Senegal's President Basirou Diomaye Faye, poses for a photo, prior to the start of the ECOWAS meeting, in Abuja, Nigeria, Sunday, Dec 15, 2024. -

Senegal

An IMF mission arrives in Dakar this week to restart talks with Senegal after a four-month pause, as the country grapples with a deepening fiscal crisis, mounting debt concerns and growing uncertainty over its economic outlook.

The International Monetary Fund (IMF) is set to resume discussions with Senegal during a mission to Dakar running through Friday, marking the first formal engagement between the two sides since talks were suspended in February.

Led by IMF mission chief for Senegal Mercedes Vera-Martin and a team of economists, the visit comes shortly after President Bassirou Diomaye Faye appointed a new government and amid mounting concerns over the country's public finances.

Debt levels under scrutiny

A key objective of the mission is to assess the true scale of Senegal's debt burden, estimated at around 132 percent of gross domestic product when liabilities linked to state-owned enterprises are included.

IMF officials are also expected to review measures introduced by authorities to prevent the recurrence of opaque borrowing practices that have raised concerns among international lenders.

Particular attention may be given to a controversial €650 million borrowing operation structured through complex financial instruments known as total return swaps.

Financing needs take centre stage

The discussions will also focus on Senegal's immediate financing requirements, including its ability to meet debt repayments and interest obligations over the next 12 months.

Officials are expected to examine the state's revenue performance and assess whether current fiscal resources are sufficient to address growing budgetary pressures.

The review comes as Senegal faces one of the most severe budget crises in its recent history.

Economic headwinds complicate recovery

Economic conditions have become increasingly challenging for Dakar. Growth forecasts initially projected at 5 percent have been revised downward to around 2 percent.

At the same time, rising global oil prices linked to tensions in the Middle East, particularly the conflict involving Iran, are increasing pressure on public finances and adding to concerns about fiscal sustainability.

Future IMF support hangs in the balance

While the current mission is largely technical, its findings could have significant implications for Senegal's relationship with the IMF.

The assessment will help determine whether the Fund is prepared to resume a financial support programme with Senegal, a decision that could prove crucial for restoring investor confidence and stabilizing the country's economic outlook.

For Dakar, the outcome of the talks may shape its financial strategy for years to come as it seeks to navigate a period of unprecedented fiscal strain.

IMF Returns to Dakar as Senegal Seeks Debt Solution

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