Senegal’s $1.8 billion aid program with the International Monetary Fund (IMF), secured in 2023, is currently on hold, necessitating a renegotiation of the agreement. Finance Minister Cheikh Diba announced that the government aims to establish a new agreement by the first quarter of 2025.
During the annual IMF meetings in Washington, Diba emphasized that an audit revealing a larger debt and budget deficit than previously reported has prompted the need for a revision of Senegal’s program with the IMF. “We are in discussions with the Fund,” he stated, underscoring the urgency of updating the existing terms.
The scheduled payment of 338 billion CFA francs for this year has been postponed to 2025. Diba acknowledged the implications of the audit, explaining, “We were aware of the consequences, but upon discovering significant discrepancies in the figures reported to the Fund, we recognized the need to correct them.”
The audit revealed that the actual budget deficit exceeds 10% of GDP, nearly double the initial estimate of 5.5%. This disclosure has already resulted in Moody’s downgrading Senegal’s credit rating further into the speculative category, with the possibility of additional downgrades looming.
Commissioned by newly elected President Bassirou Diomaye Faye, the audit highlighted concerning statistics regarding the last five years of former President Macky Sall’s administration, indicating a debt-to-GDP ratio exceeding 80%, significantly higher than the previously announced 73%, as confirmed by an independent IMF review.
Diba clarified that funds already disbursed will not need to be repaid, stating, “This would have been necessary if we had attempted to hide the facts and were discovered. In this case, Senegal conducted an audit and returned to the IMF with accurate data.”
Furthermore, the government has launched a review of contracts in the natural resources sector. Diba remarked, “We cannot change the rules of the game mid-play, but the state has the right to ensure that contracts adhered to the mining and oil regulations in place at the time.” This review coincides with Senegal’s emergence as a significant oil and gas producer.
Major projects are on the horizon, including the $4.8 billion GTA liquefied natural gas project led by BP and Kosmos Energy, expected to begin this year, and the Sangomar oil development operated by Woodside Energy, which has been in production since June. These initiatives are projected to significantly enhance the country’s economic growth, with estimates of 6% for this year and over 10% in 2025.