Senegal: The IMF’s Bad Advice for President Macky Sall

The International Monetary Fund (IMF) is offering some advice to Senegal that seems politically tone-deaf to me. Senegal, as of April, has a new president: Macky Sall, whose triumph over two-term incumbent President Abdoulaye Wade caused jubilation in Senegal (Sall won nearly two-thirds of the vote in the second-round runoff) and reinvigorated confidence in Senegalese democracy abroad. Sall’s victory reflected longstanding disappointment among voters, especially youth, with Wade as an individual – critics accused Wade of corruption, incompetence, and authoritarian tendencies toward the press and other opponents. But the disappointment also owed to deep complaints about economic stagnation in Senegal. Complaints touched on joblessness among youth, the country’s recurring power cuts (which hurt businesses, especially small ones), and other economic woes. Whether you agree with them or not, my impression is that many Senegalese citizens looked (and still look) to the government to take a major role in solving these problems.

The IMF, in its latest press release on Senegal, stated that IMF officials meeting with Sall’s government earlier this month had urged Senegal to cut subsidies on electricity, reduce government spending, and postpone “some non-priority capital expenditure.” Reuters sums up these developments with the headline “IMF Urges New Senegal Government to Tighten Belt,” which seems apt to me.

The IMF, in a way that reminds me a little of the debate over removing the fuel subsidy in Nigeria earlier this year, uses language that suggests government expenditures could be more efficient, and subsidies more targeted. Undoubtedly this is true. But reducing expenditures means reducing expenditures. It seems that the gains that come through “efficiency” and “targeting” are never large enough to offset the reductions represented by the overall cuts. I am not an economist and many of the economic arguments are over my head. But the politics seem simple to me: If Sall wants to stay popular, he will in the medium term need to show that he can make a difference on the economic issues that affect ordinary people’s lives; the most straightforward paths to this involve government spending on these issues, especially electricity and youth job creation. If the government tightens its belt and the economic problems continue, his popularity seems likely to fall. The youth protests that shook Senegal in 2011 and 2012 were not pro-Sall protests; they were anti-Wade, but they were also in opposition to the economic and political status quo in Senegal. I would not at all be surprised, if economic conditions for ordinary people remain stagnant, to see protests re-emerge. Finally, this is not the 1980s, but the IMF should take more cognizance of the fact that many Africans have a negative view of the IMF’s historical role on the continent, and that many of them view the IMF as not just an economic institution but a political actor.

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6 thoughts on “Senegal: The IMF’s Bad Advice for President Macky Sall

  1. Reading the headline of this article, I thought the IMF would have been arguing for much more drastic measures than reducing a fuel subsidy. What I found was a much more measured approach than I had expected – consisting almost entirely of raising the fuel subsidy, with no other major cuts proposed.

    I think that you’re right that the IMF is viewed as a political actor in countries like Senegal. Just as the fuel subsidy is a political issue, not just an economic one. But I would take issue with your assertion that expenditures are expenditures. Using the same logic, aren’t tax cuts for the wealthy the same as tax breaks for the poor? I think most people would argue that they are not the same. The same logic applies to fuel subsidies. While the perception about fuel subsidies among the public is that they benefit everyone, the reality is that the vast majority of their costs accrue to the better off. Here’s one of the IMF’s articles on the subject for reference (http://www.imf.org/external/pubs/ft/fandd/2010/06/picture.htm)

    At a time when the government of Senegal is facing a budget deficit of 8 percent of GDP, I think it’s important that they look at preserving pro-poor expenditures while reducing those expenditures that benefit mostly the rich.

    Finally, while I wish it weren’t the case – you might very well be right about this one. As the example of Nigeria shows, adept politicians will exploit these issues no matter how well thought out or pro-poor they are. The rich have won a PR victory in Nigeria at the expense of the poor. Their example very well may be repeated in Senegal if the government follows the Fund’s advice.

  2. What I’m confused by is why politicians who do end subsidies always seem to do it overnight. Don’t these people ever notice how it usually ends? There are major protests, the opposition party gets more popular and the politician is forced to reverse stance in less than a week which just makes them look weak. It is possible to phase out subsidies over a period of time.

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  4. Senegal needs much more faster actions on Various fronts. Mr Sall need to do many things at the same time to show some visible improvement which is still not available here.
    The major obstacle are the taxes …. Taxes need to be cut down drastically. In the current suituation the devide between the rich and poor are still wide and the Govt need to do something very effective to improve the current economic situation.We dont need somebody from outside to come and tell senagl people what we should do when the problems and the solutions to these problems are known to us itself. we have to find our own solutions which I am sure that the current govt is well aware. only thing required is the faster decisions and some visible actions.

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