Dakar — The International Monetary Fund has reached a staff-level agreement with Senegal on a new $2.2 billion loan programme, designed to support the country’s economic and financial reform program for the 2026–2029 period. This development comes after the IMF suspended a previous $1.8 billion aid programme agreed in 2023, following the discovery of previously unreported debt under Senegal’s former administration, which was led by ex-president Macky Sall from 2012 to 2024.
Background to the Agreement
The current government in Senegal, formed after an opposition electoral victory in 2024, accused the former administration of concealing the true extent of the country’s budgetary problems, leading to the IMF’s discovery that Senegal’s 2023 budget deficit was 12.3 percent of GDP, far higher than the 4.9 percent reported by the previous government. Senegal’s total public sector debt was estimated at 132 percent of GDP at the end of 2024, according to the IMF, making it one of the most indebted countries in sub-Saharan Africa, and the new agreement requires decisive corrective measures to support the authorities’ request for a waiver regarding the misreporting of data.
Implications of the Loan Programme
The fiscal deficit in Senegal narrowed sharply from 13.4 percent of GDP in 2024 to 6.4 percent of GDP in 2025, driven largely by spending rationalisation, the IMF said in June, and the country has continued to finance itself largely through the regional bond market, but at higher costs than loans from international financial institutions, development banks, or governments. Ratings agency S&P has commented on the higher costs of financing through the regional bond market, and Moody’s downgraded Senegal’s long-term foreign-currency debt rating to Caa2 from Caa1 last week, amidst a complicated political context, where President Bassirou Diomaye Faye prefers a more conciliatory approach with the IMF, while Ousmane Sonko, who was sacked as prime minister in May and subsequently elected speaker of the National Assembly, has rejected any debt restructuring.
Next Steps
The staff-level agreement still needs approval by the IMF’s executive board, and the situation will be closely watched, as the new loan programme is expected to have a significant impact on Senegal’s economic and financial reform program for the 2026–2029 period, and the country’s ability to implement IMF reforms may be complicated by the political context, with the president’s ability to implement reforms potentially hindered by the speaker of the National Assembly’s rejection of debt restructuring. As the situation unfolds, it will be important to watch for the IMF executive board’s approval of the staff-level agreement, and the subsequent implementation of the new loan programme, which will have significant implications for Senegal’s economy and people, and the region as a whole.
