DAKAR, Senegal — The International Monetary Fund has reached a staff-level agreement with Senegal on a new $2.2 billion (about Sh284 billion) financing programme, nearly two years after the Fund suspended an earlier deal following the discovery of previously unreported government debt.
The proposed 36-month arrangement is designed to support Senegal’s 2026–2029 economic and financial reform programme, while requiring the government to take corrective measures over the misreporting of fiscal data.
The agreement still requires approval by the IMF’s executive board before the funds can be released.
IMF demands corrective measures
The IMF said Senegal would need to implement “decisive corrective measures” to support its request for a waiver related to the misreporting of financial data.
The requirement follows revelations that the country’s previous administration had significantly understated the size of its budget deficit and public debt.
The dispute led the IMF to suspend a $1.8 billion programme agreed in 2023 while it investigated Senegal’s public finances and sought additional commitments from the new government.
The latest agreement marks a potential return to a formal IMF financing relationship, but also places greater emphasis on transparency and fiscal reforms.
Senegal’s debt crisis
Senegal’s current government, which came to power after an opposition electoral victory in 2024, accused former President Macky Sall’s administration of concealing the true state of the country’s finances.
An IMF review found that Senegal’s 2023 budget deficit was equivalent to 12.3 per cent of GDP, compared with the 4.9 per cent figure previously reported by the former government.
The discrepancy triggered a prolonged review of Senegal’s finances and raised concerns over the reliability of official fiscal data.
Following several IMF missions to Senegal, negotiations on a new programme began in mid-October.
Debt reaches 132 per cent of GDP
Senegal remains under significant debt pressure.
The IMF estimated that the country’s total public-sector debt stood at about 132 per cent of GDP at the end of 2024, making Senegal one of the most heavily indebted countries in sub-Saharan Africa.
However, the country has made progress in reducing its fiscal deficit.
The IMF said in June that Senegal’s overall fiscal deficit narrowed from 13.4 per cent of GDP in 2024 to 6.4 per cent in 2025, largely because of efforts to rationalise government spending.
The improvement could strengthen the government’s case for renewed international financing, although its debt burden remains a major challenge.
Senegal relies on regional bond market
Despite the suspension of the IMF programme, Senegal has continued to finance much of its borrowing through the regional bond market.
However, ratings agency S&P has warned that such financing comes at a higher cost than loans from international financial institutions, development banks and foreign governments.
The new IMF programme could therefore provide Senegal with access to comparatively cheaper financing while also supporting efforts to restore confidence in the country’s public finances.
The agreement is also expected to provide a framework for fiscal consolidation and economic reforms over the next three years.
Political tensions complicate reforms
The IMF agreement comes amid political tensions between President Bassirou Diomaye Faye and his former prime minister, Ousmane Sonko.
The two leaders became embroiled in a political dispute over several issues, including the government’s approach to the IMF and Senegal’s debt situation.
Faye dismissed Sonko as prime minister in May, but Sonko subsequently became president of the National Assembly.
His new position could complicate the government’s efforts to implement some of the fiscal reforms required under the IMF programme because major reforms may require parliamentary backing.
The two leaders have also differed over how Senegal should manage its debt.
While Faye has favoured a more conciliatory approach towards the IMF, Sonko has rejected debt restructuring.
Moody’s downgrades Senegal
The negotiations also come as international investors remain concerned about Senegal’s creditworthiness.
Moody’s recently downgraded Senegal’s long-term foreign-currency debt rating to Caa2 from Caa1, reflecting continued concerns over the country’s debt burden and financial outlook.
The downgrade highlights the difficult environment facing the government as it attempts to balance debt reduction, economic growth and the need to maintain access to financing.
Approval of the IMF agreement would provide Senegal with additional financial support while requiring the government to strengthen fiscal management and improve transparency.
