MIL-OSI Translation: Senegal: IMF Executive Board approves standby agreement and standby credit facility arrangement for an amount of $ 650 million and completes third review of program supported by the coordination instrument of the economic policy

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MIL OSI Translation. Government of the Republic of France statements from French to English –

Source: IMF in French

June 7, 2021

IMF Executive Board approves Standby Agreement and Standby Credit Facility Arrangement in the amount of SDR 453 million (about $ 650 million or CFAF 350 billion) in favor of Senegal and completes the third review of the program supported by the instrument for the coordination of economic policy.
The 18-month funding agreement, combined with the Economic Policy Coordination Instrument, will provide an economic policy anchor for the next phase of the authorities’ response to COVID-19 and will support a strong and job-creating recovery.
While the medium-term horizon remains bright, the macroeconomic outlook for 2021 is subject to risk due to the prolonged effects of the pandemic and rising commodity prices.

Washington. The Board of Directors of the International Monetary Fund (IMF) today completed the third review of Senegal’s program supported by the Instrument for the Coordination of Economic Policy (ICPE) and approved 18-month funding. under the Standby Agreement and the Standby Credit Facility (FCC).

The approval of the FCC deal and standby agreement paves the way for an immediate disbursement of about SDR 129.4 million or about $ 187 million. It follows an emergency aid that the IMF had granted to Senegal in April 2020 for an amount of 442 million dollars at the date of approval ( see press release n ° 20/152 ).

The COVID-19 pandemic has hit the Senegalese economy hard and put many households in difficulty, especially those working in the informal economy. Growth in 2020 is estimated at 1.5%, thanks to record harvests, despite a severe contraction in the hotel, restaurant, tourism and transport sectors. The effective implementation of an economic and social resilience program (PRES) by the government has helped strengthen the health sector and mitigate the loss of household and business income. A timid recovery is expected in 2021 with growth of 3.7%.

To ensure transparency and account for pandemic-related spending, the authorities have published quarterly budget execution reports, which detail the use of corresponding resources. In addition, and the report of the monitoring committee of the Force COVID-19 fund has been finalized. The annual audit of public procurement procedures, including expenditure-related procedures for COVID-19, will be completed at the end of June and the Court of Auditors will publish its report on the execution of the 2020 finance law in October.

IMF staff and Senegalese authorities agreed on a revised fiscal deficit path for 2021–23, taking into account the deployment of COVID-19 vaccines and a new program to promote employment for young people and workers. women. A resolute execution of the medium-term revenue strategy and a redefinition of priority expenditure will make it possible to free up fiscal space, while the overall deficit should regain the anchoring of the deficit set by the WAEMU, i.e. 3% of GDP, by 2023.

The results of the ICPE-supported program remain positive and the program objectives of ensuring strong and inclusive growth while preserving macroeconomic stability remain relevant. Collaboration between the IMF and Senegal under the ICPE will continue in parallel with the new terms of the standby agreement and the FCC until the end of 2022.

At the end of the session devoted to the examination by the board of directors of the third review of the program supported by the ICPE and of the requests for confirmation and agreement under the FCC presented by Senegal , Mr. Mitsuhiro Furusawa, Deputy General Manager and Acting President, made the following statement:

“The COVID-19 pandemic has had a severe impact on the Senegalese economy, which has been mitigated by the authorities’ vigorous response. The publication of quarterly budget execution reports detailing expenses related to COVID-19 and the report of the monitoring committee of the Force COVID-19 fund is one of the important steps to ensure transparency and accountability on these expenses. .

“The near-term macroeconomic outlook has deteriorated, particularly due to the long duration of the COVID-19 pandemic, rising commodity prices and increasing financing needs for vaccine deployment. A gradual recovery is expected in 2021, although it is subject to risks, including that of a third wave of COVID-19.

“Supported by the Economic Policy Coordination Instrument, the authorities’ reform program remains appropriate to achieve the program objective of promoting strong and inclusive growth, while preserving macroeconomic stability. The budget strategy fully takes into account the costs of the vaccination campaign. Combined with new IMF financing under the Standby Credit Facility and Standby Arrangement, additional donor assistance and the extension of the debt service suspension initiative launched by the G20 , this strategy will make it possible to meet the real, but short-term, need for balance of payments financing.

“Fiscal policy must remain anchored by credible, revenue-based balancing focused on the objective of a deficit of 3% of GDP by 2023, according to the WAEMU standard. In this regard, it is essential that strong steps are taken to increase revenue for the program period and that the authorities are fully committed to the medium-term revenue mobilization strategy. The additional spending linked to the new program for the employment of young people and women must be well targeted and efficient, and be accompanied by reforms promoting job creation in the private sector. As public debt has continued to increase in recent years, the risks to debt sustainability need to be carefully monitored and priority given to financing on favorable terms.

“The legal framework that will govern the management of future hydrocarbon revenues is being finalized in the light of international good practices. Reforms undertaken to improve public financial management will help improve the efficiency and transparency of spending. “

Table 1. Senegal: main economic and financial indicators, 2019-251

2019

2020

2021

2022

2023

2024

2025

Prel.

Is.

Proj.

Proj.

Proj.

Proj.

Proj.

(Annual percentage change)

National income and prices

GDP at constant prices 1

4.4

1.5

3.7

5.5

10.8

6.1

5.4

Of which: GDP excluding hydrocarbons

4.4

1.5

3.7

5.5

6.1

6.0

5.8

Of which: Hydrocarbon GDP

10.5

-7.6

Of which: GDP excluding agriculture

4.4

-0.8

3.8

5.6

11.4

6.2

5.3

GDP deflator

1.9

2.3

1.9

2.1

1.7

1.8

1.9

Consumer prices

Annual average

1.0

2.5

2.0

2.0

1.5

1.5

1.5

End of period

0.6

2.4

2.2

1.7

1.3

1.7

1.4

External sector

Exports, f.ob. (CFA francs)

15.5

-10.5

6.4

16.2

67.6

24.5

6.1

Imports, f.ob. (CFA francs)

6.2

-6.7

11.5

6.7

23.3

11.0

6.4

Volume of exports

18.7

-7.2

2.8

15.2

79.3

22.0

4.1

Import volume

3.9

3.9

3.5

13.0

24.0

12.0

5.4

Terms of trade (- = deterioration)

-4.7

7.4

-3.8

6.8

-6.0

3.0

0.9

Nominal effective exchange rate

-1.3

Real effective exchange rate

-2.1

(Percentage change in broad money at the start of the year)

Broad money

8.2

12.4

6.2

8.6

Net domestic assets

7.4

14.4

7.6

10.7

Credit to the State (net)

1.7

15.4

2.3

4.0

(As a percentage of GDP, unless otherwise indicated)

State financial operations

Recipes

20.4

20.0

20.2

21.0

22.0

23.0

23.9

Donations

1.6

2.3

1.9

2.1

1.9

1.7

1.5

Total of expenses

24.3

26.4

25.7

25.2

24.9

26.0

26.9

Financing capacity / need (overall balance)

Donations not included

-5.5

-8.7

-7.4

-6.3

-4.8

-4.7

-4.5

Donations included

-3.9

-6.4

-5.4

-4.2

-3.0

-3.0

-3.0

Financing capacity / need (excluding one-off operations)

-3.1

-6.3

-5.1

-4.0

-3.0

-3.0

-3.0

Primary fiscal balance

-1.9

-4.3

-3.3

-2.1

-0.9

-0.9

-0.8

Savings and investment

Current balance (official transfers included)

-8.1

-10.5

-11.3

-10.5

-5.5

-3.2

-3.9

Current balance (excluding official transfers)

-8.4

-11.9

-11.8

-11.1

-6.0

-3.6

-4.1

Gross domestic investment

31.9

30.6

32.4

33.1

33.2

30.7

31.4

Public2

6.3

6.9

7.1

7.6

6.1

6.5

6.6

Not public

25.7

23.8

25.3

25.6

27.1

24.2

24.8

Gross national savings

23.8

20.2

21.1

22.6

27.7

27.5

27.6

Public

6.7

5.7

5.7

6.2

9.2

11.0

11.9

Not public

17.1

14.5

15.4

16.5

18.5

16.6

15.7

Total public debt 3

63.8

68.7

70.9

69.9

64.9

62.8

61.1

Domestic public debt 4

11.0

14.6

14.0

13.3

12.3

12.0

12.5

External public debt

52.8

54.1

56.9

56.6

52.6

50.8

48.6

Total public debt service 3

Percentage of government revenue

22.1

25.4

20.4

23.8

25.0

26.6

26.1

Memorandum items:

Gross domestic product (billions of FCFA)

13 655

14 185

14,998

16,159

18,218

19 681

21,127

Of which non-hydrocarbons (billion FCFA)

13 655

14 185

14,998

16,159

17 104

18,425

19 943

Gross domestic product (billions of dollars)

23.6

24.7

Share of hydrocarbons in total GDP (%)

6.1

6.4

5.6

National currency / dollar (average)

586

575

Sources: Senegalese authorities; IMF staff estimates and projections.

1 Based on national accounts, 2014 being the reference year.

2 Takes into account the reclassification of public investment.

3 As of 2017, debt, debt service and government revenues include preliminary data that covers the broader public sector.

4 Domestic debt includes government securities issued in national currency and held by WAEMU residents.

IMF Communications Department
MEDIA RELATIONS

PRESS OFFICER: Lucie Mboto Fouda

PHONE: +1 202 623-7100 EMAIL: MEDIA@IMF.org

EDITOR’S NOTE: This article is a translation. Apologies should the grammar and / or sentence structure not be perfect.

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