Senegal’s finance minister, Moustapha Niasse, presented a 2025 budget to parliament last week that targets a significantly lower deficit, driven by fiscal reforms and improvements in revenue management.
The draft budget, amounting to XOF 8.3 trillion (approximately USD 13.2 billion), foresees a deficit of 4.8% of gross domestic product (GDP), down from the 7.2% targeted for this year. This marks a considerable decrease from previous years, in which the government had struggled with larger deficits, including a deficit of 5.5% in 2020.
A comprehensive audit, completed in March, revealed shortcomings in the way Senegal was managing its budget and led to changes in its revenue and spending patterns. These reforms aim to strengthen the financial health of the government and restore the country’s economic stability.
Senegal is looking to build on its achievements in recent years, including improving the business climate, increasing trade and investment, and enhancing macroeconomic stability. To achieve its targets, the government plans to prioritize investments in education, health, and infrastructure.
The fiscal reform package announced last week targets additional revenue generation of XOF 1.4 trillion, through measures such as increasing income taxes, increasing excise taxes, and levying a higher minimum tax.
Government officials stressed the importance of adhering to budget discipline to achieve the nation’s development objectives, including providing more resources to improve the social services and ensuring long-term sustainable development.
By targeting a more realistic deficit for next year and increasing revenue collection, Senegal’s government has sent a reassuring message to foreign investors and economic stakeholders, bolstering confidence in the country’s economy. The approval of this budget by the National Assembly in coming weeks would confirm the implementation of these vital economic reforms.
Key highlights from the 2025 budget plan:
* The total budget: XOF 8.3 trillion (USD 13.2 billion)
* Deficit: 4.8% of GDP (compared to 7.2% projected for 2023)
* Additional revenue targets: XOF 1.4 trillion through measures such as increasing income taxes and excise taxes
* Key areas for investment: education, health, and infrastructure
It is still important for stakeholders and investors to remain vigilant about the implementation and follow-up actions the government intends to take on its fiscal plans and budget strategies, as further review and consultation may be needed before the country achieves its expected development goals.