Following the Washington trip of the Ministers of Finance and Economy and the Secretary General of the Government, an IMF delegation is arriving in Dakar this Friday to discuss economic and financial policy guidelines with the new authorities.

The International Monetary Fund (IMF) is sending a delegation of experts to spend a week in Senegal. The visit, which begins this Friday, April 26, 2024, follows last week’s visit to Washington by a Senegalese government delegation comprising the Minister of Finance and Budget (Cheikh Diba), the Minister of the Economy and Planning (Abdourahmane Sarr) and the Minister, Secretary General of the Government (Ahmadou Al Aminou Lô). The Senegalese officials were on a mission to make contact with the IMF, to present the economic and financial policy guidelines advocated by the country’s new authorities, and to see how they fit in with the current program signed between Senegal and the IMF. Discussions between the two parties are not yet very advanced, and the expected IMF mission will be used to that end.

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The international financial institution’s resident representative in Dakar, Mesmin Koulet-Vickot, pointed out: “We have not yet been able to get to the bottom of things. The upcoming mission will enable us to visit the departments, to take stock of the situation and thus evaluate the management of the current quarter, before we can make macroeconomic projections.” The mission will have to ensure the conformity of the accounting data provided by the outgoing government of Senegal. However, he points out that the mission will provide an opportunity for the Senegalese authorities to formally clarify their decision to continue with the 2023-2026 program agreed with Senegal, which provides for total disbursements of around 1,150 billion CFA francs. To do so, Senegal will necessarily need to reach an agreement with the IMF on the terms and conditions for meeting the commitments entered into.

The IMF delegation requested audiences with President Bassirou Diomaye Faye and Prime Minister Ousmane Sonko. The highest State authorities are expected to confirm their agreement to continue the program. These meetings will therefore prove crucial and conducive to a major explanation. If necessary, another IMF mission will be sent at the beginning of June 2024 to review the program and prepare a second disbursement in July 2024, following validation by the IMF Board of Directors. Should the Senegalese authorities reject the program, cooperation will be suspended until further negotiations are concluded. This seems highly unlikely, even if certain commitments relating to the reduction or outright elimination of subsidies on certain basic products and commodities will be subject to caution by the Senegalese government. 

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Bassirou Diomaye Faye’s campaign promise during the March presidential elections was to reduce the cost of living. Given the current state of public finances, it will be unbearable to maintain subsidy levels, unless all other public spending is put on hold. Another almost impossible prospect for a new government. Will Senegal widen its budget deficit and compromise its debt ratios? Will the country fall into an escalation of an abysmal budget deficit, to the point of beating the sad record of the Abdoulaye Wade regime, which smashed all ceilings to concede a budget deficit of 6.7% in 2011? The big risk would then be that the country would inevitably fall into a situation of high debt overhang, and be immediately punished by the capital markets. In any case, as usual, the IMF plans to communicate the conclusions of its mission.

By Madiambal DIAGNE / mdiagne@lequotidien.sn

  • Translation by Ndey T. SOSSEH / Serigne S. DIAGNE