Growth has been high, over 6% since 2014, and the forecast remains optimistic, particularly with oil and gas production expected in 2022. Growth accelerated to over 7% in 2017 and is expected to remain over 6% in 2018 and in the following years. All sectors supported growth in 2018, but agriculture – due to support programs, robust external demand, and large infrastructure investments in the context of Emerging Senegal Plan (Plan Sénégal Emergent or PSE) implementation remain key drivers. Maintaining high growth in the future will require additional efforts to strengthen the efficiency of public investment and to insure the stability of the macroeconomic framework, while sustained reforms to reduce remaining structural constraints would also help boost private investment. Looking forward, growth stands to substantially accelerate when production of offshore oil and gas begins.in 2022.

Despite recent advances, additional efforts to strengthen the macro-fiscal framework would be welcome. The fiscal stance remains under pressure due to fixed domestic energy prices in a context of high international oil prices, resulting in lower revenues and higher energy subsidies. As a result, the 2018 deficit increased to 3.5% (from 3% in 2017) and payments to suppliers were delayed. For 2019, Senegal remains committed to a 3% deficit target (WAEMU’s convergence criterium), yet high commodity prices imply continued constraints on the fiscal balance. Senegal may need further efforts to increase revenues and keep public expenditure under control to reach the deficit target. Looking forward, expected oil and gas production would increase fiscal revenues beginning in 2022.

Public debt continued to increase, but Senegal remains at low risk of distress, partly due to GDP rebasing. Debt (using an expanded perimeter including State Owned Enterprises (SOEs) and para-public entities) is estimated to have increased from 60.6% of GDP in 2017 to 64.5% in 2018. This is partially linked to Eurobonds issuance (around $2.2 billion in March 2018) in good financial conditions. GDP rebasing – which increased GDP by about 30% – and buying back expensive debt with part of the Eurobond proceeds helped maintain a low level of debt distress. Continued growth and fiscal discipline would help reduce debt as a share of GDP since 2019.

The current account deficit remains large, due to high commodity prices and imports of intermediary goods. The Current Account Deficit (CAD) is expected to remain large at 7.3% of GDP in 2018 (similar as in 2017) due to strong energy imports linked to high prices and volumes, but also important intermediary goods and foods imports. High growth and investments also help explain stronger imports. Exports increased rapidly – thanks to strong performance of gold, phosphoric acid and food products – but could not outpace imports. The deficit is expected to worsen in the next few years: large imports linked to important oil and gas investments – but also to high commodity prices – would keep the trade deficit large despite a good export performance. Since 2022, the external balance is expected to improve as oil and gas exploitation and exports start.