Dakar, Jan 13 (APS) – The International Monetary Fund (FMI) notes a recovery dynamic of the Senegalese economy expected to continue with growth of about 5% expected in 2021.

"With a general recovery that began in the second half of 2020 and a favourable outlook for agricultural production by the end of the year, the economic contraction that was expected in 2020 is likely to be avoided. This dynamic is expected to continue in 2021, with growth of about 5%," the IMF said. The IMF Executive Board has just completed the Second Review of the Senegal Program supported by the Policy Coordination Instrument.

A statement made public on Tuesday stresses that "despite the difficulties related to the Covid-19 pandemic, the results obtained in relation to the objectives set for the end of June in the ICPE program have been generally satisfactory and the program remains in line with the objectives".

The document of which the APS was aware notes that "the finance law for 2021 approved in December 2020 reconciles support for the recovery and gradual fiscal consolidation to facilitate the return to the regional deficit ceiling (3% of GDP) by 2023".

The IMF Executive Board has completed the second review of Senegal's program supported by the Economic Policy Coordination Instrument (ICPE), the same source said, noting that this decision was taken without the Executive Board meeting.

The agreement in favour of Senegal under the ICPE was approved on 10 January 2020, the document recalls.

This program supports the development objectives set by the authorities in the Emerging Senegal Plan (ESP) and is articulated around three main pillars including "achieving inclusive and private sector-led growth; establishing macroeconomic stability through prudent fiscal policy and sound management of debt; manage future oil and gas revenues in a sustainable and transparent manner."

For the international financial institution although the pandemic has spread relatively little in Senegal, it has had significant economic repercussions in the first half of 2020."

The statement recalls that the government has adopted strong fiscal and monetary measures that have helped strengthen the health system and cushion the economic shock, but have increased the projected budget deficit for 2020 from 3 to about 61/2 percent of GDP.

In April, the IMF even disbursed $442 million (100 percent of quota) under the Rapid Financing Instrument and the Rapid Credit Facility to support the pandemic response.

The text notes that the Senegalese authorities, learning from the crisis, have revised their economic development plan for 2021–23 with a view to fostering a more resilient and inclusive economy , including by improving the social safety net."

Thus, the 2021 finance law approved in December 2020 provides for a rebalancing of about 11/2% of GDP based on the withdrawal of recovery measures related to Covid 19, the implementation of the authorities' medium-term revenue strategy, further rationalization of current expenditure. The IMF reports that "in accordance with what has been agreed at the regional level, the authorities are determined to return to the deficit ceiling set by the WAEMU at 3% of GDP by 2023, which would help to control debt-related vulnerabilities."

It also notes that "the risk of over-indebtedness remains moderate, but with limited room for shock absorption in the short term".

According to the IMF, "reforms to gradually reduce tax expenditures, improve budget execution transparency, and monitor fiscal risks are progressing."

It adds that "the authorities are also in the process of finalizing the revised legal framework governing public-private partnerships as well as the legal framework governing the management of hydrocarbon revenues, which should be in line with international best practices".

OID/AKS