REQUEST FOR DISBURSEMENT UNDER THE RAPID CREDIT FACILITY AND PURCHASE UNDER THE RAPID FINANCING INSTRUMENT—PRESS RELEASE; STAFF REPORT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR SENEGAL
In the context of the Senegal’s Request for Disbursement Under the Rapid Credit Facility and Purchase Under the Rapid Financing Instrument, the following documents have been released and are included in this package:
A Press Release including a statement by the Chair of the Executive Board.
The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on April 13, 2020 following discussions that ended on April 1, 2020 with the officials of Senegal on economic developments and policies underpinning the IMF disbursement under the Rapid Credit Facility and Purchase under the Rapid Financing Instrument. Based on information available at the time of these discussions, the staff report was completed on April 7, 2020.
A Debt Sustainability Analysis prepared by the staffs of the IMF and the World Bank.
A Statement by the Executive Director for Senegal.
The documents listed below have been or will be separately released.
Letter of Intent sent to the IMF by the authorities of Senegal*
*Also included in Staff Report
The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents.
Copies of this report are available to the public from
International Monetary Fund • Publication Services
REQUEST FOR DISBURSEMENT UNDER THE RAPID CREDIT FACILITY AND PURCHASE UNDER THE RAPID FINANCING INSTRUMENT
April 7, 2020
Context: The COVID-19 pandemic has weakened the macroeconomic outlook for Senegal’s economy. Containment measures to avoid the propagation of the virus, lower external demand, reduced remittances, and the sudden stop of travel and tourism are having a significant impact on growth and generating an urgent budgetary and balance-of-payments (BOP) needs. The authorities have taken strong actions to address the pandemic by declaring a state of emergency, closing schools, suspending flights, banning public gatherings, and imposing a curfew. They are implementing a comprehensive plan to upgrade the health system and contain the economic impact, including by setting up a national solidarity fund and providing targeted support to vulnerable households and firms.
Request for Fund support. The authorities are seeking financial assistance under the Rapid Credit Facility (RCF) and the Rapid Financing Instrument (RFI) for a total of SDR 323.6 million (100 percent of quota) to address the urgent budgetary and external financing gaps arising from the economic impact and mitigation efforts to the COVID-19 pandemic. The RCF/RFI is expected to catalyze support from other external partners to finance the remaining needs.
Fiscal policy: Accommodate a widening of the fiscal deficit to 5.6 percent of GDP, prioritize health spending and containment efforts, and provide targeted support to vulnerable households and firms. Develop a plan to bring the deficit back to at least 3 percent of GDP once the crisis abates.
Monetary policy: Stand ready at the regional level to provide liquidity to the financial system, while ensuring availability of transparent information on eligible collateral.
Financial stability. Closely monitor the impact of the economic downturn and loan restructuring on banks’ balance sheets and take action as needed to ensure financial stability and healthy credit supply.
Staff supports the authorities’ request for a disbursement under the Rapid Credit Facility and purchase under the Rapid Financing Instrument (RFI) in light of the urgent balance of payment need. Senegal is assessed as having sustainable debt and adequate capacity to repay the Fund. The main risk in the short term is a more extensive global and domestic COVID-19 outbreak, which could lead to a much steeper economic decline in 2020 and more gradual recovery thereafter.
Annalisa Fedelino (AFR) and Ana Corbacho (SPR)
Discussions were held remotely on April 1, 2020. The mission comprised Corinne Deléchat (head), Bruno Versailles, David Stenzel (AFR), Etienne Yehoue (SPR), and Alexandra Fotiou (FAD), assisted by Cemile Sancak (Resident Representative), Saidou Ba and Abdoulaye Fame (local economists). Hilary Devine (research officer), Naa-Kwaakai Quartey and Jacques Treilly (HQ administrative assistants), Bintou Wane (local administrative assistant) also contributed to this report. Mr. Oumar Diakité (OED) participated in the policy discussions.
IMPACT OF THE PANDEMIC AND OUTLOOK
A. Fiscal Policy
B. Providing Liquidity and Safeguarding Financial Stability
ACCESS AND CAPACITY TO REPAY THE FUND
1. Selected Economic and Financial Indicators, 2018–22
2. Balance of Payments, 2018–22 (Billions of CFAF)
3. Balance of Payments, 2018–22 (Percent of GDP)
4. Budgetary Central Government Operations, GFSM 2001 Classification, 2018–22 (Billions of CFAF)
5. Budgetary Central Government Operations, GFSM 2001 Classification, 2018–22 (Percent of GDP)
6. Monetary Survey, 2018–21
7. Financial Soundness Indicators, 2011–19
8. External Financing Requirements and Sources, 2019–22
9. Indicators of Capacity to Repay the Fund, 2020–30
I. Letter of Intent
Front Matter Page
REQUEST FOR DISBURSEMENT UNDER THE RAPID CREDIT FACILITY AND PURCHASE UNDER THE RAPID FINANCING INSTRUMENT—DEBT SUSTAINABILITY ANALYSIS1
April 7, 2020
Annalisa Fedelino and Ana Corbacho (IMF), and Marcello Estevão (IDA)
Prepared by the staffs of the International Monetary Fund and the International Development Association