Senegal will revise its program with the International Monetary Fund (IMF) after an audit revealed a significantly higher debt and budget deficit than previously reported. Finance Minister Cheikh Diba stated that the country aims to meet all conditions for a new agreement with the IMF by early 2025.
The audit, ordered by President Bassirou Diomaye Faye, found that Senegal’s budget deficit stood at over 10% of GDP, nearly double the 5.5% reported under former President Macky Sall. Additionally, the country’s debt-to-GDP ratio at the end of last year was over 80%, compared to the previously reported 73%. This prompted a review by the IMF, leading to Senegal placing its existing $1.8 billion program with the fund “on hold.”
Despite the discrepancies, Senegal will not be asked to repay funds already disbursed, as the government proactively disclosed the corrected figures. The nation’s fiscal challenges have contributed to a downgrade by Moody’s, which placed Senegal’s credit rating deeper into junk status and led to a selloff of its Eurobonds.
In parallel, President Faye launched a review of Senegal’s natural resource contracts to ensure they are optimized for state benefit. This comes as Senegal is set to become a significant oil and gas producer, with major projects like the $4.8 billion Grand Tortue Ahmeyim liquefied natural gas project and the Sangomar oil development expected to boost economic growth.
Despite the current fiscal challenges, these oil and gas ventures are projected to drive Senegal’s economic growth to 6% this year, with a forecast of over 10% in 2025. The government hopes that by addressing its fiscal discrepancies and aligning with the IMF, it will stabilize the economy and continue benefiting from its emerging energy sector.
