KEY POINTS
- Senegal’s arrears stood at 1.956 trillion CFA francs ($3.5 billion) as of March 2025, and the PM warns they threaten growth and jobs.
- Dakar will reprofile rather than restructure, extending maturities and renegotiating rates, and is reworking about 30 mining agreements.
- The move follows a $2.2 billion IMF staff-level deal, two years after an IMF programme was suspended over misreported debt.
Senegal must clear billions of dollars in payment arrears to restore its public finances, Prime Minister Ahmadou Al Aminou Lo said, warning that the backlog threatens growth and jobs.
The arrears stood at 1.956 trillion CFA francs, about 3.5 billion dollars, as of March 2025. Moreover, Lo cautioned that leaving them unpaid risks stalling economic activity and triggering layoffs across the West African economy.
Reprofiling, not restructuring
Lo said Senegal will not pursue a formal debt restructuring, choosing instead to reprofile. Specifically, he said reprofiling means extending maturities and renegotiating interest rates, and he added that Senegal is also renegotiating roughly 30 mining agreements.
The plan follows fresh support from the Fund. Furthermore, the IMF and Senegal reached a staff-level agreement last week for a 2.2 billion dollar, three-year loan package. However, that comes after the IMF suspended a previous programme in 2024, when misreported debt under the prior government came to light.
The finance ministry framed the effort carefully. According to a statement last week, Senegal agreed to an “enhanced common framework” to restore debt sustainability, while excluding CFA-denominated debt from the rework.
Questions over the approach
However, the details remain murky. Dakar has said little about what its “enhanced Common Framework” actually entails. Specifically, the G20 Common Framework is a pandemic-era mechanism meant to coordinate restructurings among official creditors, including Paris Club members and newer lenders such as China.
Consequently, the reference raises questions, since the framework has drawn criticism for slow talks and uncertain outcomes. Nevertheless, Senegal insists it is not restructuring, drawing a firm line between reprofiling and a full overhaul.
Still, that distinction may not satisfy markets. Ultimately, investors often treat maturity extensions and interest-rate cuts as forms of restructuring, since they alter the original terms of the debt. Therefore, how creditors read Senegal’s plan, rather than how Dakar labels it, will likely determine whether the country restores confidence in its finances.
