturn, 2016

(CFCA billions)

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Source: LFI 2016, RTEB T2 2016, RELF 2016. C.S.T. = Special Treasury accounts.

Conclusions and recommendations

45. Fiscal reporting practices in Senegal can be improved in light of the IMF’s Fiscal Transparency Code. Generally speaking, the information is available, but it is often produced and used by various departments solely for internal purposes. There are still gaps with respect to the measurement and consolidation of government balance sheet data. A number of indicators could be improved in the short term, especially by consolidating and publishing already available data. Senegal has recently made notable progress. Two indications of that are the expanded coverage of the GFS and Senegal’s subscription to the Special Data Dissemination Standard (SDDS).

46. The fiscal and accounting reforms undertaken in the past few years can be expected to enhance fiscal transparency in the medium term. Major reforms are underway in Senegal thanks to implementation of the new WAEMU harmonized public finance framework. Adoption of the new fiscal classifications, the new government chart of accounts and the implementation by 2020 of accrual basis and balance sheet government accounting (comptabilité en droits constatés et patrimoniale) will translate into enhanced data comparability: a primary objective for WAEMU area countries.

  • Recommendation 1.1: Provide more thorough insight into public finance

    • Publish the assessment report of the fiscal cost of tax expenditure for a recent (2015 or later) fiscal year

    • Compile the final list of government entities and list units by sector

    • Compile a consolidated general government balance sheet

    • Compile a Government Fiscal Operations Table (TOFE) and a consolidated public sector balance sheet

    • Boost (human, financial and I.T.) resources for the departments responsible for economic studies and statistics, including the DEES and the DSP

  • Recommendation 1.2: Apply the classifications specified in the Organic Budget Law (LOLF)

    • Interface balance software with the Integrated Public Finance Management System (SIGFIP) to allow regular monitoring of the execution of payroll expenditure (at the very least, according to the administrative classification)

    • Produce a budget execution statement using functional classification when preparing the draft Budget Review Law (PLR) for 2017 (and beyond)

    • Continue screening and harmonizing economic classifications to facilitate the rendering of accounts and reconciliations between the accounts prepared by the authorizing officer and those prepared by the accounting officers

    • Validate the list of fiscal programs and produce financial statements using program-based budget nomenclature with data for a few tentative fiscal years

    • Produce a metadata (sources, concepts and methods) document on the migration to GFSM 2001/2014

  • Recommendation 1.3: Implement accrual basis and balance sheet accounting (comptabilité en droits constatés et patrimoniale) as well as market-based valuation

Table 1.4.

Heatmap – Pillar I (Fiscal Reporting)

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Budgets and their underlying fiscal forecasts should provide a clear statement of the government’s budgetary objectives and policy intentions, and comprehensive, timely, and credible projections of the evolution of the public finances.

47. This section assesses the quality of Senegalese practices with respect to fiscal forecasting and budgeting vis-à-vis the standards set in Pillar II of the Fiscal Transparency Code. The analysis and discussion address four main areas:

  1. The scope (comprehensiveness) of the budget law and budget documentation;

  2. The clarity of the budget process;

  3. Fiscal policy stance; and

  4. The credibility of fiscal forecasts.

48. Budgets and the macroeconomic forecasts underpinning them need to clearly state fiscal goals and policies pursued by the administration and to present comprehensive, up-to-date and credible projections of developments in public finance. To that purpose:

  • Macroeconomic forecasts and budgets must provide a thorough view of the outlook for public finance;

  • The prerogatives and responsibilities of the executive and legislative branches of government regarding budgeting need to be established by law and the budget must be presented, debated and approved within appropriate time frames;

  • Fiscal forecasts and the budget must be presented in such a way as to facilitate analysis of policies and accounting; and

  • Both economic and fiscal forecasts and budgets must be credible.

49. The content of the budget law, responsibilities, deadlines, and the rules governing presentation of the budget are established in the Constitution and in the LOLF. Apart from the Constitution, the legal framework governing the preparation, approval, execution, monitoring, and supervision of budget laws reflects the transposition of the WAEMU regional directives of 2009. That framework requires publication of several documents (Table 2.1). Its implementation is under way and should be completed by 2020, three years after the initial deadline (January 1, 2017). Thus, Senegal is currently at an intermediate stage with some of the provisions of the new legal framework coexisting with old rules and practices.

Table 2.1.

Fiscal Forecasting and Budget Documents

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Source: IMF staff.

2.1. Comprehensiveness

2.1.1. Budget unity

Not met

50. Budget documentation has expanded thanks to gradual implementation of the 2011 Organic Law. Budget documentation includes the draft budget laws and their explanatory annexes. It also comprises programming and performance documents, such as the Multiyear Budgetary and Economic Programming Document (DPBEP), the Multiyear Expenditure Programming Document (DPPD) and the Annual Performance Projects (PAP), which were introduced by the Organic Budget Law (LOLF) and constitute mandatory annexes to the draft budget laws. Implementation of the Organic Law is currently under way and budget documents still need to be completed or improved: not all the new documents have been produced and some are still being drafted (matrix tables, for instance). Nevertheless, the MEFP has gone to considerable lengths to improve the contents and presentation of budget documents.

51. With respect to the central budget, budget documentation appears to be relatively comprehensive. The budget laws and their annexes contain all tax and nontax revenue (including parafiscal taxes), grants, and exceptional revenue. Data regarding external financing are likewise available with more extensive description of certain contributions to the government budget (e.g., cooperation aid from Luxembourg). As for expenditure, outlays are now shown by type and by section (e.g., ministries/institutions). Likewise, the budget specifies the amounts of transfers of current and capital appropriations to various government entities such as government institutions or extra-budgetary funds. The revenue and expenditure recorded in the various Special Treasury accounts (CST) are also available, along with information on the debt and the fiscal deficit.

52. Although incomplete in some respects, budgetary and fiscal data for other public entities are also available (Table 2.2). The DPBEP contains information regarding subnational governments’ revenue (their own and transfers), aggregated according to source (overall transfers, transfers via investments, and earmarked taxes). One section is likewise devoted to government-owned enterprises, particularly in respect of government shares in certain corporations (e.g., SOMCOS) and government outlays for struggling corporate entities (e.g. the Postal Service, LONASE). Data are also available for the two social security funds, namely IPRES and CSS. Finally, the DPPD associated with the PAP contain medium-term projections of the expenditures of ministries and institutions, along with the goals and performance indicators for the ministries’ various programs. The DPPD and PAP documents are still being worked on. They were, nevertheless, transmitted to Parliament for informational purposes in connection with the proposed 2018 budget.

Table 2.2.

Breakdown of the Contents of Fiscal Documentation for 2018

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Source: IMF Staff.

53. While the central government budget is relatively comprehensive, the lack of information regarding “lettres de confort” weakens budget unity by failing to convey a comprehensive picture of the public debt. Letters of comfort make it possible to pay a third party even if that expenditure is not included in the budget for that year or if the expenditure exceeds the annual ceiling (Box 2.1). Letters of comfort thus seek to offset a shortfall in budget programming and to take account of unforeseen expenditures that cannot be handled by using reserve funds. Upon disbursement, the government asks the bank to pay its supplier directly, so that the money does not go through the Treasury; the government repays the bank directly out of appropriations for the project once the funding appropriated in subsequent budgets. In this case, letters of comfort are ultimately borrowings to finance expenditures that are, however, not recorded as such in the PLF. Letters of comfort may likewise be used to grant a government guarantee to an economic operator so that it can obtain financing from a financial institution.

54. Existing budgetary mechanisms would be appropriate for keeping track of these transactions that have a significant fiscal impact. Whether they make it possible to ensure the financing of an outlay or project, or to grant a guarantee, budgetary tools make it possible to track the implications of letters of comfort for the budget.

  • In the first situation, the letter of comfort’s amounts should be presented in the section for borrowing (e.g., other bank financing) (Table 2.3). Likewise, the government commitment to the whole project (not just the annual reimbursement part that must be shown in the budget law) must be recorded in the budget documents. The commitment authorizations and payment appropriations (CA-PA) mechanism provided for in the LOLF (Articles 17 and seq.) will constitute an effective tool for tracking and controlling those commitments, which in the medium term have an impact on the budget balance.

  • Letters of comfort granting guarantees should be sufficiently well provisioned in the corresponding Special Treasury account (Guarantees and endorsements) pursuant to Article 42 of the LOLF (see Principle 3.2.3). The amount provisioned in the 2018 Budget Law is a lump sum well below the provision needed to cover all existing guarantees, including the letters of comfort.

The Use of Letters of Comfort (lettres de confort)

“Letter of comfort” is a generic term covering several different situations:

  • Budgetary (or fiscal) coverage letter: This is a letter from the Minister of Finance to the Director of the Central Procurement Directorate in connection with the procedure for examining a multi-year contract subject to ex ante control (procédure d’instruction d’un marché pluriannuel soumis au contrôle a priori). The fiscal coverage letter is in fact a commitment by the Minister to allot the appropriations needed to finance a project;

  • Bank domiciliation letter: This is a letter from the Minister of Finance to the Managing Director of a bank, in which he firmly and irrevocably commits to depositing in an account opened at that bank the payments derived from a project included in the budget. The bank to which the letter is addressed is generally the one providing the financing that enables the Minister to perform the contract that has been entrusted to him;

  • Letter of comfort in the strict sense of the term: This is a letter from the Minister of Finance to the Managing Director of a bank, in which he requests financing for a given operation, to be repaid out of future appropriations (normally, in connection with a subsequent budget law);

  • Guarantee letters: The government guarantees a transactor to enable him/her/it to obtain financing from a lending institution.

Source: IMF staff.
Table 2.3.

Gap Between Letter of Comfort Amounts and Charges Against the Budget

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Source: authorities, PLF/LFI, ANSD, IMF.

55. Moreover, additional data are needed for a comprehensive vision of the public sector. For areas outside central government, fiscal reporting is heterogeneous and patchy. Thus, in the DPBEP, the data for revenue and expenditure of the Social Security Fund (CSS) are not provided and those for the IPRES should be more disaggregated. Regarding public corporations, the only data available are those referring to (operating or investment) transfers from the government budget. The various entities’ own funds are not consolidated or shown in the DPBEP.

2.1.2. Macroeconomic forecasts


56. The Office of the Director of Economic Forecasting and Studies (DPEE) reports in detail on the economic forecasts for the current and subsequent years. It publishes a report on the Economic and Financial Situation twice a year. For the current and following year, or else for the previous and current year, estimates or projections of real GDP, with its resources and expenditures component, as well as forecasts for inflation, the Government Fiscal Operations Table (TOFE) and the balance of payments. The assumptions underlying the projections are explained and accompanied by information regarding the government’s upcoming policies and reforms and private sector efforts that are likely to underpin economic growth. To ensure consistency in the overall macroeconomic framework, the DPEE, as part of the Macroeconomic Framework Committee, works with the BCEAO, the General Directorate of Government Accounting and the Treasury (DGCPT) and the General Directorate of the Budget (DGB).19 In addition to that report, the DPEE also posts Monthly Notes on Current Economic Conditions (Notes mensuelles de conjuncture) highlighting salient aspects of recent macroeconomic developments and achievements of recent months. Finally, the DPEE posts an Excel spreadsheet on its website detailing its macroeconomic forecasts for the next five years.

57. Budget documentation includes macroeconomic forecasts based on the DPEE publications. The content of the Economic and Financial Report (REF), attached to the proposed budget (PLF), therefore reflects much of the material found in the Economic and Financial Situation report of the DPEE. In addition, the Multiyear Budgetary and Economic Programming Document (DPBEP) has a section on the macroeconomic outlook for the next three years based on the multiyear forecasts of the DPEE.

Figure 2.1.
Figure 2.1.

Real GDP Growth: Gaps Between Forecasts Used for the Budget Proposal and Outturn

Citation: IMF Staff Country Reports 2019, 034; 10.5089/9781484397084.002.A001

Source: DPEE and the IMF’s Global Economic Outlook, October 2017.Note: A negative bar represents an under-estimation in the forecast vis-à-vis outturn.

58. Some aspects of the presentation of macroeconomic forecasts in the budget documents could be improved. The real GDP growth forecasts underlying the proposed budgets of recent years do not seem to have any significant bias. (Figure 2.1). However, the credibility of the forecasts could be boosted by an explanation of the reasons for discrepancies between forecasts and outturn, or even by figures on the macrofiscal impact of the government’s principal economic policy measures. At the same time, the DPBEP could provide more details regarding the multiyear macroeconomic scenario it uses: indeed, the details currently provided regarding that scenario are brief and essentially qualitative,20 even though that scenario is one of the keys to understanding the medium-term fiscal framework and possible contingencies that could affect it.

2.1.3. Medium-term budget framework


59. Although recent, the practice of elaborating a medium-term budget framework is well established in Senegal. Thanks partly to the LOLF, in recent years it has gradually become standard practice to make detailed projections of fiscal revenue and expenditure in connection with the drafting of explanatory and standardized documents annexed to the proposed budget. The DPBEP, one of the documents that are central to a medium-term budget framework, has been produced since 2013. Until very recently, fiscal forecasts were produced for the overall macroeconomic framework in the same format as the TOFE. The medium-term budget framework was developed and has become increasingly important for annual preparation of the budget and for making strategic choices with respect to broad budgetary and fiscal balance. Nowadays, in addition to the DPBEP, Senegal elaborates a medium-term budget framework (MTBF) for internal purposes in the context of the elaboration of the annual budget based on economic classification, and is beginning to produce multiyear expenditure programming documents (DPPD) on a regular basis in accordance with LOLF provisions (cf. Table 2.4). With respect to the latter, the documents at this stage still clearly need to be perfected.

Table 2.4.

Content of the DPBEP, CBMT, and DPPD Medium-Term Budget Framework

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Source: IMF staff.

60. To move toward a more advanced practice, a less aggregated (ministry or program-based) approach would be needed. About the DPBEP, the programming overview is restricted to a Table in TOFE format, which provides only a very broad idea of the path the budget will take. No overall data can convey, for instance, how the budget will perform from a ministerial or sectoral perspective. In addition, construction of the CBMT is still too focused on aggregate projection of expenditure by economic category. However, work is under way on completing the framework with detailed expenditure projections for each section of the budget and be more inclusive with line ministries according to a “bottom-up” approach. This will eventually help enhance the reliability of DPPD projections, which are the main tools for the programming of expenditures by ministry and by program.

2.1.4. Investment projects


61. The fragmented nature of public investment management in Senegal jeopardizes the transparency of programming, selection and procurement processes. Recent reforms (creation of the maturation committee for investment projects, revamping of the Procurement Code) aim at improving public investment management practices. However, transparency is compromised notably by (i) substantial spontaneous direct-contracting offers and (ii) the failure to disclose the total costs of projects for which letters of comfort are issued (see 2.1.1). The publication of feasibility studies is a practice that still needs strengthening, even though there has been recent progress in that regard. These shortcomings impair the efficiency of public investment in Senegal, even though there is room for improving the quality of public infrastructure and their access (Figure 2.2). An evaluation of public investment management using the Public Investment Management Assessment (PIMA) methodology developed by the IMF could help the authorities identify reform priorities in this area.

62. Multiyear programming of public investment is based on the Three-year Public Investment Program (PTIP), which provides data on the total costs of budgeted projects.

The PTIP is submitted to and adopted by Parliament before the end of each year. For each public investment project, the PTIP provides a total cost and a disbursement time line for the next three years. These projects are appropriated: thus, the totals given for the first year of the PTIP are, taken as a whole, consistent with the investment appropriations of the initial budget law.21 A presentation by economic sector is also provided. Updating the total costs is, however, difficult, particularly for projects using domestic resources, which jeopardizes both their execution and fiscal sustainability. In addition, there is still ample room to improve (i) the separation of current from capital expenditures and (ii) the programming of project maintenance costs. The migration to the CA-PA system, which should take effect in 2020, will help reinforce the multiyear nature of expenditure and improve the accounting and handling of public investment.

Figure 2.2.
Figure 2.2.

Quality of, and Access to, Public Infrastructure

Citation: IMF Staff Country Reports 2019, 034; 10.5089/9781484397084.002.A001

63. Project appraisal and selection mechanisms have recently been revamped and there is now more information regarding their feasibility available to the general public. The process for appraising and selecting large projects was reformed in 2015 with (1) the establishment of the maturation and appraisal committee for investment projects, for which the Planning Directorate (DP) provides secretariat services; (2) the creation of a database of mature projects maintained by the Committee, which is also charged with monitoring them throughout their life cycle. According to the decree that established it,22 the Committee supports the line ministries by keeping track of the project maturation process from the time projects are identified until the time they conduct ex ante appraisal, in the perspective of their inscription in the PTIP. The appraisal of projects which can be potentially included in the PTIP “is based on their comprehensive project documentation (technical, economic and financial feasibility studies), submitted by the line ministries and other authorized stakeholders.” 23 The process is currently being prepared for implementation.24 Since 2015, 57 feasibility studies have been carried out, followed by second technical expert opinions by the DP, and financial technical opinions by the Public Debt Directorate (DDP) and the Budget Programming Directorate (DPB). Fact sheets for these studies have also been drawn up and are now posted on the DP website. However, some large projects, especially spontaneous direct-contracting offers, appear to circumvent that selection procedure, even though they, too, are subject to second expert opinions (technical and financial).

64. Even tough government procurement information is transparent, projects out of spontaneous direct-contracting offers restrict competition. The Government Procurement Code was revised in 2014. According to that Code, notification of upcoming government procurement competitions, as well as the tenders themselves, are posted on the Government Procurement Portal. Waivers to competitive bidding processes (restricted tenders, single source procurement) are very precisely defined by that Code. Spontaneous offers may also be considered under certain conditions, such as the innovative nature of the project in question, and the obligation to outsource at least 10 percent of the contract to domestic enterprises. Nevertheless, although permitted by the Code, these spontaneous offers option, which was used for four large government contracts since 2015 (in an amount totaling CFAF 450 billion or approximately 5 percentage points of GDP, including the construction of not particularly innovative hospitals and bridges), is a major impediment on efforts to open up government procurement to competition.

2.2. Orderliness

2.2.1. Fiscal legislation


65. There is a revised legal framework for annual preparation of the annual budget. The legal framework is set forth in the LOLF, which has incorporated WAEMU Directive 06/2009/CM/UEMOA on budget laws into the domestic legal framework. The LOLF specifies (i) the main annual budgeting stages (e.g., the budget orientation debate (DOB), presentation of the proposed budget (PLF) , approval of the PLF, and promulgation); (ii) the content of draft budget laws (initial budget law, revised budget law, and financial statement law); (iii) the roles and responsibilities of the government (Ministry of Finance) and of the Legislature (adoption, authority to amend, etc.) (Table 2.5).

66. A more detailed calendar for the budget process has still to be officially defined.

Apart from the broader time frames envisaged in the organic law, the more specific and operational stages in the annual budget preparation process are traditionally established via specific decree. Given the changes introduced by the LOLF, the current (January 30, 2009) decree is no longer adequate and a draft decree amending it is available but has yet to be approved by the government. Nevertheless, a calendar is attached to the budget circular drawn up by the DGB to provide guidance to line ministries and institutions. That document, which can be modified every year, could usefully be made a permanent feature of the budget process.

Table 2.5.

Summary of the Principles Set Forth in the Organic Budget Law 2011-015

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Source: LOLF.

2.2.2. Timeliness of budget documents


67. In practice, Parliament has sufficient time to scrutinize and approve the budget and the legal deadlines have regularly been met. The established starting date for budget implementation is January 1st of each year. The proposed budget for the year is sent to Parliament, as per the Constitution (Article 68), on the opening day of the budget session (first half of October of year n – 1). That deadline has regularly been met in recent years (Table 2.6). Parliament has 60 days to scrutinize and approve the budget, and that period has always been prior to the end of the calendar year. Once Parliament has adopted the budget, the President promulgates the budget law within one to two weeks of the date of adoption (the 2018 budget law was, for instance, promulgated on December 21, 2017).

68. Budget laws and their annexes are systematically made available to the public. Once the budget law has been promulgated by the President of the Republic, it becomes official and enforceable and is published in the Official Gazette of the Republic of Senegal. Likewise, budget laws are systematically posted on line on the MEFP website ( as well as on the websites of some Directorates (such as, the DGB, DGCPT, DPEE).

Table 2.6.

Dates of the Various Budget Proposal Stages

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Source: authorities, LFI and Official Gazette (JO).

2.3. Policy Orientation

2.3.1. Fiscal policy objectives


69. Senegal is governed by several external long-lasting budget rules which serve as fiscal policy anchors. In particular, Senegal is required to abide by the convergence criteria established by the WAEMU and the Economic Community of West African States (ECOWAS). Every year, the DPEE produces multiyear convergence programs for those two regional organizations. Those documents provide both a retrospective look at past ratios and a strategy for meeting the criteria in the next five years. Comprehensive, quantitative supervision is also exercised over the WAEMU convergence criteria in the DPBEP annexed to the proposed budget (PLF), and targets are set for the following three years. All first-tier criteria were observed in 2017 (Table 2.7).

Table 2.7.

Observance of the WAEMU Convergence Criteria (2014-2018)

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Source: Multiyear Program for the Convergence, Stability, Growth and Solidarity Pact 2018-2022, October 2017. Note: The targets for the overall fiscal deficit, the public debt and tax burden must be met by 2019. p: forecasts.

2.3.2. Performance information


70. A legal framework geared to results-based management is in place and should achieve its full impact in 2020. As part of its implementation of the LOLF, Senegal has committed to introducing results-based management. Thus, Articles 12, 52 and 45 provide for all budget appropriations (including Special Treasury Accounts – CST) being distributed among programs (ministries) or allocations for specific institutions as defined in the Constitution (dotations). These programs are required to establish the classifications to be used to present, approve, execute, and report the State budget. Each program has to include in its DPPD/PAP a performance framework specifying the objectives pursued, the attainment of which is measured using indicators adjusted every year. The attainment of those objectives, or the failure to attain them must be tracked at the end of the fiscal year in the annual performance reports (RAP) that constitute mandatory annexes to the draft budget settlement law (loi de règlement). Given the complexity of this task, initiation of this reform, originally scheduled for January 1, 2017, has been pushed back to 2020. 25

71. Performance tools are gradually being implemented. For the past few years, the above-mentioned performance documents have been produced in connection with preparation of the annual budget and they are attached to the draft budget law. As part of the preparation of the 2018 PLF, DPPD and PAP were prepared and submitted to Parliament by the line ministries. Also attached to the 2018 PLF, for information purposes, was a presentation of the State budget in program-budget mode, including all the objectives and indicators associated with each program.

72. The current approach to performance is still vague and poorly defined and the tools that go with it need reinforcement. The system to be used to classify programs has not yet been established and its coordination with the other (economic, administrative or functional) fiscal classifications has not yet been incorporated into the Integrated Public Finance Management System (SIGFIP). Nor has the approach been fully harmonized or standardized, due to the fact that a regulatory document on the format and contents of the DPPD/PAP is not yet available to frame and guide the work being done by the ministries. Finally, there is not yet a systematic updating of indicators or tracking of objectives. Annual performance reports are not produced or sent to the Court of Accounts on a regular basis.

2.3.3. Public participation


73. The authorities have made a major effort to make fiscal information available in a vulgarized format, understandable by everyone. A “citizens’ budget” is compiled each year, as well as short leaflets explaining the main components of the Proposed Budget (PLF) and the Quarterly Public Investment Plan (PTIP), known as the “Budget at a Glance” (budget en bref) and “PTIP at a Glance” (PTIP en bref). With help from a nongovernmental organization (ONG 3D), the DGB is currently working on translations of certain documents into local languages, like Wolof and Pulaar. A gender-based budget is also produced. In addition, the public is promptly invited to participate in consultations aimed at establishing and monitoring public policies. Thus, trade unions, elected officials, civil society organizations and representatives of subnational governments have been involved in establishing the essential elements of the Plan Sénégal Émergent (PSE).

74. To achieve a higher level of practice, much still needs to be done to boost active civil society participation in the budget process. The ways in which the administration, Parliament or the Court of Accounts attempt to include the public in the budget process are still tentative. There once were presentations of the budget for the press, but these have been discontinued. Senegal is thus ranked low with respect to public participation in the 2017 Open Budget Survey. With the help of some donors (e.g., USAID), a few initiatives are being put together, but have not yet materialized in a budget preparation context. Senegal would do well to draw on other countries’ experiences with organizing public participation in budget preparation discussions and in monitoring public policies (Box 2.3).

Best Practice Examples of Public Participation in Budgeting and Country Case Studies

Public participation in the annual budgeting process is a way of strengthening transparency in public management and of responding to citizen’s needs with respect to the quality and allocation of public services. Several mechanisms can be used to ensure direct participation of the public in the broad sense (civil society, nongovernmental organizations, associations, trade unions, and so on) in the definition of public policies, the allocation of resources, and monitoring of the implementation of public policies.

  • Preliminary public budget discussions: open to all citizens, who are invited (via radio or TV announcements) to attend debates in the presence of the Minister of Finance and civil society organizations. One session is reserved for direct comments by the general public (Malawi, Sierra Leone, and soon in Benin);

  • Preliminary budgetary consultations: Key stakeholders are invited to a presentation/debate by the Ministry of Finance (Botswana, Nigeria, Liberia, Mali, Benin);

  • Preliminary budget proposals: The Ministry of Finance encourages the public to submit proposals/ideas as part of budget preparation. This mechanism may be open to all (Ghana, South Africa, Zambia, Democratic Republic of the Congo, Tanzania);

  • Public gatherings: of representatives of civil society. These assemblies may examine public policies and drafts of budget documents, including those dealing with public investments;

  • Consultations regarding specific public policies: Conversations on subjects that may (or may not) be related to preparation of the annual budget (Ghana);

  • Sectoral working groups: A working group is convened in connection with preparation of the budget. The Ministry of Finance, government agencies and participants exchange views on programming and sectoral and intersectoral priorities (Kenya);

  • Online participation mechanisms: A web platform is installed to gather grievances, organize feedback from the field, identify wasted resources, or conduct surveys (Malaysia, Mexico);

  • Bottom-up consultations: Grassroots consultations are conducted regarding proposed ministerial allocations. The outcomes are then transmitted to the Ministry of Finance (Philippines).

A few regional examples:

  • Malawi: The Ministry of Finance conducts consultations open to the public three months prior to the start of the budget preparation process. These consultations are organized in a number of different cities and citizens are apprised of them through posters and the media. These consultations afford an opportunity for members of the public to air their views regarding the government’s fiscal management and to voice their ideas as to priorities to be addressed in the upcoming budget. They include presentations on the first drafts of the budget, interventions by key players and question-and-answer sessions.

  • Ghana: The Ministry of Finance website allows the public to submit proposals to be included in the next draft budget. In addition, an annual consultation with key actors is organized regarding a specific topic during the budget preparation phase. This consultation is included in the budget schedule.

  • Zimbabwe: The Finance Commission of the National Assembly conducts public consultations on the budget in several cities during the budget preparation phase. Suggestions are remitted to the Minister of Finance and debated during a workshop.

Source: Global initiative for fiscal transparency (GIFT).

2.4. Credibility

2.4.1. Independent evaluation

Not met

75. There is currently no independent national entity assessing the credibility of the government’s economic and fiscal forecasts. The Court of Accounts has no jurisdiction in that regard and therefore does not issue any opinion with respect to draft budgets or fiscal forecasts. Parliament lacks both the technical and material capacity to evaluate the forecasts presented during the budget orientation debate or in the draft budget laws. On a quarterly basis, the DPEE organizes by-invitation-only Economic Briefings (Points Economiques), which provide an opportunity to present forecasts or studies, followed up with potential discussions with invitees.

76. Publication of a comparison between the government’s forecasts and those of other public or private agencies could boost the credibility of the scenario finally adopted. The credibility of the forecasts used for the macrofiscal framework is in fact examined by: the IMF, in connection with its monitoring of the program it supports; and by the WAEMU, during the meetings held every year in December to validate multiyear programs. Nevertheless, the presentation in the budget documents of a comparison between the government’s forecasts and those of independent, public or private bodies, such as banks or international organizations like the IMF or the regional headquarters of the BCEAO, could serve to highlight that the scenario chosen by the government is close to the national and international consensus forecasts.

2.4.2. Supplementary budget


77. Modifications to the original budget are clearly provided for and regulated in fiscal legislation. Pursuant to Article 47 of the LOLF, a supplementary budget law (LFR) must be adopted to validate major changes to revenue and expenditure. For less important deviations from the initial budget, the government can resort to virements and transfers. After the end of the fiscal year, a budget settlement law must provide the budget outturn and may also serve to regularize ex post the changes made to the initial budget law. Modifications to the initial budget appropriations may be substantial (Table 2.8).

Table 2.8.

Budget Amendments for Fiscal Year 2016

(CFAF billions, excluding debt)

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Sources: SIGFIP, CGAF.

78. Despite major deviations between forecasts and outturns, supplementary budgets appear not to be a systematic practice in Senegal. In fiscal year 2017, no LFR was presented to Parliament despite substantial deviations from the initial budget (LFI): tax revenue shortfalls reached approximately 7 percent at end-December 2017 vis-à-vis the amount envisaged in the LFI (sources: TOFE and LFI). Likewise, the use of letters of comfort involves sizable amounts that significantly alter the budget balance as voted in the LFI. Thus, for 2018, expected reimbursements constitute approximately 10 percent of the (domestic and external) investment amount envisaged in the budget law (see Table 2.3). In the absence of extra fiscal space, that cost is going to translate into the crowding-out of projects included in the budget in due process. Such reimbursement events, which occur during execution, should warrant that the government request parliamentary clearance and an amendment to the initial budget law. Preparing and adopting a supplementary budget is a virtuous practice that ensures that, overall, budgetary and fiscal balances are maintained; it also helps enhance the sincerity of the information contained in the budget.

2.4.3. Reconciliation of forecasts

Not met

79. The budget documents appended to initial budget laws do not account for departures from the previous fiscal year’s forecasts. Such departures are, however, potentially substantial, with respect to both macroeconomic and fiscal forecasts. In particular, changes to GDP growth projections are often key to explaining changes in tax revenue forecasts (Figure 2.3). This absence of quantitative information or qualitative explanation is found regarding both annual and multiyear forecasts.

  • Be it in the Economic and Financial Situation paper or in the Economic and Financial Report attached to the PLF, there is a detailed account of revised forecasts for the current year sometimes warranted by data on early-year outturns. However, the tables showing those revised forecasts (when there are any) make no reference to the previous fiscal year forecasts and any discrepancies are not accounted for, even qualitatively.

  • No reconciliation is attempted between successive multiyear forecasting exercises.26 The DPBEP provides neither a quantitative review of the forecasts made in the previous DPBEP nor a qualitative explanation of the reasons for their revision.

80. Only supplementary budget laws refer to the forecasts initially presented and explain the reasons for the changes to them. Their annexes provide tables comparing the new revenue and expenditure forecasts and those of the initial budget law, along with detailed explanations for the changes in the explanatory statement of the law. However, that is not enough for a “basic level practice” rating by the standards of the IMF Code of Transparency: indeed, such a rating requires at least a qualitative explanation of all updates to the forecasts given in the budget documentation (and not just those made in the course of the current fiscal year in the event of a supplementary budget law). Box 2.4 describes good practices in this regard.

Figure 2.3.
Figure 2.3.

Successive Revisions of the Real GDP and Tax Revenue Growth Under in Consecutive Forecasting Exercises

Citation: IMF Staff Country Reports 2019, 034; 10.5089/9781484397084.002.A001

Source: Budget documents.Note: A blue bar of x% means that the new growth forecast for the year in question is X% higher than that of the previous fiscal year. An orange bar means that the forecast has been revised downwards.

Analysis of Deviations from Forecasts

Senegalese budget documents – DPBEP, REF – provide detailed explanations of expected developments in the macrofiscal environment. However, they rarely refer to the forecasts made in previous fiscal years (multiyear forecasts made in the immediately preceding DPBEP, annual forecasts in the LFI). Yet, the effort to explain discrepancies makes it possible – instead of having to start from scratch and to re-explain forecasts “in a vacuum” – to highlight all the changes that have taken place since the last forecasting exercise: changes in the international macroeconomic environment, new government measures, the materialization of a fiscal risk, and so on.

Likewise, if reports do refer back to the past year’s outturn, they generally do not analyze the gap between forecasts and “actuals.” However, such analysis is not merely vital for improving forecasting methods, it also serves to bolster the credibility of forecasts.

These analytical methods could gradually be included in the DPBEP and the REF by taking the following steps:

In the short term

  • Show a Table of differences between macroeconomic forecasts and outturns, accompanied by explanations, specifying, for instance, the part played by different supply and demand sectors in causing those differences; plus a Table of the discrepancies between fiscal forecasts and outturns, accompanied by qualitative explanations for them;

  • Compile Tables comparing macroeconomic forecasts with those of the preceding fiscal year, specifying the part played by different supply and demand sectors in causing those differences; and do the same for fiscal forecasts using the standard presentation shown below (example taken from the DPBEP), with an at least qualitative explanation of the discrepancies. In particular in the case of the PLF for year N + 1, it is best to compare the revised forecasts for year N with those of the LFI for year N.

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In the medium term

  • Provide a quantitative analysis of the reasons for the differences between fiscal forecasts and outturn

  • Provide a quantitative analysis of the reasons for revising fiscal forecasts from one exercise to the other, using, for example, the following standard presentation example taken from the DPBEP):

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Source: IMF staff.

Conclusions and Recommendations

81. The practices observed in Senegal reflect ongoing efforts to enhance the transparency of budgetary and fiscal reporting. The quality and coverage of budget information have improved noticeably thanks, inter alia, to the gradual implementation of the LOLF. Budget documentation has expanded considerably and provides increasingly comprehensive and accurate information regarding the various facets of fiscal management. The scope of budget documentation has likewise improved and now covers not only budgetary central government but also the other public bodies, even though further improvements are needed for a comprehensive overview. The concerted efforts of the authorities to enhance fiscal transparency in recent years are promising and in line with the vision of an emergent Senegal.

82. Nevertheless, the quality of the budget process would benefit from the elimination of certain shortcomings. The main issues have to do with: (1) the less than exhaustive coverage of the budget information provided, which, albeit improving, still presents major gaps; and (2) the level of analysis required for reliable budget programming, which still lacks certain data and analyses. Finally, over the medium term, major improvements could be made with respect to the general public’s participation in budget preparation debates and monitoring of public policies.

  • Recommendation 2.1: Strengthen fiscal integrity and ensure that all government commitments are included in the budget

    • Bring the use of letters of comfort into line with the accounting and fiscal rules derived from the LOLF and reflect them in the public debt calculations;

    • Implement the provisions of the LOLF regarding the provisioning of government guarantees (including those granted via letters of comfort);

    • Put a mechanism in place for the monitoring of multiyear government commitments using the commitment authorization and payment appropriation system (AE/CP) and approve an annual AE ceiling in the budget law, pursuant to the LOLF (Articles 17ff, 44 and 60).

  • Recommendation 2.2: Enrich the information and analysis contained in budget programming documents.

    • Show in the DPBEP the evolution of budget appropriations using the administrative and/or sectoral classification;

    • Add to the DPBEP quantitative detail on multiyear forecasts of the main macroeconomic indicators (e.g., real GDP growth, inflation, exchange rate) and compare them with forecasts made by other stakeholders (e.g., the BCEAO, IMF);

    • Complement the information provided in the DPBEP with data currently missing, including for example: (i) own resources of public corporations and agencies, (ii) more disaggregated data on subnational governments and a breakdown of revenue, and (iii) expenditures of both social security funds, using a format that allows for comparisons.

    • Provide more explanations for macroeconomic and fiscal forecasts by providing: (i) quantitative analysis of the deviations between forecasts and outturns; and (ii) explanations of the reasons that led to the revision of projections from one fiscal year to the next (Box 2.4)

  • Recommendation 2.3: Enhance public participation in the discussions and monitoring of fiscal policy.

    • Systematize the preparation and adoption of a LFR in the event of a substantial alteration of the initial budget balance. A mid-year update on revenue and expenditure execution should make it possible to gauge the extent of changes vis-à-vis initial forecasts. The Quarterly Budget Execution Report (RTEB) for the second quarter of year N is the ideal tool for that analysis

    • Boost the quality of budget documents in program-budget format: (i) draft and disseminate a manual for preparing the DPPD, PAP and RAP; and (ii) carry out a review of the existing DPPD and PAP

    • Put a mechanism in place for public participation in fiscal policy discussions, drawing on best international practices (see Box 2.3)

Table 2.9.

Heatmap – Pillar II (Fiscal Forecasting and Budgeting)

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Governments should disclose, analyze, and manage risks to the public finances and ensure effective coordination of fiscal decision-making across the public sector.

83. This Chapter assesses the quality of fiscal risk analysis and management in Senegal in light of the standards set in Pillar III of the Fiscal Transparency Code. To that end, there core aspects of analyzing and managing those risks are addressed:

  1. Disclosure and analysis of specific macroeconomic and fiscal risks;

  2. Monitoring, publication and management of specific fiscal risks; and

  3. Coordination of public sector fiscal decision making.

84. Senegal has recently striven to identify certain fiscal risks, but its monitoring of those risks is not exhaustive and its analytical methods are incomplete. The concepts of monitoring and managing fiscal risks are beginning to emerge in Senegal’s administrative culture. Laws and regulations governing public financial management contain no specific provisions on the subject. Furthermore, the WAEMU Directives on public financial management27 make no reference to fiscal risks. The clearest evidence of the emergence of that notion in Senegal is the summary in the DPBEP of fiscal risks associated with state-owned enterprises. However, that document’s discussion of fiscal risks is still very limited (Table 3.1).

85. A formal framework would help the authorities identify the fiscal risks that Senegal faces. (Figure 3.1) Fiscal risks – i.e., factors capable of triggering a discrepancy between fiscal outcomes and forecasts – may be grouped together under two main headings:

  • Macroeconomic shocks or risks, or general risks consisting of unforeseen changes in macroeconomic variables, such as economic growth, raw materials prices, the (CFAF/US$) exchange rate, interest rates and inflation.

  • Specific fiscal risks, which are fiscal obligations that the State may be required to deal with, if uncertain events occur. They include, for instance, institutional, political or security risks, as well as contingent liabilities, which may be:

    • Explicit, in the form of a formal contract forcing the State to bear the fiscal costs resulting from the materialization of certain events (activation of a guarantee issue on behalf of a state-owned enterprise or a public-private partnership – PPP or settlement of lawsuits);

    • Implicit: Even in the absence of formal contracts, the State could be confronted with so-called implicit contingent liabilities, in the sense of finding itself forced to assume the fiscal burden following a default by a state-owned enterprise, a financial institution, a private sector operator in a PPP, a subnational government, or a strategic private enterprise, or following a natural disaster (such as a flood or drought).

Figure 3.1.
Figure 3.1.

Sources of Fiscal Risks

Citation: IMF Staff Country Reports 2019, 034; 10.5089/9781484397084.002.A001

Source: IMF staff.

86. The importance attached to the monitoring and management of fiscal risks is mainly the result of the global economic and financial crisis of 2008. Indeed, for numerous countries the effects of the crisis were exacerbated by conditional commitments for which no consideration had been given to the risk of their materializing. That was particularly the case for financial sector commitments (bailouts of defaulting banks, liquidity support) but also with respect to the activation of guarantees or interventions in subnational governments.

87. Apart from macroeconomic risks, Senegal is characterized by a marked prevalence of diversified contingent liabilities. Like many countries at a similar level of development, Senegal faces high macroeconomic risks and remains vulnerable to the international economic cycle. Such risks may be exacerbated, as they were in 2017, by domestic institutional mechanisms, such as administered prices arrangements (oil, electricity, for instance). Moreover, a variety of (explicit or implicit) contingent liabilities are to be found all over the public sector. There is no consolidated outlook on most of them (risks relating to PPPs, government equity shares or the financial sector, for example).

88. The wide range of risks that Senegal faces calls for better identification of the main ones. There is no widespread practice of conducting quantitative analyses of fiscal risks in Senegal. Yet, given that Senegal faces a wide range of risks, developing such analysis would allow for better identification of the key risks, better monitoring and implementation of more effective management measures. Various types of quantitative analyses are shown in Annex IV.

Table 3.1.

Examples of Reports on Fiscal Risks

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Source: Authorities.

3.1. Fiscal Risk Disclosure and Analysis

3.1.1. Macroeconomic risks

Not met

89. Sensitivity and alternative scenario analyses are published only for public debt (not for other macroeconomic and fiscal indicators). The Report on Public Debt Sustainability Analysis (DSA) is based on a range of scenarios, including one known as the historical scenario and one extreme scenario, in accordance with the methodology developed by the IMF. It is the only document produced by Senegalese authorities to contain quantitative analysis of the impact of a modification of the macroeconomic environment on a fiscal aggregate. Thus, neither the DPBEP, nor the REF contain sensitivity or alternative scenario analyses. The Plan Senegal Émergent (PSE) does address, in addition to the baseline scenario (prior to the PSE), an optimistic takeoff scenario (the central scenario of the PSE) and a pessimistic scenario; however, consideration is in practice given only to the consequences of that latter scenario for financing for the Plan.

90. The volatility of the macroeconomic environment is low relative to the countries in Sub-Saharan Africa, but there are some major grounds for uncertainty. The standard deviation for nominal GDP growth over the past fifteen years has been the lowest in the sub-region (Figure 3.2). However, according to the government’s DSA, even though the risk of over-indebtedness may be deemed low, if growth and the primary deficit were to return to their historical averages, the debt would exceed WAEMU’s regulatory threshold of 70 percent of GDP within 15 years. Finally, uncertainty with respect to the exchange rate, security threats and above all oil price volatility could render the macrofiscal environment unstable because of their potential impacts on economic activity, government expenditure (due particularly to the existence of administered prices for oil and electricity), and on government revenue (see 3.2.6).

Figure 3.2.
Figure 3.2.

Regional Comparison of the Volatility of Nominal GDP Growth Rate

(Standard deviation of growth rates, 2000-2015)

Citation: IMF Staff Country Reports 2019, 034; 10.5089/9781484397084.002.A001

Source: World Economic Outlook of the IMF.

3.1.2. Specific fiscal risks

Not met

91. Senegal’s central government is exposed to various risks that could affect fiscal and budgetary forecasts and are not addressed in any consolidated report (Table 3.2). A non-exhaustive list of those risks includes:

  • Risks affecting government tax revenue not directly related to macroeconomic determinants. These risks include environmental risks (see Section 3.2.7), security risks28 or health risks;

  • Legal risks. A certain number of litigation cases involve the central government (for instance, in the banking sector or procurement disputes29), but there is no consolidated overview of the whole set of these risks or any report on them published by the State Judicial Agency;

  • Risks related to the management of government assets and liabilities. These risks include those related to holdings of financial assets of state-owned enterprises. In addition, risks related to general government liabilities may turn out to be sizeable;

  • Risks related to possible government liabilities, especially with respect to guarantees (see Section 3.2.3) or the management of certain public entities (see Section 3.3.2);

  • Risks related to the existence of public-private partnerships (PPPs), for which there is no consolidated overview. The future development of PPPs will also be a source of fiscal risks over the long term (see Section 3.2.4); and

  • Risks related to the exploitation of natural resources, whose share in the Senegalese economy is likely to grow (see Section 3.2.6).

92. With the exception of those relating to state-owned enterprises, no analytical summary of the major fiscal risks is currently published. The budget laws and the DPBEP include a presentation of certain fiscal risks relating to state-owned enterprises (Section 3.3.2). Apart from that, the DPBEP mentions the impact of certain public policies on the management of IPRES’ resources. Nevertheless, no consolidated report establishing the most significant fiscal risks is produced or published. That makes it harder to make qualitative or quantitative assessments of those risks.

Table 3.2.

Specific Fiscal Risks

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Source: IMF staff estimates.1/ Amount guaranteed on December 31, 2017.

3.1.3. Long-term fiscal sustainability analysis


93. Each year, the Public Debt Directorate produces a debt sustainability analysis report, using methodology developed by the IMF. This report is submitted to the National Public Debt Committee before being published. It shows the projected path of both the public debt and the external debt over the next 20 years based according to a baseline scenario, as well as simulations of that path based on a range of scenarios, one of which is known as the historical scenario and another as the extreme scenario. The findings of the debt sustainability analysis conducted by the authorities are in line with those produced by IMF staff, also covering 20 years.

94. Of all the social protection agencies, only the National Retirement Fund (FNR), which manages civil servants’ pensions, produces an actuarial study. So far, the FNR has published such a study twice, with approximately three years in between. The latest dates back to 2016 and covers the period 2013-2050. The mission was told that a new study is near completion. The estimates refer to the FNR’s revenue and expenditure over 40 years, based on a series of demographic and macroeconomic scenarios. According to the baseline scenario, FNR expenditures will slightly exceed contributions until 2022; thereafter, the FNR is projected to make a profit. The report also simulates the impact of six modifications to the retirement plan (increase in the contribution rate, increase in the retirement age, and so on) on the financial position of the FNR.

95. No actuarial studies have yet been done on the other social security agencies.

Expenditures of the Social Security Fund and the IPRES, which manages private sector pensions and those of government contractual employees, together accounted for 1.2 percent of GDP in 2016. That percentage is likely to increase over the medium-to-long term: the expected ageing of the population, especially by 2030, should push health and pension expenditures upward. This highlights the importance of conducting an analysis of the long-term sustainability of social protection plans,

96. There is also room for improving existing analyses of long-term fiscal sustainability, in line with more advanced practices. The debt sustainability analysis period could be extended to 30 years and DSA could include scenarios involving the materialization of contingent liabilities for central government, such as the debt assumption from a state-owned enterprise. The actuarial study of the FNR could include an estimate and analysis of the pension liabilities so far incurred by the Fund.

3.2. Fiscal Risk Management

3.2.1. Budgetary contingencies


97. The budget in Senegal provides for various kinds of fiscal reserves. Together, those mechanisms account for approximately 4 percent of appropriations, excluding debts. First of all, the section of the budget open to the whole government (unallocated expenses) contains a built-in reserve for provisions and contingencies. There is also a management reserve (investment spending) and a precautionary reserve (current spending). Nevertheless, those last two types of reserve are in fact budget appropriations already allocated but rendered unavailable to their end users (ministries/directorates); they are released in exchange for predetermined actions negotiated with the MEFP (e.g., conducting prior studies for investment projects). They cannot be regarded as general reserves for dealing with budgetary contingencies. The LOLF (Article 14) provides for eventually establishing general appropriations in the form of an endowment to cover accidental and unforeseen expenses, but that type of reserve is not yet in place.

98. The framework governing use of the contingency reserve lacks transparency. The reserve for provisions and contingencies amounted to CFAF 25.5 billion in 2017 (or approximately 1 percent of appropriations authorized in the initial budget law, excluding debt). The reserve is not explicitly mentioned in the budget law (e.g., in the preamble, articles or annexes) and there is no monitoring of its use in budget execution reports. Moreover, the rules governing the allocation of this reserve are not established or known in advance; how it is used depends on a decision by the MEFP. Senegal could usefully tap the framework established in other countries, to improve the mechanism for this reserve (Box 3.1).

Rules Governing the Use of Budgetary Contingency Reserve in South Africa

In South Africa use of the budgetary reserve is restricted to expenses of an “inevitable and unforeseeable” nature. Usage rules define situations that do not match that requirement. Thus, the following are not inevitable and unforeseeable: (i) expenses that were known when the budget was being drawn up, but were not taken into account in that context; (ii) increases due to tariff adjustments or price hikes; or (iii) expenditures relating to increases in the provision of public utilities or the establishment of new public services.

Natural disasters linked to extreme climatic conditions constitute a good example of inevitable and unforeseeable circumstances.

Source: South African government, 2014.

3.2.2. Asset and liability management

Not met

99. There is no document or publication on the risks associated with government asset and liability management, not even one with limited coverage. Estimates made in connection with this report point to general government liabilities equivalent to 97.2 percent of GDP at December 31, 2016 and financial assets equal to 23.2 percent of GDP. This lack of a document prevents monitoring of risks such as those associated with the numerous cases of government shares–direct, indirect or in PPPs.

100. Some public sector liabilities are granted legal and strategic exemptions. Government and state-owned enterprise debt is regulated by law.30 However, letters of comfort, which also give rise to a government liability,31 estimated at 1.9 percent of GDP, are not subject to any form of legal control. In addition, certain types of public debt, especially that of state-owned enterprises and extrabudgetary entities, are not covered by the Medium-Term Debt Strategy.

101. Information regarding central government financial assets is sketchy and no analysis is conducted of the risks associated with them. For example, public-private partnerships give rise to a liability on the central government balance sheet, particularly if off-setting mechanisms are in place in the event of revenue shortfalls. Conversely, they should also be accompanied with the valuation of related public capital; and the government needs to devise a strategy for the valuation of these assets. Likewise, no analysis is conducted of the risks associated with the holding of financial assets by IPRES (CFAF 193.3 billion at end-2016) or by the Deposit and Consignment Office (Caisse des Dépôts et Consignations, CDC) even though those two institutions have posted substantial losses32 on their investments in recent years. Conducting such analyses should help implement more transparent and balance sheet-oriented management of government assets.

3.2.3. Guarantees

Not met

102. At end-2017, all outstanding debt explicitly guaranteed by the government was equivalent to approximately 3.6 percent of GDP. Those contingent liabilities are largely created by onlending (CFAF 214 billion), whereas the shares of guaranteed financing (CFAF 80 billion, for external financing alone) and of letters of comfort (CFAF 49 billion) are more limited. In addition, under a guaranteed purchase of energy contract involving SENELEC and a private third party, the government has assumed a contingent risk estimated in 2016 at CFAF 2.4 billion (Figure 3.3).

103. The rules governing the granting of government guarantees and endorsements are defined by law. Article 42 of the LOLF provides that guarantees or endorsements shall be granted by decree issued in the Council of Ministers. That also covers any guarantees granted in connection with financing for PPP. Although the net change in outstanding guarantees and endorsements is supposed to be subject to an annual ceiling established by a budget law, that practice does not appear to have been followed in recent fiscal years. There is no mandatory remuneration of guarantees.

Figure 3.3.
Figure 3.3.

Central Government-Guaranteed Liabilities

Citation: IMF Staff Country Reports 2019, 034; 10.5089/9781484397084.002.A001

Source: Senegalese authorities. Calculations by IMF staff.

104. The DDP keeps track of guarantees, which are provisioned via an account for guarantees and endorsements. The LOLF provides that the provision set aside to cover repayment defaults or activation of guarantees shall amount to 10 percent of annual maturities. For several years now, that special treasury account has been allocated a lump sum in the budget law. It appears to be markedly under-provisioned given the government’s liabilities.

105. There is also ad hoc monitoring of other contingent liabilities, such as onlending or certain letters of comfort. Onlending is especially agreed upon in connection with externally financed projects. That financing is subject to an agreement with the Minister of Finance and is handled as part of Senegal’s relations with its technical and financial partners. It is monitored in the DGB by the department for external cooperation and financing, which is separate from the DDP. That makes it more difficult to consolidate all guaranteed liabilities. Furthermore, the use of letters of comfort constitutes a derogatory practice.33 The lack of monitoring of those letters makes it impossible to gauge the extent of the government’s exposure to fiscal risks.

106. Very little information is available regarding guarantees and contingent liabilities.

There is no regular publication of government guarantees, their beneficiaries, or the liabilities that result from them. The same is true of onlent loans. Nevertheless, the Directorate-General of Government Accounting and Treasury (DGCPT) has access to the information (except for data on guarantees granted via letters of comfort). Furthermore, there is very little analysis or disclosure of the likelihood of guarantees being activated, with the notable exception of the purchase guarantee involving SENELEC, which is mentioned in qualitative terms in the DPBEP and in the annex to the LFI on fiscal risks associated with public enterprises.

3.2.4. Public-private partnerships

Not met

107. There is a dual framework for public-private partnerships (PPP) in Senegal. They come under either (i) outsourcing of public services (délégations de service public - DSP); or (ii) partnership contracts (CP).34 The telecommunications, energy and mining sectors are excluded from the general regulations governing partnership contracts and remain governed by sectoral regulations. Within central government, responsibilities are divided mainly between the Ministry for the Promotion of Investment, Partnerships and the Development of Government Teleservices, through its Directorate of Financing and Public-Private Partnerships (DFPPP), and the MEFP, particularly through its Central Directorate of Public Procurement. The contracting parties must be legal entities, given the broad area covered by the laws and regulations. Thus, the central government, a subnational government, a public corporation, a government-controlled or government-owned independent company (société nationale) or a joint stock company in which the government owns a majority of the stock may all enter into PPPs.

108. Even though the new institutional framework for PPPs is not yet in effect, new contracts have been signed. Established in Article 1 of Law No. 2014-09, the National Committee to Support PPPs, which is the body responsible for validating project appraisals prepared by contracting authorities, for helping public sector entities prepare, negotiate and monitor public private partnerships and for publicizing and promoting them, is in fact not yet up and running. That therefore is a limit to the implementation of the framework described above and may hamper the development of PPPs in Senegal.

109. There are no documents showing general government liabilities related to PPPs, whose capital stock is equivalent to 6 percent of GDP. Some key infrastructure projects have been implemented through PPP arrangements (railroads, the concession contract for the financing, construction, servicing and maintenance of the toll highway between Dakar and Diamniadio; the container terminal at the Autonomous Port in Dakar; numerous electricity generation projects; and construction of the Blaise Diagne international airport). According to World Bank data, 14 projects have been undertaken as PPPs since 2008, the average size of which has increased over time35 (Figure 3.4). These projects involve long-term fiscal commitments. Yet, no comprehensive analysis of those liabilities is yet available.

110. The dearth of information regarding the obligations taken on by the public sector in connection with PPP contracts contributes to the creation of significant fiscal risks. The size of the projects,36 the possibility that contracts will be renegotiated and the creation of long-term liabilities (extending, for example, over 25 or 30 years) may heavily impact public finances. The lack of consolidated monitoring of these liabilities prevents any accurate assessment of the risks involved, which may be exacerbated by extensive recourse to unsolicited private sector bids (more than one third of the PPPs since 2008).

Figure 3.4.
Figure 3.4.

Development of PPPs

Citation: IMF Staff Country Reports 2019, 034; 10.5089/9781484397084.002.A001

Source: World Bank data, IMF staff calculations.

3.2.5. Financial sector exposure

Not met

111. The banking sector in Senegal, the second largest financial market in the WAMU, is characterized by a strong presence of international lending institutions, rendering it vulnerable to regional and international economic conditions. At end-2017, Senegal had 29 licensed financial institutions, including 14 international banks and 10 subregional banks. Sixteen lending institutions had balance sheets above or equal to CFAF 100 billion, including 12 with a balance sheet above or equal to CFAF 200 billion. The shareholders of credit institutions are thus for the most part international banking groups, that control more than 51 percent of the capital stock of 16 institutions. The risks incurred as a result of these foreign-held shares could be either systemic or tied to any economic and political crises that could occur in the parent companies’ countries of origin.

112. The government is a direct or indirect shareholder in several banks or insurance companies. The government has a stake in seven banks, with equity shares of between 5 percent and 34 percent. The banks in which the government exercises notable influence specialize in financing agriculture, housing and small and medium-sized enterprises. For their part, IPRES and CSS also hold shares in banks (the BNDE, for instance), which boosts the participation of the public sector, without making it the majority shareholder. Finally, the government holds stock in seven insurance companies, including one in which it has a majority share (the Automobile Guarantee Fund, with 61 percent of the capital).

113. Other direct government liabilities in the financial sector create major fiscal risks.

Through its deposit and fund management activities, as well as through its investments, the CDC (Box 3.2) forms part of the financial sector. The same holds true for the financial activities of the Postal Service, through its Poste Finances subsidiary. The CDC, the Postal Service, IPRES and the CSS are explicitly mentioned as bodies included for monitoring by the National Financial Stability Committee.37 FONSIS conducts capital investment activities on behalf of the government and receives large budget appropriations.38 Finally, the government stake in the capital of the BCEAO (CFAF 16.8 billion in equity shares) creates liabilities associated with a possible recapitalization in the event that the central bank were to encounter problems.

114. The development of guarantee mechanisms in the event of financial sector default also gives rise to new risks for the government, which have not yet been assessed. A Deposit Guarantee Fund39 to protect the deposits of customers of banks and of large-scale microfinance institutions40 and a Financial Stability Fund aimed at preventing payment defaults by States in respect of their liabilities on the WAMU financial market and on international financial markets have been established in WAMU. The possibility of setting up a resolution fund for managing institutions in default is likewise being studied. At the domestic level, a microfinance Fund is due to receive an appropriation. So far, however, none of these funds is operating and there is no explicit mechanism that could cope with risks materializing in the meantime. No assessment of the Senegalese State’s exposure to risk has been undertaken, even though the stakes are high. For instance, savings deposits totaled more than CFAF 707 billion at end-2016.

115. Even though certain risks have already materialized, the government’s financial sector exposure has barely been analyzed or quantified. The Senegalese government has had to intervene several times in order to recapitalize the Senegalese National Agricultural Credit Fund (CNCAS) or to sort out the Postal Service’s troubled financial activities. Although stress tests have been carried out at the BCEAO level, information regarding the central government’s financial sector exposure is still sketchy and fragmented, even though the context is complex and the government wishes to support financial sector development.

The Deposit and Consignment Office

The CDC was established by Law No. 2006-03 of January 4, 2006. It is a special status public entity (établissement public à statut spécial), responsible for managing the deposits and safeguarding the securities belonging to agencies and funds bound to or requesting this management; for receiving administrative and judicial deposits and guarantees; and for managing services relating to the Funds whose management has been entrusted to it. In addition, the CDC lends support to the government with financing affordable housing (logement social), equipment for subnational governments, and loans to medium-sized enterprises, as a way of compensating for deficiencies in private sector financing.

According to the DPBEP, the CDC made CFAF 145 million in 2015. Its exposure level at end-2016 was high in respect of several investment and securities transactions:

  • CFAF 74.9 billion in equity shares in a number of companies (CFAF 38 billion already paid up);

  • CFAF 14 billion outstanding, to be recouped through buyback agreements;

  • A very low level of return on the real estate projects in which the CDC has already invested a total of CFAF 33 billion.

CDC equity shares have not yet generated significant revenue. Indeed, at end-December 2015, only CFAF 20.7 million in dividends for SONATEL shares was recorded in the institution’s operating account.

The CDC also has complex financial ties to numerous government entities (as a shareholder in several public enterprises,41 managing Poste Finances deposits, as a SENELEC creditor, manager of public funds, and so on).

Published financial data on the CDC are very patchy and insufficient for risk assessment. For instance, no annual report and no information on its financial statements are published.

Source: Court of Accounts, DPBEP.

3.2.6. Natural resources

Not met

116. Senegal possesses notable natural resources, whose contribution to the economy is still modest, but should increase in the medium term. According to the Extractive Industries Transparency Initiative (EITI), of which Senegal is a member, the country has ample and diversified resources.42 Mining of those mineral and oil resources contributes modestly to the Senegalese economy (Figure 3.5). Nevertheless, their share in the economy should increase over the next few years.43

Figure 3.5.
Figure 3.5.

Contribution of Natural Resources to the Economy

Citation: IMF Staff Country Reports 2019, 034; 10.5089/9781484397084.002.A001

Source: 2016 Reconciliation Report, EITI Senegal.

117. The Senegalese authorities do not publish statistics on their natural resource reserves and their valuation. Neither government statistics nor national accounts currently take natural resource reserves into account, nor their extraction and value expected in the medium and long term. Partial estimates, for certain minerals deposits, are provided in the EITI Reconciliation Report.44 However, a valuation of these reserves, based on different price and extraction scenarios, is not available.

118. Budget documentation does not include any details on natural resource related revenue, even though they make a notable contribution to the economy. In particular, revenue from the extractive sector is not singled out in government accounts. The TOFE and the budget documents published by Senegal do not include classification specific to the extractive sector.45 The contribution of extractive sector revenue to the national budget, according to the EITI Reconciliation Report amounted to CFAF 105.9 billion in 2016, that is to say, 4.6 percent of fiscal revenue and grants. The mining sector remains the main source of extractive sector revenue in the central government budget, accounting for CFAF 99.2 billion, or 94 percent of the fiscal revenue derived from the extractive sector, followed by the oil sector, which contributes CFAF 6.7 billion.

119. Relations between the public sector and the exploitation of natural resources are complex. Apart from tax revenue, these industries also contribute to pension and social security institutions (CSS and IPRES) as well as to subnational governments, through an equalization fund, and to the Sovereign Funds Strategic Investment (FONSIS). Finally, two enterprises in which the government holds a majority of the stock, Petrosen and Miferso, and several enterprises in which the government holds a minority of the shares, also intervene in the promotion and development of oil and gas and mineral resources, respectively.

120. Management of fiscal risks associated with the development of natural resources thus appears to be largely precluded by the gaps in budgetary and fiscal monitoring. While the DPEE does provide limited assumptions regarding economic activity in the extractive sector,46 current documentation is insufficient to determine the importance of natural resource development in the national budget. The lack of a consolidated overview of the impacts on the public sector, in a complex environment, severely hampers the ability of the Senegalese authorities to measure the fiscal risks associated with the development of those resources.

3.2.7. Environmental risks


121. Senegal faces substantial environmental risks, some of which are likely to materialize. Today, those risks have largely been identified both by the Senegalese authorities and by international partners, particularly the World Bank.47 The most serious risks include coastal erosion, bush fires, flooding,48 drought and locust plagues, but there are also chemical and industrial hazards. Some of these risks, such as ongoing coastal erosion or worsening climate-related contingencies are both especially likely to occur and fraught with serious consequences. Indeed, one third of the Senegalese population is exposed to drought and 60 percent of the population lives in coastal areas.

122. Given the economic and fiscal issues associated with these risks, Senegal has developed monitoring and insurance capabilities. In 1986, the Ecological Monitoring Center (CSE) was established49 and it participates in the assessment of environmental risks as well as in the management of risks and disasters (for example, by keeping track of bush fires). The Senegalese National Agricultural Insurance Fund (CNAAS) was established in 2008 as a licensed insurance company50 in which the government has a minority stake.51 The principal purpose of the CNAAS is to participate in insurance for the Senegalese agricultural sector, whereby the government also intervenes by subsidizing the insurance premium. Senegal is also a member of the Green Climate Fund. Finally, Senegal joined African Risk Capacity or ARC in 2011. As an international mutual insurance company, ARC enables its member states to withstand natural disasters through rapid access to compensation funds to finance the implementation of pre-established emergency plans. In that way, Senegal was one of the first countries to benefit from ARC insurance coverage in 2014.

123. The risks identified and budget costs have not been quantified, as agencies have rather focused on operational responses. Disaster risk management, particularly in response to environmental risks, is focused today on bolstering operational capacities. For example, the Fire Fighting Fund, which was allocated CFAF 200 million in the initial 2018 budget mainly supports the development of civil protection facilities (in this case the Fire Brigade). Assessment of the fiscal impact of a materialization of environmental risks, including with the help of historical data, has not been carried out.

124. The economic impact and high probability of environmental hazards materializing are grounds for requiring more precise budgetary information. Coastal erosion will have a lasting impact on the Senegalese economy, especially on productive sectors relying on the marine economy. Conversely, certain risks, such as floods, may have high short-term costs.52 Environmental risks therefore give rise to contingent liabilities, currently assessed at 0.6 percent of GDP,53 a figure that could keep growing. The quality of fiscal information and the ability of the Senegalese government to mobilize adequate budgetary resources therefore depend on a better assessment of both short- and long-term environmental impacts.

3.3. Fiscal Coordination

3.3.1. Subnational governments


125. Subnational governments, organized administratively in accordance with act III of the decentralization process, are moderately important in public sector finance. There are 599 subnational governments in Senegal, including 42 departments and 557 communes (which include 5 major cities). The regions, as well as differences between the statutes of the communes, were eliminated as part of act III of the decentralization process. 54A consolidated overview of subnational government finances is provided annually in the DPBEP. In 2016, subnational government expenditure amounted to CFAF 90.3 billion, or 1 percent of GDP, while revenue totaled CFAF 122.7 billion, or 1.4 percent of GDP.

126. Financial ties with central government remain substantial and complex. In 2016, transfers of fiscal resources55 from the government to subnational governments totaled CFAF 48.5 billion, or 40 percent of subnational government revenue. That revenue derives in particular from the Decentralization Appropriation Fund (FDD), the Subnational Government Equipment Fund (FECL) and revenue transfers. Up 13 percent over 2015, these transfers are likely to continue to increase over the next few years, almost doubling between 2014 and 2020 (see Figure 3.6). It is to be noted that there is also an Equalization and Support for Subnational Government Fund (FPACL), which receives the portion of extractive sector revenue allocated for subnational government equipment.56 From fiscal years 2010 to 2015, this Fund received CFAF 7.6 billion.57 Finally, there is a Special Treasury account for loans to subnational governments (allocated CFAF 800 million in the initial budget for 2018) and a Special Treasury Account for advances to subnational governments (also allocated CFAF 800 million in LFI 2018).58

Figure 3.6.
Figure 3.6.

Central Government Transfers to Subnational Governments

Citation: IMF Staff Country Reports 2019, 034; 10.5089/9781484397084.002.A001

Source: DPBEP 2018-2020, IMF staff calculations.

127. Subnational government debt is limited by law. Subnational government borrowing is governed by Article 54 of the LOLF. In particular, that article requires the operating budget to be balanced without recourse to borrowing. The implementing regulation governing and capping the possibility of borrowing to finance subnational government investment has not yet been adopted. Nevertheless, according to Article 245 of Law No. 2013-10 of December 28, 2013 on the General Local Authorities Code, debt and guarantees remain subject to prior approval by the Minister of Finance.

128. While subnational government debt appears to be limited, debt monitoring needs to be stepped up, particularly if subnational governments are to play a more prominent role.

There is currently no documentation or analysis of subnational government debt. Information on both debt and budget execution is, nonetheless, gathered at the Ministry of Finance. The Municipal Development Agency (ADM) is the body mainly responsible for organizing borrowing to finance the municipalities. At end-2016, outstanding non-institutional debt (dettes non institutionelles) of subnational governments with the ADM totaled CFAF 4.1 billion. However, other actors involved in lending to communes are emerging. Indeed, the city of Dakar has received loans from the French Development Agency (AFD) and Islamic Bank of Sénégal. The rise of the communes under act III of the decentralization process calls for better monitoring of the risks associated with subnational government debt,59 particularly as part of the development of the subnational finance observatory in the DGCPT.

3.3.2. Public corporations


129. The Senegalese government owns a complex portfolio of direct and indirect equity capital shares, for which no clear consolidated accounts are yet available. There are 13 government-owned companies (sociétés nationales),60 11 companies in which the government owns a majority of the stock, 33 companies in which the government holds a minority of the stock and 3 companies governed by specific laws in which the government owns a majority of the equity capital.61 The legal classification of these entities gives no clear indication of how they are treated in government statistics. The total subscribed capital stock is equivalent to 5.2 percent of GDP (see Figure 3.7). The sociétés nationales are mainly responsible for providing certain public services or managing national monopolies. There is, however, no consolidated overview of enterprises held by the public sector, while many entities also have equity shares, sometimes in the form of cross-participations.

Figure 3.7:
Figure 3.7:

Types of Government Participation in Public Corporations

Citation: IMF Staff Country Reports 2019, 034; 10.5089/9781484397084.002.A001

Source: DSP, Calculations by IMF staff.

130. Management of the government portfolio, boosted by widespread performance contracts, forms part of an unpublished shareholding policy. Under the Plan Sénégal Émergent, the government has set ambitious goals in terms of the profitability of its equity portfolio and improved management of public corporations. Nevertheless, the portfolio management strategy of the government and its subdivisions, drawn up in 2016 and validated by the Minister of Finance has not yet been published. This strategy operationalizes the objectives of the Plan Senegal Émergent. In particular, it fosters the spread of performance contracts between the government and the parapublic sector (including extrabudgetary entities). By end-2016, 34 such contracts had been signed.

131. A government portfolio statement is disclosed each year, with a number of omissions. Two annual documents show the main changes to the government portfolio. The report on the parapublic sector, published by the DSP, analyzes changes and annual performance of enterprises belonging to the parapublic sector. They are addressed again, in a condensed fashion, in the DPBEP produced by the DGB, and in the LFI. While major transfers between the government and public enterprises are recorded in the budget documents62 (Figure 3.8), some, including taxation in particular, are left out of the analysis. Moreover, the analysis of public enterprise debt and of fiscal performance indicators is scant, or even nonexistent. The DSP has developed software for the consolidation of public enterprise balance sheets and financial statements, which should enable it to substantially enhance the content and analysis in its report (Box 3.3).

Figure 3.8.
Figure 3.8.

Distribution of Selected Transfers Between General Government and Public Enterprises

Citation: IMF Staff Country Reports 2019, 034; 10.5089/9781484397084.002.A001

Source: DSP, LFI 2017, IMF staff calculations.

Publication of an Annual Report on the Monitoring of Public Enterprises

Several countries produce an annual report on public enterprises and institutions In some cases they are consolidated (as in the case of Morocco): or split between public policy operators and non-operators (as in the case of France: report on the State as shareholder: and State operators: publique/files/farandole/ressources/2018/pap/pdf/jaunes/Jaune2018operateurs.pdf).

In Sweden the report on State shareholdings includes for each enterprise: (i) the establishment of objectives (sustainable development/public policy objectives; medium-term agenda); (ii) assignment of individual quantified targets (profitability, capital structure and debt share, dividends); and (iii) information regarding risk management policy.

Source: IMF staff.

132. The analysis of public enterprise-related fiscal risks provided in the DPBEP does not allow for the consolidated overview of those risks. The main risks related to government shareholdings (debt, recapitalization and restructuring, cross-debts and guarantees) are shown but either qualitatively or individually. The document does not however specify that those are the main risks, even though, through multiple channels, public enterprises pose risks for the national budget (see Figure 3.9). The material nature of these risks is thus difficult to grasp, while certain enterprises may experience financial difficulties or their indebtedness may deteriorate or cross debts may accumulate63 (see Figure 3.10). It is noteworthy that on several occasions in recent years, the government has chosen to convert debts into capital in order to recapitalize struggling enterprises.

Figure 3.9.
Figure 3.9.

Summary of Sources of Fiscal Vulnerability for Public Enterprises

Citation: IMF Staff Country Reports 2019, 034; 10.5089/9781484397084.002.A001

Source: IMF staff.

133. Quasi-fiscal activities, some of which are compensated, are not clearly disclosed.

Certain public enterprises, especially sociétés nationales, conduct quasi-fiscal activities or have to operate with social tariffs or regulated prices. Some are explicitly compensated for those activities, especially via a performance contract spelling out the ways in which compensation is calculated. Disclosure of the cost of those fiscal activities is patchy and does not allow for an exact calculation.

Figure 3.10.
Figure 3.10.

Indebtedness of Selected Public Enterprises at December 31, 2016

Citation: IMF Staff Country Reports 2019, 034; 10.5089/9781484397084.002.A001

Source: DSP, LFI 2017, IMF staff calculations.

Conclusions and Recommendations

134. The government in Senegal is exposed to numerous fiscal risks. The materialization of those risks could pose a threat to the achievement of macro-fiscal targets, the success of the emergence strategy and investor and market trust. It is therefore crucial, from the perspective of a successful PSE, for Senegal to acquire the analytical tools which could help ensure comprehensive identification and careful monitoring of fiscal risks, as well as transparent disclosure of those risks and of the steps taken to mitigate them.

135. Strengthening the DPBEP by adding a chapter stating and analyzing fiscal risks would be a notable step forward for Senegal. The development of that tool should be gradual and strengthened over time. In particular, the Senegalese administration has at its disposal plentiful qualitative information that could be published in the short term, while quantitative studies should be conducted over the medium term. Because of their significant size, macroeconomic risks warrant specific action as well as efforts to upgrade budgetary documentation.

136. Better handling of the reserve for provisions and contingencies could enhance its role in attenuating fiscal risks. Senegal has few explicit measures for attenuating fiscal risks, even though so much is at stake. Due to budget constraints, Senegal has little available fiscal space. For that reason, improving the manner in which the reserve for provisions and contingencies operates appears to be the most effective and operational risk mitigation option.

  • Recommendation 3.1: Fully disclose the government’s strategy vis-à-vis enterprises in which it holds all or part of the capital stock or liabilities.

    • Publish the government shareholdings strategy. That strategy has already been drafted and validated by the Minister of Finance. Publishing it, in line with best international practices, would enhance fiscal transparency and constitute a significant mechanism for the explanation of public policies conducted via the parapublic sector.

    • Publish guarantee and onlending data on the DDP website. This data is already available internally.

  • Recommendation 3.2: Enrich the 2019-2021 DPBEP by adding a chapter on fiscal risks.

    Qualitative at first, that chapter, or Fiscal Risk Statement (FRS), would then gradually be enriched with quantitative analyses in the medium run. A specific Action Plan for this recommendation can be found in Annex 5.

  • Recommendation 3.3: As part of the FRS, strengthen analysis in budget documents of the impact of macroeconomic risks on public finance aggregates.

    • Produce basic sensitivity analyses of major fiscal flow variables (revenue, expenditure, deficit) to certain key macroeconomic variables (real GDP growth, inflation, oil price per barrel, exchange rate), for publication in the DPBEP (FRS) and/or the REF.

    • Construct alternative macroeconomic scenarios (possibly starting from scenarios developed in the DSA) and show their impact on the budgetary and fiscal environment in the budget documents.

  • Recommendation 3.4: Improve handling of the reserve for provisions and contingencies

    • Establish objective and transparent criteria for using that reserve (e.g., in the annual budget circular), targeting, as a priority, expenditures of a truly unpredictable nature.

Table 3.3.

Heatmap – Pillar III

(Fiscal Risk Analysis and Management)

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Annex I. FTE Questionnaire

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