The International Monetary Fund on Wednesday called for Senegal to streamline tax exemptions and phase out costly energy subsidies as part of “urgent reforms” after an audit revealed misreporting of economic data.
The IMF suspended its existing $1.8 billion credit facility to the Western African nation pending a review of state finances, which confirmed last month that the debt and budget deficit were much wider than former President Macky Sall’s administration reported.
At the end of 2023, the total outstanding debt represented 99.67% of gross domestic product, a report from Senegal’s Court of Auditors said. That compared with a previously recorded figure of 74.41%.
“These findings point to serious lapses in budget controls and public financial reporting, underscoring the need for urgent reforms,” IMF mission chief Edward Gemayel said in a statement on Wednesday after concluding meetings with President Bassirou Diomaye Faye and other officials.
Priority steps to bring down public debt “include streamlining tax exemptions and phasing out costly, untargeted energy subsidies,” he said.
Senegal’s Finance Minister Cheikh Diba has said his country was hoping for a new IMF programme by June.
Gemayel, however, did not commit to that timeline in an interview on Monday with Reuters, instead saying a new programme could only be discussed once “we settle on the misreporting” – a point he reiterated in his statement on Wednesday.
He also said it was “too early to make that call” when asked if Senegal was heading for a credit event such as a debt restructuring, rescheduling or default.
Preliminary estimates put the central government’s debt at 105.7% of gross domestic product at the end of last year, with real GDP growth at around 6%, Gemayel said in his statement.
The IMF mission aims to determine how Senegal’s misreporting happened and what steps the government would take to avoid it in the future.
