SENEGAL: COUNTER-PRODUCTIVE CREDIT RATING DOWNGRADE RAISES SOVEREIGN DEFAULT RISKS

   Fri, 07 March 2025

A widely anticipated public accounts audit has uncovered billions of dollars’ worth of undisclosed domestic debt with disbursement under the previous government lacking transparency. In response, the current administration, which ordered the audit, has swiftly committed to extensive fiscal reforms and debt transparency measures to avoid a sovereign default and accelerate resumption of IMF credit support. Nevertheless, double notch credit rating downgrades will be counter-productive, delaying talks with the IMF and forcing the government to secure alternative costly financing in the interim. Despite resilient economic performance and rising export revenue, the mitigation of near-term debt risks will hinge largely upon securing a new IMF programme.

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