Senegal’s Prime Minister Ousmane Sonko on Friday unveiled a new economic recovery strategy that will rely heavily on domestic financing, with 90% of the initiative set to be funded internally to avoid taking on new debt.
The plan comes as the country confronts serious financial challenges and increased scrutiny following revelations of hidden debts from the previous government, issues that prompted the International Monetary Fund (IMF) to freeze its loan program, according to Reuters.
Speaking in the capital Dakar, Sonko said, “We have identified more than 4.6 trillion CFA francs ($8.16 billion) in available resources between 2025 and 2028, without increasing the state’s debt.”
The plan is designed to stabilize Senegal’s finances as it begins producing oil and gas, and to reduce the budget deficit from 12% of GDP in 2024 to 3% by 2027.
Among the cost-saving and revenue-boosting measures outlined are the merging and downsizing of state institutions, a move projected to save around 50 billion CFA francs.
The government will also eliminate certain tax exemptions, especially in the largely untaxed digital economy. Sonko cited online gaming and mobile money as key targets.
Taxes on tobacco will rise from 70% to 100%, and visa fees will be introduced for travelers from non-African countries and African nations that require Senegalese citizens to obtain visas. These visa fees are expected to bring in 60 billion CFA francs.
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The government also plans to renegotiate contracts in the oil and mining sectors to raise an additional 884 billion CFA francs and expects to collect 200 billion CFA francs from the renewal of telecom licenses.
In a bid to attract investment, it will ease access to land titles and raise the age limit for imported vehicles, a change that responds to demands from Senegal’s diaspora.
Senegal will continue to seek external partners to recycle existing assets and raise funds on the local market using its currency.
However, Sonko made it clear that any new foreign currency debt will be directed only to strategic sectors such as hydrocarbons, oil, gas, and minimining.
The reforms, he said, would also help the government better target subsidies and social programs to serve those who truly need them.
The IMF has long urged Senegal to reduce what it calls costly and ineffective energy subsidies, which in March were estimated at up to 4% of GDP.
“The problem with these subsidies is that it’s not the vulnerable households that benefit from them. Most of these subsidies, they go to the wealthiest households,” said Edward Gemayel, IMF mission chief, in an interview with Reuters in Dakar earlier this year.
He recommended gradually phasing out the subsidies and replacing them with direct cash support for vulnerable families, emphasizing the importance of clear communication with the public about why the cuts are needed.
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Image Credit: Reuters
