Senegal’s debt management under political time constraints

The management of public debt in Senegal has become a critical challenge, forcing policymakers to navigate a delicate balance between short-term political considerations and long-term economic sustainability. This dilemma, rooted in the theory of public choice, highlights the tension between election-driven decision-making and the need for pragmatic, sustainable fiscal policies.

The global economic landscape has intensified these pressures, particularly as Senegal faces mounting debt obligations that threaten its financial stability. Analysts argue that the country’s debt trajectory must evolve to ensure long-term viability, with key variables such as interest rates, debt-to-GDP ratios, and average maturity needing urgent adjustment. Whether through refinancing, reprofiling, or restructuring, any intervention will inevitably reshape the country’s debt repayment schedule.

Evaluating Senegal’s debt burden through recent data

Official assessments reveal a stark reality: Senegal’s public debt stood at 23.67 trillion CFA francs by the end of 2024, equivalent to 118.8% of GDP. The situation is further compounded by the fact that debt servicing—encompassing principal, interest, and commissions—consumes the entirety of the country’s tax revenue. In 2025, debt servicing reached 4.36 trillion CFA francs, while tax revenues totaled only 4.09 trillion CFA francs. Projections for 2026 indicate a widening gap, with debt servicing expected to rise to 5.5 trillion CFA francs against projected tax revenues of 5.38 trillion CFA francs.

This imbalance underscores a fundamental issue: Senegal is increasingly reliant on additional borrowing to meet its operational and investment expenditures, risking a cycle of unsustainable debt accumulation. The government’s official stance has been to avoid outright restructuring, instead relying on internal mechanisms such as budget consolidation and debt refinancing. However, empirical evidence raises questions about the efficacy of this approach, particularly as the country grapples with persistent fiscal deficits.

The fiscal recovery plan: ambitions versus realities

In response to these challenges, Senegal unveiled its Economic and Social Recovery Plan (PRES) in August 2025, aiming to generate an additional 3.17 trillion CFA francs in tax revenue between 2025 and 2028. This includes 2.11 trillion from direct revenue measures and 1.06 trillion from multiplier effects. Additionally, the plan targets 1.09 trillion CFA francs from state asset recycling, particularly through land and property optimization.

Yet, early indicators suggest a significant gap between ambition and execution. By the end of the first quarter of 2026, tax revenues amounted to just 54.2 billion CFA francs, with optimistic forecasts capping the year-end total at 300 billion. Structural economic constraints—such as a narrow tax base, a large informal sector, and limited digitalization in revenue collection—further complicate efforts to boost fiscal intake. Despite a 7% increase in tax revenues between 2023 and 2025, the effective tax pressure stood at only 18.9% of GDP, far below the potential of 25.3% outlined in 2019.

The disparity between debt servicing and revenue growth remains acute. For 2025, debt servicing consumed 106.6% of tax revenues, and projections for 2026 indicate a further increase of 1 trillion CFA francs in debt obligations. By 2028, Senegal is expected to face a peak in debt repayments, exacerbating liquidity pressures.

The refinancing illusion: short-term relief at a long-term cost

With international capital markets largely inaccessible, Senegal has turned to regional financing within the West African Economic and Monetary Union (WAEMU) to meet its funding needs. In 2025, the country mobilized 4.04 trillion CFA francs through public bond offerings, a fourfold increase from 2024. However, this strategy carries significant risks. The average interest rate on new debt has risen to between 7% and 8% in 2026, compared to 6-7% in 2024, reflecting growing investor risk premiums. Additionally, the average maturity of new debt has shortened, increasing refinancing risks.

Critically, the cost of new debt exceeds that of the debt it replaces. The effective interest rate on central government debt stood at 3.9% at the end of 2024, but new regional borrowings carry rates of up to 8%, while domestic debt remains more expensive at 5.3%. This not only erodes fiscal space but also accelerates debt accumulation. Between 2024 and 2025, the central government’s debt stock increased by 1.53 trillion CFA francs, reaching 25.2 trillion, while the debt-to-GDP ratio improved only due to hydrocarbon-driven GDP growth.

The unsustainable trajectory of debt dynamics

Three key indicators define Senegal’s debt dynamics: the effective interest rate on debt, GDP growth, and the primary balance—the difference between revenue and non-interest expenditure. A negative primary balance indicates that current revenues are insufficient to cover operational costs, let alone debt servicing, forcing the government to borrow to bridge the gap.

In 2025, Senegal’s primary balance stood at a deficit of 401.7 billion CFA francs (-1.8% of GDP), while the effective interest rate on debt (4.59%) surpassed non-hydrocarbon GDP growth (2.2%). To stabilize the debt-to-GDP ratio at 2024 levels (119%), a primary surplus of 2.7% of GDP would have been required. Instead, the ratio deteriorated to 124% without hydrocarbon contributions. Projections for 2026 paint a similarly bleak picture, with a primary deficit of 246 billion CFA francs and an interest rate of 4.79%, further widening the gap between debt growth and economic expansion.

Without decisive intervention, the debt-to-GDP ratio is expected to spiral, driven by a combination of high borrowing costs, sluggish growth, and persistent deficits. The current strategy—reliant on internal fiscal adjustments and regional refinancing—risks deepening the crisis by crowding out private investment and limiting public expenditure.

Institutional reforms must align with economic pragmatism

Senegal has recently established a General Directorate for Financing and Debt to centralize debt management, a commendable step toward improving institutional governance. However, structural fiscal reforms are equally critical. The government must consider pragmatic solutions, including renegotiating debt terms with multilateral, bilateral, and commercial creditors. Options such as extending maturities, reducing interest rates, or accepting nominal haircuts on certain debt tranches could alleviate immediate pressures without resorting to unsustainable borrowing.

Delaying such measures risks exacerbating the economic cost of refinancing, as public resources are diverted from productive investments to meet debt obligations. The choice is clear: prioritize short-term political expediency or embrace the necessary fiscal discipline to secure long-term stability. The latter, though politically unpopular, remains the only viable path forward.