Senegal and IMF strike $2.2bn deal, two years after debt scandal froze funding

The 36-month arrangement, announced on Tuesday, is intended to support Senegal's economic and financial reform programme for 2026 to 2029.

However, it still requires approval from the IMF's executive board and depends on Senegal securing financing assurances from international partners.

The deal follows months of negotiations with President Bassirou Diomaye Faye's government, which came to power in 2024 after accusing the administration of former president Macky Sall of concealing the true scale of the country's debt and budget deficit.

Those revelations prompted the IMF to suspend a $1.8 billion (€1.55 billion) programme agreed in 2023 while it sought clarification over Senegal's public finances.

The Fund said the new agreement would require “decisive corrective measures” to address the earlier misreporting.

Finance Minister Cheikh Diba welcomed the breakthrough, saying Senegal and the IMF had reached a technical agreement that “paves the way for financing prospects”.

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Debt burden remains high

Mercedes Vera Martin, a division chief in the IMF's African Department, said the Senegalese authorities had taken steps to improve transparency since the undeclared debt was uncovered.

Those efforts included audits and work to reconcile historical financial data.

Senegal's total public-sector debt was estimated at 132 percent of gross domestic product at the end of 2024, making it one of the most heavily indebted countries in sub-Saharan Africa.

There are, however, signs that the pressure is beginning to ease. The fiscal deficit fell from 13.4 percent of GDP in 2024 to 6.4 percent in 2025, largely as a result of tighter government spending, according to the IMF.

The economy also remained resilient, expanding by 6.7 percent in 2025 as Senegal benefited from its first full year of oil production. Growth outside the hydrocarbon sector was more modest, slowing to 2.2 percent.

Senegal began producing oil from its first offshore field in 2024, providing a new source of growth and revenue as the government works to stabilise the public finances.

The country has meanwhile continued to raise funds on regional markets, although borrowing there is generally more expensive than financing from international institutions and development banks.

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 'Debt treatment'

The question of how Senegal should manage its debt has also become politically contentious.

Tensions between Faye and his former prime minister, Ousmane Sonko, intensified earlier this year over several issues, including relations with the IMF.

Faye dismissed Sonko in May, but Sonko later became speaker of the National Assembly, giving him an influential role as reforms linked to the IMF programme move through parliament.

Faye has favoured a more conciliatory approach towards the Fund, while Sonko has rejected conventional debt restructuring.

Asked whether the new programme involved restructuring, Vera Martin said it included “debt treatment”, adding that Senegal had developed its own plan.

Diba stressed that the proposal was “not a restructuring in the traditional sense”, but an approach designed around Senegal's specific circumstances.

Sonko, however, called for greater transparency in a Facebook post on Tuesday and demanded details of what “debt treatment” would involve.

He also said any commitments would ultimately be debated in the National Assembly, where his Pastef party holds a majority.

The agreement comes after Moody's last week downgraded Senegal's long-term foreign-currency debt rating from Caa1 to Caa2.

(with newswires)