Senegal’s Debt Challenge Under Political and Economic Pressures

The management of public debt in Senegal is increasingly becoming a balancing act between short-term political imperatives and long-term economic sustainability. As the country grapples with a growing debt burden, the choices made today will shape its economic trajectory for years to come. The urgency of this issue cannot be overstated, particularly as the government seeks to align debt management strategies with fiscal realities.

Public Debt: A Growing Burden

According to official figures released in mid-2026, Senegal‘s public debt stood at 23.67 trillion CFA francs by the end of 2024, representing 118.8% of the country’s GDP. This staggering figure includes only the central government’s debt, excluding arrears and obligations from public enterprises. The debt service—comprising principal repayments, interest, and commissions—has become a significant strain on the national budget, consuming the entirety of tax revenues in 2025. Specifically, the debt service amounted to 4.36 trillion CFA francs, with 3.27 trillion allocated to principal repayments and 1.09 trillion to interest and commissions.

The situation has not improved in 2026, with projections indicating that debt service will reach 5.5 trillion CFA francs, while tax revenues are expected to total just 5.38 trillion CFA francs. This imbalance underscores a critical issue: the government’s ability to meet its financial obligations is increasingly dependent on additional borrowing, creating a precarious cycle that threatens long-term economic stability.

The Limits of Revenue-Based Adjustments

The government’s Economic and Social Recovery Plan (PRES), launched in 2025, aims to generate an additional 3.17 trillion CFA francs in tax revenues between 2025 and 2028. This includes 2.11 trillion from direct tax measures and 1.06 trillion from multiplier effects of broader economic policies. However, the early performance of these measures has fallen short of expectations. By the end of the first quarter of 2026, tax revenues amounted to just 54.2 billion CFA francs, with optimistic projections estimating 300 billion by year-end. This gap highlights the structural challenges hindering revenue growth, including the size of the informal economy, tax administration efficiency, and the overall economic growth rate.

The potential for tax revenue expansion in Senegal is further constrained by the country’s tax-to-GDP ratio, which stood at 18.9% in 2025. While the government aims to bridge a 6% fiscal gap, the historical growth rate of tax revenues (7% between 2023 and 2025) suggests that even without new tax measures, significant progress is unlikely in the short term. The debt service for 2025 alone accounted for 106.6% of tax revenues, and projections for 2026 indicate that debt service will exceed revenues by 100 billion CFA francs. This trend is expected to continue through 2028, as Senegal faces a peak in debt repayments.

The Pitfalls of Refinancing as a Short-Term Solution

In response to these challenges, the government has relied heavily on refinancing as a means of managing its debt obligations. In 2025, Senegal raised 4.04 trillion CFA francs from the regional financial market of the West African Economic and Monetary Union (WAEMU), a significant increase from 998 billion CFA francs in 2024. However, the cost of this refinancing has been prohibitive. The average interest rate on new debt issued in 2025 ranged between 6% and 7%, with projections for 2026 climbing to 7-8%. These rates are higher than the average interest rate on existing debt, which stood at 3.9% at the end of 2024, with domestic debt carrying a significantly higher rate of 5.3% compared to 3.4% for foreign-denominated debt.

Moreover, the maturity profile of new debt has deteriorated. The average maturity of new debt has shortened due to investor demands for higher risk premiums, increasing the likelihood of liquidity crises in the near term. While refinancing has provided temporary relief, it has exacerbated the long-term debt burden by increasing the cost and shortening the repayment timeline of the debt stock.

A Debt Spiral Looms

The combination of high debt service costs, stagnant revenue growth, and expensive refinancing has created a precarious fiscal environment. Key indicators such as the primary balance, interest rates, and GDP growth rates all point to a worsening debt dynamic. The primary balance—a measure of government revenue minus non-interest expenditures—was a deficit of 1.8% of GDP in 2025. The average interest rate on debt (4.59%) exceeded the non-hydrocarbon GDP growth rate (2.2%), necessitating a stabilizing primary surplus of 2.7% of GDP to prevent further debt accumulation. However, with the primary balance in deficit, this scenario remains unattainable without drastic measures.

Projections for 2026 are equally concerning. The government anticipates a primary deficit of 246 billion CFA francs, with the average interest rate on debt expected to rise to 4.79%. Despite a slight improvement in the GDP growth rate to 3.2%, the stabilizing primary surplus required remains out of reach. This suggests that, without intervention, Senegal faces a debt spiral, where the cost of servicing debt outpaces economic growth, leading to unsustainable borrowing and economic instability.

Beyond Institutional Reforms: The Need for Pragmatic Solutions

In response to these challenges, Senegal has established a General Directorate of Financing and Debt to centralize and streamline debt management. While this institutional reform is a step in the right direction, it alone cannot resolve the underlying arithmetic of the debt crisis. The government must adopt a pragmatic approach that goes beyond internal budgetary adjustments and refinancing. This may include renegotiating debt terms with multilateral, bilateral, and commercial creditors, extending maturities, reducing interest rates, or even considering nominal haircuts on certain debt stocks.

Delaying these measures risks exacerbating the economic and budgetary costs of the current refinancing strategy. It could also crowd out private sector investment in the domestic financial market and constrain public investment, further stifling economic growth. The choice facing policymakers is clear: act decisively to address the debt crisis now, or face the inevitability of a more severe economic downturn in the future.

The time for half-measures has passed. Senegal must strike a balance between political expediency and economic pragmatism to secure a stable and prosperous future.