An International Monetary Fund staff team is visiting Dakar to advance discussions with West African authorities toward establishing a new lending program aimed at stabilizing Senegal’s public finances.
According to a statement released by the Washington-based lender, the August 19 to September 1 mission seeks to build on preliminary policy negotiations initiated earlier this year.
The multilateral intervention follows the suspension of a prior $1.8 billion facility after an independent audit revealed widespread off-budget borrowing and systematic fiscal data underreporting by the previous administration.
Subsequent reconciliations conducted by international audit firm Forvis Mazars saw central government debt projections revised sharply upward from 74.4% to 118.8% of gross domestic product at end-2024.
The country’s fiscal deficit also surged past 11% of GDP, driven by unrecorded off-balance-sheet liabilities and unpaid contractor obligations accumulated prior to President Bassirou Diomaye Faye’s election victory.
“The staff team and authorities will continue discussions toward reaching a shared understanding of the policies and reforms that could be supported by an IMF arrangement,” the IMF stated.
Financial authorities in Dakar have already implemented several preliminary remedial measures, including centralizing sovereign debt management operations, expanding the Treasury Single Account, and auditing state payment arrears.
To secure final Executive Board approval, Senegal must consolidate its budget deficit back toward the West African Economic and Monetary Union regional threshold of 3% of GDP.
This fiscal target requires structural reforms, such as phasing out untargeted energy subsidies, broadening the domestic tax revenue base, and rationalizing capital expenditure programs across public institutions.
Despite severe debt servicing burdens, economic growth expanded by double digits in early 2025, buoyed by initial output from commercial offshore oil and natural gas fields.
However, non-hydrocarbon sector output remains severely constrained at 3.1%, largely reflecting tight regional liquidity and structural bottlenecks across domestic construction and industrial sectors.
A successfully negotiated Staff-Level Agreement remains critical for Senegal to restore credit rating stability, lower Eurobond yields, and catalyze bilateral development funding.
