Africa-Press. Senegal is struggling to contain the repercussions of a crisis involving undisclosed debts that came to light after the arrival of President Bassirou Diomaye Faye to power, marking one of the largest financial crises the country has faced in years.
Official estimates indicate that the actual public debt has risen to about 132% of GDP by the end of 2024, following the revelation of financial obligations that were not included in previous government data.
The discovery of these hidden debts has led to the suspension of a $1.8 billion financing program with a financial institution, while the government is negotiating with the institution to rebuild trust and reach a new framework for financial cooperation.
According to Senegalese authorities, the financial review conducted by the new government uncovered loans, guarantees, and obligations that had not been fully reported in previous years, prompting international institutions to reassess the true financial situation of the country.
This comes at a time when Senegal is facing additional pressures due to rising debt service costs and increased fuel subsidy expenses. The Senegalese Minister of Finance, Sheikh Diba, recently warned that the fuel subsidy bill could exceed the approved budget allocations by as much as $2 billion if global oil prices continue to rise.
Despite the crisis, the government asserts that it does not intend to resort to restructuring sovereign debt at this time, but instead aims to restore fiscal discipline, improve public revenues, and complete negotiations with the financial institution. It is also counting on the returns from new oil and gas projects to support public finances in the coming years.
Analysts believe that Senegal’s success in overcoming the crisis will largely depend on the speed of reaching a new agreement with the financial institution and the government’s ability to implement necessary financial reforms.
