Via IMF (Den Internationale Valutafond)

IMF Staff Completes Review Mission to Senegal







June 14, 2020







End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF’s Executive Board for discussion and decision.









Washington, DC – June 12, 2020
A staff team from the International Monetary Fund (IMF), led by Ms. Corinne
Deléchat, conducted a virtual mission from June 2-12, 2020 and engaged in
discussions as part of the first review of the IMF’s Policy Coordination
Instrument (PCI) approved in January 2020.

At the conclusion of this mission, Ms. Deléchat issued the following
statement:

The IMF team reached staff-level agreement with the authorities on economic
and financial policies that could support approval of the first review of
their three-year program under the PCI. The IMF Executive Board could
consider the first review in the second half of July 2020.

The COVID-19 pandemic has had a significant impact on economic activity,
exacerbated by border closures, a curfew, and social distancing. The GDP
growth rate is projected at 1.1 percent for 2020 compared to 5.3 percent in
2019. These forecasts are based on the control of the spread of the
pandemic, the implementation of measures to support the economy, and a
gradual recovery of economic activity during the second half of 2020. The
forecasts are nonetheless subject to major downside risks.

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To mitigate the effects of the crisis attributable to COVID-19, the
government has set up an economic and social resilience program to
strengthen the health system and to support households, the Senegalese
diaspora, as well as firms and their employees. In April 2020, the IMF
disbursed US$442 million (100 percent of Senegal’s quota), i.e., about CFAF
263 billion or approximately 2 percent of GDP under the Rapid Financing
Instrument (RFI) and the Rapid Credit Facility (RCF), thus providing
immediate liquidity to support the government in its implementation of the
national COVID-19 response plan (plan de riposte).

The performance of the PCI-supported program is satisfactory. At
end-December 2019, all quantitative targets under the program, except for
one on the share of single-sourced public tenders, were met, and
significant progress was achieved in attaining the reform objectives for
end-June. In particular, Fund staff welcome the finalization of the
medium-term revenue mobilization strategy, whose implementation in the
second half of 2020 will support economic revitalization measures.

A comprehensive assessment of the impact of the pandemic on revenue
collection and supplementary expenditure requirements raises the estimated
budget deficit to 6.1 percent of GDP in 2020. The authorities have stated
their commitment to implementing measures that are temporary,
well-targeted, cost-effective, and fully reflected in a revised budget.
They intend to return gradually to a budget deficit of 3 percent of GDP
through 2022 (WAEMU convergence criterion) as the crisis abates. The
authorities are also committed to taking steps to strengthen transparency
and accountability regarding emergency expenditure.

With respect to economic support measures, it is important to ensure that
financing assistance for firms is properly coordinated and targeted, and to
ensure that the requirements for eligibility for the various facilities are
clarified. Such support should also be based on appropriate risk-sharing in
order to limit moral hazard and fiscal costs. Direct transfers intended for
viable firms should be evaluated on a basis of cost-benefit analysis.

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The crisis represents an opportunity to expand social safety nets and
enhance the effectiveness of the available instruments for supporting
small- and medium-sized enterprises (SMEs). The government will examine the
possibility of broadening social safety nets in cooperation with its
development partners. In addition, the government intends to accelerate the
strengthening of the coordination of entities and programs whose mission is
to support SMEs.

The structural reforms of public financial management will continue, with
the full implementation of program budgets beginning with the 2021 budget
law, tightened control over treasury deposit accounts ( comptes de dépôt), strengthening of the Treasury Single Account,
as well as sound debt management. The government is also continuing to
prepare the governance framework to manage revenues generated by
hydrocarbon operations.

The team wishes to thank the authorities for the close cooperation and
frank discussions.


IMF Communications Department
MEDIA RELATIONS

PRESS OFFICER: Lucie Mboto Fouda, LMbotoFouda@imf.org

Phone: +1 202 623-7100Email: MEDIA@IMF.org

@IMFSpokesperson