Efficient Energy Investment and Fiscal Adjustment in Senegal

Abstract

Senegal’s fiscal deficit and public debt have been on the rise in recent years owing partly to an ailing and inefficient oil-based energy sector. In this paper the authors use a two-sector, open-economy, dynamic general equilibrium model to investigate the effects of varying fiscal policy instruments one at a time and of policy packages that increase public investment in energy and infrastructure in scenarios with varying degrees of debt finance and with different types of supporting fiscal adjustment. This work is part of the ‘Macroeconomics in Low-income countries’ programme