Senegal faces economic uncertainty as a slowing economy, expanding fiscal deficit, and potential delays in IMF funding raise concerns ahead of the parliamentary elections scheduled for Nov. 17, analysts warn.
President Bassirou Diomaye Faye, who has been in office for just five months, dissolved the opposition-controlled National Assembly last week, triggering a snap election. This comes as Senegal prepares for a key review of the $1.9 billion IMF loan, which was aimed at stabilizing public finances. However, analysts, including Barclays’ Michael Kafe, predict that the IMF may delay its approval of the next funding tranche until December.
Senegal’s growth forecast has been revised down to 6.0% from an earlier projection of 7.1%, due to weaker performance in mining, construction, and agro-industry sectors, according to the IMF. Analysts are now closely monitoring both the economic and political landscape leading up to the election, though fears of repeat unrest like the protests in 2021 have not materialized.
Adding to the fiscal challenges, government revenues have dropped in the first eight months of the year, while spending remains steady. This has widened the fiscal deficit and forced the government to rely on costly short-term borrowing. Following the dissolution of parliament, Senegal’s dollar bonds saw a slight decline.
Faye, a former tax inspector, blamed the opposition for blocking his proposed budget and reforms, including efforts to cut inefficient state bodies. He won the presidential election in March with 54% of the vote but his Pastef party held only 26 out of 165 parliamentary seats.
Looking ahead, Faye may benefit from the anticipated economic boost from Senegal’s new oil and gas production. The country began producing oil in June, and gas production is set to begin by year-end, potentially helping the administration address the country’s fiscal and external imbalances.
Political analysts from Eurasia Group suggest that Faye’s popularity could rise in the November elections, supported by initiatives such as judicial reforms and financial audits, as legislative results often align with presidential outcomes when held soon after.