DAKAR, Senegal, Aug. 31 (UPI) -- Emerging as a potential oil producer, the economy in Senegal is stable with a growth rate of around 6 percent expected, the International Monetary Fund said.
"The macroeconomic framework remains stable with robust growth," Ali Mansoor, the IMF's division chief for West Africa, said in a statement.
The IMF said the projected growth rate for Senegal is around 6 percent through next year. Both inflation and the budget deficit are expected to remain at levels supportive of economic expansion.
West Africa has drawn interest from international energy companies eager to tap into unexploited reserves. Cairn Energy, an explorer with headquarters in Scotland, said it plans to spend about half of its $135 million target for future exploration and appraisal on drilling activity in Senegal.
Cairn's counterparts at Australia's FAR Ltd. said last year it was evaluating the potential for commercial operations in a basin said to hold at least 200 million barrels of oil off the coast of Senegal.
Third party assessment of the reserve potential conducted after FAR drilled two additional appraisal wells suggests a best-case estimate of 641 million barrels of oil. So far, the Australian company said success in the region confirms West Africa is emerging as a major new oil and gas frontier.
The real challenge for Senegal, the IMF said, is to generate inclusive growth so that the nation's youth and low-income citizens can feel the benefits of economic growth.
"This requires the maintenance of a stable macroeconomic framework and the acceleration of reforms to improve productivity and the business environment, and promote the private sector," the IMF said.
Poverty rates are high in Senegal, with nearly half of the population affected. The benefits of oil for Senegal may be a way off and, while one of the more stable countries in the region, the IMF said volatility in crude oil prices and the potential spillover from the problems affecting the rest of Africa present risks to Senegal.