By Libby George
LONDON, Sept 29 (Reuters) – Senegal must persuade the International Monetary Fund that its groaning debt pile is on a sustainable path before it can unlock much-needed Fund financing.
But proving this is much more complex than simply spending less or earning more. The IMF weighs debt-servicing costs, revenues, borrowing needs and debt versus the size of the economy.
Below are key charts illustrating the challenges facing Senegal.
HOW EASY WILL THE PROCESS BE?
Senegal’s troubles began in 2024, when leaders revealed misreported debts that ultimately pushed debt to GDP, including state-owned enterprises and government-guaranteed debt, to roughly 130%.
President Bassirou Diomaye Faye said the government is targeting a debt treatment within months – n unusually rapid timeline. Leaders have largely avoided the word “restructuring”, reflecting political sensitivities; National Assembly President Ousmane Sonko has said debt default would be a “disgrace”.
Senegal could seek longer maturities or lower interest rates, but the debt burden could make avoiding investor losses, known as “haircuts”, difficult.
Central government debt hit 25.2 trillion CFA francs ($44 billion) at the end of 2025.
Senegal must also clear arrears, which stood at 1.956 trillion CFA francs ($3.42 billion) as of March 2025. An ongoing audit will determine the final figure, but Prime Minister Ahmadou Al Aminou Lo warned arrears were weighing on economic activity.
This month, the government raised the deficit forecast by nearly 2 percentage points, to 7.6% of GDP, as energy subsidies more than tripled, debt costs rose and revenues fell.
Investors are watching proposed changes to the IMF debt sustainability framework that will inform, though not govern, its assessment of Senegal. It aims to revise some benchmarks for assessing debt, including targets for gross financing needs and interest to revenue ratios.
WHO ARE SENEGAL’S BILATERAL CREDITORS?
France and China are Senegal’s largest bilateral creditors and widely expected to co-chair talks on behalf of the Paris Club group of wealthy creditor nations though the Club has made no announcements.
Bilateral creditors often set the benchmark for relief expected from other lenders under the “comparability of treatment” principle.
China’s lending has fuelled worries that talks will not be easy; official lenders took a hard line on comparable treatment during restructurings in Ethiopia and Zambia, where China was also a key creditor.
A tough Paris Club stance could reignite a debate over whether lenders such as BOAD, Afreximbank or AFC should be shielded from losses.
WHO IS IN LINE TO FACE LOSSES?
Not all lenders will share any losses equally. The IMF, World Bank and some other multilateral lenders are shielded, as typically are short-term export credit facilities.
Multilateral lenders held about 40% of external debt in 2024, and another 9% was export credit.
Any relief would therefore fall on roughly half the external debt stock, raising concerns among bondholders about their burden.
WHY DOES EXCLUDING CFA-DENOMINATED DEBT MATTER?
Senegal has said CFA franc-denominated debt, including retail investor bonds and regional market debt, is not part of the rework.
Those accounted for roughly 30% of central government debt at end-2024. But after the misreported debt scandal froze IMF support and curtailed international market access, Senegal ramped up regional borrowing.
Regional issuance more than doubled to 2.2 trillion CFA francs last year and reached 2 trillion CFA francs by end-August.
Regional debt now represents nearly 58% of debt-servicing costs in the revised 2026 budget. Excluding it would increase external creditors’ burden.
S&P said that Senegal’s substantial domestic debt raises the possibility that local-currency obligations could be drawn into a broader debt treatment.
WHAT OTHER ISSUES ARE THERE?
Senegal raised $1.26 billion in net financing by end-2025 using total return swaps (TRS) – derivative-based financing structures backed by local-currency government bonds.
The IMF has raised concerns about TRS opacity, and other experts have flagged their implications for creditor seniority.
The Fund said Senegal’s TRS count as external debt, but that it is up to the nation and its creditors to determine their debt rework treatment.
TRS remain largely untested in sovereign restructurings; Fitch warned the Common Framework is “not yet well equipped” to handle them.
Some investors say Senegal could try to unwind its TRS before the debt treatment, though its TRS financing is a substantial sum compared with its overall debt.
($1 = 572.7500 CFA francs)
(Reporting by Libby George, editing by Karin Strohecker and Alexandra Hudson)
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