In June, the International Monetary Fund (IMF) approved the release of $216 million to Senegal, following months of careful review and negotiations.
Now, Senegal will receive a supplemental $216 million loan and an increase of its 18-month credit facility – launched June 2021 – from $650 million to $777 million.
This development reflects the country’s strong leadership under H.E. Macky Sall, achieving all but one of the end-December 2021 goal criteria assigned to it by the IMF.
Despite single-source procurement contracts continuing to exceed the IMF’s expected bar, the country was among a handful of African nations to maintain GDP growth throughout the COVID-19 pandemic, recovering from a 1.5% growth low in 2020 to 6.1% last year, keeping inflation to a highly manageable 2.2% nationally.
Notably, thanks to the forceful implementation of its Economic and Social Resilience Program, Senegal had succeeded in administering 15 vaccination doses per 100 residents as of May this year, mitigating the worst of the pandemic’s effects. Through H.E. President Macky Sall’s landmark Emergent Senegal Plan, $20 billion has been mobilized towards securing and sustaining an 8% GDP growth over the coming decade, however, recent economic developments have created cracks in these plans.
Thus, the IMF’s increased credit facility also recognizes the external circumstances inhibiting Senegal’s growth, recently revising down its GDP growth forecasts for the nation this year to 5%, pinning inflation at 5.5%. Behind this are spill overs from the war in Ukraine increasing food prices by 2.9%, coupled with July’s upcoming national elections driving up social demands for government spending. With public debt expected to reach 75% of the nation’s $25 billion GDP this year, the IMF’s intervention seeks to halve the nation’s fiscal deficit by 2024, arriving with a set of strong science-backed recommendations for the nation in aid of this goal. Thus, the IMF is asking Senegal to revise is legal framework for public procurement to rely more regularly on open and competitive tenders, to prepare a roadmap towards eliminating energy subsidies and to operationalize a new fiscal framework governing the use of hydrocarbon revenues.
In short, as Senegal enters this pivotal stage in its national development, it faces both challenges and opportunities. On the one hand, the five years prior to COVID-19’s outbreak saw foreign direct investment in-country double and its energy sector has provided $9 billion in developments launching next year. On the other, policy reform remains of paramount importance in addressing lingering roadblocks towards the nation’s equitable sustainable development.
MSGBC Oil, Gas & Power 2022 will bring these dialogues to the fore, writing a robust future for Senegal’s energy that supports a resumption of its pre-pandemic accelerated development track, gathering international investors from across Africa but also Europe, Asia, America, Australia and the Middle East to springboard this journey.
Last year, Energy Capital & Power’s events secured $2.5 billion in deals for the sector and this year’s MSGBC conference is set to return bigger and better than its 2021 pilot. Head to https://msgbcoilgasandpower.com/ register.