NAIROBI – The government of Senegal and the International Monetary Fund have reached a preliminary agreement for a three-year loan package of 2.2 billion US dollars, unblocking funds frozen since the discovery of 7 billion in hidden debt by the old administration.
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The Ministry of Economy and Finance of Dakar stated that it has joined a “shared framework” to restore the sustainability of Senegalese public finances. The announcement caused a record drop in its foreign currency bonds, reflecting enthusiasm that will need to be assessed during implementation. The agreement, the IMF recalled in a note, remains subject to final approval by the Fund’s management and board and requires, among other conditions, the “necessary financial guarantees” from Senegal.
The hidden debt scandal
The IMF had blocked a 1.8 billion dollar program with Dakar when the government of the current leader, Diomaye Faye, revealed the existence of 7 billion in accumulated and hidden debt in the accounts by former president Macky Sall. The freeze from Washington excluded Dakar from international markets and forced the government to borrow on the domestic market, hindering a phase of growth driven by the change of leadership and the billion-dollar investments in energy resources discovered in onshore and offshore deposits in the country.
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The Fund praised the strength of the Senegalese economy, citing a 6.7% GDP increase in 2025 driven by oil production, inflation at 1.4%, and an expansion of non-hydrocarbon GDP at a rate of 4.7% year-on-year in the first quarter of the current year. Now the key reforms supported by the Fund should “restore the sustainability of public finances while protecting vulnerable households,” while the “fiscal strategy focuses on strengthening domestic resource mobilization and rationalizing expenditure […]”.
The agreement reached in Dakar represents a turning point in a saga lasting at least two years and resulting in both financial and political repercussions for Senegal. The approach to the debt crisis was one of the recurring frictions between the former top duo of Faye himself and his former prime minister Ousmane Sonko, divided between the more accommodating line of the former and the more stringent of the latter. Sonko himself, dismissed as prime minister and reemerged as leader of Parliament, has opened up to a debt restructuring.
