Senegal’s $11 Billion Hidden Debt Scandal Triggers Credit Downgrades and IMF Standoff

Senegal’s financial credibility has collapsed under the weight of a massive hidden debt scandal that has exposed billions of dollars in unreported liabilities, triggered multiple credit downgrades, frozen international lending programs, and sparked an increasingly contentious standoff between the West African nation’s new government and the International Monetary Fund over how to resolve the crisis.

The fiscal catastrophe, which authorities now estimate at over $11 billion in previously undisclosed debt, has pushed Senegal’s debt-to-GDP ratio to approximately 119 percent by the end of 2024—more than 40 percentage points higher than the previous administration had reported to international partners. The revelations have sent shockwaves through African financial markets, with Senegal’s international bonds plummeting to record lows and the country facing what credit rating agencies describe as a “substantial” risk of sovereign default.

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From Democratic Triumph to Fiscal Nightmare

The crisis emerged in the wake of Senegal’s historic March 2024 presidential election, when opposition candidate Bassirou Diomaye Faye, a 44-year-old former tax inspector, won a stunning victory campaigning on promises to restore economic sovereignty and root out financial mismanagement. Faye ran as a surrogate for firebrand opposition leader Ousmane Sonko, who had been disqualified from the race over a libel conviction involving the then-tourism minister but remained the dominant force in Senegal’s political opposition.

The election result represented a dramatic repudiation of former President Macky Sall’s 12-year administration, with voters responding to pledges from Faye and Sonko to cut debt, restore growth, and investigate what they characterized as years of economic mismanagement under the previous government. Upon assuming office, Faye appointed Sonko as prime minister, elevating his former political mentor to the position of day-to-day government leader.

In September 2024, Prime Minister Sonko ordered a comprehensive audit of Senegal’s public finances, accusing Sall’s government of lying to international partners and falsifying figures. What the audit revealed shocked economists, investors, and development partners alike: Senegal’s real debt-to-GDP ratio was closer to 100 percent, compared with the roughly 70 percent that had earlier been reported, revealing almost $7 billion in undisclosed borrowing that largely stemmed from failing to include the liabilities of state-owned enterprises.

On February 12, 2025, Senegal’s Court of Auditors published the long-awaited audit, confirming that Sall’s government had systematically understated key debt and deficit figures. The court’s findings detailed alleged data manipulation and corruption from 2019 to 2023, with debt projected to reach 114 percent of GDP by year-end 2024. The IMF endorsed the auditors’ assessment, calling it a “conscious decision” by the Sall administration to mask the true extent of Senegal’s debt.

The Credit Rating Cascade

The revelation of Senegal’s hidden debts triggered a devastating series of credit downgrades that have fundamentally altered the country’s access to international capital markets. On October 4, 2024, Moody’s became the first major rating agency to act, downgrading Senegal’s long-term ratings to B1 from Ba3, citing a significantly weaker fiscal and debt position than previously understood.

The downgrades accelerated through 2025 as the full scale of the fiscal crisis became apparent. In July, S&P Global Ratings cut Senegal’s long-term sovereign rating to “B-“, citing deepening debt strains. But the most severe blow came on November 14, 2025, when S&P downgraded Senegal’s long-term foreign currency sovereign rating to “CCC+” from “B-“ and placed the country on “CreditWatch developing”—a designation that signals further downgrades are likely if the government fails to refinance upcoming commercial maturities.

The CCC+ rating places Senegal deep within junk bond territory, in a category indicating “very vulnerable” credit quality with substantial default risk. “Public-sector borrowing needs for 2026 are elevated, as is the level and cost of general government debt and the starting point for the budgetary deficit, making public finances precarious,” S&P stated in its assessment.

The credit downgrades have had immediate and severe consequences for Senegal’s ability to access international capital. The country’s 2031 dollar bonds fell to $73.10 following Sonko’s rejection of IMF restructuring proposals, while securities maturing in 2031 and beyond traded at below 70 cents on the euro or the dollar—the threshold at which debt is considered distressed. Dollar bonds maturing in 2048 dropped to trade at just 58.06 cents, placing them among the biggest losers in emerging markets.

IMF Program Suspension and Restructuring Standoff

The crisis has been further complicated by the suspension of international financial support. In October 2024, the IMF froze a crucial $1.8 billion credit facility with Senegal following the debt revelations—a loss that represents roughly half of Senegal’s 2024 fiscal deficit and creates an enormous financing shortfall for public spending.

For months, Senegalese authorities have been negotiating with the IMF to restore the suspended program, which is essential for the government’s ability to meet its fiscal obligations and maintain basic public services. However, the negotiations have reached an impasse over a fundamental question: whether Senegal should restructure its debt as a condition for renewed IMF support.

Following a two-week IMF mission to Senegal that concluded on November 6 without agreement on a new lending program, IMF mission chief for Senegal Edward Gemayel stated: “We’re engaged and determined to move as fast as possible to help.” However, just days later, the fundamental disagreement between the IMF and Senegalese authorities became public.

On November 8, 2025, at a meeting of Pastef party officials in Dakar, Prime Minister Sonko revealed that the IMF had urged Senegal to carry out a debt restructuring—in which old debt would be swapped for new debt with longer maturities, lower interest rates, or a reduced debt stock, allowing the country to repay less. However, Sonko categorically rejected this proposal, declaring: “What the IMF is proposing is a restructuring of this abysmal debt that Macky Sall’s party has burdened us with. But we have been direct: that is out of the question. It would be a disgrace for our people.”

Sonko’s defiant stance reflects both political and ideological considerations. According to Paul Melly, a consulting fellow on the Africa programme at Chatham House, Sonko opposes an IMF-backed restructuring because “he doesn’t want to undermine his 2024 election campaign pledge to restore Senegal’s sovereignty.” The prime minister ran on a platform explicitly critical of international financial institutions and their influence over African economic policy, making acceptance of IMF-dictated restructuring politically toxic.

The IMF, for its part, has maintained that debt restructuring “remains a sovereign decision,” placing the ball firmly in Senegal’s court but making clear that without addressing the fundamental debt sustainability question, a new lending program cannot proceed.

The Daunting Fiscal Mathematics

The scale of Senegal’s fiscal challenge is staggering. The country faces approximately $4.6 billion in external debt service obligations in 2026, including $1.8 billion in commercial debt that must be refinanced. With gross financing needs estimated at nearly 29 percent of GDP for 2026—even higher than the official government figure of 26 percent—Senegal confronts what S&P Global characterizes as a precarious financial position.

The budget deficit, which reached 12.6 percent of GDP in 2024, must be dramatically reduced to restore fiscal sustainability. Prime Minister Sonko has pledged to slash the deficit to just 3 percent by 2027 through a combination of revenue enhancement and expenditure control measures. On August 1, 2025, Sonko announced a new economic recovery plan, pledging to fund 90 percent of it from domestic resources and avoid new external debt.

The government has implemented a series of new revenue measures, including levies on mobile money transactions, online gaming, tobacco, and alcoholic beverages. These taxes are designed to boost compliance and raise revenue while cutting reliance on external financing. On June 3, 2025, Sonko was quoted in local media saying Senegal would boost tax compliance to raise revenue and reduce dependence on foreign creditors.

However, the targets appear highly ambitious. S&P projects the fiscal deficit will remain elevated at 8.1 percent in 2026—well above government targets—suggesting significant implementation challenges lie ahead. IMF mission chief Gemayel has cautioned that the government’s 2026 budget is “very ambitious,” noting that the proposed tax increases are unprecedented in scale. “We’ve never seen this before,” he told officials. “So, they need to be careful.”

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Restricted Market Access and Rising Borrowing Costs

The credit downgrades and frozen IMF program have severely constrained Senegal’s ability to access international capital markets on reasonable terms. The government has been forced to rely primarily on the regional West African Economic and Monetary Union (WAEMU) bond market, which provides some financing but at significantly higher costs than concessional loans from international financial institutions or bilateral partners.

In September 2025, a government source told Reuters that Senegal planned to raise 100 billion CFA francs ($180 million) via a local sukuk by year-end and was preparing a benchmark international sukuk for 2026 to bolster its finances. However, accessing international markets has proven increasingly difficult as investor confidence has evaporated.

The contrast with regional peer Côte d’Ivoire is instructive. In July 2025, both Senegal and Côte d’Ivoire sought to issue five-year regional bonds; Abidjan’s offering was fully subscribed, but Senegal withdrew its tranche—an unmistakable sign that investor appetite for Senegalese debt had disappeared at acceptable interest rates.

Côte d’Ivoire-based banks have tripled their holdings of Senegalese debt to XOF 1.8 trillion, raising concerns that financial distress in Senegal could spill across the WAEMU regional market, potentially destabilizing the entire monetary union. The interconnectedness of West African financial systems means Senegal’s crisis poses systemic risks beyond its own borders.

In October 2025, a revised budget document showed Senegal has raised projected debt service payments over the next three years by about 3.2 trillion CFA francs ($5.8 billion), underscoring the mounting burden of servicing existing obligations at elevated interest rates. The country’s 2017 eurobond has seen yields climb from 8.6 percent to 12.8 percent over the past year, dramatically increasing the cost of rolling over debt.

Political Tensions Complicating Crisis Response

Adding another layer of complexity to Senegal’s fiscal crisis are growing tensions between President Faye and Prime Minister Sonko—the two men who rode to power together on promises of economic transformation. The power struggle between the president and prime minister threatens the government’s efforts to address the economic crisis, according to reporting by Semafor.

On July 10, 2025, Sonko accused Faye, his former political protégé, of failing to defend him from “unjust attacks” and “insidious obstacles.” The public rebuke came days after a Supreme Court ruling upheld Sonko’s defamation conviction, threatening a potential presidential run in 2029. In a country where the president is believed to have significant influence over the judiciary, many observers thought Faye could have intervened to halt the proceedings, according to Senegalese journalist Ousmane Ndiaye.

Sonko’s critical comments overshadowed Faye’s trip to the United States, where the president was attempting to pitch Senegal’s mineral wealth and political stability as an investment destination to U.S. President Donald Trump’s administration. The timing could hardly have been worse, undermining Faye’s efforts to attract foreign investment precisely when Senegal desperately needs capital inflows.

The tensions reflect both personal rivalries and differing views on how to navigate the economic crisis. Earlier this month, it emerged that Sonko’s party rejected Faye’s attempt to lead a revamped coalition, a move viewed as an effort by the president to consolidate power. Though Sonko serves under Faye constitutionally, he is widely viewed as a key power broker who shapes policy on his own terms. “Sonko was never going to be a subordinate prime minister,” Melly told Al Jazeera.

During its March visit to Dakar, the IMF took the unusual step of meeting directly with President Faye, bypassing Prime Minister Sonko—a rare signal of the crisis’s gravity and perhaps an attempt to establish a direct dialogue with Senegal’s constitutional head of state rather than the more ideologically rigid prime minister.

The Hydrocarbon Wildcard

Amid the fiscal gloom, there is one potential bright spot: Senegal’s nascent oil and gas sector. The country’s economic growth reached an impressive 12.1 percent in the first quarter of 2025, reflecting the immediate impact of hydrocarbon production from the Sangomar oil field, which became operational in June 2024, and the Greater Tortue Ahmeyim (GTA) gas project, launched in December 2024.

The government has revised down its 2025 GDP growth forecast to 6.8 percent from an earlier projection of 8.0 percent, but hydrocarbon investments continue to underpin economic expansion. Over the medium term, analysts expect GDP growth will settle at approximately 4.5 percent, supported by energy sector revenues.

However, oil and gas revenues are not a panacea for Senegal’s fiscal crisis. The government must demonstrate it can collect these revenues effectively, manage them transparently, and deploy them to reduce rather than fuel debt accumulation. Past experience with resource-dependent African economies suggests this is far from guaranteed, and skeptics point to the previous administration’s debt concealment as evidence that institutional governance remains weak.

November’s Parliamentary Mandate

One factor working in favor of Faye and Sonko is their strong democratic mandate. On November 21, 2024, provisional results showed the Pastef party had won 130 of 165 seats in legislative elections, securing a clear parliamentary majority that theoretically gives them the political capital to pursue promised reforms without obstruction from opposition parties.

This parliamentary majority should enable the government to pass the difficult fiscal consolidation measures necessary to address the crisis. However, the legitimacy that comes from electoral success also raises the stakes of failure. Voters who supported Pastef based on promises to restore economic sovereignty and improve living standards will not tolerate prolonged austerity measures or economic decline.

On November 9, 2025, Sonko asked the Senegalese people to accept “sacrifices” to ensure an economic recovery within “two to three years”—a stark acknowledgement of the difficulty ahead. “I am asking the Senegalese people for a sacrifice during two or three years, and I know you will accept this sacrifice,” Sonko told a meeting of his Pastef party near Dakar.

Whether Senegalese citizens will indeed accept years of sacrifice when they voted for change and improvement remains an open question that will test the government’s political durability.

The Road Ahead: Narrow Options and High Stakes

Senegal faces a series of interconnected challenges with no easy solutions. The country must restore investor confidence to access capital markets on reasonable terms, but confidence cannot be restored without credible fiscal consolidation and ideally IMF support. The IMF will not provide support without addressing debt sustainability, but the government has categorically rejected debt restructuring for political and sovereignty reasons.

This circular trap leaves Senegal with limited options. The government can continue attempting to fund itself through domestic revenue mobilization and regional markets, but this approach faces severe constraints given the scale of financing needs. Alternatively, the government could accept some form of debt restructuring, but this would represent a humiliating reversal of Sonko’s public commitments and potentially undermine the government’s political legitimacy.

A third possibility is that oil and gas revenues could provide sufficient fiscal space to avoid restructuring while gradually reducing the debt burden, but this scenario requires sustained high commodity prices, effective revenue collection, and prudent fiscal management—all uncertain propositions.

External grants fell more than 70 percent year-on-year by early 2025, reflecting donor wariness about Senegal’s fiscal management. The World Bank’s $115 million package to Senegal in late June reflected similar caution: just $10 million was earmarked for technical assistance, with the rest tied to measurable reforms—a sign that development partners want evidence of progress before committing significant resources.

S&P Global has indicated that Senegal could see its rating upgraded if two conditions are met: successfully refinancing upcoming commercial maturities, reducing immediate default risk; and implementing effective fiscal consolidation to control spending and reduce debt reliance. Both requirements are achievable in principle but will require sustained political will, technical capacity, and some cooperation from international partners.

Implications for West Africa and Beyond

Senegal’s debt crisis carries significance beyond the country’s borders. As Francophone West Africa’s second-largest economy and historically one of the region’s most stable democracies, Senegal has long been viewed as a developmental success story. The revelation that this success was built partly on concealed debt raises uncomfortable questions about fiscal transparency and governance across the region.

The crisis also illustrates the broader challenges facing African nations attempting to balance demands for infrastructure investment and service delivery against fiscal sustainability. Many countries face similar pressures to understate debt levels to maintain market access, creating risks of similar revelations elsewhere.

For the IMF and other international financial institutions, Senegal’s case highlights the difficulty of monitoring debt levels when governments systematically misreport data, particularly when state-owned enterprises operate with limited transparency. The organization’s insistence on addressing “misreporting” before proceeding with a new program reflects concern that without stronger institutional safeguards, any new lending could simply enable continued fiscal mismanagement.

The coming months will reveal whether Senegal can navigate its way through this crisis through domestic adjustment and regional support, or whether the country will be forced to accept IMF restructuring conditions despite the political costs. What is certain is that the path ahead requires difficult choices with profound consequences for Senegal’s economic future, political stability, and position within West Africa’s economic architecture.

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By: Montel Kamau

Serrari Financial Analyst

28th November, 2025