A $13 billion debt shock, a looming IMF programme and mounting pressure over living costs are testing President Bassirou Diomaye Faye’s economic agenda.
By Jean–Pierre Afadhali
Senegalese authorities face an uphill task to stabilise the country’s economy, which has been rocked by the discovery of previously misreported debt, rising costs of essential commodities and services, amid hopes that the International Monetary Fund (IMF) will provide a $2.2 billion bailout programme.
President Bassirou Diomaye Faye recently met IMF Managing Director Kristalina Georgieva in Washington, DC, to discuss the programme being negotiated with the IMF. The Fund’s team visited the West African country in August. The deal is subject to approval by the IMF’s Executive Board.
Senegal reached a staff-level agreement with the IMF on a 36-month arrangement under the IMF’s Extended Credit Facility, amounting to approximately $2.2 billion.
In 2024, the Diomaye Faye government inherited previously misreported debt estimated at $13 billion. The previous government had substantially understated its budget deficits and public debt in official fiscal reports between 2019 and 2023. This was revealed after an audit commissioned by the new government.
Now, the country’s economic policymakers are seeking ways to deal with the current public debt while tackling the rising cost of living, which has pushed citizens onto the streets to demand reductions in the prices of food and other essential services.
Dr Aminata Touré, the High Representative of the Senegalese president, said in an interview with BBC Focus on Africa that the debt crisis has been challenging, but as a developing country, Senegal needs financing for investments and other development projects.
“We need to deal with health, with education, with employment for our youth, but at the same time we have to pay the debt,” Dr Touré explained in the interview.
Dr Touré also praised the ongoing IMF talks with her country.
“We were quite happy after two years of negotiations to be close to a deal with the IMF and, of course, as partners,” she said.
Despite hopes that the IMF deal will be approved and help the country cope with its financial challenges and obligations, rating agency S&P Global Ratings recently issued a negative outlook. The agency’s assessment reflects the country’s challenging financial situation and could make it harder for Senegal to manage its debt repayments. It could also affect the country’s access to affordable credit.
Negative rating
On September 4, 2026, S&P Global Ratings lowered its long-term foreign-currency sovereign credit rating on Senegal to ‘CC’ from ‘CCC+’ and its long-term local-currency sovereign credit rating to ‘CCC’ from ‘CCC+’. “The outlook on both ratings is negative. We affirmed both the foreign-currency and local-currency short-term ratings at ‘C’,” the agency said in a note seen by this publication.
However, in a recent report published on September 24, S&P Global Ratings said Senegal’s plan to restructure foreign-currency-denominated debt would not hurt rated banks in Sub-Saharan Africa.
“That’s because the banks are only exposed to local-currency debt and have limited exposure to Senegal sovereign debt,” the agency said.
IMF data on Dakar’s debt show that the West African country owes the following creditors approximately: the World Bank, $2.98 billion; the African Development Bank and other African development institutions, $1.16 billion; the IMF, $991 million; China Exim Bank, $1.23 billion; the Agence Française de Développement (AFD), $872 million; India Exim Bank, $124 million; Eurobond investors, $4.05 billion; and commercial and other international creditors, $1.27 billion.
In general, a credit rating is used by sovereign wealth funds, pension funds and other investors to assess the creditworthiness of a country. It can therefore have a significant impact on a country’s borrowing costs.
Following recent talks between the Senegalese president and the IMF managing director, Georgieva said: “I was delighted to welcome President Bassirou Diomaye Faye to IMF Headquarters today and expand our constructive dialogue on Senegal’s economic policy priorities.”
The managing director added: “I expressed my deep appreciation to the President and his team for our strong partnership as we work expeditiously toward a new Fund-supported programme.”
According to Georgieva, “Senegal has made encouraging progress in strengthening the economy and improving the outlook for investments, jobs and growth.”
Defaulting is not an option
According to Dr Touré, whether the debt was underestimated or hidden, Dakar will have to repay it.
“There is a whole discussion about hidden or not, but a debt is very difficult to hide, because you have to sign the debt contract,” she explained. “Maybe that was an issue of accounting, that’s what it was, but hidden or not, the debt is here and we have to pay it.”
Amid the rising cost of living, the Senegalese government says discussions with the IMF over a bailout took a long time because the West African country did not want to implement the harsh measures aimed at reducing public expenditure associated with structural adjustment programmes.
“We have in mind the dark days, dark years of adjustment, structural adjustment, that our countries went through,” Dr Touré said in the interview with the BBC.
“I think we are close to a very balanced agreement that preserves our social programmes,” the High Representative of President Diomaye said.
Meanwhile, consumers in the West African nation continue to bear the brunt of the rising cost of living. Some have started campaigns to denounce rising food prices and other expenses.
“The slice of fish that used to cost CFA 2,500 ($4.35) now costs more than that, almost CFA 4,000 ($6.95). It scares us because we don’t have the salary to cope with this lifestyle. So, it’s normal that it worries us a little bit,” said Mahata Babi, co-founder of the 30 Days for a Fair Price campaign, a local movement that advocates for a reduction in the cost of living.
Other citizens have taken to social media to denounce rising inflation as they struggle to afford basic food commodities.
The IMF managing director further said, after talks with President Diomaye, that the Bretton Woods institution is ready to support Dakar’s reforms.
“We are fully committed to supporting the authorities’ reform efforts as they pursue their development ambitions. I am confident that, by working together, we can deliver lasting results for the people of Senegal.”
