Senegal is facing a serious debt crisis. The IMF estimated the country’s debt at 132% of GDP at the end of 2024. Debt servicing costs are projected at 5.5 trillion CFA francs (about $9.1 billion) this year, eating up a growing share of tax revenue.
A restructuring of the debt seems necessary but Senegalese Prime Minister Ousmane Sonko has ruled out this option. Instead, government has announced the shutdown of 19 agencies to save an estimated 55 billion CFA francs (about US$97.95 million) over three years.
A recent report examines the main implications of two options: trying to repay the debt at all cost or defaulting. In an interview with The Conversation Africa, Abdoulaye Ndiaye, one of the authors of the report, breaks down what each path could mean for the country.
How did Senegal’s debt crisis come about?
In September 2024, the new government announced that it found irregularities in debt reports. In response, the IMF froze its US$1.8 billion credit facility for Senegal in October 2024.
A few months later, in February 2025, Senegal’s Court of Auditors, the country’s supreme auditor of public finances, found that the deficit had been underestimated by 5.6% of GDP per year between 2019 and 2023. As a result, the debt-to-GDP ratio rose from 74% to 100%. Between March 2025 and October 2025, despite several visits to the country, the IMF program remained on hold.
The government later published a revised 2025 budget and medium-term outlook. It then estimated the debt at 120% of GDP. A month later, an IMF visit was extended by two weeks. Tension between the IMF and the Senegalese government became public. As a direct consequence, government bonds collapsed. Under pressure, Prime Minister Ousmane Sonko pledged to do everything in his power to avoid default.
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What does Senegal’s current strategy rely on?
Repaying at all costs means making two assumptions. The first is achieving massive budget consolidation in record time. In simple terms, it’s like running a marathon at sprint speed. Going from a primary deficit of roughly 14% of GDP in 2024 to a 2% surplus is something few countries have achieved. This usually requires a big natural resource windfall, as was the case in Antigua and Barbuda.
The second gamble is hoping key players, including the IMF, will agree that Senegal’s debt is sustainable and keep lending during this hard times.
To cover its current deficit and repay its debts due between 2026 and 2028, the government needs to raise 15 trillion CFA francs (US$25 billion).
If not the IMF, who could lend to Senegal and at what cost?
The IMF is the most suitable institution to support countries in crisis. Its programs are designed for these situations. They unlock other low-cost loans and offer zero-interest lending to low-income countries. Our analysis suggests that’s unlikely.
Under its own rules, the IMF can only approve a programme if its debt analysis shows the debt is sustainable.
If the IMF cannot lend, others might step in. For example, Egypt and Kenya] got loans in 2024 from emerging lenders like the United Arab Emirates despite doubts about their solvency. But this support comes at a price. The riskier the loan, the tougher the conditions, including painful privatisations.
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Does Senegal have other options?
A third option would be to rely on regional financial markets. In 2025, regional banks lent to Senegal over 4 trillion CFA francs (US$6.7 billion) . They could continue to do so, but probably not as much. If they do, they would squeeze lending to the private sector and, above all, could expose the banking sector to increasing risk.
This strategy of paying back the debt at all cost might work. But it’s a big gamble. It carries two serious risks – either the fiscal adjustment fails, or no lender steps forward.
How can Senegal negotiate with creditors without hurting future investments?
Another path is negotiating with creditors under the G20’s Common Framework. This process was devised to reduce debt owed by developing countries to bilateral creditors. This option is not easy either. That said, Ghana and Ethiopia moved faster than Zambia in negotiating with creditors?.
The international community should treat Senegal as a test of possible cooperation. China and France together hold about 70% of Senegal’s bilateral debt. They should clearly show their support by committing to fixing the debt as quickly as possible.
Dealing with private creditors adds another layer of complexity. Their primary goal is to minimise losses which tends to make negotiation’s lengthy and adversarial. If the restructuring involves reducing or rescheduling payments, the country’s bond would usually be rated as “in default” by credit agencies, taking a temporary hit to its financial reputation. Default is not the end of the road. Countries can regain access to financial markets after a default. The key is making the debt cut deep enough to restore sustainability.
International institutions should step in with new loans. This would help Senegal keep investing despite its limited access to international markets. Finally, to minimise economic costs, debts denominated in CFA francs should be excluded from the restructuring scope to avoid destabilising the regional monetary zone.
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What is the best path forward?
In any case, the lessons of this crisis must go beyond Senegal. Debt transparency and banking oversight across the region need to be strengthened. As European countries did during the Greek crisis in 2010, the West African Economic and Monetary Union will have to reform and build additional safety nets.
Experience shows that delaying a default is costly. It is better to negotiate early to reduce the impact on exports and growth. Both options – repaying and restructuring – are challenging, and can cause serious damage to the economy. Our analysis shows that without access to large amounts of cheap money, trying to repay would be more dangerous and more costly than restructuring.
Restructuring carries short-term costs mostly during the negotiation period of two to three years. A failed repayment would bring much deeper and more lasting damage to economic stability. That outcome should be avoided.
This article was commissioned in French and later translated.
Abdoulaye Ndiaye does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
