An International Monetary Fund (IMF) mission led by Mr. Ali Mansoor visited Dakar from September 2–15, 2015 to conduct discussions on the first review of the three-year arrangement under the Policy Support Instrument (PSI) approved in June 2015. The mission met with the Prime Minister, as well as with the ministers responsible for economy and finance, planning, monitoring the PSI, the budget, energy, tourism and air transportation, the BCEAO National Director, other senior government officials and representatives of Senegal’s development partners. The mission wishes to thank the authorities for their warm hospitality, as well as the close working relationship and climate of openness in evidence throughout the discussions.

At the conclusion of the visit, Mr. Mansoor made the following statement:

“Macroeconomic performance during the first half of the year has been broadly satisfactory. Sub-annual indicators suggest that economic activity is faring well. Inflation was low at 0.6 percent at end-August 2015. PSI program implementation continues to be satisfactory; all the quantitative criteria and indicative targets for end-June 2015 have been met, including the fiscal deficit target. It should not be noted, however, that while tax revenues are increasing in relation to the first half of the previous year, they remain lower than anticipated.

“The economic outlook remains favorable with a rate of growth of above 5 percent in 2015 and of 6 percent in 2016. This reflects the initial implementation of the Plan Sénégal Emergent (PSE), strengthened trade with Mali, and falling oil prices. Inflation is expected to remain moderate. The IMF team welcomes the authorities’ determination to continue pursuing an appropriate fiscal policy, while retaining their initial fiscal deficit target of CFAF 389 billion (4.8 percent of GDP). For 2016, the fiscal deficit target has been set at 4.2 percent of GDP.

“Discussions between the authorities and the mission focused on economic policies and structural reforms that should enable Senegal to achieve the growth targets set forth in the PSI. The mission emphasized that doubling and sustaining growth rates at 7 or 8 percent as envisaged in the PSI will require maintaining a sound macroeconomic framework in addition to accelerating the reforms required to promote private investment, including foreign investment.

“With respect to government finance, the mission welcomes the authorities’ commitment to further mobilizing revenue and streamlining public consumption to support the financing of public investment and social spending. The mission is also pleased with the authorities’ determination to improve the quality of government expenditure and press ahead with structural reforms with the aim of putting Senegal on the road to strong, sustainable, and more inclusive growth. The mission emphasized the importance of further efforts to enhance economic governance, and in particular, to formalize the intervention framework for distressed enterprises. The mission further stressed the need for performance contracts to be signed with all enterprises receiving financial support from the government.

“IMF Staff will recommend to Management that the report on the first review under the PSI-supported arrangement be submitted to the IMF Executive Board for discussion, scheduled for the first half of December 2015.”