IMF Extends Support for Senegal’s Plan to Be Emerging Economy

SUMMARY

The IMF’s Executive Board renews its support for Senegal’s economic and financial policies by approving a third straight endorsement of the West African nation’s policy program. The program underpins Senegal’s goal of attaining emerging-economy status by 2035.

 
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  • National plan aims to make Senegal emerging economy, regional hub
  • Authorities’ new three-year macroeconomic program backed by IMF
  • Success hinges on robust efforts to implement reforms envisaged by plan
  • The authorities’ new three-year program underpins Senegal’s longer-term goal of attaining emerging-economy status by 2035.

    The IMF Board approved on June 24 a new three-year Policy Support Instrument for Senegal. 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 Board, deliver clear signals to donors, multilateral development banks, and markets of the IMF's endorsement of the strength of a member country's policies.

    Senegal’s new economic program is designed to help achieve the goals of the country’s overarching plan for the future. The “Plan Sénégal Emergent” is the authorities’ blueprint to help Senegal exit the trap of low growth and high poverty of past years. It intends to make Senegal a hub for West Africa by achieving high rates of equitably shared economic growth.

    Ambitious yet realistic program

    The authorities’ goals of sustained growth rates of more than 7 percent (see Chart 1) and of making Senegal a regional hub, underpinned by reforms envisaged by the plan, are achievable provided reforms are successfully implemented.

    Hitting the plan’s growth targets would allow appreciable progress in improving living standards and reducing poverty. Early signs indicate positive momentum toward plan goals, thanks to progress in reform implementation and favorable external factors. However, more remains to be done to solidify this momentum, IMF staff said in its recent report on Senegal’s economy.

    The Policy Support Instrument approved by the IMF has the overriding goal of macroeconomic stability through accelerated and sustained growth aimed at reaching higher living standards and thus reducing poverty. The instrument also meshes with the authorities’ objectives of

    • Achieving high, sustainable, and inclusive growth;

    • Preserving macroeconomic stability through prudent fiscal policy;

    • Strengthening institutions and reforming the state;

    • Improving the business climate and governance; and

    • Building human capital and social protection.

    In 2015, Senegal’s fiscal deficit will be contained to 4.7 percent of...

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