Senegal’s sovereign dollar bonds took a hit on Friday after a government audit unveiled significantly larger debt and deficit figures than previously reported by the former administration, sparking investor concern. Tradeweb data showed the bonds maturing in 2033 fell by 2.3 cents, landing at a bid price of 84.54 cents on the dollar by 0720 GMT, while the 2048 bonds saw a sharper drop of 2.42 cents. The decline reflects market apprehension following the release of the audit’s findings.
The International Monetary Fund (IMF) responded to the news, confirming that the Senegalese government had shared initial results from the audit. The IMF expressed approval of the transparency demonstrated by the new administration under President Bassirou Diomaye Faye and announced that it is working closely with the government to determine the most appropriate course of action moving forward.
The audit, ordered by President Faye, found that by the end of 2023, Senegal’s fiscal deficit had surged to over 10%, more than double the 5% deficit reported by the previous administration. Economy Minister Abdourahmane Sarr, in a statement late Thursday, emphasized the administration’s commitment to fiscal transparency and noted that the findings had prompted the government to hold off on requesting a disbursement from the IMF in July under a $1.8 billion, three-year lending program. This decision was made to ensure compliance with IMF regulations, as the deficit levels now exceed the thresholds set by the Fund.
The government has reassured stakeholders that it is engaged in ongoing discussions with the IMF to chart a way forward, with a focus on maintaining fiscal discipline while managing the newly revealed economic challenges.
