Senegal must clear about $3.5 billion in payment arrears and rework parts of its debt as the government seeks to restore public finances and protect economic activity, Prime Minister Ahmadou Al Aminou Lo has said.
According to Reuters, the arrears stood at 1.956 trillion CFA francs as of March 2025. Lo warned that leaving the obligations unresolved could slow economic activity and lead to job losses.
The prime minister outlined the government’s position during his first policy address to Senegal’s National Assembly in Dakar, where he said the country would pursue debt reprofiling instead of a formal restructuring.
“Reprofiling involves extending maturities and renegotiating interest rates,” Lo said.
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The announcement comes days after Senegal and the International Monetary Fund reached a staff-level agreement on a $2.2 billion, three-year loan package aimed at supporting the country’s economic recovery.
Senegal’s previous IMF programme was suspended in 2024 after authorities disclosed that public debt had been misreported under the previous government, creating a major challenge for the country’s fiscal position and its relationship with international lenders.
Lo said the government does not intend to pursue debt restructuring. Instead, it plans to extend some repayment periods and renegotiate interest rates as part of efforts to make the country’s obligations more manageable.
Senegal’s Ministry of Economy and Finance said last week that it had agreed to an “enhanced common framework” designed to restore debt sustainability, while debt denominated in CFA francs would be excluded from the process.
The exact structure of the arrangement has not yet been fully explained by the government.
The G20 Common Framework was created during the COVID-19 pandemic to coordinate debt restructuring among official creditors, including Paris Club members and newer lenders such as China.
While the mechanism was intended to make debt relief more coordinated, it has faced criticism over lengthy negotiations and uncertainty around outcomes.
Investors may still view Senegal’s approach as a form of restructuring because extending debt maturities and reducing interest costs changes the original terms of borrowing, even though the government has chosen to describe the process as reprofiling.
Lo also said the government is renegotiating about 30 mining agreements, another part of its effort to strengthen public finances and improve the economic value Senegal receives from its natural resources.
The prime minister’s position places debt management at the centre of Senegal’s economic strategy as the country seeks to stabilise its finances without creating further disruption for creditors, businesses and workers.
What This Means For Africa
Senegal’s approach will be closely watched across Africa because many governments are trying to manage high debt levels while maintaining access to international financing.
The decision to pursue reprofiling instead of a broader restructuring suggests Dakar is seeking a less disruptive path that could ease repayment pressure while preserving investor confidence.
Clearing the country’s payment arrears is also important because unpaid obligations can affect contractors, businesses and workers, creating wider consequences across the economy.
The IMF agreement could provide Senegal with additional financial support, but the success of the government’s plan will depend on how quickly it resolves outstanding payments and reaches workable terms with creditors.
For Prime Minister Ahmadou Al Aminou Lo, the challenge is now to turn the government’s debt strategy into a credible fiscal recovery plan while protecting jobs and economic activity.
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Image Credit: Inceif University
