Financial Audit Forces Senegal to Reassess IMF Program Strategy

Senegal’s $1.8 billion aid program secured from the International Monetary Fund (IMF) in 2023 is currently frozen, prompting Finance Minister Cheikh Diba to announce a necessary restructuring of the agreement. The government aims to establish a new agreement with the IMF by the first quarter of 2025 at the latest.
During the annual IMF meetings in Washington, Minister Diba indicated that an audit had uncovered significant discrepancies in the country’s financial reporting. The audit revealed a higher debt-to-GDP ratio, exceeding 80%, and a budget deficit surpassing 10% of GDP—almost double the previously reported figures of 5.5%. These revelations have raised serious concerns about fiscal management and transparency.
“We were aware of the consequences, but when we realized there were fundamental discrepancies between the figures reported to the Fund, we understood we had to report them,” Diba stated.
The findings have led to immediate consequences for Senegal’s financial standing. Moody’s downgraded the country’s credit rating further into the speculative category, with warnings of a potential additional downgrade looming. This has resulted in a sharp sell-off of Senegalese Eurobonds, reflecting investor unease.
The scheduled payment of 338 billion CFA francs this year has also been postponed to 2025, exacerbating the challenges ahead for the government.
Despite these setbacks, the Senegalese government remains optimistic about its economic growth, which is projected at 6% for this year and over 10% in 2025. Key projects in the natural resources sector, including the $4.8 billion GTA liquefied natural gas project led by BP and Kosmos Energy and the ongoing Sangomar oil development by Woodside Energy, are expected to significantly contribute to economic expansion.
Minister Diba noted that while the government cannot alter existing contracts mid-play, it has the right to review them to ensure compliance with mining and oil codes. This review comes as Senegal positions itself as a potential significant producer of oil and gas.
Conclusion
As Senegal navigates the complexities of its relationship with the IMF, the need for fiscal transparency and effective management has never been more critical. The government’s commitment to rectifying past discrepancies and pursuing new economic opportunities will be essential in restoring confidence among investors and securing a path toward sustainable growth.