Fiscal adjustment and economics growth in Senegal

This article analyses the impact of budget cuts in operating and capital expenditure on short- and long-term economic growth. The results suggest that cuts in investment expenditures have a more pronounced effect on short-term economic growth, with a loss of 0.162% of potential growth for each 1% reduction in investments. In contrast, cuts in operating expenditures have a more moderate effect, leading to a reduction of 0.04% in short- term growth, but their impact intensifies in the long term, reaching a decrease of 0.08%. For better public finance management, these results urge public authorities to further reduce operating expenses.