- The International Monetary Fund (IMF) has issued a new US$ 5.2 million credit to Senegal as part of a three-year poverty reduction programme. Approving the conditional loan, the IMF also urged the Senegalese government to speed up its structural reforms, in particular in the electricity and groundnut sectors.
The IMF on Friday announced it had made its first review of the Senegalese economy and economic reform programmes after under the poverty reduction strategy partly financed by the Fund. After approving the government's economic performance, the IMF had granted a second disbursement under the programme. The IMF board also approved an additional US$ 1.6 million to be made between February and April 2004.
Agustín Carstens, Deputy Managing Director for the IMF, commented that Senegal had managed its economy well in 2003. "The economy regained its growth trajectory after a large exogenous shock in 2002, inflation was low, and fiscal performance was on track," he said. The IMF's review had however noted that there had been delays in reforms and weakness in debt management.
Mr Carstens commended Senegalese authorities for intending to "vigorously implement their ambitious programme of economic and financial policies geared toward growth and poverty reduction." The IMF had noted that the Dakar government was now committed to pursuing "prudent macroeconomic policies and implementing the structural reform agenda," he added.
- The 2004 budget is consistent with the authorities' dual goals of higher spending on the priorities defined in their Poverty Reduction Strategy Paper and maintaining fiscal discipline, according to the statement by the IMF Director.
A firm condition for the IMF's financial support however is the implementation of wide ranging structural reforms, usually focussing on privatisation and deregulation of national markets and industries. Senegal, which traditionally had a very regulated and centralised economy, was one of Africa's latest starters in introducing structural reforms.
Mr Carstens thus again emphasised on the Fund's urge to speed up structural reforms in Senegal, saying these are "crucial to achieve high economic growth and reduce poverty." In particular, the IMF Director mentioned the Dakar agenda to "improve tax and customs administration and increase transparency in the expenditure process."
These reform aims, Mr Carstens held, "should be strictly adhered to the privatisation of the groundnut company, SONACOS," which, he said, "should be completed." The controversial groundnut sector reform has so far cost the government of President Abdoulaye Wade much of his political support in rural Senegal, where groundnuts are the dominant cash crop.
In addition to the groundnut sector, Mr Carstens held that "reforms in the electricity sector should be vigorously pursued, with a view to further harnessing private investment for the needed expansion of energy generation and forestalling the potential imposition of a burden on the government budget."
The Senegalese government has so far found it difficult to find serious investors, willing to contribute to the electrification of wider areas in Senegal. This dilemma has been known to many African governments, earlier going through the process of privatising their water and electricity utilities.
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