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Senegal announces recovery plan relying on domestic funding

On Friday, Prime Minister Ousmane sonko unveiled a plan to revive the economy of Senegal. He pledged to finance 90% through domestic resources in order to avoid further debt.

Senegal is facing financial difficulties and criticism over misreporting of debt. The plan aims to stabilize the finances of this West African nation, which began producing oil and natural gas last year.

The IMF has frozen its loan program because the country is struggling with hidden debts worth billions of dollars from the previous administration.

Sonko, during a presentation at the capital Dakar, said: "We have identified over 4.6 trillion CFA Francs ($8.16billion) in resources available between 2025-2028 without increasing the debt of the state."

The goal of the plan is to reduce the deficit in the budget to 3% GDP by 2027, down from 12%.

The government has proposed a number of measures, including merging and shrinking state institutions. This, according to the government, could save 50 billion CFA Francs. It also proposes eliminating tax exemptions for certain sectors, especially in the digital economy, which is largely untaxed. He gave mobile money and online gaming as examples.

Visa fees will be introduced to visitors from non-African states and African countries that require visas from Senegalese citizens. The fees for visas are expected to raise 60 billion CFA.

Sonko stated that the government anticipates raising 884 billion CFA Francs through the renegotiation and renewal of contracts in the oil, mining and energy sectors. An additional 200 billion CFA will be raised by the renewal of the telecom license.

The government is easing access to land titles in order to attract investment. It will also raise the age limit on imported vehicles, a demand made by the diaspora of Senegal.

Senegal will continue to mobilize resources and seek out external partners for recycling existing assets.

Domestic market

in local currency. Sonko says that foreign currency debt should target hydrocarbons, oil and gas, mining and other sectors.

He added that the reforms will also allow the government to better target social programs and subsidies to meet the needs in the population.

Since years, the IMF has called on Senegal's government to reduce what it calls expensive and inefficient subsidies for energy. In March, it estimated that these subsidies could amount to up to 4 percent of GDP.

The problem with these subsidies, is that they don't benefit the most vulnerable households. In an interview with the IMF mission head Edward Gemayel in Dakar, in March, he said that most of these subsidies go to wealthy households.

He added that the Senegalese should understand why the cuts were necessary and be informed of the reasons for the reductions. Reporting by Anait Miridzhanian and Ayen deng Bior, editing by Bate Felice, Robbie Corey Boulet and Mark Heinrich

(source: Reuters)