The International Monetary Fund (IMF) has revised its growth forecasts downwards. From 5.3%, growth forecast in 2023 would be 4.1%. This decline is explained by a tense socio-political situation which is affecting business. Inflation will also start to rise again.

The business climate needs tranquillity. The socio-political tension is rubbing off on growth, and the drop in the forecasts of the International Monetary Fund (IMF) proves it. “The tense socio-political situation weighed on activity in the trade and services sectors during the first half of this year, which led to a downward revision of the growth forecast for Gross Domestic Product (GDP), which fell from 5.3% to 4.1%”, declared Edward Gemayel, chief of mission of the IMF. Need we remind you, the government forecasts 7% growth for 2023. These forecasts were made based on the marketing of hydrocarbons scheduled for the end of 2023 and which is postponed to 2024.

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“Year-on-year inflation fell to 5.7 percent in July, but new inflationary pressures from some staple foods, including rice, onion and sugar, have emerged recently, and forecasts for average inflation in 2023 has been revised upwards from 5 to 6.1%,” he added.

However, underlines Edward Gemayel, the execution of the budget until the end of June was generally in line with the program objectives. But achieving the end-December program targets will require additional revenue mobilization efforts.

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In a press release, the IMF announced that despite the delay in starting hydrocarbon production, the macroeconomic outlook remains favourable. In 2024, real GDP growth is expected to reach 8.8%, driven by the start of oil and gas production. Growth excluding hydrocarbons should rise to 6%. “The authorities are determined to continue fiscal consolidation efforts, in order to rebuild budgetary reserves and reduce growing public debt vulnerabilities. To this end, the 2024 draft budget expects a budget deficit of 3.9% of GDP. The authorities are encouraged to streamline tax exemptions and accelerate the implementation of the Medium-Term Revenue Strategy (MRTS). They must also take all necessary measures to ensure the gradual elimination of energy subsidies which will represent 1% of GDP in 2024, as provided for in the roadmap adopted last January,” explained Edward Gemayel.

By Malick GAYE / mgaye@lequotidien.sn

  • Translation by Ndey T. SOSSEH