Senegal has reached a staff-level agreement with the International Monetary Fund (IMF) on a new $2.2 billion financing programme, marking a major step towards resolving the West African country’s deepening debt crisis.
The agreement, announced after IMF officials completed discussions with the Senegalese government on September 1, provides for a 36-month Extended Credit Facility arrangement worth approximately $2.2 billion. However, the programme still requires approval from IMF management and the Executive Board before financing can be formally released.
The agreement comes nearly two years after the IMF suspended an earlier $1.8 billion programme following the discovery of billions of dollars in previously undisclosed public debt.
The hidden debt was uncovered after President Bassirou Diomaye Faye’s government took office in 2024. A review of the country’s finances revealed that the previous administration had significantly underreported borrowing and the size of the country’s fiscal deficit.
The IMF estimates that more than $11 billion in previously unreported debt was involved, while some analysts have estimated the figure could be closer to $13 billion. The revelations pushed Senegal’s debt burden to approximately 132 per cent of gross domestic product (GDP) by the end of 2024.
The discovery severely damaged confidence in Senegal’s finances and forced the government to seek alternative sources of funding after the IMF suspended its previous programme.
Senegal increasingly relied on regional financial markets and domestic borrowing to finance government spending. However, the strategy became more difficult as borrowing costs increased and concerns about the country’s ability to repay its debts grew.
The new IMF programme is intended to help the government restore financial stability and rebuild confidence among international investors and development partners.
According to the IMF, Senegal’s reform programme will focus on restoring macroeconomic stability and debt sustainability, reducing fiscal and external vulnerabilities, increasing social spending and supporting private-sector-led economic growth.
The government has also launched a debt-treatment plan aimed at restructuring parts of the country’s external debt.
Senegal’s Ministry of Economy and Finance said the debt plan is intended to restore a sustainable debt profile and create more room for public investment in priority sectors.
The government has agreed to use an enhanced version of the G20 Common Framework as part of its efforts to address the debt problem. The framework is designed to bring official and private creditors together to help countries facing serious debt difficulties.
The restructuring process will be closely watched by investors because Senegal has billions of dollars in outstanding international bonds. Reuters reported that Senegal had more than $7 billion in international bonds outstanding at the end of last year.
The country’s financial difficulties have also affected its international bonds. Senegalese bonds initially fell sharply following the announcement of the debt-treatment plan, reflecting concerns among investors about potential losses.
However, the market showed some signs of recovery on Wednesday. Senegal’s euro-denominated bonds rebounded after the IMF agreement offered investors greater clarity about the country’s plans.
Despite the agreement, Senegal still faces significant economic challenges.
The country’s economy grew by 6.7 per cent in 2025, helped by oil production entering its first full year. However, growth outside the hydrocarbons sector was considerably weaker.
The IMF said non-hydrocarbon growth slowed to 2.2 per cent in 2025 before rebounding to 4.7 per cent year-on-year during the first quarter of 2026.
The IMF also expects economic growth to slow to around 2.7 per cent in 2026, according to Reuters, as higher energy costs and other economic pressures weigh on activity.
The government therefore faces the difficult task of reducing its debt while protecting ordinary citizens from the effects of austerity.
Under the proposed programme, Senegal plans to increase domestic revenue collection and streamline government spending. Authorities have also promised to strengthen social safety nets, including targeted cash transfers to vulnerable households.
Another major priority will be improving transparency in public finances.
The hidden-debt scandal exposed serious weaknesses in Senegal’s system of debt reporting and financial oversight. The IMF has therefore demanded stronger debt management, improved monitoring of government arrears and better oversight of state-owned enterprises.
The Fund has also said that Senegal must take “decisive corrective actions” to address the earlier misreporting before the new programme can receive final approval.
The agreement has also had political implications.
President Faye’s government has faced disagreements over how the debt crisis should be handled, particularly with former Prime Minister Ousmane Sonko, who had previously opposed debt restructuring.
Sonko is now president of Senegal’s National Assembly, giving him significant political influence over the government’s reform programme. Analysts therefore expect domestic politics to remain an important factor as Senegal implements the measures required under the IMF agreement.
If approved, the IMF programme could also unlock additional financial assistance from institutions such as the World Bank and the African Development Bank.
The IMF expects its programme to help catalyse financing from international development partners, providing Senegal with additional resources as it works to stabilise its finances.
For President Faye’s government, the agreement represents an important opportunity to restore credibility after the hidden-debt scandal.
However, the difficult part will be implementation. Senegal must balance debt reduction and fiscal reforms with the need to maintain public services, protect vulnerable citizens and support economic growth.
The IMF agreement is therefore not an immediate solution to Senegal’s financial problems. It is the beginning of a long reform process that will require cooperation between the government, creditors, international institutions and Senegalese citizens.
As the IMF’s Executive Board considers the proposed programme, attention will now turn to whether Senegal can successfully implement the reforms and restructure its debt without placing excessive pressure on its population.
