Senegal Nears New IMF Deal After Audit Uncovers Hidden Debt and Triggers Funding Freeze

DAKAR, Senegal — Standing before lawmakers in Dakar on Dec. 30, Finance Minister Cheikh Diba said Senegal was close to securing a new deal with the International Monetary Fund, despite one of the steepest debt shocks seen in Africa in recent years.

“We hope to finalize the program very quickly,” Diba told the National Assembly, saying negotiations with the IMF were “going very well” and that both sides had “reached consensus” on correcting the country’s fiscal data and tackling budget and debt issues.

Behind his measured tone lies a dramatic reversal of fortune for a country long held up as a regional reform model. A sweeping audit ordered by Senegal’s new government has uncovered tens of billions of CFA francs in previously unreported obligations, pushing the estimated public-sector debt burden to about 132% of gross domestic product and prompting the IMF to freeze disbursements under an existing $1.8 billion lending arrangement.

The freeze and data revisions have turned Senegal from a star borrower into a test case of how international institutions deal with hidden debt — and how a populist-leaning government balances anti-IMF rhetoric with urgent financing needs.

A debt pile that wasn’t in the books

Until this year, Senegal’s official figures painted a far more benign picture. The previous administration of President Macky Sall reported central government debt at 74.4% of GDP at the end of 2023, with fiscal deficits averaging about 5.5% of output in recent years.

Those numbers began to unravel after President Bassirou Diomaye Faye, elected in March 2025 on a platform of transparency and economic sovereignty, instructed the Cour des comptes (the state audit court) and the Inspection générale des finances to review public finances between 2019 and early 2024. The government also hired audit firm Forvis Mazars to reconcile debt data.

The audits concluded that central government debt had been significantly understated. Once off-budget loans, state guarantees and arrears were included, the stock of central government debt at the end of 2023 rose to between about 99.7% and 111% of GDP, depending on coverage, and to roughly 118.8% at the end of 2024.

An IMF mission in March described “hidden loans” amounting to approximately 25 percentage points of GDP. These, IMF staff said, included borrowing by state-owned enterprises that carried an implicit or explicit government guarantee, contractual obligations under public-private partnerships and sizable domestic arrears, particularly in the energy, infrastructure and construction sectors.

When debts of public enterprises and other public-sector liabilities are consolidated, IMF staff now estimate Senegal’s overall public-sector debt at around 132% of GDP at the end of 2024 — a level more usually associated with countries in or near default.

IMF freezes funding, probes misreporting

The revelations have had immediate consequences for Senegal’s relationship with its main official lender.

In June 2023, the IMF Executive Board approved a three-year package for Senegal combining an Extended Fund Facility and an Extended Credit Facility worth about $1.5 billion, alongside a $320 million Resilience and Sustainability Facility to help finance climate-related reforms. At the time, the Fund’s statements emphasized Senegal’s “strong track record” and the authorities’ commitment to reducing debt vulnerabilities.

After the audit findings were shared, the IMF determined that the earlier data underlying the program had been materially inaccurate. An IMF spokesperson said in mid-2025 that disbursements under the arrangement had been frozen after an audit revealed that deficits and debt had been understated.

The Fund has launched a formal misreporting process to assess whether Senegal provided incorrect information under IMF-supported programs. The case has also triggered an internal review of how the institution assesses the reliability of government data, particularly where state-owned enterprises and complex financing structures are involved.

At the same time, IMF staff and Senegalese officials have been trying to design a new program that reflects the revised debt picture. Missions in March, August and late October through early November 2025 focused on corrective measures and potential new financing. The latest visit was extended by several days but ended without a finalized agreement, though both sides described the talks as constructive.

Politics of disclosure and blame

The debt shock has sharpened political divisions in Dakar.

Supporters of President Faye and Prime Minister Ousmane Sonko say the audits confirm what opposition figures long alleged: that Sall’s government concealed the true cost of a debt-fueled infrastructure and energy drive. The audit reports accuse the previous administration of systematically understating debt and deficits between 2019 and 2023.

Sall and his allies have not publicly accepted those accusations. They have argued more broadly that Senegal, like many developing countries, was hit by overlapping external shocks — including the COVID-19 pandemic, surging energy and food prices and tighter global financial conditions — and that borrowing was necessary to sustain growth and protect households.

For the new leadership, transparency is a political asset but also a constraint. By consolidating all obligations into one large debt figure, the government strengthens its case that it inherited a severe problem. It also exposes itself to market scrutiny and the need for rapid policy adjustment.

Prime Minister Sonko, a long-time critic of the IMF, has taken a confrontational line on options that could be seen as humiliating. In November, he said any debt restructuring pushed by the Fund would be “a disgrace” that Senegal wanted to avoid. His stance echoes his campaign calls to rethink what he has described as “neo-colonial” economic arrangements with international institutions.

Finance Minister Diba has sounded a different note. He has emphasized correcting data, cooperating with the IMF and maintaining access to markets, including through potential Eurobond issuance, despite the ratings downgrades.

Ratings slump and market pressure

Credit rating agencies have responded quickly to the new numbers.

S&P Global Ratings cut Senegal’s sovereign rating three times in 2025, from B+ at the start of the year to CCC+ by mid-November, citing the upwardly revised debt levels and large financing needs. The agency said the new government’s discovery of about $11 billion of previously unreported public debt had sharply worsened the country’s credit profile.

Moody’s Investors Service lowered its rating on Senegal to Caa1, placing the country firmly in highly speculative territory.

Prices of Senegal’s Eurobonds due 2033 and 2048 fell to around 60 to 68 cents on the dollar after the IMF’s November mission ended without a new program, pushing yields above 11% and 13%. The higher borrowing costs complicate Dakar’s efforts to refinance upcoming maturities and plug a budget deficit that IMF staff estimate was in double digits as a share of GDP in 2024.

Officials say they still intend to tap international and regional markets but acknowledge that restoring investor confidence hinges on an IMF-backed framework.

Oil, gas and the cost of adjustment

The debt crisis has arrived just as Senegal begins to pump oil and gas from the Sangomar field and the Greater Tortue Ahmeyim project, developments that had fueled expectations of a fiscal windfall.

Official projections suggest that hydrocarbon production helped drive real GDP growth into double digits in early 2025, with non-oil activity expanding more modestly. But even with new exports, the additional revenue will take time to build and is unlikely to erase the debt overhang in the short term.

Both the government and the IMF are working on a fiscal adjustment path that would reduce the budget deficit from an estimated 12% to 13% of GDP in 2024 to around 5.4% by 2026 and to the 3% ceiling set by the West African Economic and Monetary Union thereafter.

That consolidation is expected to rely on a mix of lower energy subsidies, tighter control of public investment, and changes to tax policy, including streamlining exemptions and improving revenue collection. Such steps could weigh on households and businesses already facing high living costs and delayed payments from the state.

Domestic contractors in the construction and public works sectors have complained of mounting arrears, while unions and civil society groups have warned against measures that would sharply raise fuel or electricity prices. The risk for the Faye–Sonko administration is that voters who backed promises of social justice may end up bearing the costs of cleaning up hidden debts they did not know existed.

A narrow window for a new deal

Diba told lawmakers that the IMF is reviewing Senegal’s proposals and that a new mission chief is expected to take up the file in January 2026. Any agreement will also require the IMF Executive Board to grant a waiver for past misreporting, a decision that hinges on whether directors judge the inaccuracies to have been unintentional and whether the authorities are taking corrective steps.

If a new program is approved, it could unlock fresh concessional financing, reassure private investors and anchor the fiscal adjustment the government says it is committed to. If talks stall, Senegal may have to rely more heavily on expensive domestic and regional borrowing or contemplate some form of debt treatment despite official reluctance.

For now, officials in Dakar are trying to present the crisis as an opportunity to reset how the country manages its public finances. IMF staff have praised the new government’s decision to bring the full extent of the debt into the open and to commission independent audits.

Whether that transparency can be turned into a durable improvement in governance and debt sustainability will become clearer in the months ahead, as Diba returns to the negotiating table and Senegal’s first significant oil revenues start to flow.