IMF Executive Board Approves for Senegal a US$442 Million Disbursement Under the Rapid Credit Facility and Purchase Under the Rapid Financing Instrument
April 13, 2020
- The IMF Executive Board approves the tenth request for emergency financial assistance to help its member countries address the challenges posed by COVID-19.
- The approval of the request from Senegal will make available US$442 million to be drawn under the Rapid Credit Facility and the Rapid Financing Instrument and will provide much-needed liquidity to support the authorities’ response to the crisis.
- The economic impact of the COVID-19 pandemic is rapidly unfolding, with the near-term outlook deteriorating quickly.
- The authorities have acted fast by putting in place strong measures to help contain the spread of the disease and mitigate the pandemic’s impact on the economy.
The Executive Board of the International Monetary Fund (IMF) today approved the purchase under the Rapid Financing Instrument (RFI) equivalent to SDR 215.7 million (about US$294.7 million, 67 percent of quota) and a disbursement under the Rapid Credit Facility (RCF) equivalent to SDR 107.9 million (US$147.4 million, 33 percent of quota) to help Senegal meet the urgent balance of payment needs stemming from the COVID-19 pandemic.
The Covid-19 pandemic is hitting Senegal hard. The sharp global economic downturn and domestic containment measures have led to a substantial reduction in economic activity, with sectors such as tourism, transport, construction, and retail particularly hard-hit, and the pandemic in Europe is also translating into lower remittances. As a result, the short-term economic outlook has deteriorated significantly, with large uncertainties surrounding the duration and spread of the pandemic.
The authorities have acted fast to mitigate the impact of the pandemic by increasing health spending and providing targeted support to vulnerable households and firms, including trough food aid, suspension of utility bills, and targeted tax relief. IMF financing will help preserve fiscal space and catalyze further assistance from the international community, preferably in the form of grants.
The IMF continues to monitor Senegal’s situation closely and stands ready to provide policy advice and further support as needed.
Following the Executive Board’s discussion of Senegal, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, issued the following statement:
“The COVID-19 Pandemic is having a severe impact on Senegal, creating an urgent balance-of-payments and fiscal financing need. To mitigate the impact of the pandemic, the authorities have acted fast by increasing health spending and providing targeted support to vulnerable households and firms, including through food aid, suspension of utility bill payments for the poorest, and targeted tax relief.
“The IMF’s emergency financing under the Rapid Credit Facility and the Rapid Financing Instrument will provide much-needed liquidity to support the authorities’ response to the crisis and could catalyze further assistance from the international community, preferably in the form of grants.
“A temporary widening of the budget deficit is appropriate to mitigate the health and economic impact of the pandemic. It is also advisable that macroeconomic policies continue to be guided by the objectives of the current Policy Coordination Instrument (PCI) to the extent possible. Once the crisis abates, a gradual return to the budget deficit target of 3 percent of GDP, in line with regional fiscal rules, is necessary to preserve external and debt sustainability.
“Additional concessional donor support will be critical to close the remaining financing gap, ease the adjustment burden, and preserve Senegal’s impressive economic achievements. Ensuring that disbursed funds are used in a well-targeted, cost-effective and transparent manner remains imperative.”
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Table 1. Senegal: Selected Economic and Financial Indicators, 2018–221 |
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|
2018 |
2019 |
2020 |
2021 |
2022 |
|
|
Prel. |
Prel. |
Proj. |
Proj. |
Proj. |
|
|
(Annual percentage change) |
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|
National income and prices |
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|
GDP at constant prices 1 |
6.4 |
5.3 |
3.0 |
5.5 |
8.0 |
|
Of which: Non-hydrocarbon GDP |
6.4 |
5.3 |
3.0 |
5.5 |
6.8 |
|
Of which: Hydrocarbon GDP |
… |
… |
… |
… |
… |
|
Of which: Non-agriculture GDP |
6.0 |
5.8 |
2.7 |
5.7 |
8.3 |
|
GDP deflator |
-0.5 |
1.7 |
2.0 |
1.7 |
1.4 |
|
Consumer prices |
|||||
|
Annual average |
0.5 |
1.0 |
2.0 |
1.9 |
1.5 |
|
End of period |
1.1 |
0.6 |
1.9 |
2.0 |
1.1 |
|
External sector |
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|
Exports, f.o.b. (CFA francs) |
17.8 |
13.5 |
-3.7 |
12.3 |
27.1 |
|
Imports, f.o.b. (CFA francs) |
16.0 |
9.4 |
-7.9 |
13.2 |
9.5 |
|
Export volume |
8.3 |
15.0 |
2.0 |
12.8 |
36.7 |
|
Import volume |
8.3 |
14.6 |
1.4 |
13.2 |
10.4 |
|
Terms of trade ("–" = deterioration) |
1.5 |
3.4 |
4.0 |
-0.4 |
-6.2 |
|
Nominal effective exchange rate |
4.1 |
-1.3 |
… |
… |
… |
|
Real effective exchange rate |
1.7 |
-4.5 |
… |
… |
… |
|
(Changes in percent of beginning-of-year broad money) |
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|
Broad money |
14.2 |
8.2 |
2.9 |
4.1 |
… |
|
Net domestic assets |
4.8 |
7.5 |
7.4 |
5.7 |
… |
|
Credit to the government (net) |
1.5 |
1.7 |
7.0 |
1.4 |
… |
|
Credit to the economy (net) |
1.4 |
6.1 |
1.5 |
5.6 |
… |
|
|
(Percent of GDP, unless otherwise indicated) |
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|
Government financial operations |
|
|
|
|
|
|
Revenue |
18.8 |
20.2 |
19.3 |
19.5 |
20.3 |
|
Grants |
2.0 |
1.6 |
2.2 |
2.0 |
1.9 |
|
Total expenditure |
22.4 |
24.1 |
25.0 |
22.8 |
23.3 |
|
Net lending/borrowing (Overall Balance) |
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|
excluding grants |
-5.6 |
-5.5 |
-7.8 |
-5.3 |
-5.0 |
|
including grants |
-3.6 |
-3.9 |
-5.6 |
-3.3 |
-3.0 |
|
Net lending/borrowing (Overall Balance, excl. SENELEC operation) |
-3.6 |
-3.2 |
-5.6 |
-3.3 |
-3.0 |
|
Primary fiscal balance |
-1.7 |
-1.9 |
-3.5 |
-1.2 |
-1.1 |
|
Savings and investment |
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|
Current account balance (official transfers included) |
-8.8 |
-9.1 |
-11.3 |
-11.4 |
-8.5 |
|
Current account balance (official transfers excluded) |
-9.2 |
-9.5 |
-11.6 |
-11.7 |
-8.8 |
|
Gross domestic investment |
32.5 |
33.4 |
30.4 |
33.3 |
33.4 |
|
Government 2 |
6.3 |
7.3 |
8.0 |
7.9 |
8.6 |
|
Nongovernment |
26.2 |
26.1 |
22.4 |
25.4 |
24.7 |
|
Gross national savings |
23.7 |
24.3 |
19.1 |
21.9 |
24.9 |
|
Government |
5.0 |
6.6 |
5.8 |
6.1 |
7.1 |
|
Nongovernment |
18.7 |
17.7 |
13.3 |
15.7 |
17.8 |
|
Public Debt |
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|
Total public debt 3 |
62.1 |
64.2 |
67.4 |
67.6 |
66.5 |
|
Domestic public debt 4 |
13.9 |
11.2 |
13.3 |
13.7 |
14.7 |
|
External public debt |
48.1 |
52.9 |
54.2 |
53.9 |
51.8 |
|
Total public debt service 3 |
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|
Percent of government revenue |
42.8 |
27.6 |
31.2 |
28.5 |
28.6 |
|
Memorandum items: |
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|
Gross domestic product (CFAF billions) |
12,907 |
13,815 |
14,516 |
15,580 |
17,074 |
|
of which non-hydrocarbon (CFAF billions) |
12,907 |
13,815 |
14,516 |
15,580 |
16,798 |
|
Gross domestic product (USD billions) |
23.2 |
23.6 |
… |
… |
… |
|
Share of hydrocarbon in total GDP (%) |
… |
… |
… |
… |
1.6 |
|
National Currency per U.S. Dollar (Average) |
555 |
586 |
… |
… |
… |
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Sources: Senegal authorities; and IMF staff estimates and projections. |
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1 Based on new national accounts rebased to 2014. |
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2 Reflects reclassification of public investment. |
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3 Starting in 2017 debt level, debt service and government revenue include preliminary data covering the broader public sector. |
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4 Domestic debt includes government securities issued in local currency and held by WAEMU residents. |
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For information on the emergency financing requests approved by the IMF Executive Board, please see a link to the IMF Lending Tracker: https://0-www-imf-org.library.svsu.edu/en/Topics/imf-and-covid19/COVID-Lending-Tracker
For upcoming discussions on the emergency financing requests, please see a link to the calendar of the IMF Executive Board meetings: https://0-www-imf-org.library.svsu.edu/external/NP/SEC/bc/eng/index.aspx
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