Senegal’s economic ministry forecast a sharp slowdown in annual growth and highlighted the uncertainty over the West African country’s debt challenges in a document released on Wednesday.
Senegal has faced economic challenges since the discovery of US$13 billion in hidden debt attributed to the previous administration.
It has relied heavily on the regional debt market to meet its funding needs since last year due to the misreporting case that has closed off funding from the International Monetary Fund and other financiers.
An economic outlook document released by the ministry said Senegal’s growth was expected to slow to 2.5% this year from 6.7% in 2025 due to declining hydrocarbon production.
While the public debt-to-GDP ratio is expected to decline from 121.3% in 2024 to 116.2% in 2025, the overall risk of sovereign debt stress remains high in the medium term, the document showed.
It said the budget deficit declined to 6.2% of gross domestic product in 2025 from 13.7% the previous year, driven mainly by deep cuts in public spending.
The deficit is expected to narrow further to about 5.4% of GDP in 2026, as new tax measures under a government recovery programme and rising hydrocarbon revenues help offset a planned rebound in public investment.
The deficit is expected to return to the West African regional ceiling of 3% of GDP in 2027.
“The reduction in the deficit… was a positive surprise, and the authorities deserve credit for it, particularly given the sharp reduction in capital expenditures and the good performance on the revenue front,” Fernando Gimenez, Senior Economist from Promeritum Investment Management, told Reuters.
The ministry’s document showed that the treasury’s borrowing on the securities market had increased by 122.8% to 2,225 billion CFA francs ($3.99 billion) in 2025, with bonds and bills dominating issuances.
Senegalese banks accounted for 55.5% of the investments, while Ivorian banks held almost 36% of the securities issued in 2025.
The lack of a new program with the IMF and the significant financing needs have created a situation of uncertainty that is weighing on Senegalese securities, the document said, adding that the Eurobond maturing in 2028 reached a record yield of 50% in April 2025.
“On the financing side, while the regional market has proven to be resilient, it is unclear whether it would be able to keep up with the gross financing needs,” Gimenez said.
Reuters
