Senegal's economy is expected to grow by 4 percent in 2013 from 3.5 percent the previous year while inflation should remain below 2 percent, the International Monetary Fund said on Wednesday.
The multilateral lender, which has just completed a mission to review Senegal's policy support programme with the Fund, said the West African country must prioritize efforts to reduce its fiscal deficit.
"Notwithstanding the sluggish international environment, GDP growth is expected to tick up to 4 percent in 2013," the Fund said in a statement.
"However, deficit reduction will be slightly lower than expected in 2013, to allow for non recurrent expenditures associated with the security situation in Mali and the Sahel,", it said.
Senegal's current account deficit worsened, rising to 10 percent of gross domestic product (GDP) last year.
Senegal has sent over 500 troops to Mali as part of the West African regional bloc ECOWAS effort to help its neighbor fight Islamist insurgents who had occupied the north of the country.
The IMF mission voiced concern at a huge energy subsidy bill which stood at more than 160 billion CFA francs ($319.17 million) in 2012.
The IMF has urged countries in the region to cut fuel subsidies, which it said are inefficient and do not directly benefit the poor.
"The mission believes that this burden is difficult to bear for public finances...and encouraged the authorities to phase out these subsidies," the statement said.
Senegal has regular power cuts and high fuel prices are a very sensitive problem which has triggered riots in the recent past. ($1 = 501.3040 CFA francs)