Senegal’s $1.8 billion aid program with the International Monetary Fund (IMF), secured in 2023, is currently on hold. Finance Minister Cheikh Diba stated that a revised agreement will be necessary, targeting a new deal by the first quarter of 2025.
Minister Diba revealed at the annual IMF meetings in Washington that the audit has exposed a significantly higher debt and budget deficit than initially reported, prompting the need to revise Senegal’s program with the IMF. Quoted by Bloomberg, he said, “We are in discussions with the Fund.” Senegal now aims to finalize a new agreement by early 2025.
The IMF program, initially set to disburse $338 billion CFA francs this year, has postponed payments to 2025 due to the funding freeze. Reflecting on the decision, Minister Diba acknowledged, “We were aware of the consequences, but when we realized there were fundamental discrepancies between the figures reported to the Fund, which formed the basis of our relationship, we understood we had to report them.”
The audit, commissioned by President Bassirou Diomaye Faye, uncovered that the country’s budget deficit exceeds 10% of GDP—nearly double the previously reported 5.5%. Additionally, Senegal’s debt-to-GDP ratio was found to be over 80% at the end of 2023, compared to the earlier reported figure of 73%. This audit has had immediate repercussions; Moody’s downgraded Senegal’s credit rating further into speculative territory, with a potential additional downgrade looming. Senegalese Eurobonds also saw a wave of sell-offs following the news.
Despite these setbacks, Minister Diba emphasized that Senegal will not need to repay disbursed funds, stating, “This would have been the case if we had tried to conceal the facts and were caught. In this instance, Senegal conducted an audit and returned to the IMF with the correct figures.”
In addition, the government has initiated a review of natural resource contracts. “We cannot change the rules of the game mid-play, but the state has the right to verify if the contracts complied with the mining and oil codes in effect at the time,” Diba explained. This review aligns with Senegal’s ambitions to emerge as a key player in oil and gas production. The $4.8 billion GTA liquefied natural gas project, led by BP and Kosmos Energy, is slated to start this year, while the Sangomar oil project, operated by Woodside Energy, began production in June. These projects are expected to drive economic growth, forecasted at 6% this year and projected to exceed 10% in 2025.
