IMF urges Senegal to rein in spending to cut deficit

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The International Monetary Fund urged Senegal to rein in public spending to bring its public deficit down to 4 % of gross domestic product, from 5 %t last year.

The IMF reaffirmed its forecast that the West African state would see economic growth rise to around 3.5 % this year after the global economic slowdown knocked it back to an average of 2 % a year in 2008 and 2009.
“The global budget deficit was higher than expected in the 2009 programme, climbing to 5 percent of the GDP,” the IMF’s head of mission, Norbert Funke, told a news conference at the end of a visit to Senegal.

The Fund forecast the deficit would begin to fall this year and called on the government to bring it down to 4 % of GDP in the medium term.
“To achieve this objective, it will be necessary to keep non-priority spending under control with a healthy management of public finances,” it said in a statement.

Senegal issued a debut Eurobond in December, a $200 million five-year bond SN047485975=RRPS with a 9.25 % coupon.

Funke said government revenues were low due to tax arrears from state companies, notably power company Senelec.

However the IMF said Senegalese authorities were making progress in settling unpaid bills to private contractors, an amount estimated last year at 67 billion CFA francs ($136 million) and judged to be a major drag on growth.
“It’s an area where the authorities made real progress. It is an important way of normalising relations with the private sector,” Funke said, welcoming a target for at least half to be settled by September this year and the remainder paid next year.



Source: www.af.reuters.com