Senegal Achieves Record Economic Growth Amid Oil and Gas Exports

Senegal has reported an 8.9% GDP growth in Q3, marking record economic expansion due to oil exports. The IMF anticipates a 9.3% growth in 2024. Alongside oil, gas exports from BP’s project are expected to drive further growth. The government aims to reduce its budget deficit to 3% of GDP by 2027, improving public finances amidst significant economic advancements.

Senegal has achieved record economic growth, with an 8.9% increase in gross domestic product (GDP) in the third quarter, attributed to the commencement of oil exports. The International Monetary Fund forecasts a 9.3% economic expansion for the nation in the upcoming year. Furthermore, the country’s economy expanded by 11.5% compared to the same period last year, emphasizing the positive trend in economic development.

The economic growth trajectory is expected to continue its upward trend as Senegal prepares to export gas from BP Plc’s Greater Tortue Ahmeyim liquefied natural gas project, with operations anticipated to begin in early 2024. Mark Bohlund, a senior credit research analyst at REDD Intelligence, predicts that the first gas from this project should further enhance growth in the first quarter of 2025, although a subsequent decline in growth rates is likely.

The notable economic advancement offers a critical opportunity for Senegal to address its public finances, as projections indicate a budget deficit exceeding 11% of GDP for the current year. On the financial markets, Senegal’s dollar bonds reflected minimal changes, with bonds set to mature in 2033 rising to 80.12 cents on the dollar.

In light of the burgeoning economic conditions, Prime Minister Ousmane Sonko announced plans to trim the budget deficit to 3% of GDP by 2027 through expenditure reductions and enhanced tax revenue initiatives. Notably, Woodside Energy Group Ltd., which is Australia’s largest oil and gas producer, initiated its first oil production from the Sangomar project offshore Senegal in June.

The recent surge in Senegal’s economic growth, buoyed by oil exports, presents a significant opportunity for fiscal reform. With projections for continued growth from gas exports and strategic measures to reduce the budget deficit, Senegal is positioned to stabilize its economy effectively. Overall, the nation’s growth trajectory remains a promising development in West Africa’s economic landscape.

Original Source: www.energyconnects.com