The International Monetary Fund said on Tuesday it has discussed various options with Senegal to address the country’s “significant debt vulnerabilities,” adding a decision on whether to overhaul the debt rests with the government.<\/p>\n
The IMF froze a $1.8 billion financial support package for the West African economy last year after a then new government disclosed hidden debts that are now estimated at more than $11 billion.<\/p>\n
Prime Minister Ousmane Sonko said over the weekend Fund officials were pushing for a restructuring of Senegal’s debt\u2014a move he said the government would not accept\u2014which sent the country’s international bonds sharply lower on Monday.<\/p>\n
A discussion of the policy choices that Senegal faces, during a staff mission to Dakar that ended last week, was part of the IMF’s role to offer expert analysis and advice for government consideration, a Fund spokesperson told Reuters.<\/p>\n
“The choice and specific nature of debt operations, and whether to seek to restructure debt obligations, remains a sovereign decision,” the spokesperson said.<\/p>\n
BONDS EXTEND THEIR RECENT LOSSES<\/strong><\/p>\n Senegal’s international bonds extended their losses on Tuesday, albeit by smaller intra-day margins, keeping them at lows last seen in July.<\/p>\n The 2031 bond fell by 0.7 cents on the dollar to bid at 71.77 cents, while the euro-denominated 2028 bond shed 0.65 euro cents to bid at 79, Tradeweb data showed.<\/p>\n Securing a financing programme from the Fund requires a government to set out a clear path to put its finances, including its debt burden, on a sustainable footing.<\/p>\n In August, Prime Minister Sonko unveiled a new economic recovery plan for Senegal, pledging to finance 90% of the initiative through domestic resources and avoid additional debt.<\/p>\n The government, however, still faces a precarious fiscal situation.<\/p>\n Rejecting the option of a debt restructuring constricts Senegal’s choices as it seeks to plug a gaping budget deficit and manage debt that is now estimated at 132% of GDP, said Tellimer’s Stuart Culverhouse in a research note.<\/p>\n “Without IMF-backed relief, the government must rely on domestic financing and deep spending cuts, risking social unrest,” he said.<\/p>\n DEBT OVERHAULS UNPALATABLE<\/strong><\/p>\n Zambia, Ghana and Ethiopia have all been forced to restructure their debts since 2020, but the drawn-out processes and economic hardship endured has made debt reworks unpalatable to other heavily indebted African governments.<\/p>\n Kenya, another debt strained country, has opted for costly trade-offs like tax hikes that sparked deadly protests last year.<\/p>\n “Senegal cannot afford the luxury of waiting until every governance and accountability reform is fully in place before securing a new IMF program,” said Abdoulaye Ndiaye, professor of macroeconomics and public finance at New York University.<\/p>\n","protected":false},"excerpt":{"rendered":" The International Monetary Fund said on Tuesday it has discussed various options with Senegal to address the country’s “significant debt vulnerabilities,” adding a decision on whether to overhaul the debt rests with the government. The IMF froze a $1.8 billion financial support package for the West African economy last year after a then new government […]<\/p>\n","protected":false},"author":1,"featured_media":18542,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"iawp_total_views":1,"jnews-multi-image_gallery":[],"jnews_single_post":{"format":"standard","override":[{"template":"1","parallax":"1","fullscreen":"1","layout":"right-sidebar","sidebar":"default-sidebar","second_sidebar":"default-sidebar","sticky_sidebar":"1","share_position":"top","share_float_style":"share-monocrhome","show_featured":"1","show_post_meta":"1","show_post_author_image":"1","show_post_date":"1","post_date_format":"default","post_date_format_custom":"Y\/m\/d","show_post_reading_time":"0","post_reading_time_wpm":"300","post_calculate_word_method":"str_word_count","show_zoom_button":"0","zoom_button_out_step":"2","zoom_button_in_step":"3","show_post_tag":"1","show_comment_section":"1","number_popup_post":"1","show_post_related":"1","show_inline_post_related":"1"}],"image_override":[{"single_post_thumbnail_size":"crop-500","single_post_gallery_size":"crop-500"}],"trending_post_position":"meta","trending_post_label":"Trending","sponsored_post_label":"Sponsored by","disable_ad":"0","source_name":"Reuters","subtitle":""},"jnews_primary_category":[],"jnews_social_meta":[],"jnews_override_counter":{"view_counter_number":"0","share_counter_number":"0","like_counter_number":"0","dislike_counter_number":"0"},"footnotes":""},"categories":[32,2362,27],"tags":[1163,1203,283],"class_list":["post-18541","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","category-featured","category-west-africa","tag-international-monetary-fund-imf","tag-ousmane-sonko","tag-senegal"],"_links":{"self":[{"href":"https:\/\/qiraatafrican.com\/en\/wp-json\/wp\/v2\/posts\/18541","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/qiraatafrican.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/qiraatafrican.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/qiraatafrican.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/qiraatafrican.com\/en\/wp-json\/wp\/v2\/comments?post=18541"}],"version-history":[{"count":0,"href":"https:\/\/qiraatafrican.com\/en\/wp-json\/wp\/v2\/posts\/18541\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/qiraatafrican.com\/en\/wp-json\/wp\/v2\/media\/18542"}],"wp:attachment":[{"href":"https:\/\/qiraatafrican.com\/en\/wp-json\/wp\/v2\/media?parent=18541"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/qiraatafrican.com\/en\/wp-json\/wp\/v2\/categories?post=18541"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/qiraatafrican.com\/en\/wp-json\/wp\/v2\/tags?post=18541"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}