- Senegal, which has been hit hard by internal bottlenecks and the global crisis, may see a slow recovery of its economy already this year. But growth is still uncertain.
According to the International Monetary Fund (IMF), which agreed to a US$ 47.7 million disbursement to continue to fund Senegal's anti-poverty programme today, growth perspectives in the West African country are still fragile.
IMF analyst Murilo Portugal concluded that a full recovery of the Senegalese economy was still not in sight. "Following food and fuel price shocks in 2008, economic activity slowed further in 2009 because of the global economic downturn and domestic shocks, including temporary electricity shortages," Mr Portugal noted.
Indeed, the two last years saw an economic growth averaging about 2 percent. This is well below Senegal's population growth, meaning that per capita income declined in 2008 and 2009, thus leading to more poverty in the country.
For 2010, projections are still unsure, Mr Portugal noted. "While some uncertainties about the economic outlook persist, recent indicators suggest that economic growth may have bottomed out. Growth is projected to gradually recover," the IMF analyst held.
While numbers are uncertain, the IMF and Senegalese authorities have forecast a GDP growth of around 3.5 percent for this year, meaning that the population will see real but very slow growth.
Among the greater insecurities of this outlook is the still fragile energy supply in Senegal. Temporary electricity shortages are still a major problem, which could get worse before it gets better. This could jeopardise the modest growth predicted for this year.
Another main uncertainty is the development of the global market, where a threatening new finance crisis would hit also Senegal's fragile growth. Also renewed external shocks as high fuel prices would make Senegalese growth very vulnerable.
While the IMF at this point approved a major disbursement for Senegal, the Fund made it clear that the Dakar government is too ineffective in carrying out needed structural reforms. Government was especially urged to finally "fully normalise relations with the private sector," where tax issues among others remain unsolved.
Also, the Fund expressed its scepticism towards how the Senegalese government chooses its investment projects, which are often called extravagant and channelled to prestigious projects. "Investment projects should be selected and prioritised based on rigorous economic cost-benefit analysis to raise the productivity of government spending," Mr Portugal emphasised.
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