Senegal is facing mounting fiscal pressure as public debt continues to rise sharply, revealing deeper imbalances in the country’s finances. By the end of the first quarter of 2025, the government’s debt servicing obligations had reached approximately $1.4 billion, representing a year-on-year increase of more than 20%. The country’s financial strain has been worsened by a shortfall in revenue collection, which accounted for just 21% of the annual target, while expenditure significantly exceeded projections.
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A recent audit by Senegal’s Court of Auditors uncovered major discrepancies in previously reported debt and deficit figures. Contrary to earlier claims that placed the debt-to-GDP ratio at 74%, the audit found the actual figure to be closer to 100%. The investigation also revealed hidden obligations, including arrears owed to suppliers and state institutions, bringing the unreported debt total to roughly $7 billion. As a result of the findings, the International Monetary Fund has suspended its $1.8 billion support program and delayed further disbursements pending reforms aimed at improving fiscal transparency and data accuracy.
In response to the growing debt burden, the Senegalese government has initiated several measures to stabilize public finances. These include enhanced tax compliance programs designed to replace lost external funding and reduce reliance on concessional lending. The government also turned to the regional bond market, raising 405 billion CFA francs through a domestic bond issuance in April. Despite these efforts, external grant inflows have fallen by more than 70%, increasing Senegal’s dependence on market-based borrowing at higher interest costs.
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The country’s deteriorating fiscal position has triggered negative reactions from credit rating agencies. Moody’s has downgraded Senegal’s credit rating, citing heightened liquidity risks and diminished investor confidence. These developments have made Senegal’s sovereign bonds some of the worst-performing in Africa this year, highlighting the rising concern among investors over the country’s ability to manage its obligations and restore fiscal balance.
As Senegal works to regain control of its finances, the success of its economic strategy will depend on the government’s ability to implement meaningful reforms. These include improving revenue mobilization, enforcing budget discipline, and restoring credibility in financial reporting. Achieving these goals will be critical to unlocking suspended IMF funds, regaining access to affordable credit, and protecting long-term investment in infrastructure and development.
