Senegal's unprecedented budget impasse

Heavily indebted Senegal is wrangling with an unprecedented political and budgetary stalemate between its government and parliament.

President Bassirou Diomaye Faye is at loggerheads with the National Assembly, where the opposition Pastef party holds an enormous majority and is hostile to his budget measures, putting the country in a precarious situation.

The deadlock has put at risk significant financial aid expected from the International Monetary Fund and jeopardises new government spending for 2027.

Here is a summary of what is at stake.

IMF programme

Earlier this month Pastef, which controls 130 of the 165 seats in the National Assembly, rejected a revised 2026 budget in parliament. It has said it will do the same for the 2027 budget.

The two budget bills are key tools for settling Senegal's debt, which a new $2.2 billion loan programme from the IMF is meant to help remedy.

The programme was announced in September but is subject to certain conditions and has yet to be approved by the IMF's executive board.

Senegal faced public-sector debt estimated at 132 percent of GDP at the end of 2024, and the IMF has requested that Senegal address debt settlement in its budget.

While the budgetary blockade "does not automatically call into question the technical agreement" with the IMF, "it could seriously delay its approval by the Fund's board of directors", Senegalese economist Amath Ndiaye told AFP.

Negotiations with other creditors "can continue" despite the blockage, he said, but "their outcome could be delayed" in the absence of a budgetary programme supported by the IMF.

In addition, the lack of an IMF agreement would pose "a real risk of disbursement delays" expected from other donors and accentuate cash flow tensions, said another economist, Ahmadou Aly Mbaye.

Another risk would be "additional deterioration in the perception of Senegalese sovereign risk", he said.

Other negative consequences would include higher borrowing costs, increased pressure on Senegal's sovereign bond prices, and difficulties in accessing financing, Mbaye said.

2027 budget

Pastef's charismatic leader Ousmane Sonko, who is engaged in a dramatic political feud with President Bassirou Diomaye Faye, is speaker of the National Assembly. Having once served as prime minister, Sonko was fired by Faye in May.

The populist is known for his disdain for debt restructuring, which is required under the IMF loan, and previously called the concept a "disgrace" that would compromise Senegal's sovereignty.

He and his party have accused the government of cutting social spending in the revised 2026 budget and have criticised what Sonko said are "conditionalities" laid out in the IMF programme.

Pastef has meanwhile called into question revenue forecasts under the proposed 2027 budget.

With the blockage, new expenses planned under the 2027 proposed budget would not go into effect.

The government has already said under such a scenario the country would be exposed to electricity cuts and that it would not be able to pay arrears owed to businesses nor aid to poor families.

To get around the 2027 budget blockage the government could use constitutional provisions to push it through by decree or simply renew the 2026 budget.

Several other parliamentary tactics are at the government's disposal, but they could result in a dissolved government or dissolved National Assembly.