The “transparency” exercise by Ousmane Sonko and some of his ministers on the deficit and debt figures has not improved the economic situation to date. The IMF mission, which has just concluded its visit, expressed concern yesterday, especially about the level of spending and the deficit figures. It also did not fail to denounce the loans taken out from local banks, which are not covered. A risk for the entire banking system.

“Senegal continues to face a challenging environment, with signs of increased tensions in budget execution. The revenue shortfall, identified during the last staff visit, was confirmed in late September. At the same time, expenditures have remained high, mainly due to a substantial increase in capital expenditures, as suggested by the preliminary findings of the IGF report. In the absence of decisive measures on expenditures, the budget deficit is expected to worsen this year, exceeding the previous estimate of 7.5% of GDP.” This statement by Mr. Edward Gemayel, head of the International Monetary Fund (IMF) mission, indicates that the Bretton Woods institution does not yet have complete confidence in the management of the current government.

‘Falsification’ of economic figures: MACKY CHALLENGES SONKO

Indeed, for a government that has blacklisted the management of the previous regime, accusing it of having covered up a situation that was much more serious than it thought, it has not, for its part, begun to improve things. Reducing spending is not yet on the agenda and the future will be difficult. The budget deficit, at the rate things are going, could reach double digits by the end of the year, if nothing is done to rectify the situation. 

The most serious thing is that, in its concern to do without external borrowing as much as possible, the government has turned to national partners, particularly banks. The IMF noted, with concern, that investments have been made with loans taken out from local banks. And that is the danger. Indeed, most of these banks have made these loans without external cover. It would be enough for one of these banks to default for the entire banking system to find itself in a delicate situation, endangering the entire financial system. One wonders whether during its visit, the team led by Edward Gemayel was able to discuss with the officials of the Central Bank of West African States (BCEAO), responsible for ensuring monetary stability in the UEMOA zone. In this case, they will undoubtedly have explained how they allowed this situation prosper.

New development reference: The Project is Here!

Until the public can be informed, the Fund’s press release stresses that « in the future, it is essential that the authorities implement bold and rapid measures to ensure the sustainability of public finances and put public debt on a downward trajectory. » To achieve this, budgetary and fiscal transparency would have to be the norm in this area, which does not yet seem to be the case. This would be difficult, moreover, if the Prime Minister claims to have found a country « in the fourth basement » and that he needs to raise it. Hence the need to borrow even more. But where? And with what guarantees? For its part, the IMF indicates that “the 2025 Finance Law represents a crucial opportunity for the government to reaffirm its commitment to essential reforms and address long-standing structural challenges. Strategic actions to strengthen domestic revenue mobilization—in particular through the rationalization of tax exemptions—as well as efforts to phase out energy subsidies and non-essential transfers will be crucial to fostering fiscal discipline and strengthening confidence in public governance, thereby laying the foundations for a more inclusive growth model, driven by the private sector.”

We see that the Fund is showing almost blissful optimism, seeming to indicate that the most urgent task of the authorities, after the November legislative elections, will be to install a legislature which will quickly vote on a Finance Law allowing the country to be given a budget resolutely oriented towards endogenous development. Time will tell. The IMF mission, which ended its visit to Senegal yesterday, is the first since the Prime Minister and some members of the government came out, accusing President Macky Sall’s regime of having falsified the figures for the deficit and public debt. Macky Sall responded to them yesterday, from London. And no doubt to have the last word, the president of Pastef will use his media to respond.

By Mohamed GUEYE / mgueye@lequotidien.sn 

  • Translation by Ndey T. SOSSEH