Senegal Credit Rating Slashed to ‘CCC+’ by S&P Amid Critical Debt Strains

By: Chidozie Nwali

S&P Global Ratings has delivered a sharp blow to Senegal’s financial credibility, downgrading the West African nation’s long-term foreign currency sovereign credit rating to ‘CCC+’ from ‘B-‘. The decision, announced Friday, places the West African nation deep into highly speculative territory, citing a “precarious debt position” and “elevated” borrowing needs for 2026.

The downgrade highlights the severe fallout from the discovery of massive undisclosed public debt under the previous administration, which has created a fiscal crisis for the new government of President Bassirou Diomaye Faye and Prime Minister Ousmane Sonko.

Following an audit by the new government, total general government debt is now estimated at 119% of GDP as of December 2024, which is more than 40 percentage points higher than previously reported. the IMF, places the public debt-to-GDP ratio as high as 132% when accounting for various off-balance-sheet liabilities.

S&P noted that this staggering debt level, combined with a projected gross financing requirement of approximately 29% of GDP for 2026, leaves public finances highly exposed.

“The public finances remain precarious, particularly in the absence of a comprehensive official support program. The ‘CCC+’ rating reflects a vulnerability to adverse conditions and a substantial risk of default in the medium-term without immediate external financing.” S&P stated.

The rating agency also placed the country on CreditWatch developing, indicating the rating could be lowered further if Senegal fails to refinance its upcoming commercial debt maturities, which include a critical $1.8 billion external debt service due in 2026.

The debt crisis has been amplified by the suspension of a crucial $1.8 billion International Monetary Fund (IMF) program in late 2024, which followed the initial revelation of the hidden debts.

While negotiations for a new program and a vital “debt misreporting waiver” began in October 2025, talks concluded earlier this month without a final agreement. A key sticking point is the IMF’s potential insistence on debt restructuring (which could involve losses for creditors) for a new deal, an option Prime Minister Sonko has publicly and vehemently rejected.

Prime Minister Sonko’s Position: “Senegal is a proud nation… We will not be treated like a failed state. We will meet our obligations with our own means,” Sonko stated recently, calling debt restructuring a “disgrace.”

In response to the crisis, the Sonko-Faye government unveiled its flagship “Jubbanti Koom” Economic and Social Recovery Plan in August. The plan is described as a move toward “assertive sovereignty”, aiming to finance 90% of development initiatives through domestic resources to reduce dependence on foreign borrowing.

The economic plan increases taxes on mobile money, online gaming, tobacco, and alcoholic beverages. Targeting to slash the budget deficit to 3% of GDP by 2027 from 12.6% in 2024.

However, S&P remains skeptical of the government’s ambitious deficit targets, projecting the deficit will remain elevated at 8.1% of GDP in 2026, noting that the “very high tax yield” assumed from the new measures poses a significant risk.

Despite the severe fiscal challenges, S&P noted a silver lining in Senegal’s dynamic economy. The country is poised for a significant economic boost from the commencement of its new oil and gas production, including the Sangomar oil field and the Greater Tortue Ahmeyim gas project. The government is forecasting 6.8% GDP growth for the full year, driven in part by a strong 12.1% growth rate in the first quarter of 2025.

The immediate challenge for Dakar is to bridge the funding gap for 2026 and finalize a comprehensive support program that can restore investor confidence without compromising the government’s stated commitment to financial sovereignty.