Senegal is making strides towards fiscal recovery as government proposals reveal a reduced budget deficit of around 7% of the gross domestic product for 2025. This improvement comes in the wake of an audit that uncovered discrepancies in debt and deficit figures, leading to a freeze on the country's $1.9 billion IMF program.
President Bassirou Diomaye Faye's administration ordered the audit, which unveiled a deficit of over 10% at the end of 2023, significantly higher than the 5% previously reported. The IMF program is expected to remain on hold until at least June 2025, pending further developments.
The new budget proposals, set to be reviewed by the parliament, outline Senegal's strategy to maintain a "prudent" debt policy. This approach includes securing funding from traditional donors, exploring domestic financing options, and targeting a potential 1,500 billion CFA domestic diaspora bond market.
As stakeholders await the final audit report from the court of auditors in mid-December, the government anticipates an upward revision in outstanding debt and debt service for 2024 and 2025. To manage its debt effectively, Senegal plans to negotiate repayment terms with investors, possibly issuing securities on the international market to ensure sustainable debt management.
Through proactive debt management measures, Senegal aims to spread out payments, enhance debt sustainability, and create room in the budget for essential expenditures. By taking these steps, the government seeks to navigate the current financial challenges and pave the way for economic stability and growth in the years ahead.