Senegal is moving towards a new phase in its effort to resolve a debt crisis that has weighed on the West African economy since the discovery that billions of dollars in government borrowing had previously gone unreported.
According to Reuters, the crisis emerged after President Bassirou Diomaye Faye came to power in 2024 and his administration began reviewing the country’s public finances. The findings revealed that Senegal’s debt and budget deficit were substantially higher than previously reported under former President Macky Sall’s government.
The scale of the problem eventually disrupted Senegal’s relationship with the International Monetary Fund, triggered successive credit rating downgrades and left the government searching for ways to restore confidence without pursuing the debt restructuring it had resisted.
That process has now reached an important stage, with Senegal and the IMF reaching a staff-level agreement for a three-year, $2.2 billion lending programme. The deal requires Senegal to seek relief from creditors and remains subject to approval by the IMF Executive Board.
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The roots of the crisis became clearer in September 2024, when then-Prime Minister Ousmane Sonko accused the previous government of falsifying financial figures.
A subsequent review by Senegal’s Court of Auditors confirmed that debt and deficit figures had been understated. It placed public debt at 99.7% of GDP at the end of 2023, compared with the previously reported 74.41%, implying around $7 billion in hidden borrowing.
The revelations prompted the IMF to suspend Senegal’s $1.8 billion credit facility while it assessed the revised financial data. Talks on a new programme were also delayed as the Fund demanded that the debt misreporting be addressed.
The situation continued to deteriorate as new estimates suggested the debt burden was even larger. By mid-2025, banks estimated that Senegal’s debt had reached about 119% of GDP, while S&P Global Ratings estimated hidden liabilities at around $13 billion and downgraded the country.
The government responded by seeking to strengthen domestic revenue and reduce dependence on external borrowing. Sonko announced plans to improve tax compliance and later unveiled an economic recovery programme intended to be funded 90% from domestic resources.
But negotiations with the IMF remained difficult. By November 2025, talks had still failed to produce a new lending programme, international bonds came under pressure and Senegal faced growing questions over whether it would eventually need to restructure its debt.
Sonko rejected that option, arguing that Senegal could manage its obligations without restructuring. The government maintained that position into 2026 even as Finance Minister Cheikh Diba acknowledged fundamental differences with the IMF.
Senegal continued servicing its international obligations, including about $480 million in payments to international bondholders in March.
Economic pressures nevertheless intensified. Government projections in April showed economic growth slowing to 2.5% from 6.7%, while the IMF lowered its own forecast to 2.2%.
Fuel subsidies created another strain, with Diba warning that their cost could exceed the budgeted amount by as much as $2 billion.
Political changes followed in May when President Faye dismissed Sonko as prime minister, dissolved the government and appointed economist Ahmadou Al Aminou Lo to lead a new administration. Sonko subsequently became speaker of parliament.
Technical discussions with the IMF continued, eventually producing the staff-level agreement on the $2.2 billion programme.
Senegal’s economy and finance ministry has separately said it agreed to an “enhanced common framework” aimed at restoring debt sustainability, marking a significant shift in the government’s effort to address the crisis.
What This Means For Africa
Senegal’s experience shows how undisclosed public borrowing can quickly develop into a wider economic crisis, affecting access to international financing, sovereign credit ratings, government spending and investor confidence.
The country had built a reputation for relative political and economic stability in West Africa, making the discovery of billions of dollars in previously unreported debt particularly significant.
The new IMF agreement offers Senegal a possible route towards rebuilding financial credibility, but it also brings difficult decisions. Seeking creditor relief, improving revenue collection and controlling subsidies will have to be balanced against the economic pressures facing households and businesses.
For other African economies carrying high debt burdens, Senegal’s crisis also reinforces the importance of transparent public finances and credible debt reporting. The next test for President Faye’s administration will be turning the IMF agreement into a sustainable recovery while rebuilding confidence in how the country manages its public finances.
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Image Credit: The Daily Circular
