Approved by: Prepared by the staffs of the International Abebe Adugna and Marcello Estevão (IDA) Development Association (IDA) and the Annalisa Fedelino and Natalia Tamirisa International Monetary Fund (IMF). (IMF) SENEGAL : JOINT BANK-FUND DEBT SUSTAINABILITY ANALYSIS Risk of external debt distress Moderate1 Overall risk of debt distress Moderate Granularity in the risk rating Limited space to absorb shocks Application of judgment No Senegal faces a moderate risk of external and overall public debt distress under the baseline scenario, with limited space to absorb shocks. This rating is contingent upon a growth rebound and a significant boost to growth and exports from hydrocarbon production over the medium term. The baseline also assumes that fiscal deficits will converge to the regional convergence criterion of 3 percent of GDP in 2024, supported by the unwinding of one-off COVID-19-related spending and enhanced revenue-mobilization. However, projections are subject to significant uncertainty. Potential risks include a slower pace of the domestic vaccination campaign as new COVID variants emerge, socio-political unrest, security challenges and delays to the hydrocarbon projects. Maintaining debt sustainability in this context requires a prudent borrowing strategy that prioritizes concessional external borrowing and domestic regional financing alongside continued efforts to strengthen debt management. Broader fiscal policy should seek to increase fiscal space over the medium-term to respond to future shocks. 1 >>> 1. This DSA uses a broad definition of public debt . The assessment includes public and publicly guaranteed (PPG) debt held by (i) the central government, (ii) para-public entities, and (iii) state-owned enterprises (SOEs) (Text Table 1). 2 This DSA uses a currency-based definition of external and domestic debt as data constraints prevent the use of a residency-based definition. Debt to the regional development bank (BOAD) has been treated as domestic debt since the beginning of the current PCI in January 2020. The default financial sector shock of 5 percent of GDP is more than adequate to cover contingent risks from potential bank recapitalization needs, which are estimated to be less than 1 percent of GDP. 2. The authorities are taking steps to strengthen the quality and coverage of public debt data. A recent audit of the quality and coverage of the public debt database did not identify major weaknesses, but noted risks related to the timeliness and reliability of SOE debt data. The authorities have developed an action plan to address these deficiencies. In addition, the national debt committee (CNDP), chaired by the Minister of Finance, reviews all large public investment decisions, including those by SOEs. A recent circular and decree have reinforced the role of the CNDP by clarifying the need for regular and timely provision of debt data by SOEs as a pre-requisite for consideration by the CNDP of any public borrowing. 3. Public sector debt levels have more than doubled over the last decade. Senegal has 2 >>> significant development needs and some of the large increases in public debt reflect investments associated with the national development plan, the Plan Senegal Emergent (PSE). The government has scaled-up capital expenditures, notably in infrastructure, energy, and agriculture, with public investment representing 38 percent of public expenditure on average from 2010 to 2020, contributing to economic growth. More recently, external public debt has also been driven by investments related to the oil and gas sector and the fiscal response to the COVID-19 pandemic contributed to a further surge in public debt levels. As of end-December 2020, public sector external debt stood at 54 percent of GDP, while total public sector debt reached 68.8 percent of GDP (Text Figure 1). 3 The main holders of Senegal’s external debt are private creditors, the World Bank and regional development banks (Annex 1). Sources: Senegalese authorities 4. Senegal continues to successfully access global financial markets. Following issuances in 2011, 2017, and 2018, the authorities issued a EUR775 million Eurobond in June 2021, its first Euro- denominated obligation. Just under half of the proceeds were used to buy back USD-denominated Eurobonds maturing in 2024, thereby improving the maturity profile of external debt while reducing rollover and FX risk.4 The remainder was used for financing the central government deficit and pre-financing for the state-owned oil company’s investments. The Eurobond issuance will also help create space in the regional bond market for other WAEMU members and support the build-up of WAEMU pooled reserves. 5. The 2021 SDR allocation has resulted in an increase in public debt at highly concessional rates. In line with the WAEMU-wide agreement, the BCEAO on-lent the counterpart of the SDR allocation (CFAF 246.7 billion, or 1.6 percent of GDP). This loan is treated as domestic debt. The DSA calculates the present value of the loan to incorporate its highly concessional nature, 5 which reduces its initial impact on the DSA’s assessment of the overall risk of debt distress (discussed below). 6 Reflecting this, Senegal’s public sector debt has become more concessional on average, as measured by the difference between the 3 >>> nominal and present value of the debt (Text Figure 2). 7 Sources: Senegalese authorities, IMF estimates and projections . 6. External and total public debt service are significant . The ratio of public external debt service to exports reached 23.5 percent in 2020, reflecting in part the sharp decline in exports due to the COVID shock. It is projected to remain at about 23 percent as the Eurobond buyback brought forward external debt service from 2024 to 2021, slightly smoothing out the debt service profile over the medium term (Text Figure 3). This ratio is expected to average about 20 percent over the medium term as the recovery takes hold and hydrocarbon exports materialize. Public external debt service is projected to average about 16 percent of revenues over the medium term (Table 1), while for total public debt service the average is around 26 percent of revenues and grants for the same period (Table 2). Sources: Senegalese authorities, IMF estimates and projections. 7. Senegal is participating in the G-20 Debt Service Suspension Initiative (DSSI). The DSSI is a NPV neutral exercise intended to provide eligible members with liquidity relief to allow them to focus more resources on responding to the COVID-19 pandemic. The DSSI provided around CFAF 30 billion in debt 4 >>> service relief (0.2 percent of GDP) over May-December 2020. The extension of the DSSI until the end of 2021 is expected to result in additional debt service relief of CFAF 71 billion (0.5 percent of GDP). This is CFAF 20 billion lower than projected in the previous DSA (June 2021) due to revised figures on which partners and projects are participating. The DSA incorporates these deferred payments over the period 2022–27, which average about CFAF 17 billion per year. 8. The macroeconomic assumptions underlying the projections are consistent with the program baseline discussed in the main staff report. The main changes relative to the previous DSA of June 2021 include a more rapid recovery in economic output this year, a delay in the return to a central government fiscal deficit of 3 percent of GDP by one year (to 2024), and downward revisions to the oil exports forecast. Long-run macroeconomic assumptions remain largely unchanged from the previous DSA in June 2021. The main macroeconomic assumptions are as follows: • Real GDP Growth. Senegal’s real GDP growth rate is estimated to be 5 percent in 2021, compared to 3.7 percent at the time of the 3rd review. This reflects the broad-based recovery that is underway in Senegal, particularly in the secondary and tertiary sectors. The recovery will continue in 2022 with growth around 5 ½ percent. The onset of oil and gas production will temporarily lift growth in 2023 and 2024 after which growth is projected to decline to 5.5 percent by 2026, close to the long run average of about 5 percent.8 Real GDP growth is the primary driver of improving debt dynamics under the baseline (Figure 2). • Oil and gas. The baseline includes the Sangomar (SNE) offshore oil field development and the Greater Tortue Ahmeyim (GTA) gas project, with production expected to begin in the second half of 2023.9 Box 1 outlines the main assumptions about the macroeconomic impact of these products. Notably, the share of oil production that contributes to exports has been reduced to 70 percent (from 100 percent), to account for the 30 percent share that will be destined for the domestic oil refinery. This change results in significantly lower export volume over the forecast horizon. The remaining financing needs of Petrosen (the state-owned oil company) for both projects are estimated at CFAF 1,090 billion from 2021 through 2037 (Text Table 2), which is slightly lower than previous estimates due to a change in the financial structure of the project. These estimates are subject to change as the projects evolve. The Yakaar-Taranga project has not yet reached a final investment decision and is thus not included in the DSA. • Inflation. Inflation is projected to be 2 ½ percent in 2021 and average around 1.5 percent over the medium term. • Public sector deficit. The public sector deficit—which includes both the central government deficit and the net lending and borrowing of SOEs—is estimated to be 7.4 percent of GDP in 2021. This mainly reflects the higher fiscal deficits from the central government and large investments by Petrosen. The public sector deficit is projected to stabilize at around 3 percent of GDP over the medium term as the central government deficit converges towards the regional target of 3 percent of GDP in 2024 (supported by the unwinding of one-off COVID-19-related spending and enhanced 5 >>> revenue-mobilization), financing needs in the hydrocarbon sector decline, and efforts to strengthen the financial performance of SOEs bear fruit. Source: Senegalese authorities, IMF staff projections. • Revenues. Relative to 2019, the central government’s tax revenue declined by almost 1 percent of GDP in 2020 due to the pandemic, to 16.7 percent of GDP. Non-hydrocarbon tax revenues are projected to gradually increase to 20 percent of non-hydrocarbon GDP in 2024, in line with the objectives of the Medium-Term Revenue Strategy (MTRS),and are expected to stay above that level over the medium term. This outlook assumes the steady implementation of MTRS reforms to support revenue mobilization, with a focus on expanding the tax base and reducing tax expenditures. Oil and gas-related revenues will start adding to revenue from 2023 onwards. • Current account deficit. The baseline scenario assumes a current account deficit of 10 percent in 2020 and 10.6 percent in 2021. This is lower for 2021 than at the time of the 3rd review (11.3 percent), which primarily reflects higher than anticipated exports. The current account deficit is projected to sharply decline starting in 2023 as oil and gas exports come online, with a recovery in services exports (tourism) also contributing. 9. The DSA assumes the authorities will implement a prudent borrowing strategy that includes support from multilateral and bilateral partners. The revised 2021 budget will be primarily financed by concessional and semi-concessional loans—including from the World Bank, African Development Bank, and other partners—and the SDR-related loan from the BCEAO. The SDR allocation and the Eurobond were not included in the previous DSA’s borrowing plan, contributing to higher gross financing in 2021 than in the previous baseline CFAF (2061 billion versus CFAF 1415 billion). The authorities’ medium-term debt strategy (MTDS) includes continued support from multilateral partners but also a gradual shift away from external financing denominated in U.S. dollars towards a greater reliance on the regional CFAF market. Accordingly, the DSA assumes that domestic borrowing will increase over time and account for an average of about 42 percent of total financing over 2022–26, from about 23 percent in 2021. The issuance of Eurobonds is also assumed to gradually increase over the long term (with new issuances equivalent to the stock of maturing Eurobonds plus 20-30 percent) as Senegal shifts away from concessional external borrowing to access the market more regularly. 10. The realism tools suggest that the proposed fiscal adjustment path is ambitious, but staff believe it is realistic under the circumstances. The assumed primary balance adjustment path of 3.3 percent of GDP over 2021–23 is in the top quartile of the historical distribution for LICs (Figure 4). However, in the case of Senegal, a significant portion of the adjustment reflects one-off expenditures introduced in response to the COVID-19 shock in 2020 (4.5 percent of GDP) and those associated with the 6 >>> SDR allocation in 2021 (1.6 percent of GDP). Staff believes that reaching the central government’s 3 percent fiscal deficit target by 2024 is realistic, though it depends upon the implementation of the program’s revenue-enhancing measures. The high residual (Figure 3) is explained by the expansion of the debt perimeter in 2017. Separately, the projected economic growth rates in 2021 and 2022 are above the range of potential growth paths under various fiscal multipliers, but the COVID-19 pandemic and the related- recovery are not well-captured by the exercise (Figure 4). Changes in the projected contributions to real GDP growth reflect the revised oil and gas growth assumptions and do not signal realism concerns. Staff updated projections regarding the Production by Project (Million of barrel of oil equivalent) macroeconomic impact of the oil and gas projects. 50 In the pre-production phase, the projects have led to a 45 40 major increase of foreign direct investment from about 35 30 2 percent of GDP to an expected 7.8 percent of GDP 25 20 in 2021. This finances to a large extent imports of 15 10 services which are expected to reach 9.9 percent of 5 GDP in 2021. For the production phase starting in - 2023 2024 2025 2026 2027 2028 2029 2030 2023, the macroeconomic framework includes the two Sangomar GTA projects that have reached final investment decision Hydrocarbons: Impact on real GDP growth and “Grand Tortue Ahmeyim” (GTA, LNG) and “Sangomar” Hydrocarbons: Impact onexports Real GDP Growth and Exports (oil). 15 15 Growth and exports will receive a boost in 2023 10 10 and 2024. Growth will be temporarily lifted to about 5 5 10 percent in 2023 and 2024—with a shift in the level 0 0 of GDP while future growth is not expected to benefit 2023 2024 2025 2026 2027 2028 2029 2030 from further production increases. It is assumed that Hydrocarbons: Contribution to GDP growth (in percent, rhs) 70 percent of crude oil and 100 percent of LNG will be Real non-oil GDP growth (in percent, rhs) sold abroad, adding about 5 percent of GDP to current Hydrocarbon exports (in percent of GDP, lhs) exports of goods between 2023 and 2030. Moderate public revenues are expected in the Projected Revenues from Oil and Gas Projects medium term. Total net revenue projections, (in percent of GDP) including cash flows from the state-owned oil company Petrosen, depend crucially on actual production volumes, future oil and gas prices, possible investment in future phases, and repayments of initial investments. As such, uncertainty around these estimates is high but staff expects revenues to average 0.7 percent of GDP through 2026. Sources: Senegalese authorities; and IMF staff estimates. 7 >>> Source: IMF staff estimates and projections PPG Debt CFAF billions Central Government 2061 External 1207 Concessional/Semi-concessional 1/ 699 Commercial 2/ 508 Domestic 854 SDR-related loan 246 State Owned Enterprises (net) 250 Total Public Sector 2311 Use of funds Fiscal deficit (central government) 3/ 967 Amortizations and Eurobond repurchases 754 Overfinancing (net) 120 Below-the-line spending 4/ 220 SOE sector (net) 5/ 250 1/ Debt with a positive grant element 2/ Debt without a positive grant element. Includes amounts on-lent to 3/ Budget deficit minus operating expenditures and overfinancing from 2020 4/ Operating expenditures, on-lending to Petrosen, SDR financial transactions 5/ Excludes amounts on-lent to Petrosen Source: Senegalese authorities, IMF staff estimates 8 >>> 11. Senegal’s debt carrying capacity is rated as strong. Based on data from the October 2021 World Economic Outlook database and the World Bank’s 2020 Country Policy and Institutional Assessment (CPIA) score, Senegal’s Composite Indicator (CI) is 3.25. This assessment affects the thresholds used to calculate the mechanical external debt risk ratings. Senegal’s CI score has increased marginally compared to the last vintage (3.23) (Text Table 5). Components Coefficients (A) 10-year average CI Score components Contribution of values (B) (A*B) = (C) components CPIA 0.385 3.733 1.44 44% Real growth rate (in percent) 2.719 5.845 0.16 5% Import coverage of reserves (in percent) 4.052 45.974 1.86 57% Import coverage of reserves^2 (in percent) -3.990 21.136 -0.84 -26% Remittances (in percent) 2.022 10.635 0.22 7% World economic growth (in percent) 13.520 3.137 0.42 13% CI Score 3.25 100% CI rating Strong Source: IMF staff estimates 12. The standard stress tests have been applied, along with a market financing shock. The use of a tailored stress test for market financing reflects Senegal’s outstanding Eurobonds. The test uses the default parameters which assumes i) a temporary increase in the cost of new commercial external borrowing by 400 basis points, ii) a nominal depreciation of the CFAF relative to the US dollar, and iii) a shortening of maturities and grace periods. This results in a one-off breach of the PV of debt-to-GDP ratio in 2022, but otherwise does not flag any areas for concern (Figure 5). The June 2021 Eurobond issuance, which lengthened the maturity profile of external debt and swapped USD for EUR-denominated debt, reduced the risk from such a potential shock. 13. External debt indicators remain below their thresholds under the baseline scenario, with the exception of a temporary one-off breach in 2021. PPG external debt is projected to peak at 57.9 percent of GDP in 2021 (compared to 57 percent of GDP in the 3rd PCI review), before steadily declining over the medium-term (Table 1). The present value of debt to exports is close to the risk threshold in the first year of the baseline projection but steadily declines thereafter, aided by higher growth from the oil and gas projects. The external debt service to exports ratio now breaches the risk threshold in 2021 under the baseline (a change since the previous DSA), reflecting the front-loading of debt service payments brought about by the Eurobond buyback operation discussed above. This short-lived one-year breach is discounted for the DSA risk ratings. The external debt service to revenues ratio is projected to average around 16 percent over the medium term. 14. Three of the four external debt burden indicators breach their threshold under the sensitivity 9 >>> analysis. For the PV debt-to-GDP ratio, the most extreme shock is a combination shock. For the two export- related indicators, the most extreme shock is a shock to exports, but sustained breaches also occur for the combination shock (Table 3). Overall, these results point to potential vulnerabilities under adverse conditions, including a slower global recovery that would hit Senegal’s main export markets, or in case of significant delays in the development of the hydrocarbon sector. A key difference between the baseline and the historical scenario is that the baseline scenario reflects prospective hydrocarbon exports. 15. There are no breaches of the overall public debt risk indicator in the baseline scenario. Total public debt is projected to peak at 73 percent of GDP in 2021 before gradually declining due to higher growth and fiscal consolidation (Table 2). The present value of public debt to GDP remains below its benchmark under the baseline scenario, steadily declining over time (Figure 2). The present value of debt to revenues is also projected to gradually decline. Debt service is projected to remain substantial, averaging about a quarter of total revenues and grants over the next five years. 16. Stress tests indicate that Senegal is most vulnerable to a growth shock. Under the standard growth shock (which simulates a growth rate of 2.4 percent in 2022–23), two of the three public debt indicators would be set on an explosive growth path and the other would also increase substantially. This represents an extreme shock, one that ignores the expected rebound from COVID-19 and growth impact of hydrocarbon production. Nevertheless, it underscores the importance of reforms to strengthening Senegal’s resilience by building fiscal space and enhancing its medium -term growth potential. 17. Senegal remains at moderate risk of external debt distress, with limited space to absorb shocks (Figure 6). Senegal is considered to have “limited space to absorb shocks” because the realization of the median observed shock is expected to result in a downgrade to high risk of debt distress. Senegal’s vulnerability to growth and export shocks, combined with heightened uncertainty over the global economic outlook, points to the need for a balanced approach that combines near-term recovery with medium-term sustainability. The authorities should focus on targeted near-term support with a gradual reduction in fiscal deficits to the agreed WAEMU target. An overall increase in total interest payments calls for prioritizing concessional debt whenever possible. This should be supported by reforms to contain fiscal risks and continued strengthening of debt management to ensure that debt continues to be effectively channeled towards productive capital formation.10 18. Senegal’s overall risk of debt distress also remains moderate. Given elevated debt service, 10 >>> the authorities should prioritize further efforts to mobilize additional domestic revenues and seek out concessional borrowing where possible in the near term. 19. There are significant risks to the assessment. The near-term outlook depends primarily on the speed of the global recovery and Senegal’s access to vaccines . Slower global growth could hinder the recovery while limited access to vaccines leaves the country vulnerable to future waves of COVID-19. While higher global growth would be beneficial for Senegal’s growth and exports, it may also contribute to higher interest rates and imported commodity prices, such as oil. This could impact Senegal’s terms of trade, fiscal balances (via domestic fuel price subsidies) and market access, although the latter risk has been mitigated by the recent Eurobond buyback operation. Over the medium term, sustained higher oil prices would increase the profitability of the new hydrocarbon projects, thereby strengthening the external and fiscal outlook. By contrast, significant delays in hydrocarbon production would have a material impact on growth and revenues. As the downside scenario illustrates (Box 2), the simultaneous materialization of growth, fiscal, and external sector risks would result in a significant deterioration in Senegal’s debt profile. Senegal is also subject to risks from natural disasters, regional security, and socio-political developments. Staff has developed a downside scenario to illustrate the macroeconomic impact if risks materialize. The scenario assumes: • Lower growth due to a more protracted recovery from the pandemic, delayed and lower oil and gas production and lower trend non-oil growth in the medium to long term. • Reduced goods and services exports due to lower oil and gas exports, weaker external demand, and less competitive supply of tradable goods. • A more gradual increase of the tax to GDP ratio than in the baseline reflecting incomplete implementation of the medium-term revenue strategy as tax policy measures face increasing resistance by vested interests. • A less ambitious fiscal consolidation and a higher medium-term fiscal deficit of 4.5 percent of GDP reflecting high subsidy needs and rising overall spending pressures. Assumptions Debt vulnerabilities would be exacerbated in such a scenario. The debt-to-GDP ratio would remain above 70 percent of GDP while debt service would rise rapidly. The external sustainability indicators of the DSA would worsen significantly and indicate high risk of debt distress, given limited space to absorb 11 >>> shocks. Less successful domestic revenue mobilization would lead to less nominal spending despite the assumed higher fiscal deficit. PV of debt-to GDP ratio PV of debt-to-exports ratio 60 300 50 250 40 200 30 150 20 100 10 50 0 0 2021 2023 2025 2027 2029 2031 2021 2023 2025 2027 2029 2031 Debt service-to-exports ratio Debt service-to-revenue ratio 30 25 25 20 20 15 15 10 10 5 5 0 0 2021 2023 2025 2027 2029 2031 2021 2023 2025 2027 2029 2031 Downside Scenario 1 Baseline Source: IMF staff calculations 20. The authorities share staff’s overall assessment. The authorities agree with the DSA assessment and recognize that there is limited space to absorb shocks, especially in the near term. However, they are more optimistic about the boost to medium-term growth from both hydrocarbon projects and other reforms to enhance competitiveness. To reduce the country’s reliance on debt financing, the authorities are committed to gradually reducing fiscal deficits to meet the regional target and to mobilize higher revenues through the MTRS. In the meantime, they will continue to look for pro-active debt management opportunities to help smooth out debt service payments and further mitigate FX risks. 12 >>> PV of debt-to GDP ratio PV of debt-to-exports ratio 100 400 90 350 80 300 70 60 250 50 200 40 150 30 Most extreme shock: Combination 100 20 10 50 Most extreme shock: Exports 0 0 2021 2023 2025 2027 2029 2031 2021 2023 2025 2027 2029 2031 Debt service-to-exports ratio Debt service-to-revenue ratio 40 30 35 25 30 20 25 20 15 15 10 10 5 5 Most extreme shock: Exports Most extreme shock: Combination 0 0 2021 2023 2025 2027 2029 2031 2021 2023 2025 2027 2029 2031 Baseline Historical scenario Most extreme shock 1/ Threshold 1 3rd Review - Jun 2021 Customization of Default Settings Borrowing assumptions on additional financing needs resulting from the stress tests* Size Interactions Default User defined Shares of marginal debt No No External PPG MLT debt 100% Tailored Stress Terms of marginal debt Combined CL Yes Avg. nominal interest rate on new borrowing in USD 3.7% 3.7% Natural disaster n.a. n.a. USD Discount rate 5.0% 5.0% Commodity price n.a. n.a. Avg. maturity (incl. grace period) 18 18 Market financing No No Avg. grace period 6 6 Note: "Yes" indicates any change to the size or interactions of * Note: All the additional financing needs generated by the shocks under the stress tests are the default settings for the stress tests. "n.a." indicates that the assumed to be covered by PPG external MLT debt in the external DSA. Default terms of marginal stress test does not apply. debt are based on baseline 10-year projections. Sources: Country authorities; and staff estimates and projections. 1/ The most extreme stress test is the test that yields the highest ratio in or before 2031. The stress test with a one-off breach is also presented (if any), while the one-off breach is deemed away for mechanical signals. When a stress test with a one-off breach happens to be the most extreme shock even after disregarding the one-off breach, only that stress test (with a one-off breach) would be presented. 13 >>> PV of Debt-to-GDP Ratio 120 100 80 60 40 Most extreme shock: Growth 20 0 2021 2023 2025 2027 2029 2031 PV of Debt-to-Revenue Ratio Debt Service-to-Revenue Ratio 350 40 300 35 30 250 25 200 20 150 15 100 10 50 Most extreme shock: Growth Most extreme shock: Growth 5 0 0 2021 2023 2025 2027 2029 2031 2021 2023 2025 2027 2029 2031 Baseline Most extreme shock 1/ TOTAL public debt benchmark Historical scenario 1 3rd Review - Jun 2021 Borrowing assumptions on additional financing needs resulting from the stress Default User defined tests* Shares of marginal debt External PPG medium and long-term 56% 56% Domestic medium and long-term 40% 40% Domestic short-term 4% 4% Terms of marginal debt External MLT debt Avg. nominal interest rate on new borrowing in USD 3.7% 3.7% Avg. maturity (incl. grace period) 18 18 Avg. grace period 6 6 Domestic MLT debt Avg. real interest rate on new borrowing 3.5% 3.5% Avg. maturity (incl. grace period) 6 6 Avg. grace period 3 3 Domestic short-term debt Avg. real interest rate 2.8% 2.8% * Note: The public DSA allows for domestic financing to cover the additional financing needs generated by the shocks under the stress tests in the public DSA. Default terms of marginal debt are based on baseline 10-year projections. Sources: Country authorities; and staff estimates and projections. 14 >>> Gross Nominal PPG External Debt Debt-creating flows Unexpected Changes in Debt 1/ (in percent of GDP; DSA vintages) (percent of GDP) (past 5 years, percent of GDP) 60 Current DSA Residual 80 30 Previous DSA proj . 40 Interquartile 70 DSA-2016 Price and 25 range (25- 60 exchange 20 75) rate 20 50 Real GDP 15 Change in growth 0 40 PPG debt 3/ 10 Nominal -20 30 interest rate 20 5 Median Current -40 10 account + 0 FDI 1 2 -60 0 Change in -5 Contribution of 5-year 5-year unexpected 2017 2020 2023 2026 2029 2030 2016 2018 2019 2021 2022 2024 2025 2027 2028 2031 PPG debt 3/ Distribution across LICs 2/ historical projected -10 cha nges change change Public debt Gross Nominal Public Debt Debt-creating flows Unexpected Changes in Debt 1/ (in percent of GDP; DSA vintages) (percent of GDP) (past 5 years, percent of GDP) Current DSA Residual 60 Previous DSA proj. 35 DSA-2016 Interquartile 80 30 Other debt 40 range (25-75) 70 creating flows 25 60 Real Exchange 20 20 50 rate depreciation Real GDP growth 15 Change in 40 0 debt 30 10 Real interest rate 20 -20 5 10 0 Primary deficit Median 0 -40 -5 Contribution of 5-year 5-year 2017 2019 2021 2023 2025 2027 2016 2018 2020 2022 2024 2026 2028 2029 2030 2031 Change in debt unexpected Distribution across LICs 2/ historical projected -10 changes change change 1/ Difference between anticipated and actual contributions on debt ratios. 2/ Distribution across LICs for which LIC DSAs were produced. 3/ Given the relatively low private external debt for average low-income countries, a ppt change in PPG external debt should be largely explained by the drivers of the external debt dynamics equation. 15 >>> 3-Year Adjustment in Primary Balance Fiscal Adjustment and Possible Growth Paths 1/ (Percentage points of GDP) 8 3 7 14 Distribution 1/ 6 In percentage points of GDP 2 12 Projected 3-yr 3-year PB adjustment 5 adjustment greater than 2.5 percentage In percent 10 points of GDP in approx. top 4 1 quartile 3 8 2 6 0 1 4 0 -1 -1 2 2015 2016 2017 2018 2019 2020 2021 2022 Baseline Multiplier = 0.2 Multiplier = 0.4 0 m… Multiplier = 0.6 Multiplier = 0.8 0.0 1.5 3.0 4.5 6.0 0.5 1.0 2.0 2.5 3.5 4.0 5.0 5.5 6.5 7.0 7.5 8.0 -4.5 -4.0 -3.5 -3.0 -2.5 -2.0 -1.5 -1.0 -0.5 1/ Bars refer to annual projected fiscal adjustment (right-hand side scale) and lines show 1/ Data cover Fund-supported programs for LICs (excluding emergency financing) possible real GDP growth paths under different fiscal multipliers (left-hand side scale). approved since 1990. The size of 3-year adjustment from program inception is found on the horizontal axis; the percent of sample is found on the vertical axis. Public and Private Investment Rates Contribution to Real GDP growth (percent of GDP) (percent, 5-year average) 30 8 28 26 7 24 22 6 20 18 5 16 14 4 12 10 3 8 6 2 4 2 1 0 0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Historical Projected (Prev. DSA) Projected (Curr. DSA) Gov. Invest. - Prev. DSA Gov. Invest. - Curr. DSA Contribution of other factors Priv. Invest. - Prev. DSA Priv. Invest. - Curr. DSA Contribution of government capital 16 >>> GFN 1/ EMBI 2/ Benchmarks 14 570 Values 12 441 Breach of benchmark No No Potential heightened liquidity needs Low 1/ Maximum gross financing needs (GFN) over 3-year baseline projection horizon. 2/ EMBI spreads correspond to the latest available data. PV of debt-to GDP ratio PV of debt-to-exports ratio 60 300 50 250 40 200 30 150 20 100 10 50 0 0 2021 2023 2025 2027 2029 2031 2021 2023 2025 2027 2029 2031 Debt service-to-exports ratio Debt service-to-revenue ratio 25 25 20 20 15 15 10 10 5 5 0 0 2021 2023 2025 2027 2029 2031 2021 2023 2025 2027 2029 2031 Baseline Market financing Threshold Sources: Country authorities; and staff estimates and projections. 17 >>> PV of debt-to GDP ratio PV of debt-to-exports ratio 60 300 50 250 40 200 30 150 20 100 10 50 0 0 2021 2023 2025 2027 2029 2031 2021 2023 2025 2027 2029 2031 Debt service-to-exports ratio Debt service-to-revenue ratio 25 25 20 20 15 15 10 10 5 5 0 0 2021 2023 2025 2027 2029 2031 2021 2023 2025 2027 2029 2031 Threshold Baseline Limited space Some space Substantial space Sources: Country authorities; and staff estimates and projections. 1/ For the PV debt/GDP and PV debt/exports thresholds, x is 20 percent and y is 40 percent. For debt service/Exports and debt service/revenue thresholds, x is 12 percent and y is 35 percent. 18 >>> Actual Projections Average 8/ Actual Projections Average 8/ 2018 2019 2020 2021 2022 2023 2024 2025 2026 2031 2041 Historical Projections 2018 2019 2020 2021 2022 2023 2024 2025 2026 2031 2041 Historical Projections External debt (nominal) 1/ 70.0 73.9 74.7 75.2 73.4 69.8 65.0 62.9 61.0 54.7 39.5 59.3 63.0 Definition of external/domestic debt Currency-based External debt (nominal) 1/ 70.0 73.9 74.7 75.2 73.4 69.8 65.0 62.9 61.0 54.7 39.5 59.3 63.0 Definition of external/domestic debt Currency-based of which: public and publicly guaranteed (PPG) 50.1 52.8 54.0 57.9 57.2 53.4 49.5 46.8 45.0 38.5 23.3 36.4 46.8 of which: public and publicly guaranteed (PPG) 50.1 52.8 54.0 57.9 57.2 53.4 49.5 46.8 45.0 38.5 23.3 Is there a material 36.4 46.8difference between the Yes between the Is there a material difference two criteria? Yes Change in external debt 8.8 3.9 0.8 0.5 -1.8 -3.5 -4.8 -2.1 -2.0 -1.4 -1.9 two criteria? Change in external debt 8.8 3.9 0.8 0.5 -1.8 -3.5 -4.8 -2.1 -2.0 -1.4 -1.9 Identified net debt-creating flows -0.3 3.3 0.2 -0.6 -2.4 -5.3 -6.9 -3.3 -3.1 -1.9 -2.6 2.7 -3.2 Identified net debt-creating flows -0.3 3.3 0.2 -0.6 -2.4 -5.3 -6.9 -3.3 -3.1 -1.9 -2.6 2.7 -3.2 Non-interest current account deficit 6.8 5.5 7.8 8.7 7.1 5.0 2.0 2.4 2.5 3.0 2.0 6.0 3.6 Non-interest current account deficit 6.8 5.5 7.8 8.7 7.1 5.0 2.0 2.4 2.5 3.0 2.0 6.0 3.6 Deficit in balance of goods and services 15.1 14.3 17.2 17.8 16.6 13.9 9.8 9.7 9.7 9.2 5.5 14.7 11.1 Deficit in balance of goods and services 15.1 14.3 17.2 17.8 16.6 13.9 9.8 9.7 9.7 9.2 5.5 14.7 11.1 Exports 23.6 25.0 19.9 21.7 22.6 24.1 27.9 27.6 26.8 27.7 40.6 Exports 23.6 25.0 19.9 21.7 22.6 24.1 27.9 27.6 26.8 27.7 40.6 Debt Accumulation Imports 38.8 39.3 37.2 39.5 39.2 38.0 37.7 37.3 36.4 36.9 46.1 Debt Accumulation Imports 38.8 39.3 37.2 39.5 39.2 38.0 37.7 37.3 36.4 36.9 46.1 8.0 25 Net current transfers (negative = inflow) -8.9 -9.0 -9.6 -9.5 -9.2 -8.9 -8.2 -7.9 -7.8 -7.4 -7.1 -9.6 -8.1 8.0 25 Net current transfers (negative = inflow) -8.9 -9.0 -9.6 -9.5 -9.2 -8.9 -8.2 -7.9 -7.8 -7.4 -7.1 -9.6 -8.1 of which: official -0.3 0.1 -1.3 -0.1 -0.2 -0.2 -0.2 -0.1 -0.1 -0.1 -0.2 of which: official -0.3 0.1 -1.3 -0.1 -0.2 -0.2 -0.2 -0.1 -0.1 -0.1 -0.2 7.0 Other current account flows (negative = net inflow) 0.6 0.1 0.2 0.5 -0.2 0.0 0.5 0.6 0.7 1.2 3.6 0.8 0.6 7.0 Other current account flows (negative = net inflow) 0.6 0.1 0.2 0.5 -0.2 0.0 0.5 0.6 0.7 1.2 3.6 0.8 0.6 20 Net FDI (negative = inflow) -3.4 -4.3 -5.8 -7.8 -8.1 -6.3 -4.6 -4.5 -4.3 -3.7 -3.7 -2.6 -5.0 6.0 20 Net FDI (negative = inflow) -3.4 -4.3 -5.8 -7.8 -8.1 -6.3 -4.6 -4.5 -4.3 -3.7 -3.7 -2.6 -5.0 6.0 Endogenous debt dynamics 2/ -3.6 2.1 -1.9 -1.5 -1.5 -4.0 -4.3 -1.3 -1.3 -1.2 -0.9 Endogenous debt dynamics 2/ -3.6 2.1 -1.9 -1.5 -1.5 -4.0 -4.3 -1.3 -1.3 -1.2 -0.9 5.0 Contribution from nominal interest rate 2.0 2.7 2.2 1.8 2.3 2.2 2.0 1.9 1.9 1.6 1.0 15 Contribution from nominal interest rate 2.0 2.7 2.2 1.8 2.3 2.2 2.0 1.9 1.9 1.6 1.0 5.0 Contribution from real GDP growth -3.4 -3.1 -1.0 -3.3 -3.8 -6.2 -6.3 -3.2 -3.2 -2.8 -1.9 15 Contribution from real GDP growth -3.4 -3.1 -1.0 -3.3 -3.8 -6.2 -6.3 -3.2 -3.2 -2.8 -1.9 4.0 Contribution from price and exchange rate changes -2.2 2.5 -3.1 … … … … … … … … 4.0 Contribution from price and exchange rate changes -2.2 2.5 -3.1 … … … … … … … … Residual 3/ 9.1 0.6 0.6 1.1 0.6 1.8 2.1 1.2 1.2 0.5 0.7 0.7 1.4 10 Residual 3/ 9.1 0.6 0.6 1.1 0.6 1.8 2.1 1.2 1.2 0.5 0.7 3.0 0.7 1.4 10 of which: exceptional financing 1.1 -1.1 1.3 -0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.0 of which: exceptional financing 1.1 -1.1 1.3 -0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.0 2.0 5 Sustainability indicators 5 Sustainability indicators 1.0 PV of PPG external debt-to-GDP ratio ... ... 48.9 49.8 49.4 46.2 43.1 41.0 39.8 34.8 21.3 1.0 PV of PPG external debt-to-GDP ratio ... ... 48.9 49.8 49.4 46.2 43.1 41.0 39.8 34.8 21.3 PV of PPG external debt-to-exports ratio ... ... 245.5 228.9 218.7 191.8 154.5 148.6 148.6 125.6 52.3 PV of PPG external debt-to-exports ratio ... ... 245.5 228.9 218.7 191.8 154.5 148.6 148.6 125.6 52.3 0.0 0 PPG debt service-to-exports ratio 15.9 13.3 23.5 23.3 20.3 18.6 17.7 17.2 20.4 13.4 7.2 0.0 0 PPG debt service-to-exports ratio 15.9 13.3 23.5 23.3 20.3 18.6 17.7 17.2 20.4 13.4 7.2 2021 2023 2025 2027 2029 2031 PPG debt service-to-revenue ratio 13.5 11.2 16.4 17.1 15.3 14.7 16.0 14.7 16.9 11.5 8.9 2021 2023 2025 2027 2029 2031 PPG debt service-to-revenue ratio 13.5 11.2 16.4 17.1 15.3 14.7 16.0 14.7 16.9 11.5 8.9 Gross external financing need (Billion of U.S. dollars) 1.8 1.4 1.9 2.0 1.4 1.3 1.1 1.4 1.9 2.3 2.2 Debt Accumulation Gross external financing need (Billion of U.S. dollars) 1.8 1.4 1.9 2.0 1.4 1.3 1.1 1.4 1.9 2.3 2.2 Debt Accumulation Grant-equivalent financing (% of GDP) Key macroeconomic assumptions Grant-equivalent financing (% of GDP) Key macroeconomic assumptions Grant element of new borrowing (% right scale) Real GDP growth (in percent) 6.2 4.4 1.5 5.0 5.5 9.5 10.3 5.4 5.5 5.3 4.9 4.6 6.1 Grant element of new borrowing (% right scale) Real GDP growth (in percent) 6.2 4.4 1.5 5.0 5.5 9.5 10.3 5.4 5.5 5.3 4.9 4.6 6.1 GDP deflator in US dollar terms (change in percent) 3.7 -3.5 4.3 7.3 3.5 3.5 3.0 3.0 2.7 1.9 2.3 0.0 3.1 GDP deflator in US dollar terms (change in percent) 3.7 -3.5 4.3 7.3 3.5 3.5 3.0 3.0 2.7 1.9 2.3 0.0 3.1 Effective interest rate (percent) 4/ 3.6 3.9 3.2 2.8 3.4 3.3 3.3 3.3 3.2 3.0 2.5 2.7 3.1 External debt (nominal) 1/ Effective interest rate (percent) 4/ 3.6 3.9 3.2 2.8 3.4 3.3 3.3 3.3 3.2 3.0 2.5 2.7 3.1 External debt (nominal) 1/ Growth of exports of G&S (US dollar terms, in percent) 19.2 6.7 -15.7 22.9 13.5 20.7 31.8 7.3 5.0 10.4 13.2 4.8 13.0 of which: Private Growth of exports of G&S (US dollar terms, in percent) 19.2 6.7 -15.7 22.9 13.5 20.7 31.8 7.3 5.0 10.4 13.2 4.8 13.0 of which: Private Growth of imports of G&S (US dollar terms, in percent) 19.6 2.3 0.0 19.9 8.1 10.1 12.6 7.5 5.7 11.4 11.4 6.4 9.4 80 Growth of imports of G&S (US dollar terms, in percent) 19.6 2.3 0.0 19.9 8.1 10.1 12.6 7.5 5.7 11.4 11.4 6.4 9.4 80 Grant element of new public sector borrowing (in percent) ... ... ... 9.1 19.0 19.0 17.1 21.6 16.1 15.2 17.4 ... 16.4 Grant element Government of new revenues public (excluding sector grants, inborrowing (in percent) percent of GDP) 27.7 ... 29.6 28.6 ... 29.6 ... 30.0 9.1 30.5 19.030.9 19.0 32.3 17.1 32.3 21.6 32.4 16.1 32.5 15.2 17.4 ... 70 16.4 20.4 31.6 70 AidGovernment revenues flows (in Billion (excluding of US dollars) 5/ grants, in percent of GDP) 1.0 27.7 1.5 29.6 1.7 28.6 0.4 1.0 29.6 1.0 30.0 1.0 30.51.1 30.9 1.1 32.3 1.2 32.31.9 32.4 32.5 20.4 31.6 Aid flows (in Billion of US dollars) 5/ 1.0 1.5 1.7 0.4 1.0 1.0 1.0 1.1 1.1 1.2 1.9 60 Grant-equivalent financing (in percent of GDP) 6/ ... ... ... 2.5 3.2 2.8 2.6 2.4 2.3 1.9 1.5 ... 2.3 60 Grant-equivalent financing (in percent of GDP) 6/ ... ... ... 2.5 3.2 2.8 2.6 2.4 2.3 1.9 1.5 ... 2.3 Grant-equivalent financing (in percent of external financing) 6/ ... ... ... 21.2 35.0 38.8 35.5 42.0 33.5 37.6 49.9 ... 35.8 50 Grant-equivalent financing (in percent of external financing) 6/ ... ... ... 21.2 35.0 38.8 35.5 42.0 33.5 37.6 49.9 ... 35.8 50 Nominal GDP (Billion of US dollars) 23 23 25 28 30 34 39 42 46 67 133 Nominal GDP (Billion of US dollars) 23 23 25 28 30 34 39 42 46 67 133 40 Nominal dollar GDP growth 10.2 0.8 5.9 12.7 9.1 13.3 13.6 8.6 8.3 7.2 7.2 4.5 9.5 Nominal dollar GDP growth 10.2 0.8 5.9 12.7 9.1 13.3 13.6 8.6 8.3 7.2 7.2 4.5 9.5 40 30 Memorandum items: 30 Memorandum items: PV of external debt 7/ ... ... 69.6 67.1 65.6 62.6 58.6 57.1 55.7 51.0 37.5 20 PV of external debt 7/ ... ... 69.6 67.1 65.6 62.6 58.6 57.1 55.7 51.0 37.5 20 In percent of exports ... ... 349.1 308.5 290.1 260.0 209.9 206.8 208.1 184.3 92.2 In percent of exports ... ... 349.1 308.5 290.1 260.0 209.9 206.8 208.1 184.3 92.2 10 Total external debt service-to-exports ratio 19.1 18.7 28.7 28.2 24.8 21.2 19.6 19.1 22.4 15.1 8.2 10 Total external debt service-to-exports ratio 19.1 18.7 28.7 28.2 24.8 21.2 19.6 19.1 22.4 15.1 8.2 PV of PPG external debt (in Billion of US dollars) 12.1 13.8 15.0 15.9 16.9 17.4 18.3 23.1 28.4 0 PV of PPG external (PVt-PVt-1)/GDPt-1 debt (in Billion of US dollars) (in percent) 12.1 7.1 4.2 13.8 2.9 15.0 2.8 15.91.4 16.9 2.0 17.4 1.4 18.30.1 23.1 28.4 0 (PVt-PVt-1)/GDPt-1 (in percent) 7.1 4.2 2.9 2.8 1.4 2.0 1.4 0.1 2021 2023 2025 2027 2029 2031 Non-interest current account deficit that stabilizes debt ratio -2.0 1.5 7.1 8.3 8.9 8.6 6.8 4.5 4.5 4.4 4.0 2021 2023 2025 2027 2029 2031 Non-interest current account deficit that stabilizes debt ratio -2.0 1.5 7.1 8.3 8.9 8.6 6.8 4.5 4.5 4.4 4.0 Sources: Country authorities; and staff estimates and projections. 0 Sources: Country authorities; and staff estimates and projections. 0 1/ Includes both public and private sector external debt. 1/ Includes both public and private sector external debt. 2/ Derived as [r - g - ρ(1+g)]/(1+g+ρ+gρ) times previous period debt ratio, with r = nominal interest rate; g = real GDP growth rate, and ρ = growth rate of GDP deflator in U.S. dollar terms. 2/ Derived as [r - g - ρ(1+g)]/(1+g+ρ+gρ) times previous period debt ratio, with r = nominal interest rate; g = real GDP growth rate, and ρ = growth rate of GDP deflator in U.S. dollar terms. 3/ Includes exceptional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets; and valuation adjustments. For projections also includes contribution from price and exchange rate changes. 3/ Includes exceptional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets; and valuation adjustments. For projections also includes contribution from price and exchange rate changes. 4/ Current-year interest payments divided by previous period debt stock. 4/ Current-year interest payments divided by previous period debt stock. 5/ Defined as grants, concessional loans, and debt relief. 5/ Defined as grants, concessional loans, and debt relief. 6/ Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt). 6/ Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt). 7/ Assumes that PV of private sector debt is equivalent to its face value. 7/ Assumes that PV of private sector debt is equivalent to its face value. 8/ Historical averages are generally derived over the past 10 years, subject to data availability, whereas projections averages are over the first year of projection and the next 10 years. 8/ Historical averages are generally derived over the past 10 years, subject to data availability, whereas projections averages are over the first year of projection and the next 10 years. 19 >>> Actual Projections Average 6/ 2018 2019 2020 2021 2022 2023 2024 2025 2026 2031 2041 Historical Projections Public sector debt 1/ 61.5 63.8 68.8 73.0 71.6 67.7 63.1 61.5 60.0 54.7 48.4 49.4 61.8 Definition of external/domestic of which: external debt 50.1 52.8 54.0 57.9 57.2 53.4 49.5 46.8 45.0 38.5 23.3 36.4 46.8 Currency-based debt of which: local-currency denominated Change in public sector debt 0.4 2.3 4.9 4.2 -1.4 -3.9 -4.6 -1.7 -1.4 -0.8 -0.6 Is there a material difference Identified debt-creating flows 3.1 3.0 1.8 2.3 0.5 -3.2 -4.0 -1.2 -1.1 -0.8 -0.6 2.6 -1.1 Yes between the two criteria? Primary deficit 1.8 2.4 4.8 4.9 2.9 1.5 0.8 0.6 0.7 0.7 0.6 2.6 1.4 Revenue and grants 29.7 31.3 30.9 31.2 31.8 32.3 32.5 33.7 33.7 33.7 33.7 22.5 33.1 of which: grants 2.0 1.6 2.3 1.5 1.8 1.8 1.6 1.5 1.5 1.4 1.2 Public sector debt 1/ Primary (noninterest) expenditure 31.5 33.7 35.7 36.0 34.7 33.8 33.3 34.3 34.4 34.5 34.3 25.2 34.4 Automatic debt dynamics 0.8 -0.1 -4.3 -2.6 -2.4 -4.7 -4.8 -1.8 -1.7 -1.5 -1.1 of which: local-currency denominated Contribution from interest rate/growth differential -0.8 -1.3 0.3 -2.6 -2.4 -4.7 -4.8 -1.8 -1.7 -1.5 -1.1 of which: foreign-currency denominated of which: contribution from average real interest rate 2.8 1.3 1.2 0.7 1.4 1.5 1.5 1.4 1.4 1.3 1.2 of which: contribution from real GDP growth -3.6 -2.6 -0.9 -3.3 -3.8 -6.2 -6.3 -3.2 -3.2 -2.8 -2.3 80 Contribution from real exchange rate depreciation 1.5 1.2 -4.6 ... ... ... ... ... ... ... ... 70 Other identified debt-creating flows 0.6 0.7 1.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.7 0.0 60 Privatization receipts (negative) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 50 Recognition of contingent liabilities (e.g., bank recapitalization) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 40 Debt relief (HIPC and other) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 30 Other debt creating or reducing flow (below-the-line operations) 0.6 0.7 1.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 20 Residual -2.8 -0.7 3.1 1.9 -1.9 -0.7 -0.6 -0.4 -0.3 0.0 0.0 1.5 -0.2 10 Sustainability indicators 0 PV of public debt-to-GDP ratio 2/ ... ... 60.6 64.0 62.6 59.5 55.8 54.9 54.1 50.6 46.4 2021 2023 2025 2027 2029 2031 PV of public debt-to-revenue and grants ratio … … 196.3 205.3 196.7 184.3 171.8 162.7 160.4 150.0 137.6 Debt service-to-revenue and grants ratio 3/ 31.4 20.9 23.6 24.0 25.4 25.1 24.9 26.2 28.6 21.8 24.5 Gross financing need 4/ 11.7 9.7 13.4 12.3 11.0 9.6 8.8 9.4 10.3 8.1 8.8 of which: held by residents of which: held by non-residents Key macroeconomic and fiscal assumptions 1 Real GDP growth (in percent) 6.2 4.4 1.5 5.0 5.5 9.5 10.3 5.4 5.5 5.3 4.9 4.6 6.1 1 Average nominal interest rate on external debt (in percent) 4.2 3.7 3.8 3.1 3.9 3.8 3.8 3.8 3.8 3.8 3.7 2.9 3.7 1 Average real interest rate on domestic debt (in percent) 4.6 3.7 4.1 3.3 3.9 4.4 4.4 4.4 4.3 3.8 3.6 4.7 3.8 1 Real exchange rate depreciation (in percent, + indicates depreciation) 4.0 2.4 -8.7 … ... ... ... ... ... ... ... 1.1 ... 1 1 n.a. Inflation rate (GDP deflator, in percent) -0.8 1.9 2.3 2.5 2.3 2.0 1.8 1.9 1.9 1.9 2.3 1.3 2.2 0 Growth of real primary spending (deflated by GDP deflator, in percent) 63.0 11.5 7.5 6.1 1.6 6.6 8.6 8.7 5.7 5.3 4.8 11.5 5.8 0 Primary deficit that stabilizes the debt-to-GDP ratio 5/ 1.4 0.1 -0.1 0.6 4.3 5.4 5.4 2.2 2.1 1.5 1.1 0.5 2.6 0 PV of contingent liabilities (not included in public sector debt) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 0 2021 2023 2025 2027 2029 2031 Sources: Country authorities; and staff estimates and projections. 1/ Coverage of debt: The entire public sector, including SOEs . Definition of external debt is Currency-based. 2/ The underlying PV of external debt-to-GDP ratio under the public DSA differs from the external DSA with the size of differences depending on exchange rates projections. 3/ Debt service is defined as the sum of interest and amortization of medium and long-term, and short-term debt. 4/ Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period and other debt creating/reducing flows. 5/ Defined as a primary deficit minus a change in the public debt-to-GDP ratio ((-): a primary surplus), which would stabilizes the debt ratio only in the year in question. 6/ Historical averages are generally derived over the past 10 years, subject to data availability, whereas projections averages are over the first year of projection and the next 10 years. 20 >>> Projections 1/ 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 PV of debt-to GDP ratio Baseline 50 49 46 43 41 40 39 38 37 36 35 A. Alternative Scenarios A1. Key variables at their historical averages in 2021-2031 2/ 50 55 60 66 70 74 79 83 87 90 93 A2. Alternative Scenario :[Customize, enter title] 48 47 43 40 39 36 34 33 31 29 28 B. Bound Tests B1. Real GDP growth 50 52 54 50 48 47 45 44 43 42 41 B2. Primary balance 50 50 48 45 42 41 40 39 38 37 36 B3. Exports 50 53 58 54 51 50 48 47 46 44 42 B4. Other flows 3/ 50 56 57 53 51 49 48 47 45 43 41 B5. Depreciation 50 62 52 49 46 45 44 43 42 41 40 B6. Combination of B1-B5 50 63 67 63 60 58 56 55 53 51 49 C. Tailored Tests C1. Combined contingent liabilities 50 53 50 46 44 43 42 42 41 39 38 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C4. Market Financing 50 55 51 48 46 45 43 42 41 40 38 Threshold 55 55 55 55 55 55 55 55 55 55 55 PV of debt-to-exports ratio Baseline 229 219 192 154 149 149 147 144 140 133 126 A. Alternative Scenarios A1. Key variables at their historical averages in 2021-2031 2/ 229 245 249 235 252 277 299 317 328 336 334 A2. Alternative Scenario :[Customize, enter title] 229 226 210 178 173 174 173 168 158 146 132 B. Bound Tests B1. Real GDP growth 229 219 192 154 149 149 147 144 140 133 126 B2. Primary balance 229 221 198 159 153 153 152 150 145 139 130 B3. Exports 229 281 364 292 282 281 278 273 263 248 230 B4. Other flows 3/ 229 248 238 191 184 184 182 178 171 161 150 B5. Depreciation 229 219 173 139 134 134 133 131 126 122 115 B6. Combination of B1-B5 229 294 236 262 253 253 250 245 235 221 206 C. Tailored Tests C1. Combined contingent liabilities 229 234 206 166 160 161 160 159 154 147 139 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C4. Market Financing 229 219 192 155 150 150 148 145 139 133 125 Threshold 240 240 240 240 240 240 240 240 240 240 240 Debt service-to-exports ratio Baseline 23 20 19 18 17 20 18 16 13 12 13 A. Alternative Scenarios A1. Key variables at their historical averages in 2021-2031 2/ 23 21 22 23 24 29 28 26 24 24 29 A2. Alternative Scenario :[Customize, enter title] 23 20 20 21 20 25 22 20 16 14 16 B. Bound Tests B1. Real GDP growth 23 20 19 18 17 20 18 16 13 12 13 B2. Primary balance 23 20 19 18 17 21 18 16 13 12 14 B3. Exports 23 24 29 29 29 34 30 26 22 23 25 B4. Other flows 3/ 23 20 20 19 19 22 19 17 15 15 16 B5. Depreciation 23 20 19 17 17 20 18 15 12 10 12 B6. Combination of B1-B5 23 23 28 26 26 30 27 24 21 21 23 C. Tailored Tests C1. Combined contingent liabilities 23 20 19 18 18 21 19 16 13 12 14 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C4. Market Financing 23 20 19 18 18 23 22 20 14 10 12 Threshold 21 21 21 21 21 21 21 21 21 21 21 Debt service-to-revenue ratio Baseline 17 15 15 16 15 17 15 13 10 10 11 A. Alternative Scenarios A1. Key variables at their historical averages in 2021-2031 2/ 17 16 17 21 20 24 23 21 19 20 25 A2. Alternative Scenario :[Customize, enter title] 17 15 16 19 17 21 18 16 13 12 14 B. Bound Tests 17 15 16 19 17 21 18 16 13 12 14 B1. Real GDP growth 17 16 17 19 17 20 17 15 12 11 13 B2. Primary balance 17 15 15 16 15 17 15 13 11 10 12 B3. Exports 17 15 15 18 16 18 16 14 12 13 14 B4. Other flows 3/ 17 15 15 17 16 18 16 14 12 12 14 B5. Depreciation 17 19 18 19 18 21 18 16 12 11 13 B6. Combination of B1-B5 17 17 19 21 19 21 19 17 15 15 17 C. Tailored Tests C1. Combined contingent liabilities 17 15 15 16 15 17 15 13 11 10 12 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C4. Market Financing 17 15 15 17 16 19 18 16 11 9 10 Threshold 23 23 23 23 23 23 23 23 23 23 23 Sources: Country authorities; and staff estimates and projections. 1/ A bold value indicates a breach of the threshold. 2/ Variables include real GDP growth, GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows. 3/ Includes official and private transfers and FDI. 21 >>> Projections 1/ 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 PV of Debt-to-GDP Ratio Baseline 64 63 59 56 55 54 53 52 52 51 51 A. Alternative Scenarios A1. Key variables at their historical averages in 2021-2031 2/ 65 64 65 66 68 69 71 73 74 76 77 A2. Alternative Scenario :[Customize, enter title] 60 61 58 56 55 53 52 52 51 50 49 B. Bound Tests B1. Real GDP growth 65 68 77 77 81 84 88 91 95 98 102 B2. Primary balance 65 65 63 59 58 57 56 55 54 53 53 B3. Exports 64 66 70 66 64 63 62 61 60 58 57 B4. Other flows 3/ 64 69 70 66 65 64 62 61 60 59 57 B5. Depreciation 65 76 69 63 59 56 52 49 47 44 42 B6. Combination of B1-B5 65 63 63 61 61 61 62 62 62 63 63 C. Tailored Tests C1. Combined contingent liabilities 65 70 66 62 61 60 59 58 57 56 55 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C4. Market Financing 64 63 60 56 55 54 54 53 52 51 50 TOTAL public debt benchmark 70 70 70 70 70 70 70 70 70 70 70 PV of Debt-to-Revenue Ratio Baseline 205 197 184 172 163 160 158 156 154 152 150 A. Alternative Scenarios A1. Key variables at their historical averages in 2021-2031 2/ 209 202 202 203 200 204 209 214 218 222 226 A2. Alternative Scenario :[Customize, enter title] 24 28 28 28 27 29 23 23 20 18 20 B. Bound Tests B1. Real GDP growth 209 213 236 235 237 248 259 269 279 289 299 B2. Primary balance 209 203 194 181 171 168 165 163 160 158 156 B3. Exports 205 207 217 202 190 187 184 181 178 173 170 B4. Other flows 3/ 205 217 218 203 192 188 185 182 178 174 170 B5. Depreciation 209 241 216 193 175 165 156 147 139 131 123 B6. Combination of B1-B5 209 197 197 187 181 182 183 183 185 185 186 C. Tailored Tests C1. Combined contingent liabilities 209 220 206 191 181 178 175 172 169 167 164 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C4. Market Financing 205 197 185 172 164 161 159 156 153 151 149 Debt Service-to-Revenue Ratio Baseline 24 25 25 25 26 29 24 23 20 19 22 A. Alternative Scenarios A1. Key variables at their historical averages in 2021-2031 2/ 24 26 27 28 30 34 29 29 26 25 29 A2. Alternative Scenario :[Customize, enter title] 24 28 28 28 27 29 23 23 20 18 20 B. Bound Tests B1. Real GDP growth 24 27 30 30 32 36 34 35 33 33 38 B2. Primary balance 24 25 25 25 27 29 25 24 21 20 22 B3. Exports 24 25 26 26 27 30 25 24 22 22 24 B4. Other flows 3/ 24 25 26 26 27 30 25 24 22 22 24 B5. Depreciation 24 26 29 29 30 33 28 26 22 21 23 B6. Combination of B1-B5 24 25 27 27 29 31 27 27 24 23 26 C. Tailored Tests C1. Combined contingent liabilities 24 25 27 26 27 31 27 26 21 20 23 C2. Natural disaster n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C3. Commodity price n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. C4. Market Financing 24 25 25 25 27 31 27 26 21 18 21 Sources: Country authorities; and staff estimates and projections. 1/ A bold value indicates a breach of the benchmark. 2/ Variables include real GDP growth, GDP deflator and primary deficit in percent of GDP. 3/ Includes official and private transfers and FDI. 22 >>> Debt Stock (end of period) Debt Service 2020 2020 2021 2022 2020 2021 2022 (US$, millions) (Percent total debt) (Percent GDP) (US$, millions) (Percent GDP) Total 18094 100 69 1838 2079 2412 7.0 7.9 9.2 Central Government 16518 91 63 1562 1780 1882 5.9 6.8 7.2 State-owned enterprises (SOEs) 1576 9 0 6 0 276 299 531 1.0 0.0 1.1 0.0 2.0 0.0 External 13395 74 51 1002 1222 1210 3.8 4.6 4.6 Multilateral creditors 5302 29 20 136 198 296 0.5 0.8 1.1 IMF 508 3 2 World Bank 2665 15 10 ADB/AfDB/IADB 1063 6 4 Other Multilaterals 1066 6 4 o/w: IsDB 496 3 2 EIB 185 1 1 Bilateral Creditors 3243 18 12 274 209 451 1.0 0.8 1.7 Paris Club 1042 6 4 31 0 111 0.1 0.0 0.4 o/w: France 894 5 3 Spain 51 0 0 Non-Paris Club 2201 12 8 243 209 340 0.9 0.8 1.3 o/w: EXIM China 1363 8 5 EXIM India 234 1 1 Bonds (Eurobonds) 4193 23 16 265 780 427 1.0 3.0 1.6 Commercial/Other International creditors 657 4 2 326 35 37 1.2 0.1 0.1 o/w: SGCIB 301 2 1 AFREXIM 91 1 0 SOEs 852 5 3 N/A N/A N/A N/A N/A N/A Domestic 3123 17 12 561 558 671 2.1 2.1 2.6 Held by residents, total N/A N/A N/A N/A N/A N/A N/A N/A N/A Held by non-residents, total N/A N/A N/A N/A N/A N/A N/A N/A N/A T-Bills 102 1 0 0 100 0 0.0 0.4 0.0 Bonds 2298 13 9 393 293 554 1.5 1.1 2.1 Loans 723 4 3 168 151 117 0.6 0.6 0.4 SOEs 725 4 3 N/A N/A N/A N/A N/A N/A Memo items: 2 Collateralized debt 0 0 0 o/w: Related o/w: Unrelated Contingent liabilities 0 0 0 o/w: Public guarantees 3 o/w: Other explicit contingent liabilities Nominal GDP 26317 1/As reported by Senegalese authorities according to their classification of creditors, including by official and commercial. Debt coverage is the same as the DSA. 2/Debt is collateralized when the creditor has rights over an asset or revenue stream that would allow it, if the borrower defaults on its payment obligations, to rely on the asset or revenue stream to secure repayment of the debt. Collateralization entails a borrower granting liens over specific existing assets or future receivables to a lender as security against repayment of the loan. Collateral is “unrelated” when it has no relationship to a project financed by the loan. An example would be borrowing to finance the budget deficit, collateralized by oil revenue receipts. See the joint IMF-World Bank note for the G20 “Collateralized Transactions: Key Considerations for Public Lenders and Borrowers” for a discussion of issues raised by collateral. 3/Includes other-one off guarantees not included in publicly guaranteed debt (e.g. credit lines) and other explicit contingent liabilities not elsewhere classified (e.g. potential legal claims, payments resulting from PPP arrangements). 23 >>>