Senegal has unveiled a $10 billion recovery plan aimed at addressing its deepening debt crisis and restoring investor confidence, with discussions set to begin with the International Monetary Fund (IMF) next month.
Prime Minister Ousmane Sonko said on Friday in Dakar that the government will implement tax increases, review energy contracts and cut subsidies to mobilize about 5.7 trillion CFA francs ($9.9 billion) over three years.
He noted that 90 percent of the package will be financed from domestic resources, a shift away from dependence on external assistance.
“Sixty-five years after independence, we must fully assume our future,” Sonko said. “This means making efforts, mobilizing our internal resources, and freeing ourselves from the automatic responses that systematically send us back to external assistance.”
Rising Debt Burden
The plan follows the discovery of $7 billion in unreported borrowing by the previous administration, which pushed Senegal’s debt to nearly 119 percent of GDP in 2023, compared with a previously reported 74.4 percent.
The disclosure led the IMF to suspend a $1.8 billion loan program last year, while S&P Global Ratings downgraded the country further into junk territory.
Senegal’s statistics agency is also preparing to rebase GDP figures, a move expected to lower the debt-to-GDP ratio and improve debt sustainability metrics.
Market Reaction
Despite the announcement, Senegalese Eurobonds declined on Friday. The 2033 Eurobond dropped 0.7 percent to 73.98 cents on the dollar by 2 p.m. in London.
Investors remain cautious, with analysts emphasizing the need for credible fiscal reforms to stabilize the market.
IMF Engagement
The IMF confirmed last week that discussions for a new program will begin in August. The program is expected to focus on fiscal consolidation, targeting a reduction in the budget deficit to 3 percent of GDP by 2027.
Economy Minister Abdourahmane Sarr said the recovery plan will prioritize high-impact investments, improve efficiency in public spending, and reduce debt accumulation. “In short, the recovery plan aims to send a strong, positive signal to financial markets,” he stated.
Fiscal Outlook
To achieve its targets, the government plans to introduce taxes on goods and services, including mobile-money transfers, while cutting non-essential expenditures. Officials indicated that debt reprofiling, including maturity extensions, may be considered, but ruled out a full restructuring.
With the IMF engagement on the horizon, Senegal’s fiscal strategy will be closely monitored by investors seeking evidence of a sustainable path to debt stabilization.