Country Report Senegal July 2008

Outlook for 2008-09

• The president, Abdoulaye Wade, is faced with social and political unrest as well as tensions within the ruling Parti democratique senegalais (PDS) over his succession.
• Following the approval by the IMF of a non-financial policy support instrument (PSI), the government will continue to pursue a donor-supported economic reform programme and implement large infrastructure projects.
• The new food price subsidies will cause the fiscal deficit to widen in 2008 to 4.9% of GDP. In 2009, as world food prices drop back and the cost of price subsidies falls, the deficit is forecast to narrow to 4.1% of GDP.
• Real GDP growth is forecast to rise to 4.8% in 2008 and 4.9% in 2009, driven by stronger growth in phosphate production, construction and services.
• Although the trade deficit is forecast to widen to US$2.7bn in 2008-09 owing to high food and oil prices, the current-account deficit will narrow from 11.9% of GDP in 2008 to 11.4% of GDP in 2009 because of rising real GDP growth.

Monthly review

• In response to continued strikes by schoolteachers, the president has split the education portfolio into three and appointed a teacher and trade unionist as minister in charge of the schools most affected by the strikes.
• The nationwide political consultations, Assises nationales, organised by the opposition are under way, and although some opposition politicians and civil society organisations are staying away, many others are taking part.
• In its latest country report on Senegal, the IMF has commended much of the government's performance under the PSI, although it notes a temporary increase in domestic arrears in 2007, which will have to be paid off in 2008.
• Power cuts have continued to affect parts of the country, which the state-owned electricity company, Senelec, has blamed on equipment failure rather than its financial difficulties.
• The World Bank has approved a loan of US$80m to support Senegal's electricity sector and help Senelec to restore its finances and bring down its debt to manageable proportions by December 2009.
• Seniran Auto—the car assembly plant in Thies, which is 60%-owned by an Iranian vehicle manufacturer, Khodro—has started operations, assembling Samand cars premanufactured in Iran.

Source: Country Report