The International Monetary Fund (IMF) and Senegal have reached a staff-level agreement for a new three-year, $2.2 billion Extended Credit Facility (ECF) arrangement. This agreement aims to support Senegal's economic and financial reform program for the 2026-2029 period. The deal is contingent on approval from IMF management and its Executive Board, requiring Senegal to take decisive corrective actions regarding misreported debt.
This new program comes after the IMF suspended a previous $1.8 billion aid package in 2023 due to the discovery of billions of dollars in misreported borrowing by the prior administration. The IMF estimates this misreported debt to be over $11 billion based on figures from the end of 2023, while some analysts place it closer to $13 billion, representing more than a quarter of the country's $40 billion economy. Senegal's debt burden had reached 132% of its Gross Domestic Product (GDP) by the end of 2024.
A key component of the new agreement is Senegal's commitment to a "debt treatment plan" to restore debt sustainability. While Finance Minister Cheikh Diba described this not as a traditional restructuring but as an initiative tailored to Senegal's specific characteristics, IMF mission chief Mercedes Vera Martin confirmed that it does include "debt treatment." This has led to mixed reactions, with President Bassirou Diomaye Faye favoring a conciliatory approach, while opposition leader Ousmane Sonko has expressed reservations about debt restructuring, calling it a "disgrace."
Despite a narrowing fiscal deficit from 13.4% of GDP in 2024 to 6.4% in 2025, Senegal's bonds fell to record lows after the announcement, trading below 50 cents on the dollar or euro. Moody's recently cut Senegal's long-term foreign-currency debt rating to Caa2 from Caa1. The IMF-supported program is expected to catalyze additional financing from partners like the World Bank and the African Development Bank, while also requiring further financing assurances from Senegal's partners.
