According to a report by the International Monetary Fund staff, a new development plan designed to help Senegal exit a trap of low growth and high poverty could boost the economy if it is consistently implemented.
“The plan presents a unique opportunity to unlock broad-based and inclusive growth that will make Senegal a regional hub and an emerging economy,” read the IMF country statement.
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“Senegal’s growth in recent years has been sluggish, which has hampered progress toward inclusiveness and poverty reduction.”
According to the IMF, continued prudent policies have helped preserve macroeconomic stability in Senegal, but slow implementation of structural reforms continues to weigh down growth.
Senegal was hit by a series of externally sourced shocks, such as spikes in food and fuel prices, the global financial crisis, regional droughts and floods, and more recently, the spillovers from the Ebola outbreak.
“As a result, poverty has declined only slightly in recent years and stands at about 47 per cent,” adds the IMF.
According to the IMF, Senegal’s GDP growth is projected to rise to about 4.5 per cent in 2014 and reach 7 per cent by 2019.
“Consistent implementation of reforms set out in the new development plan, while preserving fiscal and debt sustainability, are key preconditions for such growth acceleration,” added the IMF.
“The authorities are taking steps in this direction. The fiscal outlook has improved owing to stronger revenue performance and expenditure control, and the overall deficit is expected to fall to about 5 percent of GDP in 2014.”
The “Plan Sénégal Emergent” is the authorities’ plan designed to help Senegal exit the trap of low growth and high poverty of recent years. It intends to make Senegal a hub for West Africa by achieving high rates of equitably shared growth.
The plan is articulated around three pillars of higher and sustainable growth through structural transformation; human development and social protection; and improved governance, peace, and security.
“The plan envisages structural reforms to attract foreign investment and increase private investment. It also calls for constraining public consumption and increasing public savings to generate fiscal space for higher public investment in human capital and public infrastructure.”
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Priority will be given to making delivery of public services more efficient, improving the impact of public spending through public financial management reforms, containing public consumption to generate the fiscal space for investment in human capital and public infrastructure, and strengthening social safety nets.