IMF Mission in Senegal Concludes Without New Lending Programme
The International Monetary Fund (IMF) has concluded its mission to Senegal without finalizing a new lending program. However, an official from the organization indicated that the body is working on finalizing such a program soon. Mission Chief Edward Gemayel shared this information with journalists, stating that discussions would continue in the coming weeks.
Senegal’s current administration has shown a commitment to addressing its debt issues after uncovering billions in unreported debt from the previous administration. “We still need some more discussions. Hopefully, in the coming weeks we can reach a conclusion,” Gemayel said during his remarks.
Debt Misreporting and Waiver
The IMF had previously frozen Senegal’s $1.8 billion lending program last year after the newly elected leaders revealed hidden debts. These debts have since grown to over $11 billion. The Fund estimates that at the end of last year, total public sector debt reached 132 percent of GDP, including 4 percent in domestic expenditure arrears.
Senegal is now seeking a new lending program, but it also requires approval from the IMF board for a crucial debt misreporting waiver. Gemayel mentioned that the Fund is working on the waiver alongside the new lending program, although the two may not be presented to the board simultaneously.
Fiscal Targets and Risks
Senegal’s budget targets a 5.4 percent deficit for 2026, which represents a reduction from 7.8 percent this year and 13.4 percent of GDP in 2024. While the ambition is commendable, Gemayel noted in a statement that the high tax yield assumed from the announced measures poses a significant risk, emphasizing the need for more conservative projections.
Talks on a new program began last month, and an IMF team has been based in Dakar since October 22.
Debt Restructuring or Re-profiling
Gemayel informed reporters that there is still technical work to be done on the debt sustainability analysis, which will determine what Senegal must do to secure the program. This could include whether the country might need to restructure its debts.
“Regarding debt, Senegal intends to continue implementing conventional active debt management operations, both on domestic and external debt, in order to reduce debt-related vulnerabilities,” the finance ministry stated.
Investors are divided on whether the IMF might advise Senegal to restructure its debt, which could result in losses for creditors, or to re-profile it, which would extend maturities without reducing the principal or interest.
“They are very serious about putting in place the consolidation path, which is very aggressive in our view. That shows you how much they are determined to bring debt on a downward trajectory,” the IMF official said.