Economic Recovery Strategy Unveiled by Senegal's Government During Debt Crisis
Senegal, currently navigating a complex fiscal environment, is preparing to announce a "turnaround plan" in the coming days. The West African nation is grappling with high public debt, elevated budget deficits, and ongoing institutional reforms, all while under investor concerns and International Monetary Fund (IMF) scrutiny.
The country's financial woes are evident in the key indicators. Barclays projects Senegal’s public debt could reach 119% of the GDP for 2024, a significant increase that signals heightened financial risk. This outlook is substantially worse than previous expectations, with analysts now estimating it could take nearly a decade for Senegal to reduce its debt burden below 100% of GDP.
The 2025 budget deficit has been revised up to 7.82% of GDP from an initial forecast of 7.08%, mainly due to reduced revenues and a downward revision in nominal GDP. Over the medium term (2025–2028), deficits are expected to average around 6.5% of GDP. Real GDP growth expectations for 2025 have been downgraded to 8.0% from 8.8%, with exclusions for hydrocarbons, growth only projected at 3.8%.
Senegal's vulnerability to exchange rate shocks has increased, with the share of public debt denominated in foreign currencies rising from 63% in 2023 to 71% in 2024. Additionally, an audit in September 2024 revealed that prior administrations had misreported debt and deficit figures, with budget deficits exceeding 10% of GDP from 2019 to 2023—more than double the reported numbers. This led to the IMF suspending its program with Senegal at the end of 2023.
Since President Bassirou Diomaye Faye took office in March 2024, the government has embarked on sweeping institutional reforms to reset governance and improve fiscal transparency. Senegal’s National Assembly approved a supplementary budget law in June 2025, tightening public finances but also reflecting a broader slowdown in macroeconomic indicators.
The IMF has confirmed its commitment to Senegal, but discussions on a new loan arrangement remain ongoing. The prior suspension of IMF disbursements adds pressure for credible reforms and transparent debt management.
In a live social media broadcast, Prime Minister Ousmane Sonko announced the imminent presentation of a "turnaround plan." The government's debt issues have been escalating since the publication of the Court of Auditors' report in February, and the "turnaround plan" is expected to address the State's spending and the country's debt crisis.
Prime Minister Sonko promised to explain the expectations from the people, the State's spending reduction strategies, and the way forward with partners in the upcoming "turnaround plan." However, the details of the plan remain undisclosed, raising fears of an austerity program. The initial hidden debt of the Senegalese government was reported to be $7 billion in February, and the public debt of Senegal was previously unknown to be as high as 119% of GDP for 2024.
As Senegal unveils its "turnaround plan," the focus remains on whether the country can successfully navigate its debt crisis and achieve sustainable economic growth. The path forward is complex, with lingering transparency issues and external risks complicating the process. Nonetheless, the government's commitment to reform and the IMF's ongoing engagement offer a glimmer of hope for a brighter future.
The turnaround plan announced by Prime Minister Sonko is expected to address Senegal's spending and debt crisis, as the country's financial woes are evident in increasing public debt and elevated budget deficits, with Barclays projecting that Senegal’s public debt could reach 119% of GDP for 2024. Politicians, economists, and the International Monetary Fund (IMF) are closely watching this plan unfold, as it could significantly impact Senegal's future business and finance sectors as well as its general news landscape.
