Reallocations of Special Drawing Rights and Financing of the Economic Recovery in Senegal

The Senegalese economy has recently been affected by the combination of Covid-19 shocks, geopolitical tensions in Ukraine, and climate change shocks, which are increasing from year to year. The resource required to deal with these shocks have led to a rapid deterioration of the public debt and budget deficit, which limits Senegal's chances of mobilizing resources to finance its development policies. The country, thus, finds itself in a position of having to find innovative and flexible funding mechanisms, likely not to worsen the public debt and budget deficit. One possible option is to secure the access to the reallocations of special drawing rights (SDRs) by the IMF through its Resiliense and Sustainability Trust (RST) instrument. However, these funds are subject to a host of conditionalities which make them difficult to access. A better knowledge of the possibilities for Senegal to access these RST resources is essential to prepare a solid funding application file to submit to the IMF; this file should demonstrate Senegals capacity to deal with the negative effects of the shocks that the national economy suffered in recent years as well as the capacity to put this economy back on a strong growth trajectory.