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WASHINGTON: The International Monetary Fund (IMF) on Friday approved a one-year, US$75.6-million aid package for Senegal in order to help offset the impact of skyrocketing food and energy prices.
"The Senegalese economy is facing a difficult period. Economic growth has slowed significantly, as a result of government payment delays to the private sector and the effect on consumption of high food and energy prices," IMF Deputy Managing Director and Chairman Murilo Portugal said in a statement announcing the aid.
Earlier this year, the IMF warned that the situation with Senegal's budget was "very difficult" because of unpaid bills to the private sector totalling some 150 billion CFA francs (US$335 million), over 10 per cent of the national budget.
Under the aid package, Senegal will be able to immediately draw 24.27 million Special Drawing Rights (SDR) - the unit of value used by the IMF in its financial transactions - or approximately US$37.8 million, and an equal amount after completing the first review under the country's arrangement with the IMF.
That aid scheme, the Policy Support Instrument (PSI), aims to consolidate macroeconomic stability, increase the country's growth potential, and reduce poverty.
The IMF's Executive Board also granted three waivers to Senegal, which had violated the terms of a previous agreement with the international body, after corrective government action. Senegal had provided "inaccurate information" on its fiscal deficit and budgetary float.
"In light of the substantial corrective measures that the authorities have taken and the improved fiscal monitoring systems they are committed to implementing, the Board decided to maintain a positive assessment of Senegal's programme performance," Portugal said.
The IMF's green light should unlock other aid measures, including a 125-million-euro (US$175 million) package from France, a former colonial power. The African Development Bank (AfDB) has promised US$46 million and the Netherlands have pledged 10 million euros (US$14 million).
But the IMF cautioned that Dakar will have to "strictly adhere to its 2009 budget and ensure fiscal transparency."
Senegal's foreign donors have warned the country about its serious budgetary overruns and urged the government to pay its debts to the private sector. The country's employers have predicted a rash of bankruptcies if the government debts are not paid.
"Progress with structural reforms should continue, with the aim of strengthening private sector activity and bolstering the financial sector," the IMF said.
Senegal is relatively one of the most developed nations in west Africa, a region sheltering the most impoverished countries on earth.
- AFP/yb
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