(Bloomberg) — Senegal, a nascent oil and gas producer, intends spending about 12.8 trillion CFA francs ($21 billion) on development over the next five years and aims to garner another 5.7 trillion CFA in private investment, a draft government plan shows.
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Public investment in education, energy infrastructure and a range of other projects is seen increasing by an average of 14.7% annually between 2025 and 2029, according to the document, which is still a work in progress.
The plan is being formulated by the new administration of President Bassirou Diomaye Faye, who took office in April and has pledged to tackle high levels of poverty and unemployment. It notes that a lack of transparency and bad management of public finances has stymied efforts to uplift Senegal’s 18 million people, that wealth and income disparities between those living in the capital and the countryside have widened and that the country is too highly indebted.
“We will follow a new economic trajectory,” Prime Minister Ousmane Sonko said at a presentation of the plan in the city of Diamniadio on Monday. “In the next 25 years, we’re expecting a new economic landscape.”
About half of the West African nation’s people who don’t reside in the main cities live below the poverty line, official youth unemployment stood at more than 20% in 2022 and one fifth of eligible children aren’t in school, official data shows.
The government intends to derive more revenue from its oil, gas, gold and other natural resources going forward, while reducing its reliance on loans under a “prudent, better and more-controlled debt policy,” the plan states. It envisions the country’s debt-to-gross domestic product ratio falling to 61% in 2029.
A recent review showed the debt-to-GDP ratio averaged 76.3% during former President Macky Sall’s last five years in power — higher than the 65.9% his administration had reported. The budget deficit meanwhile averaged 10.1% of GDP, almost double what had been previously stated, according to the review.
The government will give priority to the local and African market when financing its budget deficit, and a quarter of the funding it needs will be raised through public-private partnerships Souleymane Diallo, director of planning at the ministry of economy, said on Monday.
“Fifty-seven percent of revenue goes to service our debt,” and that will be reduced, he said.
While the plan says that mining contracts and a fiscal framework for the oil and gas industry will be reviewed, it stops short of specifying that the terms will be renegotiated as Faye’s government had previously announced.
“Good governance is the first axis of our new approach,” Sonko said.
Other Key Takeaways:
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The budget deficit will be cut to 3% of GDP from next year and maintained at that level through 2025.
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The average current account deficit is expected to fall 4.1% of GDP over the next five years, from 10.3% recorded between 2014 and 2023, in part due to an increase in oil and gas exports and a gradual decline in food imports.
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Energy subsidies are expected to fall to less than 1% of GDP by 2029, from 4% over the 2020-2023 period, as the increased use of gas to generate electricity helps contain costs and more lower-cost crude oil becomes available for refining.
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The tax-to-GDP ratio is projected to rise to 21.7% from 18% currently.
(Updates with government comment starting in fourth paragraph.)
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