• Senegal began GDP rebasing on July 15 after a credit downgrade and IMF program suspension

• Authorities aim to reflect real growth and ease debt ratio concerns

• Markets rebounded, but S&P warns of $10B in 2025 financing needs

Senegal’s Ministry of Finance announced on Tuesday, July 15, 2025, it began an exercise to revise its gross domestic product, or GDP. This move comes after a recent downgrade of its sovereign credit rating. While a technical step with potentially significant effects on the country’s debt ratios, it does not fully resolve doubts about the sustainability of its public finances.

This decision takes place in a tense environment. The International Monetary Fund (IMF) suspended its financial program with Senegal after the revelation last year of several billion dollars in undisclosed debt. Meanwhile, rating agencies, including S&P Global, have issued repeated warnings. On Monday evening, S&P Global downgraded the country’s rating to B-, citing a ballooning debt-to-GDP ratio nearing 120%.

An Underestimated Economy?

Authorities state that this ratio may be artificially inflated due to an outdated calculation base. “The GDP rebasing exercise has been underway for some time. It aims to better reflect the actual level of Senegal’s economic development,” the Ministry of Finance said, without providing specific figures.

The process involves updating the base year used to estimate GDP to incorporate new economic trends, such as digital sectors or anticipated oil production. This is a common international practice. However, it prompts caution among analysts, especially when used to improve debt indicators.

This is not Senegal’s first time undertaking such a revision. The country previously rebased its GDP in 2014, implemented in 2015, shifting the reference year from 1999 to 2014. At that time, the exercise resulted in nearly a 30% increase in GDP, which mechanically lowered debt ratios while integrating high-growth sectors like telecommunications and the informal economy.

The IMF’s Shadow

When asked about the move, the IMF stated the recalculation is not a condition for reinstating its program with Senegal. A spokesperson noted, “The timing of any possible Board meeting will depend on the resolution of the misreporting issue and an agreement on the policy measures to be taken.”

Markets reacted positively. Senegal’s international bonds, which had been hit hard following the debt revelations, rebounded. The 2033 maturity bond rose by 1.6 cents, reaching 66 cents on the dollar. This marks a notable recovery, though it remains well below par.

However, for investors, key challenges lie ahead. Rebasing GDP may boost statistics, but gross financing needs will remain high. S&P forecasts record financing needs in 2025, estimated at 5,700 billion CFA francs, or $10 billion. Debt service could potentially reach 8,800 billion CFA francs in 2026.

Fiacre E. Kakpo