Senegal’s government has uncovered $7 billion in previously undeclared loans contracted by the former administration, raising alarm over the country’s fiscal transparency and debt sustainability.
According to officials, the hidden liabilities will push debt servicing costs to a staggering 5.5 trillion CFA francs in 2026 – significantly above the initially projected 4.9 trillion. Analysts say the discovery could have lasting economic and social repercussions, potentially derailing Senegal’s development agenda.
Mounting Pressure on Public Services and Citizens
Financial expert Arame Ndao warned that the fallout would “not be abstract” but would be felt across the daily lives of ordinary citizens.
“The consequences will not be abstract; they will be felt in the daily lives of the majority of the population,” she told Allen Dreyfus.
Ndao said essential sectors, such as healthcare, could face severe budget cuts, resulting in drug shortages and outdated hospital equipment. Education could also suffer, with larger class sizes and deteriorating infrastructure, while the government may turn to higher taxes to bridge the fiscal gap.
“To generate revenue and service its debts, the government will inevitably seek to increase its income,” she noted, adding that this would involve broadening the tax base and raising existing tax rates such as VAT, income tax, and corporate tax.
Risk of IMF Intervention and Ratings Downgrade
Faced with tightening finances, Ndao warned that Dakar may have little choice but to seek a new deal with the International Monetary Fund (IMF).
“Senegal may be forced to sign a new agreement with the IMF to obtain financial assistance and restructure its debt,” she said. “In exchange, the IMF would impose a rigorous austerity plan, with specific conditions regarding the reduction of the budget deficit.”
Such measures could undermine key sectors, such as agriculture and food security, she cautioned. Subsidies for seeds and fertilisers, and funds for agricultural modernisation, could be cut – slowing economic growth and worsening unemployment.
“If public investment declines, economic growth slows, which mechanically reduces future tax revenues, creating a vicious cycle,” she explained.
Ndao added that the debt scandal could damage Senegal’s sovereign credit rating, potentially increasing borrowing costs and limiting future access to capital markets.
“This situation will exert significant negative pressure on Senegal’s rating and restrict and increase its future access to credit,” she said. “The country risks entering a vicious cycle where the cost of debt increases, further burdening future debt servicing.”
Analysts say the liquidity crunch expected in 2026 poses a major test of Senegal’s financial resilience. “Even if the country is solvent in the long term, the peak in debt repayment in 2026 poses an immediate liquidity problem: will it have enough cash in 2026 to meet this deadline?” Ndao asked.
With global interest rates still volatile, experts warn that Senegal’s ability to refinance its maturing debt could depend on investor confidence.
“If investors deem the risk too high, they could simply refuse to subscribe to new Senegalese bond issues,” Ndao stated. “The country would then be unable to borrow on the markets to refinance its maturing debt.”
