Senegal is grappling with the fallout from billions of dollars in undisclosed debt uncovered in a government audit, a revelation that has thrown its relationship with the International Monetary Fund into jeopardy and exposed systemic failures in fiscal transparency.

In early 2025, Senegal’s Court of Auditors published findings showing that the former administration significantly underreported both debt and deficits. What was previously declared as public debt of approximately 74.4% of GDP turned out to be nearly 99.7% by the end of 2023, implying hidden borrowing of around $7 billion—equivalent to over 25% of GDP. By mid‑2024, estimates rose further, with external assessments by Barclays and S&P placing the debt-to-GDP ratio at 118–119%, hinting at hidden debt closer to $11–13 billion.

The economic ramifications were swift. Senegal’s IMF-supported $1.8 billion lending programme, initiated in 2023, was immediately placed on hold. The institution demanded detailed explanations and corrective measures before resuming disbursements. Partners like Moody’s and S&P downgraded the country’s sovereign rating amid a bond market rout and investor exit.

Between 2019 and 2023, the actual fiscal deficit averaged 11–12% of GDP, compared to the previously reported 4–5%. In response, IMF staff led by mission head Edward Gemayel met with Senegalese officials in March 2025 to review the audit, condemn the underreporting as a “conscious decision,” and chart urgent reforms in budget oversight and financial controls.

To soften the optics, the government is working on updating its GDP base year—known as GDP rebasing—which could mechanically reduce the debt‑to‑GDP ratio. While investors welcomed the move and Senegal’s 2033 bonds recovered somewhat, analysts caution that rebasing does nothing to resolve underlying debt vulnerability or gross financing needs.

The IMF remains cautious. Its Executive Board must decide whether to grant Senegal a waiver for misreporting—a step that would allow a new support programme—or require repayment of previously disbursed funds before restoring formal engagement. Resolution of the waiver and implementation of a recovery plan are expected in the following months.

Prime Minister Ousmane Sonko, who leads a ruling coalition, is preparing a recovery blueprint that emphasizes fiscal consolidation, cuts to untargeted subsidies, and improved revenue collection. Meanwhile, civil society and analysts warn that governance reforms are urgently needed to ensure transparency—pointing out that infrastructure-related Public-Private Partnerships (PPPs) and SOE liabilities accounted for much of the hidden debt.

This debt scandal echoes Mozambique’s 2016 “tuna bond” crisis but eclipses it in scale. It also serves as a wake-up call for the IMF—which has come under scrutiny for failing to detect the fiscal discrepancies during earlier surveillance missions. The Fund has initiated an internal assessment, and a failure to correct its oversight procedures could undermine trust in its broader emerging‑market engagements.

Senegal’s credibility and future access to international capital hinge on its ability to demonstrate genuine reform and restore confidence. The nation now faces a critical choice: double down on transparency and fiscal discipline to rebuild investor trust, or prolong a debt trajectory that could jeopardize economic stability and social investments. The IMF’s pending decisions—especially on waivers and new programmes—will play a defining role in whether Senegal can turn this crisis into an opportunity for deeper fiscal governance reform.

Credit: Africanews