June 12, 2024
According to the World Bank’s 2024 Economic Update for Senegal, the country’s economic development remained resilient in 2023, despite political difficulties and persistent, but reducing inflation.
Despite disruptions in the services sector and a slowing of export growth, the country’s thriving primary and secondary sectors boosted economic activity. The growth rate reached 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 objective for 2023 was met, with a deficit of 5.1% of GDP, slightly above the target of 4.9%. Several factors, including a rise in tax revenues, contributed to the deficit.
Wilfried A. Kouame, World Bank Lead Economist and one of the report’s authors, stated that “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 demonstrates that informality, a narrow tax base, and limited legislative enforcement impede direct taxes potential to boost revenues and correct pretax inequality. Accelerating tax administration improvements and personal income tax regulations can help to increase domestic revenue mobilization efforts. Finally, the research shows that poverty incidence in Senegal has remained stable, with significant regional variances and a considerable drop in places such as the Senegal River Valley.
(Source: The World Bank)
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