• Senegal raised $2.25 billion regionally in H1 2025 after IMF funding froze over $7 billion in hidden debt
• Public debt hit 119% of GDP; debt service costs rose sharply despite strong economic growth
• Government shifted to longer-term bonds and plans fiscal reforms in a July recovery plan

Senegal has significantly increased its reliance on the regional debt market after losing access to international markets. According to data from regional agency UMOA-Titres, Dakar raised 1,262.5 billion CFA francs, or approximately $2.25 billion, solely through public securities auctions in the first half of 2025. This represents a 267% increase compared to the 343.46 billion CFA francs raised during the same period a year earlier.

This heavy dependence on the domestic market comes as disbursements from the International Monetary Fund (IMF) remain frozen. This freeze followed the suspension in March 2024 of a $1.8 billion program agreed with the institution. The decision was made after the revelation of about $7 billion in undisclosed liabilities, including arrears owed to suppliers and off-balance-sheet Public-Private Partnership (PPP) commitments.

As a result, the country’s public debt was reassessed at 119% of GDP, a sharp contrast to the officially reported 75% in 2023. The budget deficit for 2023 was also revised upward, reaching 12.3% of GDP, with a projection of 7.8% for 2025, according to the latest forecasts.

Shifting Debt Strategy and Investor Appetite

To address this situation, Senegal has favored medium- and long-term instruments on the regional market. Nearly 70% of the funds raised, equivalent to 879.43 billion CFA francs, came from Treasury bonds (OAT), reflecting a desire to extend debt maturity. This marks a shift from previous years, which were dominated by short-term Treasury bills (BAT). On June 27, a three-year OAT issue raised 205 billion CFA francs at a marginal rate of 7.53%. Investor appetite for Senegalese paper remains strong despite rising sovereign risk.

Dakar is actively engaging on all fronts in the regional financial market. Between March and April, the country completed a public offering operation, raising 400 billion CFA francs through the syndicated window of the regional financial market. A new operation was launched on the same platform at the end of June. So far, regional investors have responded quite well, with issues regularly oversubscribed.

Budgetary Pressures Amidst Economic Strengths

However, this momentum masks growing budgetary tensions. Debt servicing costs jumped by 44.5% in the fourth quarter of 2024 and by 23.98% in the first quarter of 2025, reaching around $1.4 billion over nine months, according to official data. This increase is shrinking fiscal space available for social and investment spending. At the same time, some economic fundamentals remain strong. GDP grew by 12.1% year-on-year in the first quarter of 2025, driven by initial hydrocarbon exports. Tax revenues rose by 12.2%, with an 11.6% increase in taxes and a 24.4% rise in non-tax revenues.

While awaiting a new recovery agreement with the IMF, the government is intensifying transparency efforts. An economic recovery plan is expected in early July, with targeted reforms on budget governance, revenue mobilization, and possible debt restructuring. According to several economists, credible consolidation, including broadening the tax base, cutting state spending, and fostering export-oriented industrial transformation, has become unavoidable.

Fiacre E. Kakpo