Senegal has announced a recalculated gross domestic product resulting in improved debt metrics, a move the finance ministry has described as an attempt to give a more accurate picture of the economy as it grapples with a crisis over unreported debt.
The West African country announced in July it had begun the recalculation using an updated base year. That announcement came in a statement responding to a credit rating downgrade by S&P Global, in which the agency warned that the government’s debt-to-GDP ratio had jumped to almost 120% at the end of 2024.
Updating the base year that a country uses to calculate its economic output is an internationally accepted practice. It is meant to take into account new emerging industries and other developments, but it can raise questions among economists when it results in big debt-to-GDP ratio improvements.
Senegal’s GDP recalculation, published on Tuesday by the country’s National Agency for Statistics and Demography, updates the base year from 2014 to 2021. The new 2021 GDP figure is 17,316 billion CFA francs, up 13.5% from the previous estimate, and the new public debt figure for 2021 is 80%, down from 90.8%. The document does not give a more recent debt figure.
The adjustments reflect inclusion of emerging activities such as digital financial services, the oil and gas industry and cashew production, according to the document.
Credit rating agency S&P earlier this month downgraded Senegal’s long-term sovereign credit rating to “CCC+” from “B-“, citing its precarious debt position. It also placed Senegal’s ratings on “CreditWatch developing”, signalling that it could lower them if the government is unable to refinance its upcoming commercial maturities.
The finance ministry said in July that S&P debt figures had not taken into account the potential impact of the ongoing rebasing exercise.
The International Monetary Fund froze a $1.8 billion programme with Senegal last year after the discovery of the hidden debt, which the current government has blamed on the administration of former President Macky Sall. The IMF said in July that rebasing GDP was “not a prerequisite for progressing in our engagement” on a potential new programme. The Fund did not immediately respond to a request for comment on Wednesday.
