Senegal is facing liquidity challenges, with its debt reaching 107% of GDP. The government has pledged reforms to ensure greater transparency, and talks are underway about restructuring local bank debt. At the IMF, officials have expressed support for the country, with ongoing efforts to find solutions to stabilize the situation.

Senegal’s international bonds are holding steady on the market, despite a downgrade by Moody’s. As of the week of February 21, 2025, four of Senegal’s Eurobonds tracked by the Ecofin Agency are showing an increase in value, signaling that investor sentiment toward the country’s international debt is not as negative as expected. The Eurobond with the nearest maturity date (2028) is offering an 8.7% return for investors, reflecting the risk they’re taking.

For the other three international loans, expected returns have stabilized around 10%. While the spread above initial borrowing rates remains high, it’s still far from the 12.7% yield Gabon recently secured when refinancing one of its Eurobonds. In Senegal, the country’s debt-to-GDP ratio is now estimated to be 107%, compared to just 57% on average for sub-Saharan Africa.

In 2025, Senegal is set to pay about $21 million in interest on its four Eurobonds, most of which will be due in the first half of the year. Despite this, Moody’s has warned that the government may face liquidity challenges. The initial 2025 finance law, which will be revised, already projected a financing gap of around 20% of GDP, with nearly 12.7% (about CFA2,900 billion) allocated for debt repayment.

A report by the Court of Auditors also revealed a debt of nearly CFA2,500 billion ($4 billion) owed to various local banks, with short- and medium-term maturities. By 2028, Senegal will also need to either repay or refinance a $1 billion Eurobond.

Despite these challenges, the continued confidence in Senegal’s market shows that the government, under Ousmane Sonko, is demonstrating its ability to find solutions that won't severely harm investor interests. Senegal’s authorities have committed to more transparency and reforms aimed at preventing discrepancies in debt figures from happening again.

Internally, sources close to the process indicate that discussions have already started on rescheduling the maturities of local bank debt, with more talks in the works. The IMF, which could act as a last resort for concessional support, has expressed its ongoing commitment to Senegal and its challenges.

According to sources close to the institution, the next few months will be critical, and teams are continuing to learn from past events as they work towards new arrangements. Given the urgency, the government and the IMF are working under pressure to achieve quick results.

While Moody’s has forecast difficulties for the Senegalese government, it has not commented on the private sector’s resilience. On the ground, the economy shows positive signs. Although companies saw a 2.68% decrease in value-added in 2024, according to the National Statistics Agency, the pace of price increases has slowed at the start of 2025, and production costs appear to be stable.

However, more will be needed for the government to fulfill its promises of change for a population of 18.7 million, half of whom are under the age of 19.