IMF Renews Support for Senegal's Economic Reforms
The policies endorsed by the IMF focus on accelerating economic growth and improving resilience to shocks to help Senegal meet its development objectives.
Maintaining macroeconomic stability and enabling more and better infrastructure investment supported by a sound fiscal policy form the backbone of Senegal’s IMF-supported program. In renewing its support for Senegal’s economic policies, the IMF underscored the need to build on recent achievements and advance structural reforms that can help raise economic growth and reduce poverty.
Senegal’s economic growth began to recover in 2010 and is expected to strengthen further in 2011. Growth is projected at 4 percent for 2010 and 4.4 percent for 2011, after averaging 2.7 percent in 2008 and 2009 (see Chart 1). Consumer price inflation turned positive in June 2010 and has picked up slightly, mainly because of higher food prices. Underlying inflation is expected to remain modest.
However, Senegal’s recovery is still at an early stage and uncertainties about the short-term outlook persist. Risks relate to economic developments in partner countries, the potential for higher oil prices, possible further problems with the domestic electricity supply, and pressures typically associated with pre-election year economic policymaking. To achieve stronger growth, Senegal needs to maintain macroeconomic stability supported by a sound fiscal policy, and also implement broad-based reforms.
Positive conclusion
Approval of continued IMF support for Senegal’s policy program follows the positive conclusion of the country’s previous three-year economic and financial package supported by an IMF Policy Support Instrument approved in November 2007. The previous program helped Senegal improve its public financial management and, together with an 18-month Exogenous Shocks Facility that disbursed $179 million, helped to buffer the impact of a series of external shocks.
The Policy Support Instrument supports low-income countries that do not want—or need—IMF financial assistance but seek to consolidate their economic performance with IMF monitoring and support. The instrument helps countries design effective economic programs that, once approved by the IMF's Executive Board, deliver clear...
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