Key facts
- Senegal will restructure its debt as part of a $2.2 billion IMF bailout.
- The country's debt-to-GDP ratio surged to 130% after the discovery of over $11 billion in undisclosed debt.
- The IMF had previously frozen its support program due to the debt crisis.
- The debt restructuring will utilize an enhanced version of the G20's Common Framework.
- Senegal's CFA franc-denominated debt will be excluded from the restructuring process.
Senegal is set to restructure its debt as part of a $2.2 billion International Monetary Fund bailout, two years after a hidden debt scandal plunged the country into crisis. The nation's debt-to-GDP ratio ballooned to 130% after the discovery of over $11 billion in undisclosed public debt, leading the IMF to freeze its existing support program and triggering a selloff in Senegal's bonds.
The government, led by Finance Minister Cheikh Diba, announced the plan, which it described as "not a restructuring in the classic sense." The debt overhaul will utilize an "improved" version of the Common Framework, a G20-backed initiative designed to help crisis-hit countries restructure their debts with official and private creditors. However, details on how this improved framework will operate remain unclear.
Senegal's total government debt, excluding state company borrowing, stood at 119% of GDP at the end of 2024. Analysts estimate that when liabilities from state-related entities and arrears are included, the figure approaches 131%. A significant portion of the debt is owed to multilateral lenders and governments on concessional terms, while commercial creditors hold the remaining half, including over $7 billion in international bonds. The government has indicated that its CFA franc-denominated debt will not be part of the restructuring, a move that complicates the process due to Senegal's membership in the West African Economic and Monetary Union.
The push for restructuring comes after previous attempts to secure funding from regional borrowing markets and retail sales faltered, exacerbated by the Iran war's impact on public and private investment and rising energy costs. Growth is now projected to fall to 2.7% this year from 6.7% last year. Notably, former Prime Minister Ousmane Sonko had previously opposed debt restructuring, calling it a "disgrace" for the country.