Senegal

Since discovering UD7bn of underreported debt issued by the previous Macky Sall Administration on the back of the IMF program between 2020 to 2024, the Senegalese Government led by President Faye failed to reach an agreement with the IMF in late 2025. Debt is now estimated to have been at 132% of GDP at end-2024, compared to the previously reported 80%. The 2031 Eurobond was at its lowest level in December 2025, 61 cents to the dollar, as concerns about the payments to external creditors in 2026 increased. S&P was the latest to downgrade the country to CCC+. International bondholders, as well as rating agencies, consider that the government cannot maintain current levels of spending while servicing all of next year’s debt. However, the government considers that the substantial increase in revenues from new oil and gas revenues should support its plan. 40% of the debt is owed to multilaterals, while China and France are their main bilateral creditors, holding 40% and 30% respectively. The fragmentation of bondholders would slow down the process in case of a restructuring, as experienced in the cases of Ethiopia or Ghana.  Out-of-the-box ideas have been floated, including currency swaps to Chinese-issued USD-debt to saving on debt service – similar to Kenya – or debt-for-nature swaps.

Senegal’s fiscal position remains weak despite improvements. The overall balance stood at -13.4% in 2024 and it is projected to decrease to -7% in 2025 and to -5% in 2026. The external gap is also slowly being closed from -12.5% in 2024 and projected to reach -5% in 2026, supported by increased exports. Senegal is heavily dependent on imports of food and crude oil and is thus exposed to international commodity price developments. Import-price volatility along with adverse domestic weather conditions preserved a structural trade deficit for a long time.

Senegal remains in the low human development category of the HDI composite, given its low literacy rate (just above 40%), relatively low life expectancy (68) – though this is higher than the rest of the Sahel – and low GDP per capita. In the early days of the Faye administration, economic policy has turned around two pillars: sovereignty and growth. Motivated by strong colonial hardships, Senegal’s new leadership aims to reduce dependence on foreign aid and creditors. The administration wants to gain independence on food and energy imports while boosting growth. In an ambitious 25-year economic and social development plan, Dakar’s government aims to finance investment via hydrocarbon revenues, while promising fiscal discipline. The plans include increasing agriculture and fertilizer production, as well as boosting manufacturing by processing the country’s raw materials in-house.

Security concerns have grown over the last few months as Senegal’s main exporting market, Mali, has experienced the resurgence of an Islamist terrorist group. In September 2023, the terrorist group imposed a fuel blockade on Mali, carrying out attacks against fuel trucks on the border with Senegal and Cote d’Ivoire, and claimed control of the border regions. It is not clear how long the situation could persist and how long the Malian state can avoid collapse, which could bring security threats into Senegal, as well as migration pressures.