Senegal Weighs Debt Management Review After Financial Audit
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Loading... - Charles Effah
- 23 Dec 2024
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Senegal is considering a liability management plan aimed at extending debt maturities following a state audit that revealed public finances are in a worse state than previously believed. The initiative seeks to create “a more appropriate repayment profile favoring re-profiling with extended maturities,” as outlined in draft budget documents.
This move comes as the country awaits the results of a comprehensive audit of its public finances, which indicated that its debt had risen to over 80% of economic output by the end of last year, a significant increase from the previously reported figure of 73%. The Senegalese government aims to adopt a “proactive and strategic approach to public debt management” to optimize its repayment profile while maintaining commitments to investors. Notably, the government has stated that it has no intention of renegotiating or restructuring its debt.
The audit also revealed that the budget deficit exceeded 10% of gross domestic product (GDP), nearly double the 5.5% reported under former President Macky Sall. This alarming figure led the International Monetary Fund (IMF) to freeze $1.8 billion in loans earlier this year, with discussions regarding Senegal’s loan program scheduled for January.
The revisions to the financial data, currently under review by Senegal’s court of auditors, are expected to have significant implications for the country’s finances. The auditors' review, anticipated by mid-December, will likely result in an upward revision of both outstanding debt and debt service for 2024-2025. The finance ministry has indicated that the budget deficit is projected to exceed 11% in 2024.
The government’s 2025 budget document highlights that this active debt management exercise will also address issues related to the international market to smooth out debt service, particularly in 2026 and 2027. Senegal has approximately $3.2 billion in dollar and euro bonds maturing over the next decade.
For the upcoming year, Senegal is targeting a budget shortfall of 7% within a total budget of 6.4 trillion CFA francs (approximately $10.2 billion), as detailed in the draft budget awaiting approval from lawmakers.
In a bid to reduce reliance on external funding, Senegal plans to issue 1.5 trillion CFA francs in diaspora bonds. Additionally, the government aims to finalize a review of the mining code by May to optimize revenue sharing. Efforts are also underway to increase local content and job creation in the oil and gas sector, alongside updates to the tax code to maximize state benefits.
Economic growth is projected at 8.8% in 2025, driven by oil production that commenced this year and anticipated gas production from the $4.8 billion BP Plc-operated Grand Tortue Ahmeyim field, set to begin in 2025. Inflation is expected to average 1.9% next year, according to the draft budget.
