IMF mission to Senegal ends without new lending programme but talks are ongoing

The International Monetary Fund says its mission to Senegal has ended without a new lending programme but an official said the body is planning to finalize one soon.

Mission Chief Edward Gemayel told journalists that talks would continue in the coming weeks and that Senegal was serious about getting its debts in check after discovering billions in debt that the previous administration had not reported to the IMF.

“We still need some more discussions. Hopefully, in the coming weeks we can reach a conclusion,” Gemayel said.

Debt misreporting waiver

The Fund froze Senegal’s previous $1.8 billion lending programme last year after the then-new leaders revealed the hidden debts, which have since ballooned to more than $11 billion. The Fund estimates that at the end of last year, total public sector debt stood at 132 percent of GDP, including 4 percent in domestic expenditure arrears.

The country is now seeking a fresh lending programme, but also needs the IMF board to approve a crucial debt misreporting waiver.

Gemayel said the Fund was working on the waiver in tandem with the new lending programme, though the two may not go before the board at the same time.

Senegal’s budget targets the 2026 deficit at 5.4 percent of GDP, a further reduction from 7.8 percent this year and 13.4 percent of GDP in 2024. “While the ambition is laudable,” he said later in a statement, “the very high tax yield assumed from the announced measures poses a significant risk, underscoring the need for more conservative projections.”

The country started talks on a new programme last month and an IMF team has been in Dakar since October 22.

Restructure or re-profile

Gemayel told reporters there was still outstanding technical work on the debt sustainability analysis, which will determine what Senegal must do to secure the programme – including whether it might need to restructure debts.

“Regarding debt, Senegal intends to continue implementing conventional active debt management operations, both on domestic and external debt, in order to reduce debt-related vulnerabilities,” Senegal’s finance ministry said in a statement.

Investors are split on whether the Fund might tell Senegal to restructure its debt, which might involve losses for creditors, or to re-profile it, which would extend the maturities without reducing the principal or interest.

“They are very serious about putting in place the consolidation path, which is very aggressive in our view. That shows you how much they are determined to bring debt on a downward trajectory,” the IMF official said.