DAKAR, June 12, 2024 - According to the World Bank’s 2024 Economic Update for Senegal, economic growth in the country proved resilient in 2023 amid political tensions and persistent, albeit declining, inflation.
The country’s vibrant primary and secondary sectors supported economic activity despite disruptions in the services sector and a slowdown in export growth. The growth rate stood at 4.3%, up from 3.8% in 2022.
“The new authorities’ desire to strengthen transparency and public financial management is an opportunity to bolster Senegal’s positive medium-term economic outlook. This outlook is, however, contingent in the short term on a commitment to fiscal consolidation and the implementation of transformative reforms that underpin macroeconomic stability,” noted Keiko Miwa, World Bank Country Director for Cabo Verde, The Gambia, Guinea-Bissau, Mauritania, and Senegal.
The fiscal deficit reduction target for 2023 was achieved, resulting in a deficit of 5.1% of GDP, slightly above the target of 4.9%. A number of factors, including the increase in tax revenues, contributed to the deficit.
According to Wilfried A. Kouame, World Bank Lead Economist and one of the report’s authors, “Tax reforms and improved personal income tax can raise domestic revenues by broadening the tax base and enforcing the legal framework without increasing poverty or inequality.”
The report also shows that informality, a narrow tax base, and limited enforcement of legislation hinder the ability of direct taxes to increase revenues and correct pretax inequality. Accelerating tax administration reforms and personal income tax policies can help boost domestic revenue mobilization efforts. Lastly, the report indicates that poverty incidence in Senegal has remained stable, with marked regional differences and a notable decline in areas such as the Senegal River Valley.
