The International Monetary Fund approved about $1.8 billion in loans for Senegal to support the nation’s recovery and protect it from future shocks.
The West African economy will receive an immediate disbursement of about $216 million, the Washington-based lender said in a statement on Monday following an executive board meeting.
The board approved an extended fund and credit facility of $1.51 billion over three years, as well as $324 million from its resilience and sustainability trust, aimed at helping the country deal with prolonged risks such as climate change.
A confluence of external shocks largely linked to Russia’s invasion of Ukraine hindered Senegal’s post-Covid-19 recovery, strained public finances and external payment positions and increased its debt levels.
“Reducing growing debt vulnerabilities requires a steadfast implementation of the fiscal consolidation strategy anchored on commitments to reach a fiscal deficit of 3% of GDP by 2025,” the fund said, referring to gross domestic product.
The money will help boost fiscal space for the government of President Macky Sall, who spent 4% of gross domestic product last year to keep fuel and food prices under control after costs rose. It also provides balance of payment support for the economy that is poised to become Africa’s second-fastest growing this year, is scheduled to hold presidential elections next year and is recovering from riots.
Clashes broke out earlier this month between the police and supporters of popular opposition leader Ousmane Sonko, who was sentenced to two years in prison for “morally corrupting a youth,” which could prevent him from running in next year’s elections. The violent protests left at least 16 people dead and several stores looted and torched.
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The start of oil and gas production in the fourth quarter may accelerate Senegal’s economic expansion to 8.3% this year, the fastest in Africa after Libya’s projected growth of 17.5%, according to the IMF.
Public debt will ease to 73.1% of GDP after rising 28 percentage points from pre-pandemic levels to 75% of GDP last year, IMF said. Inflation is expected to slow to 5%, down from 9.7% in 2022.