IMF renews monitoring programme of Senegal economy

The IMF on Friday approved a new three-year economic monitoring program for Senegal and said the country’s fiscal deficit will be allowed to rise temporarily to accommodate its huge infrastructure needs.

The IMF’s Policy Support Instrument for the West African country involves no IMF loans, only IMF advice, monitoring and endorsement of economic policies.

“To accommodate the additional infrastructure spending, the fiscal deficit will be temporarily higher, but will need to be reduced in the medium term to maintain a low risk of debt distress,” IMF First Deputy Managing Director John Lipsky said in a statement.

Growth in Senegal is set to increase to 4.4 percent in 2011, up from about 4 percent 2010, the IMF said. Inflation turned positive in June 2010 for the first time in more than a year, and has picked up mainly because of higher food prices, the Fund added.

Senegal’s overall fiscal deficit is expected to reach 4.8 percent of GDP in 2010, broadly in line with the budget target. The impact of the global financial crisis on workers’ remittances and foreign direct investment (FDI) has been smaller than originally expected. The current account deficit is projected to change little in 2010 and remain at about 8 percent of GDP, the Fund said.
Source: Reuters