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The IMF Executive Board completed the fifth review under the Policy Coordination Tool, and the second review under the Stand-by Credit Facility and Stand-by Arrangement, and requests for enhancement to Senegal

The IMF Executive Board completed the fifth review under the Policy Coordination Tool, and the second review under the Stand-by Credit Facility and Stand-by Arrangement, and requests for enhancement to Senegal

The IMF Executive Board completed the fifth review under the Policy Coordination Tool, and the second review under the Stand-by Credit Facility and Stand-by Arrangement, and requests for enhancement to Senegal

22 June 2022

  • The war in Ukraine and trade sanctions against Mali are having a significant impact on Senegal.
  • Officials are taking temporary and targeted measures to support the most vulnerable, and stabilize food prices, while maintaining credit stability.
  • Rebuilding the buffers through prompt implementation of a domestic revenue mobilization strategy, prudent debt management, and increased spending efficiencies is critical, especially by gradually phasing out subsidies and reducing recourse to single source procurement.

Washington DC
: Today, the Executive Board of the International Monetary Fund (IMF) completed the fifth review under the Policy Coordination Instrument (PCI) and the second review under the Stand-by Arrangement (SBA) and arrangements under the Standby Credit Facility (SCF). , Completion of the reviews could lead to an immediate release of approximately US$215.78 million (SDR 161.82 million) to Senegal. The board also approved increased access and relaxation of non-compliance with performance criteria, and amendments to performance criteria and quantitative targets. As a result, total reach (see press release number 21/159) under the blended 18-month SBA/SCF arrangements approved in June 2021 increased from approximately US$650 million (SDR) to approximately US$172.6 million (SDR 129.44 million). was. 453 million), up to approximately US$776.67 million (SDR 582.44 million) at the time of approval.

Rising global fuel and food prices, compounded by the war in Ukraine, and, in part, a freeze on trade with Mali due to sanctions by the Economic Community of West African States (ECOWAS), are impeding post-pandemic recovery and Increasing difficult policy trade-offs. As a result, this year the growth has been revised down to around 5 per cent, while inflation is expected to reach 5.5 per cent due to higher food and energy prices.

Officials adopted a supplementary budget in May 2022 to accommodate temporary and targeted measures to support the most vulnerable and stabilize food prices consumed by low- and middle-income households while maintaining credit stability . The new expenditure included in the supplementary budget will push the fiscal deficit to 6.2 per cent of GDP this year, as against 4.8 per cent of GDP in the initial budget. Public debt is expected to reach 75 percent of GDP in 2022.

Despite these challenges, the outlook points to strong economic activity in the medium term provided appropriate policies are put in place. However, this outlook is subject to significant uncertainty and risks to the downside. These include a protracted war in Ukraine, a prolonged halt on trade with Mali, the outbreak of the COVID-19 pandemic, the worsening of the regional security situation, rising social demands, the hardening of external financial conditions and the impact of potentially unfavorable climatic conditions.

Following the Executive Board discussion, Mr. Kenji Okamura, Deputy Managing Director and Acting Chairman issued the following statement:

“Despite the challenging environment, the performance under the program has been largely satisfactory. Senegal’s economy entered 2022 with a strong growth momentum, but the rebound is hindered by the war in Ukraine.

“The post-pandemic recovery is now facing headwinds from global fuel and food prices and an increasingly challenging external environment. Near-term growth prospects have weakened, inflationary pressures have emerged, and fiscal and external financing needs have increased.

“The fiscal policy response of the authorities to these challenges appropriately supports vulnerable households through temporary and targeted measures as well as fiscal deficit relaxation. Reaching a fiscal deficit of 3 per cent of GDP by 2024 will require firm implementation of a medium-term fiscal consolidation strategy to reduce debt sensitivity that has been steadily increasing over the past decade.

“Rising energy subsidies due to high global oil prices are a significant financial risk. Recent selective energy price hikes, carefully designed to protect the most vulnerable, are in the right direction to mitigate this risk. In the medium term, the gradual elimination of energy subsidies is a priority, along with measures to strengthen the existing social safety net.

“Fiscal and external flexibility will need to be further strengthened through prompt implementation of domestic revenue mobilization strategy, prudent debt management, and increased spending efficiencies, particularly by reducing recourse to single source purchases of oil and oil. Finalization of fiscal framework for managing gas revenue and improving business environment to attract private investment and create jobs is a priority.

“While the financial system as a whole remains strong, there is a need to monitor vulnerabilities and address deficiencies in the AML/CFT framework to avoid potentially negative macroeconomic and reputational repercussions.”

IMF Communications Department
media relations

Press officer: Eva Graf

phone: +1 202 623-7100E-mail: [email protected]

@IMFSSpokesperson

credit source

The IMF Executive Board completed the fifth review under the Policy Coordination Tool, and the second review under the Stand-by Credit Facility and Stand-by Arrangement, and requests for enhancement to Senegal

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