Muthomi Ireri
Senegal’s $1.8 billion IMF aid program, secured in 2023, is currently on hold, requiring a restructuring due to an audit revealing a higher-than-expected debt and budget deficit. Finance Minister Cheikh Diba announced, during the annual IMF meetings in Washington, that the government aims to renegotiate the agreement by the first quarter of 2025.
The audit, commissioned by new President Bassirou Diomaye Faye, exposed significant discrepancies in Senegal’s finances over the past five years, uncovering a budget deficit above 10% of GDP—almost double the previously reported 5.5%—and a debt-to-GDP ratio exceeding 80% instead of the 73% initially reported. These findings prompted Moody’s to downgrade Senegal’s credit rating further into speculative territory, sparking a brief sell-off of Senegalese Eurobonds.
The freeze on the IMF program includes delaying a payment of 338 billion CFA francs initially scheduled for this year until 2025. Minister Diba clarified that Senegal will not have to repay funds already disbursed, as the government disclosed the revised figures rather than concealing them.
Additionally, Senegal has begun reviewing contracts in its burgeoning natural resources sector. This includes scrutinizing whether agreements in the mining and oil industries adhered to relevant legal codes. As Senegal gears up to become a major oil and gas producer—with BP and Kosmos Energy’s $4.8 billion GTA liquefied natural gas project set to start this year, and the Sangomar oil project by Woodside Energy already in production—the government aims to ensure resource contracts align with national interests. These projects are projected to propel the country’s economic growth to 6% this year, with expectations exceeding 10% in 2025.
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