Senegal’s bonds have sharply declined in November as uncertainty surrounds a potential new loan program with the International Monetary Fund (IMF) and investor fears of a possible debt restructuring, which Prime Minister Ousmane Sonko has firmly rejected.
Here is an overview of the situation and its implications.
Why is Senegal Facing a Debt Crunch?
In October 2024, Senegal’s incoming government revealed previously undisclosed debts left by its predecessor, though officials warned it would take time to determine the full extent. In July, the IMF estimated this additional debt at over $11 billion based on end-2023 figures, while rating agencies and analysts place it around $13 billion—more than a quarter of total debt.
The revelation prompted the IMF to freeze a $1.8 billion support program, leading to a slump in Senegalese bonds and multiple credit rating downgrades. Bonds recovered briefly after Finance Minister Cheikh Diba met IMF Managing Director Kristalina Georgieva in Washington but fell again after an IMF staff mission concluded without a deal. Sonko said the IMF had pushed for a debt restructuring, which he rejected as a “disgrace.” The IMF maintained it had only presented options, leaving the restructuring decision to the government.
Senegal’s Debt Profile
At the end of 2024, Senegal’s total debt—excluding state-owned companies—stood at 23.67 trillion CFA francs ($42.15 billion), or 119% of GDP, according to government data. Domestic debt accounts for roughly a third, including regionally issued bonds and loans. Of the remaining external debt exceeding $28 billion, half is owed to multilateral and government lenders on concessional and semi-concessional terms, while the other half is held by commercial creditors. International capital markets account for $7.7 billion, nearly a fifth of total debt.
In response to the lack of IMF and concessional financing, Senegal has increasingly relied on regional markets and retail bond sales to fill funding gaps.
Impact of the Regional Financial Union
As a member of the West African Economic and Monetary Union (WAEMU), Senegal benefits from a shared central bank, a common currency, and pooled financial markets with seven other countries, including Ivory Coast and Benin. The CFA franc is pegged to the euro, with France guaranteeing convertibility, providing stability, low inflation, and predictable external debt servicing. Regional reserves also help meet external obligations.
However, risks remain. Senegal’s increased borrowing in regional markets, known as UMOA-Titres, could have broader implications for regional financial stability, as commercial lenders in neighboring countries, such as Ivory Coast, hold significant Senegalese government debt, according to S&P Global Ratings.
What Comes Next?
Senegal received its last IMF disbursement in 2023. Despite the funding freeze, the government has secured at least 70% of planned 2025 financing through regional and local markets, demonstrating resilience.
Challenges remain. In October, the government revised projected 2026 debt repayments upward by 11% to 5.49 trillion CFA francs, with additional large payments expected over the next two years. Investors warn that upcoming external maturities heighten pressure to resolve the IMF misreporting issue and secure a new support deal.
Both the government and the IMF indicate a resolution could come soon. The IMF is collaborating with the World Bank on a new debt sustainability analysis, which will guide future steps. Meanwhile, the government has recalculated GDP using an updated base year, improving debt metrics through higher output.
($1 = 566 CFA francs)
