Senegal expects a budget deficit of about 7% of gross domestic product in 2025, according to government proposals seen by Reuters on Saturday, down from the 10% revealed in an audit that triggered a freeze on the country’s $1.9 billion IMF programme.
The International Monetary Fund package agreed in 2023 has been on hold since the audit uncovered larger debt and deficit figures than the previous administration had reported, sending yields on the West African nation’s dollar bonds soaring and triggering credit ratings downgrades.
The audit, ordered by newly elected President Bassirou Diomaye Faye, showed the deficit at the end of 2023 stood at more than 10% compared with the about 5% reported by the previous government.
Any new IMF programme or resumption of the existing one will not be possible before June 2025, Reuters has reported.
The budget proposals, expected to be examined by the country’s new parliament in the coming days, say Senegal will implement a “prudent” debt policy using traditional donors to finance projects in 2025 and the years to follow.
It will also seek to develop domestic financing and target a potential 1,500 billion CFA ($2.41 billion) domestic diaspora bond market, according to proposed budget.
The government, donors and investors are awaiting a final audit report from the court of auditors, which is expected in mid-December.
“The integration of the results of the Court of Auditors audit on public finances will lead to an upward revision of the outstanding debt and debt service, in particular in 2024 and 2025,” the government said.
It said in the budget proposal that given its current level of debt it plans to negotiate repayment terms with investors to spread out payments and make debt management more sustainable.
“This active debt management exercise will also concern issuance on the international market to smooth debt servicing, particularly for 2026 and 2027, in order to preserve debt sustainability margins and free up budgetary space,” it said.
Next year’s economic growth is seen at 8.8%, boosted by this year’s launch of oil production but hampered by a slowdown in secondary and tertiary activity, the government said.
