IMF Staff Completes the Fourth PSI Review Visit to Senegal

WASHINGTON, April 12 — The International Monetary Fund issued the following news release:

A staff team from the International Monetary Fund (IMF), led by Mr. Ali Mansoor, visited Dakar from March 30 through April 12, 2017, to engage in discussions as part of the fourth review of the three-year arrangement under the Policy Support Instrument (PSI) approved in June 2015.

At the conclusion of the visit, the team issued the following statement:

“The macroeconomic performance remained solid in 2016, with GDP growth above 6 percent for the second consecutive year. Inflation remains low, owing to low international oil prices and an elevated supply of cereal products on the market. The external current account deficit improved due to higher exports and workers' remittances.

“PSI program implementation continues to be satisfactory overall. All the quantitative criteria and indicative targets for end-December 2016 have been met. Tax revenue gains combined with a continued policy to streamline public consumption expenditure have helped contain the fiscal deficit within the target set by the program. Significant progress has also been made in meeting structural benchmarks.

“The outlook for 2017 remains favorable, with growth once again expected to exceed 6 percent. This will nevertheless require continued fiscal consolidation, strengthened public financial management and enhanced governance, improvements to the business climate, and measures to promote SMEs and social inclusiveness. The discussions between the authorities and the team focused on these particular points.

“The IMF team welcomes the authorities' determination to continue pursuing an appropriate fiscal policy through the maintenance of their initial fiscal deficit target of CFAF 349 billion (3.7 percent of GDP) in 2017 to maintain the sustainability of public debt. Prudent fiscal policy in line with WAEMU convergence criteria should also help safeguard the Union's stability. The team noted that public debt levels at end-December 2016 were higher than expected, owing to a reduction in balances on creditor deposits (comptes de depots) and advances that the government has made available to the national postal service (La Poste) over the last few years. The team encourages the authorities to take the appropriate measures to strengthen cash flow management and to prevent publicly-owned companies from imposing a heavy burden on public finances and the economy. The team also calls on the authorities to honor their commitment to privatize SONACOS and reduce the number of public agencies. To reach the growth targets set in the “Plan Senegal Emergent” (PSE), public expenditure should focus primarily on public investment, including in human capital, and social inclusiveness.

“Reaching the PSE objectives also requires a faster pace of reform to promote private investment, including foreign investment. Growth driven by public investment alone is not sustainable. In this respect, the team welcomes the progress made in this area, particularly, the law passed on the Special Economic Zone (SEZ). The team has encouraged the authorities to finalize the implementing decrees as quickly as possible, along with the final measures required for the law's effective implementation, while ensuring that the tax system will make it possible to raise the resources required to implement the PSE. The team also encourages the authorities to speed up the pace of ongoing reforms to promote SMEs, to enable them to play a full role in contributing to strong and inclusive growth, and job creation.

“IMF staff will recommend that management request the completion of the fourth review under the PSI, to be taken up by the Executive Board in late June 2017.”

The team met with the President of the Republic, the ministers responsible for the economy, finance and planning, the civil service, industry and mines, the BCEAO National Director, other senior government officials and development partner representatives. The team wishes to thank the authorities for their hospitality, as well as the close working relationship and climate of openness in evidence throughout the discussions.