Senegal slams Moody’s downgrade as ‘biased and unfounded’ amid new Caa1 rating

By: Chidozie Nwali

The Senegalese government has forcefully rejected the latest sovereign credit rating downgrade by Moody’s Investor Services, on Saturday calling the move “speculative, subjective, and biased.”

The international ratings agency, Moody’s, announced its decision on October 10, 2025, lowering Senegal’s long-term foreign and local currency issuer ratings from B3 to Caa1. This is the second major downgrade the West African nation has faced this year, pushing its rating deeper into non-investment-grade territory.

In a sharp response the Ministry of Finance and Budget (MFB) in Dakar, stated in a statement that the downgrade “does not reflect the reality of the country’s economic fundamentals, nor the public policy measures currently being implemented to consolidate budget stability and reinforce debt sustainability.” It said.

Moody perceived increased risks to Senegal’s debt trajectory and liquidity position, largely stemming from the revelations of substantially higher public debt figures following a government audit earlier in 2025.

The agency also noted the slower-than-expected progress in securing a new program with the International Monetary Fund (IMF), which has left the government reliant on the costlier regional market for its high financing needs.

The IMF had noted last week that it’s now ready for a “program discussion” with Senegal, after it had completed and shared its public debt audits with the Fund, showing signs of transparency by the Senegalese authorities.

In response, the MFB accused Moody’s of issuing “hazardous and ill-founded initiatives, based on partial, premature, and undisclosed sources.” The Ministry highlighted key indicators that it argues demonstrate the robustness of the Senegalese economy:

•  Fiscal Consolidation on Track: The government reported a budget deficit of 688 billion FCFA (or 50% of total expenditure) at the end of June 2025, stating this is in line with its 7.8% of GDP deficit target for 2025 and its goal of reaching 5.0% of GDP in 2026.
•  Economic Reform and Growth: The MFB pointed to the ongoing implementation of the Economic and Social Recovery Plan (PRES), which includes the impending adoption of revisions to the General Tax Code and a new Investment Code by the National Assembly. External projections, like those from the World Bank, have forecasted Senegal’s GDP growth to accelerate to 6.4% in 2025, largely driven by the start of new hydrocarbon production.
• Financing Stability: The Ministry underscored its “mobilization of diverse financial resources,” including successful fundraising on the regional market and the expansion of its base of international partners, which it says demonstrates controlled access to funding.

The conflict between the rating agency and the sovereign government traces back to earlier in 2025. Following the change of administration in Senegal, an audit by the Court of Auditors revealed a dramatically higher debt-to-GDP ratio than previously reported, exposing material gaps in the transparency of government accounts under the previous administration.

Senegalese Prime Minister Ousmane Sonko last month  unveiled an Economic and Social Recovery Plan, a comprehensive strategy to tackle a 14% budget deficit and a public debt equivalent to 119% of GDP, while prioritizing domestic funding.

“We have identified more than 4.6 trillion CFA francs ($7.67 billion USD) in available resources between 2025 and 2028, without increasing the state’s debt,” he said.

The “available resources” involve selling its visa and citizenship to foreigners, renegotiation of oil, gas, and mining contracts, and the renewal of telecom licenses. These according to the prime minister will generate massive revenue for the west African economy.

While the current administration has committed to a path of rigorous fiscal transparency and consolidation, Moody’s latest action suggests diminished confidence in the short-term ability to stabilize debt metrics and secure external multilateral support. The Caa1 rating indicates the country is judged to be at a very high risk of loan and investment default.

Senegal to mobilize domestic resources to restore fiscal Sovereignty

Senegalese Prime Minister Ousmane Sonko on Friday  unveiled the “Jubanti Komm” Economic and Social Recovery Plan, a comprehensive strategy to address the nation’s fiscal challenges while prioritizing domestic funding.

Senegal prime minister outlined a path to tackle a 14% budget deficit and a public debt equivalent to 119% of GDP, according to Economy Minister Abdourahmane Sarr.

Sonko announced that 90% of the plan’s funding—totaling 5.7 trillion CFA francs ($9.5 billion USD)—will come from internal resources, avoiding additional external debt.

“We have identified more than 4.6 trillion CFA francs ($7.67 billion USD) in available resources between 2025 and 2028, without increasing the state’s debt,” Sonko declared, emphasizing efforts to reverse economic mismanagement from the previous administration.

Meanwhile, the o revious administration had acquired tremendous debts and hide them, forcing the IMF to cancel it’s loan programs to the West African nation.

The recovery plan, developed by a task force under the Prime Minister’s Office, focuses on three pillars: reducing public debt, mobilizing domestic resources, and securing internal financing without new debt.

Key measures include merging and downsizing state institutions to save approximately 50 billion CFA francs ($83.33 million USD), eliminating tax exemptions in the digital economy—such as online gaming and mobile money—and increasing tobacco taxes from 70% to 100%.

A new fiscal e-visa system for non-African visitors and African nations requiring visas for Senegalese citizens is projected to generate 60 billion CFA francs ($100 million USD) by 2028.

Sonko highlighted the renegotiation of oil, gas, and mining contracts, expected to yield 884 billion CFA francs ($1.47 billion USD), and the renewal of telecom licenses, projected to add 200 billion CFA francs ($333.33 million USD).

However, to address revenue losses, regularizing contracts at Senelec, the national electricity company, is expected to recover over 90 billion CFA francs ($150 million USD) by tackling technical fraud. Fees for the audiovisual sector will further boost state revenue.

The plan also raises the age limit for imported vehicles to address diaspora demands, aiming to stimulate economic activity. Access to land titles will be eased to attract investment, while energy subsidies will be phased out gradually, with cash compensation for vulnerable families to cushion the impact. Sonko stressed clear communication to maintain public support.

Senegal faces scrutiny over hidden debts from the prior administration, leading the International Monetary Fund (IMF) to freeze its $1.8 billion USD loan program after uncovering misreported deficits. An IMF mission is expected later this month to review corrective measures.

Economy Minister Sarr noted a 20% unemployment rate and poverty affecting 36% of the population. He assured that public finance reforms would protect private sector interests while prioritizing vulnerable communities, aligning with “Vision Senegal 2050” and the 2025-2029 macroeconomic framework.

President Faye, elected in March 2024 on a platform of economic sovereignty, joined Sonko in framing the plan as a step toward reducing reliance on foreign powers, particularly France. The duo called for national unity, with Faye urging citizens to support the initiative.

“This plan reflects our commitment to reinforcing Senegal’s sovereignty,” Sonko said. “Together, we will meet the challenge and secure a stronger future.”