Debt agreement between Senegal and the IMF: $2.2 billion released

NAIROBI – The Senegalese government and the International Monetary Fund have reached a preliminary agreement on a three-year loan package worth US$2.2 billion, thereby unfreezing funds that had been frozen since the discovery of US$7 billion in hidden debt by the previous administration.

The Ministry of Economy and Finance in Dakar has stated that it has committed to a ‘shared framework’ to restore the sustainability of Senegal’s public finances. The announcement triggered a record fall in the value of its foreign-currency bonds, reflecting a level of enthusiasm that will need to be assessed during the implementation phase. The IMF noted in a statement that the agreement remains subject to final approval by the Fund’s Executive Board and Board of Governors and requires, amongst other conditions, the ‘necessary financial assurances’ from Senegal.

The IMF had suspended a $1.8 billion programme with Dakar when the government of the current leader, Diomaye Faye, revealed the existence of 7 billion in accumulated debt that had been concealed in the accounts by former president Macky Sall. Washington’s freeze cut Dakar off from international markets and forced the government to borrow on the domestic market, hampering a period of growth spurred by the change of leadership at the top and the billion-dollar investments pouring into the country’s energy resources, discovered in onshore and offshore fields.

The Fund praised the strength of the Senegalese economy, citing a 6.7 per cent rise in GDP in 2025 driven by oil production, inflation at 1.4 per cent and growth in non-hydrocarbon GDP at an annualised rate of 4.7 per cent in the first quarter of the current year. The key reforms supported by the Fund are now expected to ‘restore the sustainability of public finances, whilst protecting vulnerable households’, whilst the ‘fiscal strategy focuses on strengthening domestic resource mobilisation and rationalising expenditure [...]’.

The agreement reached in Dakar marks a turning point in a saga that has lasted at least two years and has had both financial and political repercussions for Senegal. The approach to the debt crisis was one of the recurring points of friction between the former leadership duo of Faye himself and his former prime minister, Ousmane Sonko, who were divided over the former’s more conciliatory stance and the latter’s more confrontational approach. Sonko himself, who was dismissed as prime minister and has since re-emerged as leader of Parliament, has indicated a willingness to consider debt restructuring.