Senegal has announced a series of measures—including raising taxes and renegotiating energy contracts—to generate nearly $10 billion over the next three years in a bid to tackle its mounting debt crisis.
The move comes as the country attempts to reassure investors, following a statement from the International Monetary Fund (IMF) last week confirming it will begin talks with Senegal next month over new funding arrangements.
Senegalese eurobonds due in 2033 dropped by 0.7% to 73.98 cents on the dollar in London trading on Friday, reflecting investor concern.
According to a Bloomberg report, Prime Minister Ousmane Sonko said in Dakar that the government would reduce expenditure and boost domestic revenue in the coming months. These efforts aim to stabilise public finances and rebuild investor confidence.
“Sixty-five years after independence, we must fully take responsibility for our future,” Sonko stated. “This means making sacrifices, mobilising internal resources, and moving away from the default response of turning to external aid.”
Last year, President Bassirou Diomaye Faye’s administration revealed $7 billion in previously undisclosed borrowing by the former government—an exposure that pushed Senegal to the brink of financial crisis. Under the new plan, the government intends to fund 90% of its recovery strategy from domestic sources. It will cut subsidies and introduce new taxes on various goods and services, including mobile-money transactions, aiming to raise 5.7 trillion CFA francs (approximately $9.9 billion).
The IMF suspended a $1.8 billion loan programme in response to the borrowing revelation, while S&P Global Ratings downgraded Senegal’s credit rating further into junk status.
Economy Minister Abdourahmane Sarr explained that Senegal’s statistics agency plans to rebase the country’s gross domestic product (GDP), which may help improve debt ratios. Following the audit, the debt-to-GDP ratio surged to 99.7% in 2023, up from the previously reported 74.4%. According to Sarr, total public obligations reached 119% of GDP last year.
A new agreement with the IMF—crucial for funding the recovery plan and restoring market confidence—depends on Senegal presenting a credible roadmap back to fiscal discipline.
“This includes improving the efficiency of public spending through high-impact investments, consolidating public finances, and achieving a 3% budget deficit by 2027,” Sarr said. “The recovery plan is designed to send a strong and positive message to financial markets.”
While the government has considered reprofiling its debt by extending maturities, it insists that it will not pursue a full restructuring.