Senegal’s government has officially committed to clearing a staggering 1.9 trillion FCFA (approximately €2.9 billion) in public arrears before the end of the fiscal year. The announcement, made by a deputy minister at the Ministry of Economy, Finance and Planning, signals a direct lifeline for small and medium-sized enterprises (SMEs) that have long waited to be compensated for services rendered to the state.
Unpaid bills and the cost of delayed obligations
With arrears totaling nearly 10% of Senegal’s projected 2024 GDP (around 19 trillion FCFA), this backlog reveals deep-seated fiscal strains. The unpaid amounts stem from delayed government contractor payments, outstanding public procurement invoices, and unsettled tax credits, though authorities have not disclosed how much falls under domestic versus external debt or how many enterprises will benefit from the initial repayment wave.
Years of opacity have left businesses in the dark. Employer groups, including the Conseil national du patronat (CNP) and Confédération nationale des employeurs du Sénégal (CNES), have warned that over 60% of some sectors—such as construction, IT services, and administrative supplies—rely heavily on public contracts. Since mid-2023, numerous suppliers have faced financial collapse, mass layoffs, and reduced access to bank credit, compounding the economic slowdown.
From hidden ledgers to fiscal reckoning
The accumulation of arrears is inseparable from a February 2025 report by Senegal’s Court of Auditors, which exposed hundreds of billions in unrecorded public commitments from the previous administration. This revelation prompted the International Monetary Fund (IMF) to freeze its ongoing program and demand a comprehensive audit before resuming disbursements. Negotiations for a new funding arrangement have since stalled.
The urgency to resolve these arrears is now a cornerstone of donor confidence. The IMF treats the reduction of domestic arrears as a key structural benchmark, alongside public wage control and primary surplus targets. A transparent repayment schedule—whether through direct cash payments, treasury bill issuance, or tax offsets—could unlock the next round of IMF support and restore investor trust.
Regional lessons: can Senegal follow suit?
Senegal is not the first West African nation to tackle this issue. Côte d’Ivoire successfully cleared around 800 billion FCFA in domestic arrears between 2012 and 2015 by combining direct payments with regional debt instruments traded on the West African Monetary Union market. Benin implemented a similar strategy in 2019 for local suppliers. In both cases, restoring SME liquidity preceded a surge in private investment.
The Bassirou Diomaye Faye – Ousmane Sonko administration, which took office in April 2024 on a platform of fiscal transparency, faces a defining test. Meeting the end-of-year deadline would send a strong signal to local entrepreneurs after months of declining public spending and revised growth forecasts. Yet the source of funding remains unclear. With Senegal’s public bond yields exceeding 8% in regional markets this year, further borrowing risks deepening debt pressure rather than easing it.
Balancing act: debt, fiscal relief, or austerity?
The government must decide whether to absorb the cost by issuing more debt, stagger payments, or allow tax offsets for suppliers. Each option carries trade-offs. While immediate cash relief could stabilize struggling SMEs, it may worsen the fiscal deficit. Conversely, delaying payments risks prolonging the economic squeeze and eroding confidence in government procurement cycles.