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DAKAR (Reuters) – Senegal expects a budget deficit of around 7 percent of gross domestic product in 2025, according to government proposals seen by Reuters on Saturday, up from 10 percent found in an audit that prompted the country’s IMF freeze of 1, 9 billion dollar program.
An International Monetary Fund package agreed in 2023 is on hold after an audit revealed higher debt and deficit figures than reported by the previous administration, sending yields on the West African country’s dollar-denominated bonds higher and prompting a downgrade.
The audit, ordered by President-elect Basiru Diomayo Faye, showed the deficit at the end of 2023 was more than 10 percent, compared to about 5 percent reported by the previous government.
Any new IMF program or continuation of the existing one will not be possible before June 2025, Reuters reported.
The budget proposals, which are expected to be considered by the country’s new parliament in the coming days, say Senegal will implement a “prudent” debt policy using traditional donors to finance projects in 2025 and beyond.
It will also seek to develop domestic financing and target a potential CFA 1,500 billion ($2.41 billion) domestic diaspora bond market, according to the proposed budget.
The government, donors and investors are waiting for the final audit report of the Court of Auditors, which is expected in mid-December.
“The integration of the results of the audit of public finances by the Court of Auditors will lead to an audit of outstanding debt and upward debt servicing, especially in 2024 and 2025,” the government announced.
The budget proposal stated that, given the current level of debt, it plans to negotiate repayment terms with investors to spread payments and make debt management more sustainable.
“This active debt management activity will also concern issuance on the international market for easier debt servicing, especially for 2026 and 2027, in order to preserve debt sustainability margins and free up budget space,” the statement said.
Next (LON:) Annual economic growth is seen at 8.8%, boosted by this year’s start of oil production, but hampered by the slowdown in secondary and tertiary activity, the government announced.
(1 USD = 623.5000 CFA francs)
