Abdourahmane Sarr links IMF agreement to debt sustainability issue

Abdourahmane Sarr reacted to the conclusion of the International Monetary Fund (IMF) mission to Senegal, which ended with a staff-level agreement between the institution and the Senegalese authorities represented by the Minister of Economy and Finance.

In an op-ed, the former Minister of Economy, Planning and Cooperation says the IMF still considers Senegal’s debt unsustainable. He links this assessment to the authorities’ stated intention to seek debt treatment in order to restore its sustainability.

Awaiting details of the agreement

Details of the staff-level agreement reached with the IMF are awaited. Abdourahmane Sarr stresses that their publication has also been requested by the legislative branch, through the President of the National Assembly.

He argues that the financial support the IMF may mobilise will depend in particular on the source of the financing need. In his analysis, the institution does not intend to cover a deficit arising from spending it considers unproductive, citing untargeted energy subsidies. He says the IMF instead favours direct cash transfers to vulnerable populations.

Debt, fiscal framework and economic transformation

The former minister recalls that Senegal’s macroeconomic framework has not shown any financing need over the past two years. He believes IMF financing on favourable terms would be a positive development, provided it remains compatible with the systemic transformation objectives associated with Vision 2050 and the five-year plan.

Abdourahmane Sarr believes a sound macroeconomic framework is necessary for any development strategy. He also considers that the establishment of responsibility for the hidden debt and its clarification will weigh on the IMF’s consideration of a waiver related to a breach of the reporting obligation.

In his view, restoring fiscal balances, reducing interest costs and improving the redistribution of public resources will not, on their own, bring about structural transformation. He calls for changes to the organisation of the state and for Senegalese people’s capabilities to be mobilised.