Investors are increasingly convinced that Senegal will default on its debts, yet the country’s leadership remains reluctant to pursue a restructuring, sources familiar with the situation said, even as Dakar continues talks with the International Monetary Fund (IMF).
No agreement is expected from the current IMF mission, with both sides still far apart on how to address the West African nation’s heavy debt burden. The situation has already locked Senegal out of international capital markets and forced it to repeatedly roll over short-term regional borrowing to avoid default.
The impasse began in 2024 when the new administration revealed that the previous government had under-reported public debt, prompting the IMF to freeze its $1.8 billion support programme. Negotiations for a new loan have since stalled, further complicated by political turmoil. Last month, President Bassirou Diomaye Faye sacked Prime Minister Ousmane Sonko, a strong opponent of debt restructuring who had described default as a “disgrace.”
“They have been trying to keep their lights on by rolling over debt, but now it is a question of when rather than if,” said Elina Theodorakopoulou of Manulife Investment Management.
Many investors view Sonko’s departure as the removal of a major obstacle to a debt overhaul. However, the government now appears to be exploring whether guarantees from multilateral development banks could help it access cheaper financing.
“The government does still seem to be positioning itself in a muddle-through approach,” said Kathryn Exum of Gramercy, whose base case assumes Senegal will eventually default. “They would like to obtain these guarantees as part of the financing envelope.”
An IMF team began a staff visit on Monday. The mission is scheduled to meet the finance minister but will not hold talks with the president or the new prime minister.