Senegal, IMF reach new $2.2bn deal

The International Monetary Fund has reached a staff-level agreement with Senegal on a new $2.2 billion debt programme, following a suspension of a prior deal after the discovery of previously unreported debt.

The 36-month arrangement, which still requires IMF executive board approval, is meant to support the country’s economic and financial reform programme for the 2026-2029 period. The IMF said the agreement would require “decisive corrective measures” to address the past misreporting of data.

In 2024, Senegal’s current government, formed after an opposition electoral victory, accused the former administration of ex-president Macky Sall of concealing the true extent of the country’s budgetary situation. As a result, the IMF suspended a $1.8 billion programme agreed in 2023. The IMF later revealed that the 2023 budget deficit was 12.3% of GDP, when the previous government had stated it was 4.9%.

Senegal’s total public sector debt was estimated at 132% of GDP at the end of 2024, according to the IMF, making it one of the most indebted countries in sub-Saharan Africa. However, the fiscal deficit narrowed sharply from 13.4% of GDP in 2024 to 6.4% in 2025, driven largely by spending cuts.

The agreement comes amid political tensions in Senegal. President Bassirou Diomaye Faye sacked Prime Minister Ousmane Sonko in May over disagreements on policy, including the IMF programme. Sonko was later elected speaker of the National Assembly, a role that could complicate the president’s ability to push through IMF reforms.

Moody’s downgraded Senegal’s long-term foreign-currency debt rating to Caa2 from Caa1 last week, amid the negotiations.

SOURCE: AP