The executive board of the International Monetary Fund (IMF) on Friday approved a fresh three-year policy coordination instrument for Senegal.
IMF said the new policy coordination instrument or PCI will “build on the lessons from the previous programs supported by the IMF”.
“It aims to support the authorities’ efforts to consolidate macroeconomic stability and foster sustained and inclusive growth,” IMF said of the policy.
PCI program reviews take place on a semi-annual fixed schedule.
While the PCI involves no use of IMF resources, successful completion of program reviews help signals Senegal’s commitment to continued strong economic policies and structural reforms.
Mr. Tao Zhang, Deputy Managing Director and Acting Chair at the IMF said Senegal’s economic performance during the first phase of the Plan Senegal Emergent has been strong.
“Growth has been robust, buoyed by favorable external conditions and significant public investment, in the context of an improving business environment. Although public debt has increased and the current account deficit has widened, the outlook remains favorable, provided the authorities follow through with their comprehensive reform strategy and measures to consolidate macroeconomic stability,” Mr. Zhang said.
He added: “The authorities’ economic program supported by the Policy Coordination Instrument (PCI) focuses on achieving high, sustainable, and inclusive growth, consolidating macroeconomic stability through prudent fiscal policy and sound debt management, and managing the oil and gas sector in a transparent manner. The PCI will provide an appropriate framework for a close policy dialogue and signal policy priorities and reform commitments to development partners.
“The reform agenda’s focus on promoting private sector‑led and inclusive growth is welcome. Policies to support private sector development will need to be well‑targeted and efficient to achieve the program’s objectives.
“Fiscal policy will be anchored by the WAEMU convergence criterion to limit the fiscal deficit to 3 percent of GDP. Further progress to better assess and contain fiscal risks is needed, including by clearing unmet obligations from 2017 and 2018, improving the recording and monitoring of arrears, eliminating below‑the‑line operations, and better managing subsidies.
“Enhanced domestic revenue mobilization and expenditure efficiency will be essential to create further fiscal space. The medium‑term revenue strategy appropriately targets an increase in the tax‑to‑GDP ratio to 20 percent of GDP by 2023.
“Future oil and gas production is likely to have substantial economic benefits. The government’s strong commitment to setting up a transparent framework to manage oil and gas revenues is welcome.”